Cadence Pharmaceuticals Reports Fourth Quarter and Full Year 2012 Financial Results

 Cadence Pharmaceuticals Reports Fourth Quarter and Full Year 2012 Financial
                                   Results

-- 2012 Net Product Revenue Exceeds $50 Million --

PR Newswire

SAN DIEGO, March 7, 2013

SAN DIEGO, March 7, 2013 /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
fourth quarter and full year ended December 31, 2012.

For the fourth quarter of 2012, Cadence reported net product revenue from
sales of OFIRMEV^® (acetaminophen) injection of $17.1 million, nearly three
times the amount reported for the fourth quarter of 2011. Additionally, during
the fourth quarter of 2012, the company entered into an agreement to terminate
its option to purchase Incline Therapeutics, Inc., in connection with the sale
of Incline to a third party. As a result, Cadence received a payment of $13.1
million for the waiver of its option plus an additional $1.5 million for the
shares of Incline stock held by the company in connection with the closing of
the transaction in January 2013. Other recent highlights include the
following:

  o Net product revenue for the fourth quarter of 2012 was $17.1 million, an
    increase of $3.2 million, or 23%, from the $13.9 million in net product
    revenue received during the third quarter of 2012.
  o Net product revenue for the twelve months ended December 31, 2012, was
    $50.1 million, more than four times the $11.5 million in net product
    revenue reported for 2011.
  o The company had over 3,750 unique customer accounts as of December 31,
    2012, an increase of 8% from the third quarter of 2012, and 66% from the
    fourth quarter of 2011.
  o The average number of orders per customer increased more than 16% for the
    fourth quarter of 2012 as compared to the fourth quarter of 2011. 
    Further, the average order size during the same period increased
    approximately 40%.
  o The gross margin on sales of OFIRMEV was 58% for the fourth quarter of
    2012, an improvement of 200 basis points from the third quarter of 2012.
  o An amendment to the company's credit facility in December 2012 delayed the
    commencement of principal payments by one year, from January 1, 2013, to
    January 1, 2014, deferring approximately $11.0 million in principal
    payments originally scheduled for 2013.
  o On February 28, 2013, Cadence announced an extension of its existing
    supply agreement for OFIRMEV with Lawrence Laboratories, a member of the
    Bristol-Myers Squibb Company group of companies, from April 2014 to
    December 2018.
  o On March 4, 2013, the company entered into an agreement with Laboratorios
    Grifols, S.A., for the development, manufacture and supply of commercial
    quantities of OFIRMEV in flexible plastic bags. Grifols has supplied
    intravenous acetaminophen to BMS in flexible plastic bags for distribution
    in certain markets outside of the U.S. and Canada since 2010.  Cadence
    plans to submit a supplemental NDA to the FDA in the second half of 2013
    seeking approval of the product to be manufactured by Grifols.
  o On March 6, 2013, Cadence and Baxter Healthcare Corporation announced the
    termination of the development and supply agreement for OFIRMEV between
    the two companies.

Ted Schroeder, President and CEO of Cadence, stated, "Our fourth quarter 2012
revenue exceeded our guidance as we ended the year with strong sales growth
and momentum. We continue to expand our customer base and drive higher OFIRMEV
utilization rates as physicians increasingly recognize that a balanced,
multimodal approach to perioperative analgesia can reduce opioid consumption.
We believe that OFIRMEV has a compelling position in such a multimodal
strategy."

Mr. Schroeder continued, "Along with our strong sales performance during the
year, the monetization of our investment in Incline and the amendment of our
credit facility helped to further strengthen our balance sheet as we achieve
steady progress toward cash flow breakeven."

Financial Results

For the three months ended December 31, 2012, Cadence reported net product
revenue of $17.1 million, an increase of $11.2 million from the $5.9 million
of net product revenue reported for the three months ended December 31, 2011.
For the twelve months ended December 31, 2012, the company reported net
product revenue of $50.1 million, an increase of $38.6 million from the $11.5
million of net product revenue reported for 2011. Additionally, the company
reported $0.1 million in licensing revenue during 2012, as compared to $5.2
million reported for 2011, primarily related to Cadence's data license
agreement with Terumo Corporation, which intends to seek regulatory approval
in Japan for the same intravenous formulation of acetaminophen as OFIRMEV.

