Somaxon Pharmaceuticals Reports Third Quarter 2012 Financial Results

Somaxon Pharmaceuticals Reports Third Quarter 2012 Financial Results

       Conference call scheduled today at 4:30 p.m. ET (1:30 p.m. PT);
     Simultaneous webcast at http://investors.somaxon.com/eventdetail.cfm

SAN DIEGO, Oct. 31, 2012 (GLOBE NEWSWIRE) -- Somaxon Pharmaceuticals, Inc.
(Nasdaq:SOMX), a specialty pharmaceutical company, today reported its
financial results for the third quarter ended September 30, 2012.

"During the third quarter of 2012, we continued to focus on our key corporate
objectives relating to Silenor commercialization and intellectual property
protection, our financial position and our strategic alternatives process,"
said Richard W. Pascoe, Somaxon's President and Chief Executive Officer.
"Commercially, we have continued to stabilize Silenor prescription volume
quarter-over-quarter, and we have made solid progress in our managed care
efforts, particularly with respect to the Medicare Part D market."

"We also settled our Silenor paragraph IV litigation with three of the four
generic filers, we bolstered our balance sheet through a registered direct
offering and we continue to manage our operating expenses in an effort to
drive towards profitability," continued Pascoe. "The progress we made in the
quarter with respect to each of these objectives has positioned us to be
actively engaged in our strategic alternatives process with our advisor,
Stifel Nicolaus Weisel, with the objective of fully leveraging Silenor for the
benefit of our stockholders."

Recent Highlights

  *Effective October 1, 2012, MedImpact Healthcare Systems adopted Silenor in
    a preferred formulary position for the treatment of insomnia in its
    Medicare Part D health plans. MedImpact is a pharmacy benefit manager
    covering approximately 100,000 Medicare Part D insomnia prescriptions per
    year. Under the agreement with MedImpact, Silenor will be included in
    MedImpact's formulary on a Tier 2 unrestricted basis for the fourth
    quarter of 2012. Thereafter, Silenor will continue to maintain a Tier 2
    unrestricted formulary position, but the formulary will specify that all
    generic products indicated for the treatment of insomnia will be second
    line treatments, with Silenor as the first line treatment.
    

  The MedImpact contract is consistent with recent updates by the Pharmacy
  Quality Alliance (PQA) of its prescription drug list entitled "Use of
  High-Risk Medications in the Elderly" and by the American Geriatrics Society
  of its "Beers Criteria for Potentially Inappropriate Medication Use in Older
  Adults."In both cases, Silenor 3 mg and 6 mg were not included in the lists
  of high-risk or potentially inappropriate medications.
  

  In addition to the MedImpact contract, earlier this month Somaxon was
  notified by Coventry Healthcare that Silenor has been added to Coventry's
  2013 Medicare Part D formulary in a Tier 3 non-restricted position.Silenor
  will be made available to Coventry's 1.7 million Medicare eligible members
  for a reasonable out of pocket cost beginning January 1, 2013.Looking
  forward, Somaxon intends to continue to seek to leverage Silenor's unique
  safety profile to further penetrate the Medicare Part D market in 2013 and
  beyond.
  

  *On October 11, 2012, Somaxon effected a 1-for-8 reverse stock split of its
    common stock and a decrease in the number of authorized shares of its
    common stock from 100,000,000 to 25,000,000 shares.The reverse stock
    split and the decrease in the number of authorized shares of common stock
    were approved by Somaxon's stockholders at a special meeting held on
    October 5, 2012.In connection with the reverse stock split, every eight
    shares of Somaxon's issued and outstanding common stock was automatically
    combined into one issued and outstanding share without any change in the
    par value of the shares.Stockholders of record will receive cash in lieu
    of fractional shares to which they otherwise would be entitled based upon
    the closing sale price per share of Somaxon's common stock on October 11,
    2012.
    

  Somaxon effected the reverse stock split to raise its common stock price in
  order to regain compliance with the $1.00 per share minimum bid price
  requirement for continued listing on the NASDAQ Capital Market.On October,
  26, 2012, the NASDAQ Listing Qualifications Department formally notified the
  company that it had regained compliance with this requirement.As a result,
  shares of Somaxon's common stock will continue to be listed and trade on the
  NASDAQ Capital Market, and the matter is now closed.
  

