Horizon Pharma Reports Third Quarter 2011 Financial Results and Provides DUEXIS Launch Update
Horizon Pharma Reports Third Quarter 2011 Financial Results and Provides DUEXIS Launch Update
"Since completing our IPO in early August, we have transformed the Company into a fully-integrated biopharmaceutical organization," said
Recent Accomplishments
- Completed initial public offering on
August 2, 2011 with the sale of 5,500,000 shares of common stock at$9.00 per share for gross proceeds of$49.5 million . Horizon's common stock began trading on theNASDAQ Global Market onJuly 28, 2011 under the symbol "HZNP." - Received a Notice of Allowance on
September 6, 2011 from the U.S. Patent andTrademark Office for Application Serial No 11/779,204 titled "Methods and Medicaments forAdministration of Ibuprofen " with claims that cover DUEXIS®. - Submitted a New Drug Application to the
FDA for LODOTRA® onSeptember 26, 2011 . - Received a Notice of Allowance on
October 13, 2011 from the U.S. Patent andTrademark Office for Application Serial No . 12/324808 titled "Stable Compositions of Famotidine and Ibuprofen" with claims that cover DUEXIS.
DUEXIS U.S. Launch Update
- Established Cardinal SPS as our third party logistics distribution partner for commercial warehousing, shipping, ordering and customer service.
- Secured initial orders from wholesalers and key pharmacy chains.
- U.S. commercial organization prepared for full launch, with experienced arthritis therapeutic marketing, managed care and sales teams.
- Sales representatives currently promoting DUEXIS to U.S. physicians.
- Promotional materials completed and being used by sales representatives.
- Managed care account team conducting initial meetings with key managed care organizations.
- The
FDA approved the use of the sanofi-aventisCanada Inc. manufacturing site inLaval, Quebec to manufacture DUEXIS. Sanofi will serve as the primary commercial manufacturer for DUEXIS distributed in the U.S.
Third Quarter 2011 Financial Results
During the three months ended
Cost of goods sold increased
Research and development expenses decreased
Sales and Marketing expenses increased
General and administrative expenses increased
The foreign exchange loss of
Net loss for the third quarter of 2011 was
Nine Months Ended
During the nine months ended
Cost of goods sold during the nine months ended
Research and development expenses decreased
Sales and Marketing expenses increased
General and administrative expenses decreased
Interest expense increased
Horizon recorded a bargain purchase gain of
Net loss for the nine months ended
Note Regarding Use of Non-GAAP Financial Measures
Horizon provides non-GAAP net income (loss) and net income (loss) per share financial measures that include adjustments to GAAP figures. These adjustments to GAAP involve the exclusion of non-cash items such as stock compensation and depreciation and amortization, and other one-time, non-recurring charges such as the bargain purchase gain the Company recorded in connection with its acquisition of
About
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the commercial launch of DUEXIS and the expectation that Sanofi will serve as the primary commercial manufacturer for DUEXIS distributed in the U.S. These forward-looking statements are based on management's expectations and assumptions as of the date of this press release, and actual results may differ materially from those in these forward-looking statements as a result of various factors. These factors include, but are not limited to, risks regarding Horizon's ability to commercialize products successfully, Horizon's ability to continue to successfully recruit and retain sales and marketing personnel and whether Horizon and Sanofi will be able to fulfill their obligations under the commercial supply agreement for DUEXIS. For a further description of these and other risks facing the Company, please
see the risk factors described in the Company's filings with the
Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2011 2010 2011 2010 ----------- ----------- ----------- ----------- As restated (1) Revenues Sales of goods $ 233 $ 689 $ 3,290 $ 2,346 Contract revenue 40 - 111 - ----------- ----------- ----------- ----------- Total revenues 273 689 3,401 2,346 Cost of goods sold 1,249 737 5,191 2,870 ----------- ----------- ----------- ----------- Gross loss (976) (48) (1,790) (524) Operating Expenses Research and development 5,346 5,721 11,536 12,861 Sales and marketing 5,141 1,955 7,426 3,608 General and administrative 4,192 3,880 10,640 14,189 ----------- ----------- ----------- ----------- Total operating expenses 14,679 11,556 29,602 30,658 ----------- ----------- ----------- ----------- Loss from operations (15,655) (11,604) (31,392) (31,182) Interest expense, net (995) (1,031) (5,465) (1,827) Bargain purchase gain - - - 19,326 Foreign exchange (loss) gain, net (758) 164 (226) 202 ----------- ----------- ----------- ----------- Loss before income tax benefit (expense) (17,408) (12,471) (37,083) (13,481) Income tax benefit (expense) 177 (16) 545 (29) ----------- ----------- ----------- ----------- Net loss $ (17,231) $ (12,487) $ (36,538) $ (13,510) =========== =========== =========== =========== Net loss per common share-basic and diluted $ (1.30) $ (8.38) $ (6.69) $ (11.18) ----------- ----------- ----------- ----------- Weighted average shares used in calculating net loss per common share- basic and diluted 