For the three months ended December 31, 2012, Cadence reported a net loss of
$21.4 million, or $0.25 per share, compared to a net loss of $27.6 million, or
$0.37 per share, for the comparable period in 2011. For the twelve months
ended December 31, 2012, the company's net loss was $81.0 million, or $0.95
per share, compared to a net loss of $93.0 million, or $1.41 per share, for
the comparable period in 2011.

The net loss for each of the three and twelve months ended December 31, 2012,
includes impairment charges and a loss on the sale of equipment totaling $8.6
million pertaining to certain assets involved with the manufacture of OFIRMEV
under the terminated development and supply agreement with Baxter.
Additionally, the Company recognized disposal costs of $0.3 million during the
fourth quarter of 2012 for the inventory held as part of its manufacturing
suspension at Baxter. Excluding these one-time charges, the company's net loss
would have been $12.5 million, or $0.15 per share, for the three months ended
December 31, 2012, and $72.1 million, or $0.84 per share, for the twelve
months ended December 31, 2012.

The cost of product sales, as a percentage of sales, for the three and twelve
months ended December 31, 2012, was 42% and 46%, respectively. The reduction
in costs for the fourth quarter of 2012 as compared to the full year was
primarily attributable to expedited freight costs and an inventory write-down
that occurred during the first quarter of 2012.  In 2012, the company also
improved efficiencies as a result of increased production volumes and a higher
net product selling price resulting from a price increase that was implemented
in July 2012. The company's cost of product sales during 2012 was negatively
impacted by unabsorbed manufacturing costs incurred as a result of idle
manufacturing assets held at Baxter.

Research and development expenses for the three months ended December 31,
2012, decreased by $0.8 million to $1.1 million, from $1.9 million for the
comparable period in 2011. This reduction was primarily attributable to a
workforce restructuring implemented in the fourth quarter of 2011, partially
offset by clinical trial expenses incurred during this period in 2012 that
were not incurred during 2011. For the twelve months ended December 31, 2012,
research and development expenses decreased by $2.4 million to $6.5 million,
from $8.9 million for 2011. This reduction was primarily attributable to a
workforce restructuring implemented in the fourth quarter of 2011, partially
offset by clinical trial expenses incurred in 2012 that were not incurred
during 2011, as well as severance obligations related to the departure of two
of the company's officers in the third quarter of 2012.

Selling, general and administrative costs for the three months ended December
31, 2012, were $20.0 million compared to $20.5 million for the comparable
period in 2011. This reduction was primarily a result of lower sales and
marketing expenses incurred during the fourth quarter of 2012, as compared to
the same period 2011, and was partially offset by higher legal fees incurred
during the fourth quarter of 2012 as compared to the same period in 2011. For
the twelve months ended December 31, 2012, selling, general and administrative
expenses increased by $5.3 million to $86.8 million, from $81.5 million for
2011. This increase was mostly attributable to additional legal costs incurred
in 2012 related to the company's ongoing intellectual property litigation,
increased commissions earned by Cadence's hospital sales specialists as a
result of higher sales levels, and additional costs incurred in connection
with product distribution and related services. These increases were partially
offset by lower medical affairs and marketing costs.  

As of December 31, 2012, Cadence reported cash, cash equivalents and
short-term investments of $62.1 million. This figure does not include the
$14.6 million of cash received by the company in early January 2013 in
connection with the waiver of its option to acquire Incline and the sale of
its shares of Incline stock. Net accounts receivable at December 31, 2012, was
$6.2 million.

Guidance

As of March 7, 2013, Cadence expects that net product revenue from sales of
OFIRMEV for the twelve months ending December 31, 2013, will range from $94.0
million to $100.0 million.

Conference Call and Webcast on March 7, 2013 at 5:30 a.m. Pacific Time (8:30
a.m. Eastern Time)

Cadence management will host a conference call on March 7, 2013, at 5:30 a.m.
Pacific Time (8:30 a.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.

