Cadence Pharmaceuticals Reports Third Quarter 2012 Financial Results

     Cadence Pharmaceuticals Reports Third Quarter 2012 Financial Results

PR Newswire

SAN DIEGO, Nov. 5, 2012

SAN DIEGO, Nov. 5, 2012 /PRNewswire/ --Cadence Pharmaceuticals, Inc.
(NASDAQ: CADX), a biopharmaceutical company focused on acquiring,
in-licensing, developing and commercializing proprietary products principally
for use in the hospital setting, today reported financial results for the
third quarter and nine months ended September 30, 2012.

Highlights from the third quarter include:

  oNet product revenue for the third quarter of 2012 was $13.9 million, an
    increase of $2.8 million, or 25%, from $11.1 million for the second
    quarter of 2012
  oNet product revenue for the nine months ended September 30, 2012, was
    $33.0 million, which is $27.4 million, or nearly five times, higher than
    the $5.6 million of net product revenue reported for the same period in
    2011
  oThe customer base for OFIRMEV increased by 10% during the third quarter as
    compared to the second quarter of this year, with a total of nearly 3,500
    unique customer accounts at September 30, 2012
  oThe gross margin on sales of OFIRMEV was 56% for the third quarter of
    2012, which represents an improvement over the 48% gross margin reported
    for the second quarter of 2012
  oAs of September 30, 2012, OFIRMEV was on formulary at over 2,000
    institutions throughout the U.S.

"With strong third quarter sales growth and continued expansion of its user
base, we believe that OFIRMEV, used as the foundation of a multimodal
analgesic approach, is on track to become a standard of care in acute pain
management. An increasing number of physicians and hospitals are choosing
OFIRMEV to effectively manage acutepain and to reduce opioid use. OFIRMEV's
customer base has nearly doubled over the past year and it is now being used
in over 70% of the top 2,000 accounts in the country, when ranked by the
quantity of IV analgesic products purchased," said Ted Schroeder, President
and CEO of Cadence.

Financial Results

For the three months ended September 30, 2012, Cadence reported net product
revenue of $13.9 million, an increase of $10.4 million from the $3.5 million
of net product revenue reported for the three months ended September 30, 2011.
For the nine months ended September 30, 2012, the company reported net product
revenue of $33.0 million, an increase of $27.4 million from the $5.6 million
of net product revenue reported for the corresponding period in 2011. During
the nine months ended September 30, 2012, the company reported less than $0.1
million in licensing revenue, as compared to $5.2 million reported for the
nine month period ended September 30, 2011, which was primarily related to a
one-time data license to Terumo Corporation, which intends to seek regulatory
approval in Japan for the same intravenous formulation of acetaminophen as
OFIRMEV. No licensing revenue was reported for the three months ended
September 30, 2011, or 2012.

For the three months ended September 30, 2012, Cadence reported a net loss of
$15.9 million, or $0.19per share, compared to a net loss of $21.8 million, or
$0.34 per share, for the comparable period in 2011. For the nine months ended
September 30, 2012, the company's net loss was $59.6 million, or $0.70 per
share, compared to a net loss of $65.4 million, or $1.03 per share, for the
comparable period in 2011.

Cost of product sales for the three months ended September 30, 2012, was
approximately 44% of net product revenue, compared to 65% for the comparable
period in 2011. The reduction in costs was mostly attributable to increased
efficiencies from higher production volumes in 2012, while net product revenue
benefitted from a higher net selling price as a result of a price increase
implemented in July 2012. In addition, the company's cost of product sales for
the three months ended September 30, 2011, was negatively impacted by an
accrual for minimum royalty obligations. For the nine months ended September
30, 2012, cost of product sales was 49% of net product revenue, compared to
64% for the comparable period in 2011. This decrease includes efficiencies
achieved in 2012 as a result of higher production volumes, which were
partially offset by higher freight costs resulting from the company's
temporary supply disruption during the first quarter of this year, unabsorbed
manufacturing costs, and an inventory write-down. These excess costs were
primarily related to Cadence's previously reported suspension of production of
OFIRMEV at its initial contract manufacturer's facility.

Research and development expenses for the three months ended September 30,
2012, increased $0.5 million to $2.2 million, from $1.7 million for the
comparable period in 2011. This increase was primarily a result of severance
obligations related to the departure of two of the company's officers, and
included approximately $0.3 million of non-cash, stock-based compensation
expense. For the nine months ended September 30, 2012, the company reported
research and development expenses of $5.4 million, a decrease of $1.6 million
from the $7.0 million reported for the comparable period in 2011. This
reduction was primarily attributable to the workforce restructuring
implemented in the fourth quarter of 2011, partially offset by severance
charges incurred during the third quarter of 2012.