  *In July 2012, Somaxon entered into separate settlement arrangements with
    Mylan Inc. and its subsidiary, Mylan Pharmaceuticals, Inc., Par
    Pharmaceutical Companies, Inc. and its subsidiary Par Pharmaceutical, Inc.
    and Cadila Healthcare Limited and Zydus Pharmaceuticals (USA), Inc. to
    resolve pending patent litigation involving Silenor 3 mg and 6 mg
    tablets.

  The settlement agreement with Mylan grants Mylan the exclusive right to
  begin selling an authorized generic version of Silenor (i.e., a generic
  version sold under Somaxon's New Drug Application) on January 1, 2020, or
  earlier under certain circumstances. Mylan's right to sell such an
  authorized generic product could extend for a period of as long as 360 days,
  and after such period Mylan will have the non-exclusive right to sell a
  generic version of Silenor under its Abbreviated New Drug Application.In
  connection with the settlement agreement, the parties also entered into a
  supply agreement under which Mylan has agreed to supply the company with
  commercial quantities of Silenor 3 mg and 6 mg tablets.

  The settlement agreements with Par and Zydus grant each of them the right to
  begin selling a generic version of Silenor 180 days after the earlier of the
  date that a third party's generic version of Silenor is first sold in the
  United States under a license from Somaxon or a final court decision that
  the asserted patents are not infringed, invalid or unenforceable, or earlier
  under certain circumstances.

  Each of the settlement agreements became effective upon the entry by the
  U.S. District Court for the District of Delaware of an order dismissing the
  litigation with respect to Mylan, Par or Zydus, as applicable.The company
  remains in litigation with Actavis Inc. and its subsidiary Actavis Elizabeth
  LLC, the filers of the other application to market a generic version of
  Silenor.

  *In July 2012, Somaxon completed a registered direct offering of
    approximately 1.2 million shares of its common stock and warrants to
    purchase up to approximately 0.6 million additional shares of its common
    stock to institutional investors at a combined public offering price of
    $2.56 per share and per warrant. Aggregate gross proceeds to the company
    were approximately $3.0 million, before deducting selling commissions and
    expenses. 

Third Quarter 2012 Financial Results

Net product sales of Silenor for the third quarter of 2012 were $2.1 million,
compared to net product sales of $3.7 million for the third quarter of 2011.

Total operating costs and expenses for the third quarter of 2012 were $6.6
million, including $0.6 million of non-cash, share-based compensation expense
and an expense of $2.0 million related to the company's Paragraph IV
settlement agreements, which will be paid over a period of time, entered into
during the third quarter of 2012.Total operating costs and expenses for the
third quarter of 2011 were $18.8 million, including $1.7 million of non-cash,
share-based compensation expense.The decrease in operating costs and expenses
during the third quarter of 2012 as compared to the comparable prior year
period was primarily due to the reduction of the company's marketing efforts
and the company's reduction in force in the fourth quarter of 2011.

Cost of product sales was $0.2 million for the third quarter of 2012, compared
to $0.5 million for the comparable prior year period.Gross profit for the
third quarter of 2012 was $1.9 million, compared to $3.2 million for the third
quarter of 2011.Expressed as a percentage of net product sales, gross margin
was 89% for the third quarter of 2012 and 88% for the third quarter of 2011.

Selling, general and administrative (SG&A) expense was $4.4 million for the
third quarter of 2012, compared to $18.1 million for the third quarter of
2011.The decrease in SG&A expense during the third quarter of 2012 as
compared to the comparable prior year period was primarily due to the
reduction of the company's marketing efforts and the company's reduction in
force in the fourth quarter of 2011.

Somaxon had no research and development expense for the third quarter of
2012.Research and development expense for the third quarter of 2011 was $0.2
million.

For the third quarter of 2012, net loss was $4.5 million, or a loss of $0.65
per share, compared with a net loss of $17.0 million, or a loss of $2.86 per
share, for the third quarter of 2011.

At September 30, 2012, Somaxon had cash and cash equivalents totaling $8.2
million.Cash and cash equivalents was $10.7 million at December 31, 2011.

Non-GAAP Financial Measure

Non-GAAP operating expense was $3.8 million and $12.3 million for the third
quarter and nine months ended September 30, 2012, respectively, which is
calculated by adjusting the company's third quarter and nine months ended
September 30, 2012 GAAP operating costs and expenses of $6.6 million and $17.1
million, respectively, to exclude cost of product sales, non-cash, share-based
compensation expense and an expense related to the company's Paragraph IV
settlement agreements, which will be paid over a period of time, entered into
during the third quarter of 2012.

