CombinatoRx, Incorporated (NASDAQ: CRXX) today reported
financial results for the second quarter ended June 30, 2010.
“With Exalgo approved and launched in the U.S. market and the
merger with Neuromed complete, this marks the first quarter of
Exalgo royalty revenue and the first quarter without merger-related
charges to account for. We are very pleased with the effort and
resources Covidien has put behind the Exalgo launch, validating our
choice of marketing partner to provide this important new therapy
to the many patients who suffer with moderate to severe pain,”
commented Mark H.N. Corrigan, MD, President and CEO of CombinatoRx.
“We are looking forward to a very busy second half of 2010
including finalizing Phase 2 clinical plans for Synavive,
completing preclinical evaluation of our N-type calcium channel
programs to determine which candidate will be selected to move
forward into proof-of-concept clinical trials, and continuing
successful discovery efforts with our collaborators.”
Second Quarter 2010 and Recent Accomplishments:
- Covidien launched the commercial
sale of Exalgo® (hydromorphone HCl) extended-release tablets,
(CII), the only extended-release hydromorphone treatment available
in the United States, on April 26, 2010, and in the second quarter
of 2010 we began to earn royalty revenue from Covidien based upon a
percentage of Exalgo net sales. During the quarter ended June 30,
2010, we recognized $1.1 million in revenue related to Exalgo
royalties. Exalgo provides relief to opioid-tolerant patients
suffering from moderate to severe chronic pain for 24 hours per
dose.
- Fovea Pharmaceuticals, a
division of Sanofi Aventis, advanced Prednisporin™, a
CombinatoRx-derived ophthalmology product candidate, into Phase 2b
clinical testing for persistent allergic conjunctivitis, triggering
a $500,000 milestone payment to CombinatoRx. In addition to the
milestone payment, CombinatoRx will be eligible to receive further
development and regulatory-based milestone payments for
Prednisporin of up to approximately $40.0 million and, if
commercialized, tiered royalty payments of up to 12% of net
sales.
- U.S. Army Medical Research
Institute of Infectious Diseases awarded CombinatoRx a $1,056,000
contract on May 21, 2010 to utilize its combination high throughput
screening technology (cHTS™) to discover drug combinations to treat
infections by Alphaviruses, which are mosquito borne viruses whose
infection can cause severe and fatal encephalitis in humans.
- CombinatoRx was added to both
the Russell 3000 and 2000 Index during Russell’s annual
reconstitution of its U.S. and global indexes, based on its market
capitalization on June 25, 2010. Russell indexes are widely used by
investment managers and institutional investors for index funds and
as benchmarks for both passive and active investment
strategies.
- Novel synergistic mechanisms for
the treatment of multiple myeloma using cHTS were presented at the
American Association for Cancer Research meeting, held from April
17-21, 2010 in Washington, DC. These preclinical studies reinforced
the rationale for investigating A2A and B2AR agonists in the
treatment of multiple myeloma and other B-cell malignancies and
continue to highlight the power of the cHTS technology to
interrogate combination activity across large panels of cancer
cells to identify novel mechanisms.
- CombinatoRx plans to change its
name and NASDAQ ticker symbol to Zalicus Inc. (NASDAQ: ZLCS)
pending shareholder approval on September 8, 2010.
Second Quarter 2010 Financial Results (Unaudited):
As of June 30, 2010, CombinatoRx had cash, cash equivalents,
restricted cash and short-term investments of $52.2 million
compared to $55.3 million on March 31, 2010.
Total revenue was $2.9 million in the second quarter of 2010
compared to $3.3 million reported in the second quarter of 2009.
This decrease was primarily due to the termination of our
collaboration with Angiotech in 2009, partially offset by our
initial royalty revenue from net sales of Exalgo.