Selling, general and administrative costs for the three months ended September
30, 2012, increased $0.1 million to $20.0 million, from $19.9 million for the
three months ended September 30, 2011. For the nine months ended September 30,
2012, selling, general and administrative expenses increased $5.8 million to
$66.8 million, from $61.0 million for the comparable period in 2011. This
increase was mostly attributable to legal costs incurred in relation to the
company's ongoing intellectual property litigation, and increased commissions
earned by Cadence's hospital sales specialists due to increased product sales.


As of September 30, 2012, Cadence reported cash, cash equivalents and
short-term investments of $74.5 million and net accounts receivable of $6.8
million.

Guidance

As of November 5, 2012, Cadence expects that net product revenue from sales of
OFIRMEV for the three months ending December 31, 2012, will range from
approximately $15.9 million to $16.4 million.

Conference Call and Webcast on November 5, 2012 at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time)

Cadence management will host a conference call on November 5, 2012, at 1:30
p.m. Pacific Time (4:30 p.m. Eastern Time) and interested investors may
participate in the conference call by dialing (877) 303-9145 (domestic) or
(760) 536-5203 (international). To access the webcast, please visit the
company's website at www.cadencepharm.com and go to the Investors page. A
replay of the webcast will be available approximately two hours after the call
and remain available on the company's website until the next quarterly
financial results call. Cadence uses the Investors portion of its website as
one means of disclosing material non-public information, and investors are
encouraged to monitor Cadence's website in addition to following the company's
press releases, SEC filings and public conference calls and webcasts.

About OFIRMEV^® (Acetaminophen) Injection

OFIRMEV (acetaminophen) injection (1000 mg / 100 mL, 10 mg / mL; for
intravenous use only), Cadence Pharmaceuticals' proprietary intravenous
formulation of acetaminophen, is indicated for the management of mild to
moderate pain, the management of moderate to severe pain with adjunctive
opioid analgesics, and the reduction of fever. The FDA approval of OFIRMEV was
based on data from clinical trials in approximately 1,020 adult and 355
pediatric patients. These trials included two studies evaluating the safety
and effectiveness of OFIRMEV in the treatment of pain, and one study
evaluating OFIRMEV in the treatment of fever. The effectiveness of OFIRMEV for
the treatment of acute pain and fever has not been studied in pediatric
patients less than 2 years of age.

Important Safety Information

Do not exceed the maximum recommended daily dose of acetaminophen.
Administration of acetaminophen by any route in doses higher than recommended
may result in hepatic injury, including the risk of severe hepatotoxicity and
death. OFIRMEV is contraindicated in patients with severe hepatic impairment,
severe active liver disease or with known hypersensitivity to acetaminophen or
to any of the excipients in the formulation. Acetaminophen should be used with
caution in patients with the following conditions: hepatic impairment or
active hepatic disease, alcoholism, chronic malnutrition, severe hypovolemia,
or severe renal impairment.OFIRMEV should be administered only as a 15-minute
intravenous infusion. Discontinue OFIRMEV immediately if symptoms associated
with allergy or hypersensitivity occur. Do not use in patients with
acetaminophen allergy. The most common adverse reactions in patients treated
with OFIRMEV were nausea, vomiting, headache, and insomnia in adult patients
and nausea, vomiting, constipation, pruritus, agitation, and atelectasis in
pediatric patients. The antipyretic effects of OFIRMEV may mask fever in
patients treated for post-surgical pain.

For more information, please see the complete OFIRMEV Prescribing Information,
available at

www.OFIRMEV.com or www.cadencepharm.com.

About Cadence Pharmaceuticals, Inc.

Cadence Pharmaceuticals is a biopharmaceutical company focused on acquiring,
in-licensing, developing and commercializing proprietary products principally
for use in the hospital setting. The current version of Cadence
Pharmaceuticals' corporate overview may be viewed on the Investors page of
www.cadencepharm.com under "Events & Presentations" by selecting "Corporate
Overview."

