CAMBRIDGE, Mass.--()--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:
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.
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.
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.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
|Three months ended June 30,||Six months ended June 30,|
|Collaborations and other||$||2,717||$ 3,005||$||43,782||$||5,334|
|Government contracts and grants||211||313||476||617|
|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||—|
|Total operating expenses||11,871||10,505||27,798||21,730|
|(Loss) income from operations||(8,943||)||(7,187||)||16,460||(15,779||)|
|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||)|
|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|
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
|Cash and cash equivalents||$||2,175||$||8,779|
|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|
|Liabilities and stockholders’ equity|
|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|
|Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding||—||—|
|Common stock, $0.001 par value; 200,000 shares authorized; 89,020 and 117,828 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively||89||118|
|Additional paid-in capital||316,485||272,405|
|Accumulated other comprehensive income (loss)||22||(2||)|
|Total liabilities and stockholders’ equity||$||99,386||$||88,152|