Non-GAAP Financial Measures

This press release provides financial measures for net loss and basic and
diluted loss per share that exclude specifically identified non-routine items,
and are therefore not calculated in accordance with accounting principles
generally accepted in the United States ("GAAP"). Management believes that
these non-GAAP financial measures provide meaningful supplemental information
regarding its performance that enhances management's and investors' ability to
evaluate Cadence's operating results.

These non-GAAP financial measures are not intended to be used in isolation and
should not be considered a substitute for any other performance measure
determined in accordance with GAAP. Investors and potential investors are
cautioned that there are material limitations associated with the use of
non-GAAP financial measures as an analytical tool, including that other
companies may calculate similar non-GAAP financial measures differently than
Cadence, limiting their usefulness as a comparative tool. Cadence compensates
for these limitations by providing specific information regarding the GAAP
amount excluded from the non-GAAP financial measures. Cadence further
compensates for the limitations of its use of non-GAAP financial measures by
presenting comparable GAAP measures more prominently. Investors and potential
investors are encouraged to review the calculation of non-GAAP financial
measures contained within this press release with Cadence's GAAP net income
and basic and diluted loss per share.

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 plan to submit a
supplemental new drug application for OFIRMEV in flexible plastic bags in the
second half of 2013; the company's belief that it will continue to expand its
customer base and drive higher OFIRMEV utilization rates; Cadence's progress
toward cash flow breakeven; and the company's guidance regarding net product
revenue from sales of OFIRMEV for the twelve months ending December 31, 2013.
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 share and per share amounts)
                            Three Months Ended        Twelve Months Ended
                            December 31,              December 31,
                            2012         2011         2012         2011
Revenue:
  Product revenue, net      $   17,089   $    5,889   $   50,066   $   11,486
  License revenues          85           -            118          5,210
        Total revenues      17,174       5,889        50,184       16,696
Costs and expenses:
  Cost of product sales     7,178        8,818        23,256       12,406
  Amortization of patent    335          335          1,343        1,567
  license
  Research and development  1,073        1,883        6,519        8,885
  Selling, general and      20,032       20,501       86,843       81,504
  administrative
  Impairment of long-lived  7,723        -            7,723        -
  assets
  Other                     1,160        1,077        1,174        1,076
        Total costs and     37,501       32,614       126,858      105,438
expenses
Loss from operations        (20,327)     (26,725)     (76,674)     (88,742)
Other expense, net          (1,094)      (881)        (4,299)      (4,279)
Net loss                    $ (21,421)   $ (27,606)   $ (80,973)   $ (93,021)
Basic and diluted net loss  $    (0.25)  $    (0.37)  $    (0.95)  $    (1.41)
per share^(1)
Shares used to compute
basic and
diluted net loss per        85,591       73,982       85,556       66,075
share^(1)

        There is a lack of comparability in the per share amounts between the
^(1)    periods presented as a result of the issuance of 21,800,000 shares of
        common stock pursuant to a public offering in November 2011.

CADENCE PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

(in thousands)
                                              December 31,     December 31,
                                              2012             2011
                                              (unaudited)
Assets
Current assets:
    Cash, cash equivalents and short-term     $       62,072   $      127,227
investments 
    Restricted cash                           640              450
    Accounts receivable, net                  6,152            2,208
    Inventory                                 6,498            1,388
    Prepaid expenses and other current        1,154            1,161
assets 
        Total current assets                  76,516           132,434
Property and equipment, net                   1,967            10,569
Intangible assets, net                        12,090           13,433
Restricted cash                               -                190
Other assets                                  7,106            7,039
        Total assets                          $       97,679   $      163,665
Liabilities and Stockholders' Equity 
Current liabilities:
    Accounts payable                          $         5,796  $         3,801
    Accrued liabilities                       12,969           10,450
    Deferred revenue                          2,234            1,291
        Total current liabilities             20,999           15,542
Other liabilities                             51               117
Long-term debt, less discount                 28,818           28,696
Total stockholders' equity                    47,811           119,310
        Total liabilities and stockholders'   $       97,679   $      163,665
equity

 

SOURCE Cadence Pharmaceuticals, Inc.

Website: http://www.cadencepharm.com
Website: http://www.OFIRMEV.com