Forward-Looking Statements

Statements included in this press release and Cadence's conference call that
are not a description of historical facts are forward-looking statements.
Words such as "plans," "believes," "expects," "anticipates," and "will," and
similar expressions, are intended to identify forward-looking statements, and
are based on Cadence's current beliefs and expectations. Such statements
include, without limitation, statements regarding: Cadence's belief that
OFIRMEV is on track to become a standard of care in acute pain management;
Cadence's expectation that an increasing number of physicians are choosing
OFIRMEV to effectively manage acute pain and reduce opioid use; and the
company's guidance regarding net product revenue from sales of OFIRMEV for the
fourth quarter of 2012. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Cadence's
actual future results may differ materially from Cadence's current
expectations due to the risks and uncertainties inherent in its business.
These risks include, but are not limited to: Cadence's dependence on the
successful commercialization of OFIRMEV, which is the company's only product;
Cadence's ability to achieve broad market acceptance and generate revenues
from sales of OFIRMEV; Cadence's dependence on its contract manufacturers and
its ability to ensure an adequate and continued supply of OFIRMEV to meet
market demand; Cadence's ability to successfully enforce its marketing
exclusivities and intellectual property rights, and to defend the patents
covering OFIRMEV, including in current patent litigation with the parties that
have submitted abbreviated new drug applications ("ANDAs") for generic
versions of OFIRMEV; the potential that Cadence may be required to continue
patent litigation for substantial lengths of time or file additional lawsuits
to defend its patent rights from challenges by companies that have submitted
ANDAs for generic versions of OFIRMEV, and the substantial costs associated
with such lawsuits; the potential introduction of generic competition to
OFIRMEV in the event Cadence is unsuccessful in current or future patent
litigation; Cadence's dependence on its licensors for the maintenance and
enforcement of its intellectual property rights; the potential product
liability exposure associated with pharmaceutical products such as OFIRMEV and
other products Cadence may in-license or acquire; Cadence's ability to fully
comply with numerous federal, state and local laws and regulatory requirements
that apply to its commercial activities; public concern regarding the safety
of drug products such as OFIRMEV, which could result in the implementation by
regulatory agencies of new requirements to include unfavorable information in
the labeling for OFIRMEV; the risk that Cadence may not be able to raise
sufficient capital when needed, or at all; and other risks detailed under
"Risk Factors" and elsewhere in Cadence's periodic reports and other filings
made with the Securities and Exchange Commission from time to time. All
forward-looking statements are qualified in their entirety by this cautionary
statement, which is made under the safe harbor provisions of Section 21E of
the Private Securities Litigation Reform Act of 1995, and Cadence undertakes
no obligation to revise or update this press release to reflect events or
circumstances after the date hereof.

Cadence^® and OFIRMEV^® are trademarks of Cadence Pharmaceuticals, Inc.

Contact: William R. LaRue              Kelli France
         SVP & Chief Financial Officer Media Relations
         Cadence Pharmaceuticals, Inc. WCG
         Phone: 858-436-1400           Phone: 415-946-1076



CADENCE PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
                                Three Months Ended          Nine Months Ended
                                September 30,               September 30,
                                2012          2011          2012      2011
Revenue:
    Product revenue, net        $          $          $      $   
                                13,898        3,541        32,977    5,597
    License revenues            -             -             33        5,210
 Total revenues      13,898        3,541         33,010    10,807
Costs and expenses:
    Cost of product sales       6,076         2,318         16,078    3,588
    Amortization of patent      336           336           1,008     1,232
    license
    Research and development    2,235         1,656         5,446     7,002
    Selling, general and        20,039        19,943        66,811    61,003
    administrative
    Other                       13            -             14        (1)
 Total costs and     28,699        24,253        89,357    72,824
expenses
Loss from operations            (14,801)      (20,712)      (56,347)  (62,017)
Other expense, net              (1,089)       (1,117)       (3,205)   (3,398)
Net loss                        $           $           $       $  
                                (15,890)      (21,829)      (59,552)  (65,415)
Basic and diluted net loss per  $          $          $      $   
share^(1)                       (0.19)       (0.34)       (0.70)   (1.03)
Shares used to compute basic
and diluted net loss per        85,560        63,613        85,544    63,410
share^(1)
^(1) There is a lack of comparability in the per share
amounts between the periods presented as a result of the
issuance of 21,800 shares of common stock pursuant to a
public offering in November 2011



CADENCE PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
                                      September 30,        December 31,
                                      2012                 2011
                                      (unaudited)
Assets
Current assets:
 Cash, cash equivalents and        $      74,529  $     127,227
short-term investments
 Restricted cash                  450                  450
 Accounts receivable, net         6,848                2,703
 Inventory                        4,874                1,388
 Prepaid expenses and other        741                  1,161
current assets
 Total current assets          87,442               132,929
Property and equipment, net           10,004               10,569
Intangible assets, net                12,425               13,433
Restricted cash                       190                  190
Other assets                          7,021                7,039
 Total assets                  $     117,082   $     164,160
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable                 $       6,313  $       3,801
 Accrued liabilities              12,283               10,945
 Deferred revenue                 2,001                1,291
 Current debt, less discount      7,912                -
 Total current liabilities     28,509               16,037
Other liabilities                     602                  117
Long-term debt, less discount         21,193               28,696
Total stockholders' equity            66,778               119,310
 Total liabilities and         $     117,082   $     164,160
stockholders' equity

SOURCE Cadence Pharmaceuticals, Inc.

Website: http://www.cadencepharm.com
 
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