Net loss for the quarter ended June 30, 2010 was $8.6 million,
or ($0.10) per share, as compared to net income of $8.0 million, or
$0.23 per share, in the second quarter of 2009. The second quarter
of 2010 included $4.7 million of intangible asset amortization
relating to Exalgo, $0.4 million in stock-based compensation
expense and $0.6 million in depreciation expense. The second
quarter of 2009 included a $15.1 million gain from the divestiture
of our Singapore operations, $1.2 million in stock-based
compensation expense and $1.9 million in depreciation expense. Net
cash used in operating activities for the quarter ended June 30,
2010 was $2.8 million, as compared to net cash used in operating
activities of $2.6 million for the second quarter of 2009.
Net loss for the six months ended June 30, 2010 and 2009 was
$11.7 million, or ($0.15) per share, and $1.5 million, or ($0.04)
per share, respectively. The first half of 2010 included $9.4
million of intangible asset amortization relating to Exalgo. The
2010 year-to-date results also included a one-time, non-cash charge
of $29.3 million due to loss on contingent consideration related to
the Neuromed merger. Stock-based compensation expense was
approximately $2.0 million in the first half of 2010 as compared to
approximately $2.5 million in the first half of 2009. Depreciation
expense was approximately $1.2 million in the first half of 2010 as
compared to approximately $2.6 million in the first half of 2009.
The first half of 2009 included a $14.1 million gain from the
divestiture of our Singapore operations. Net cash provided by
operating activities for the six months ended June 30, 2010 was
$26.7 million, as compared to net cash used in operating activities
of $14.3 million for the six months ended June 30, 2009.
Research and development expense totaled $4.6 million in the
second quarter of 2010 compared to $6.1 million in the second
quarter of 2009. The decrease was primarily due to an increase in
consulting and preclinical expenses offset by a decrease in
formulation and external clinical trial expenses and a decrease in
laboratory supplies, facilities, depreciation and other overhead
costs associated with CombinatoRx’s 2008 and 2009
restructurings.
General and administrative expense was $2.6 million in the
second quarter of 2010 compared to $4.8 million in the second
quarter of 2009. The decrease was primarily due to decreases in
legal and consulting fees and decreases in salaries, benefit and
stock-based compensation expense associated with CombinatoRx’s 2008
and 2009 restructurings.
About CombinatoRx:
CombinatoRx, Incorporated (CRXX) develops novel drug candidates
with a focus on the treatment of pain and inflammation. The company
applies its combination drug discovery capabilities and its
selective ion-channel modulation platform to generate innovative
therapeutics. To learn more about CombinatoRx, please visit
www.combinatorx.com.
Forward-Looking Statement:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
concerning CombinatoRx, the product Exalgo™ and its ability to
generate future royalty revenue for CombinatoRx, the product
candidate Synavive, the CombinatoRx selective ion channel
modulation platform, its combination drug discovery technology
cHTS, its collaborations with Fovea and USAMRIID, its B-cell
malignancy program and its potential, CombinatoRx’s plans to rename
the company, and CombinatoRx’s financial condition, results of
operations, cash position and business plans. These forward-looking
statements about future expectations, plans, objectives and
prospects of CombinatoRx may be identified by words like "believe,"
"expect," "may," "will," "should," "seek," or “could” and similar
expressions and involve significant risks, uncertainties and
assumptions, including risks related to the sale and marketing of
Exalgo by Covidien, risks related to the development and regulatory
approval of CombinatoRx’s product candidates, the unproven nature
of the CombinatoRx drug discovery technologies, the ability of
Covidien to perform its obligations under its agreement with
CombinatoRx relating to Exalgo, the ability of the Company or its
collaboration partners to initiate and successfully complete
clinical trials of its product candidates, the Company's ability to
obtain additional financing or funding for its research and
development and those other risks that can be found in the "Risk
Factors" section of CombinatoRx's annual report on Form 10-K on
file with the Securities and Exchange Commission and the other
reports that CombinatoRx periodically files with the Securities and
Exchange Commission. Actual results may differ materially from
those CombinatoRx contemplated by these forward-looking statements.