The company believes that the presentation of this non-GAAP financial measure
provides useful supplementary information to facilitate additional analysis by
investors.This non-GAAP financial measure is in addition to, not a substitute
for, or superior to, measures of financial performance prepared in conformity
with GAAP.A reconciliation of GAAP operating costs and expenses to non-GAAP
operating expense is included with this press release.

Conference Call Information and Forward-Looking Statements

On Wednesday, October 31, 2012, Somaxon will conduct a conference call with
interested parties beginning at 4:30 p.m. ET (1:30 p.m. PT) to discuss results
and highlights of the third quarter ended September 30, 2012.

The conference call will be available to interested parties through a live
audio Internet broadcast at http://investors.somaxon.com/eventdetail.cfm. The
call will also be archived and accessible at this site for approximately one
year.Alternatively, callers may participate in the conference call by dialing
(877) 941-9205 (domestic) or (480) 629-9771 (international), conference call
ID 4570871. A telephonic replay will be available for approximately two weeks
following the conclusion of the call by dialing (303) 590-3030, and entering
passcode 4570871.

Discussion during the conference call may include forward-looking statements
regarding such topics as, but not limited to, the company's commercial
activities relating to Silenor, prescription and sales volume trends, the
company's financial status and performance and any comments the company may
make about its future plans or prospects in response to questions from
participants on the conference call.

About Somaxon Pharmaceuticals, Inc.

Headquartered in San Diego, CA, Somaxon Pharmaceuticals, Inc. is a specialty
pharmaceutical company focused on the in-licensing, development and
commercialization of proprietary branded products and product candidates to
treat important medical conditions where there is an unmet medical need and/or
high-level of patient dissatisfaction, currently in the central nervous system
therapeutic area. Somaxon's product Silenor, available by prescription in the
United States, is indicated for the treatment of insomnia characterized by
difficulty with sleep maintenance.

For more information, please visit the company's web site at www.somaxon.com.

The Somaxon Pharmaceuticals logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13679

Safe Harbor Statement

Somaxon cautions readers that statements included in this press release or the
conference call that are not a description of historical facts are
forward-looking statements.For example, statements regarding the commercial
performance and prospects of Silenor, Somaxon's ability to maintain operating
expenses at reasonable levels, the process of seeking strategic alternatives
and the ability to derive stockholder value from one or more related
transactions and Somaxon's other activities and plans are forward-looking
statements. The inclusion of forward-looking statements should not be
regarded as a representation by Somaxon that any of its plans will be
achieved.Actual results may differ materially from those set forth in this
release and the conference call due to the risks and uncertainties inherent in
Somaxon's business, including, without limitation, Somaxon's ability to
successfully market and sell Silenor; the market potential for insomnia
treatments, and Somaxon's ability to compete within that market; Somaxon's
ability, together with its strategic advisor Stifel Nicolaus Weisel, to
successfully enter into one or more transactions to enhance stockholder value;
Somaxon's ability to raise sufficient capital to fund its operations, and the
impact of any such financing activity on the level of its stock price; the
impact of any inability to raise sufficient capital to fund ongoing
operations, including patent infringement litigation; the scope, validity and
duration of patent protection and other intellectual property rights for
Silenor; whether the approved label for Silenor is sufficiently consistent
with such patent protection to provide exclusivity for Silenor; Somaxon's
ability to successfully enforce its intellectual property rights and defend
its patents, including any developments relating to the submission of
abbreviated new drug applications for generic versions of Silenor 3 mg and 6
mg and related patent litigation; the possible introduction of generic
competition for Silenor; risks related to Somaxon's settlement agreements with
Mylan, Par and Zydus, including any legal or regulatory challenges to the
settlement agreements by the U.S. Department of Justice and/or the U.S.
Federal Trade Commission, and the outcome of any such challenges; the
potential to enter into an agreement with any third party relating to
over-the-counter rights for Silenor; Somaxon's ability, together with any
partner, to receive FDA approval for an over-the-counter version of Silenor;
changes in healthcare reform measures and reimbursement policies; the ability
of Somaxon to ensure adequate and continued supply of Silenor to successfully
meet anticipated market demand; Somaxon's ability to operate its business
without infringing the intellectual property rights of others; Somaxon's
reliance on its licensees, Paladin Labs and CJ CheilJedang, for critical
aspects of the commercial sales process for Silenor outside of the United
States; the performance of Paladin and CJ CheilJedang and their adherence to
the terms of their contracts with Somaxon; inadequate therapeutic efficacy or
unexpected adverse side effects relating to Silenor that could adversely
impact commercial success, or that could result in recalls or product
liability claims; other difficulties or delays in development, testing,
manufacturing and marketing of Silenor; the timing and results of
post-approval regulatory requirements for Silenor, and the FDA's agreement
with Somaxon's interpretation of such results; and other risks detailed in
Somaxon's prior press releases as well as in its periodic filings with the
SEC.

Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.All forward-looking
statements are qualified in their entirety by this cautionary statement, and
Somaxon undertakes no obligation to revise or update this press release to
reflect events or circumstances after the date hereof.This caution is made
under the safe harbor provisions of Section 21E of the Securities Exchange Act
of 1934.



SOMAXON PHARMACEUTICALS, INC.
SUMMARY STATEMENTS OF OPERATIONS
(Unaudited)
                                                             
                      Quarter ended September 30, Nine months ended September
                                                   30,
                      2012          2011          2012          2011
                      (in thousands, except per share amounts)
                                                 
Revenues                                                      
Net product sales      $2,134      $3,676      $7,805      $12,240
License fee revenue    --           --          420          --
                                                             
Total revenues         2,134        3,676        8,225        12,240
                                                             
Operating costs and                                           
expenses
Cost of product sales  240          454          779          1,478
Selling, general and   4,377        18,101       14,276       56,767
administrative
Paragraph IV           2,000        --           2,000        --
settlement
Research and           --          242          --          1,118
development
                                                             
Total operating costs  6,617        18,797       17,055       59,363
and expenses
Loss from operations   (4,483)      (15,121)     (8,830)      (47,123)
                                                             
Other income and       14           (1,910)      45           (1,895)
expense
                                                             
Net loss               $(4,469)    $(17,031)   $(8,785)    $(49,018)
                                                             
Basic and diluted net  $(0.65)     $(2.86)     $(1.39)     $(8.52)
loss per share
Shares used to
calculate net loss per 6,897        5,954        6,310        5,755
share



SOMAXON PHARMACEUTICALS, INC.
SUMMARY BALANCE SHEETS
(Unaudited)
                                                       
                                                       
                                          September 30, December 31,
                                          2012          2011
                                          (in thousands)
ASSETS                                                  
Cash and cash equivalents                  $8,156      $10,668
Accounts receivable, net                   1,290        1,950
Other current assets                      887          1,317
                                                       
Total current assets                      10,333       13,935
Property and equipment, net               413          634
Intangibles, net                           940          1,089
Other non-current assets                   43           201
                                                       
Total assets                               $11,729     $15,859
                                                       
                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Accounts payable                          $1,676      $1,774
Accrued liabilities                       5,408        7,054
                                                       
Total current liabilities                 7,084        8,828
Paragraph IV settlement obligation         1,500        --
Other non-current liabilities              485          490
                                                       
Total liabilities                          9,069        9,318
Total stockholders' equity                2,660        6,541
                                                       
Total liabilities and stockholders' equity $11,729     $15,859



SOMAXON PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP OPERATING COSTS AND EXPENSES TO NON-GAAP OPERATING
EXPENSE
                                                    
                              Quarter ended          Nine months ended
                               September 30,          September 30,
                              2012                   2012
                              (in thousands)
                                                    
GAAP operating costs and       $ 6,617               $ 17,055
expenses
Adjustments:                                        
Cost of product sales          240                   779
Share-based compensation       583                   1,954
expense
Paragraph IV settlement        2,000                 2,000
Total non-GAAP adjustments     2,823                 4,733
                                                    
Non-GAAP operating expense     $ 3,794               $ 12,322

CONTACT: Tran Nguyen / CFO
         Somaxon Pharmaceuticals, Inc.
         (858) 876-6500
        
         Matt Sheldon
         Pondel Wilkinson, Inc.
         (310) 279-5975

Somaxon Pharmaceuticals, Inc. Logo
 
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