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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 of April 1, 2010 (the date of the Nitec acquisition) was
the statutory tax rate in Switzerland 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 ended
September 30, 2010 , which appeared in Amendment No. 4 to the Company's
Registration Statement on Form S-1, filed with the SEC on November 5,
2010 . The error was identified and corrected by the Company by
restating the nine month period ended September 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
at September 30, 2011 and December 31,
2010 , respectively; 0 shares issued and
outstanding at September 30, 2011 and
December 31, 2010 - -
Convertible preferred stock, $0.0001 par
value per share; 0 and 27,400,000 shares
authorized at September 30, 2011 and
December 31,2010 , respectively; 0 and
24,961,340 shares issued and outstanding
at September 30, 2011 and December 31,
2010 , respectively (Liquidation
preference: $0 and $177,002 at September
30, 2011 and December 31, 2010 ,
repectively) - 2
Common stock, $0.0001 par value per share;
200,000,000 and 35,400,000 shares
authorized at September 30, 2011 and
December 31, 2010 , respectively;
19,528,624 and 1,490,551 shares issued
and outstanding at September 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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