13,256,189 1,490,551 5,458,561 1,207,887 ----------- ----------- ----------- ----------- (1)The initial tax rate used to determine the amount of the deferred tax liability as ofApril 1, 2010 (the date of the Nitec acquisition) was the statutory tax rate inSwitzerland of 27.5%. Upon gaining a better understanding of the Swiss tax laws, it was later determined that the Company would receive a deduction on each of its Swiss Federal and Cantonal tax returns for taxes paid to the other jurisdiction, which would lead to a lower overall effective tax rate than the rate that was initially used. Accordingly, the deferred tax liability and the bargain purchase gain were adjusted to reflect the lower effective tax rate. The misstated bargain purchase gain and deferred tax liability based on the initial tax rate of 27.5% was reported in the Company's consolidated financial statements for the nine months period endedSeptember 30, 2010 , which appeared in Amendment No. 4 to the Company's Registration Statement on Form S-1, filed with theSEC onNovember 5, 2010 . The error was identified and corrected by the Company by restating the nine month period endedSeptember 30, 2010 which resulted in a decrease of$4,591 in deferred tax liabilities and a corresponding increase in bargain purchase gain. Further, it resulted in a decrease of$1.65 in net loss per share for basic and diluted common shares. Reconciliation of GAAP Net Loss to Non-GAAP Net Loss (in thousands, except share and per share amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2011 2010 2011 2010 ----------- ----------- ----------- ----------- As restated (1) GAAP Net Loss $ (17,231) $ (12,487) $ (36,538) $ (13,510) Non-GAAP Adjustments (net of tax effect): Bargain puprchase gain - - - (19,326) Amortization of developed technology 766 912 2,282 1,731 Stock Based Compensation 601 942 1,827 2,034 Depreciation and Amortization 104 73 305 153 Imputed interest on convertible notes 152 219 919 219 Debt extinguishment loss - - 1,334 - Debt discount expense 58 243 430 578 Amortization of deferred revenue (40) - (111) - ----------- ----------- ----------- ----------- Total of non-GAAP adjustments 1,641 2,390 6,986 (14,611) ----------- ----------- ----------- ----------- Non-GAAP Net Loss $ (15,590) $ (10,097) $ (29,552) $ (28,121) =========== =========== =========== =========== Weighted average shares - basic and diluted 13,256,189 1,490,551 5,458,561 1,207,887 GAAP net loss per common share-basic and diluted $ (1.30) $ (8.38) $ (6.69) $ (11.18) Non-GAAP adjustments detailed above $ 0.12 $ 1.60 $ 1.28 $ (12.10) ----------- ----------- ----------- ----------- Non-GAAP net loss per common share-basic and diluted $ (1.18) $ (6.77) $ (5.41) $ (23.28) =========== =========== =========== =========== Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts) September 30, December 31, 2011 2010 -------------- -------------- (Unaudited) Assets Current assets Cash and cash equivalents $ 32,997 $ 5,384 Restricted cash 450 200 Accounts receivable 438 575 Inventory 1,130 306 Prepaid expenses and other current assets 1,435 903 -------------- -------------- Total current assets 36,450 7,368 Property and equipment, net 2,334 2,107 Developed technology 38,295 39,990 In-process research and development 111,577 108,746 Other assets 547 3,474 -------------- -------------- Total assets $ 189,203 $ 161,685 ============== ============== Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 3,723 $ 2,514 Accrued expenses 6,434 6,733 Deferred revenues - current portion 1,961 1,845 Notes payable - current portion 2,386 4,220 Bridge notes payable to related parties - 10,000 -------------- -------------- Total current liabilities 14,504 25,312 Long-term liabilities Notes payable, net of current 17,467 10,395 Deferred revenues, net of current 6,005 4,123 Deferred tax liabilities 24,895 24,798 Other long term liabilities 1 1 -------------- -------------- Total liabilities 62,872 64,629 -------------- -------------- Stockholders' equity Preferred stock,$0.0001 par value per share; 10,000,000 and 0 shares authorized atSeptember 30, 2011 andDecember 31, 2010 , respectively; 0 shares issued and outstanding atSeptember 30, 2011 and December 31, 2010 - - Convertible preferred stock,$0.0001 par value per share; 0 and 27,400,000 shares authorized atSeptember 30, 2011 andDecember 31,2010 , respectively; 0 and 24,961,340 shares issued and outstanding atSeptember 30, 2011 andDecember 31, 2010 , respectively (Liquidation preference:$0 and$177,002 atSeptember 30, 2011 andDecember 31, 2010 , repectively) - 2 Common stock,$0.0001 par value per share; 200,000,000 and 35,400,000 shares authorized atSeptember 30, 2011 andDecember 31, 2010 , respectively; 19,528,624 and 1,490,551 shares issued and outstanding atSeptember 30, 2011 and December 31, 2010, respectively 2 - Additional paid-in capital 268,955 206,336 Accumulated other comprehensive income (loss) 964 (2,230) Accumulated deficit (143,590) (107,052) -------------- -------------- Total stockholders' equity 126,331 97,056 -------------- -------------- Total liabilities and stockholders' equity $ 189,203 $ 161,685 ============== ==============
ContactsRobert J. De Vaere Executive Vice President and Chief Financial Officer Email Contact MediaGeoff Curtis Invigorate PR 312-646-6298 Email Contact InvestorsKathy Galante Burns McClellan, Inc. 212-213-0006 Email Contact
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