These forward looking statements reflect management’s current views
and CombinatoRx does not undertake to update any of these
forward-looking statements to reflect a change in its views or
events or circumstances that occur after the date of this release
except as required by law.
(c) 2010 CombinatoRx, Incorporated. All rights reserved.
CombinatoRx,
Incorporated
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share amounts)
(Unaudited)
Three months ended June 30, Six
months ended June 30, 2010 2009
2010 2009 Revenue: Collaborations and other $
2,717 $ 3,005 $ 43,782 $ 5,334 Government contracts and grants
211 313 476 617
Total revenue 2,928 3,318 44,258
5,951 Operating expenses: Research and
development 4,617 6,106 11,998 13,243 General and administrative
2,569 4,824 6,431 8,471 Amortization of intangible 4,685 — 9,369 —
Restructuring — (425 ) — 16
Total operating expenses 11,871 10,505
27,798 21,730 (Loss)
income from operations (8,943 ) (7,187 ) 16,460 (15,779 ) Interest
income 30 60 37 188 Interest expense — (11 ) — (27 ) Loss on
revaluation of contingent consideration — — (29,286 ) — Other
income (expense) 15 (11 ) (127 ) (7 )
Net loss before provision for income taxes (8,898 ) (7,149 )
(12,916 ) (15,625 ) Income tax benefit 300 —
1,210 — Net loss from continuing
operations (8,598 ) (7,149 ) (11,706 ) (15,625
) Discontinued operations: Loss from discontinued operations
— (529 ) — (1,536 ) Gain on disposal of discontinued subsidiary
— 15,640 — 15,640
Gain on discontinued operations — 15,111
— 14,104 Net (loss)
income $ (8,598 ) $ 7,962 $ (11,706 ) $ (1,521 ) Net
(loss) income per share — basic and diluted: From continuing
operations $ (0.10 ) $ (0.20 ) $ (0.15 ) $ (0.44 ) From
discontinued operations — 0.43 —
0.40 Net (loss) income per share — basic and
diluted $ (0.10 ) $ 0.23 $ (0.15 ) $ (0.04 ) Weighted
average number of common shares used in net (loss) income per share
calculation — basic and diluted 88,946,220 35,026,106
76,199,264 35,019,779
CombinatoRx,
Incorporated
Condensed Consolidated Balance
Sheets
(in thousands, except per share
data)
(Unaudited)
June 30,2010
December 31,2009
Assets Current assets: Cash and cash equivalents $
2,175 $ 8,779 Restricted cash 750 750 Short-term investments 47,498
14,551 Accounts receivable 2,249 2,927 Prepaid expenses and other
current assets 1,335 5,415 Total
current assets 54,007 32,422 Property and equipment, net 7,506
8,380 Intangible asset, net 36,055 45,423 Restricted cash and other
assets 1,818 1,927 Total assets
$ 99,386 $ 88,152
Liabilities and
stockholders’ equity Current liabilities: Accounts payable $
1,094 $ 4,269 Accrued expenses 2,342 5,495 Accrued restructuring
521 1,274 Deferred revenue 2,250 2,750 Current portion of lease
incentive obligation 284 284
Total current liabilities 6,491 14,072 Deferred revenue, net
of current portion 3,167 2,667 Deferred rent, net of current
portion 759 775 Lease incentive obligation, net of current portion
1,584 1,726 Other long-term liabilities 2,103 3,235 Contingent
consideration — 12,764 Stockholders’ equity: Preferred
stock, $0.001 par value; 5,000 shares authorized; no shares issued
and outstanding — — Common stock, $0.001 par value; 200,000 shares
authorized; 89,020 and 117,828 shares issued and outstanding at
June 30, 2010 and December 31, 2009, respectively 89 118 Additional
paid-in capital 316,485 272,405 Accumulated other comprehensive
income (loss) 22 (2 ) Accumulated deficit (231,314 )
(219,608 ) Stockholders’ equity 85,282
52,913 Total liabilities and stockholders’ equity $
99,386 $ 88,152
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