Columbia Laboratories reports net revenues of $7.9 million for third quarter 2009

Nov 5 2009

Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial results for the three- and nine-month periods ended September 30, 2009.

Highlights for the quarter and subsequent events included:

• Total progesterone sales increased 11% and domestic sales of CRINONE^® 8% (progesterone gel) also rose 11% versus the immediately preceding quarter.
• Net revenues were $7.9 million as compared to $11.1 million for the third quarter of 2008. The 2008 period included a one-time recognition of $2.9 million of previously deferred revenues relating to the termination of the STRIANT^® (testosterone buccal system) license for Europe due to the bankruptcy of the Company’s licensee; without those revenues, net revenues for the 2009 third quarter decreased 4% from 2008 levels.
• PREGNANT Study enrollment continues to rise with six sites added in the third quarter and an additional 11 sites thus far in the fourth quarter, bringing the total number of sites to 51. The Company confirmed its plan to file with the FDA for PROCHIEVE^® 8% (progesterone gel) in the short cervix population near year-end 2010, assuming positive data.
• Four presentations of new data supporting the use of CRINONE^® 8% over other progesterone formulations were given at the annual meeting of the American Society of Reproductive Medicine, heightening the peer-to-peer dialogue among the Company’s infertility targets. Of particular note was the Brigham and Women’s Hospital presentation of the results of the largest prospective, randomized clinical study demonstrating that CRINONE is equally effective and significantly better tolerated than intramuscular injections of progesterone for luteal phase support in In Vitro Fertilization and Embryo Transfer cycles.
• On October 28, 2009, Columbia strengthened its balance sheet with $10.7 million dollars in net proceeds raised through the sale of common stock and warrants. These funds will enable the Company to complete the PREGNANT Study and to develop next-generation progesterone products, both critical to delivering long-term returns.

“CRINONE 8% revenues and prescriptions have grown quarter over quarter in 2009 despite the economic downturn and its lingering impact on decisions to proceed with infertility treatments. We remain focused on growing this business by emphasizing that CRINONE is clinically proven to be as effective as other progesterones and widely preferred by patients for its once-daily convenience and needle-free application,” stated Robert S. Mills, Columbia’s president and chief executive officer.

“Enrollment in the PREGNANT Study increased in the third quarter of 2009 with the addition of six new clinical sites. We maintain our conviction that if study outcomes are positive, we will file with the FDA for PROCHIEVE 8% in the short cervix population near the end of 2010 and, assuming approval, pave the way for significant long-term growth,” Mills concluded.

Third Quarter Financial Results

Net revenues for the third quarter of 2009 were $7.9 million, compared to $11.1 million for the third quarter of 2008. The 2008 third quarter included $2.9 million in previously deferred revenues.

Total net revenues from Progesterone Products decreased 2% to $6.3 million in the third quarter of 2009 as compared to $6.5 million in the third quarter of 2008. This reflects lower domestic sales of CRINONE^® 8% and PROCHIEVE^®, partially offset by higher sales of CRINONE in foreign markets. Comparing the three months ended September 30, 2009 with the same period in 2008:

• CRINONE net revenues from non-U.S. sales were 70% higher. The increase was largely a result of a 7% increase in unit volumes in 2009 coupled with a $0.6 million decrease in the third quarter of 2008 foreign CRINONE revenues for estimated sales price adjustments.
• Net revenues from domestic CRINONE sales decreased 17%, with unit volume accounting for about 15% of the decrease. Total prescriptions for CRINONE for the three months ended September 30, 2009 were 6% higher than for the same period in 2008. This increase in prescriptions was achieved despite a major economic downturn impacting patients’ decisions to postpone or forego elective infertility procedures that are not reimbursed in many major markets, including states such as California.
• Net revenues for PROCHIEVE, which the Company is no longer promoting for infertility, were $0.4 million lower than for the same period in 2008.

Net revenues from the Company’s Other Products were $1.6 million in the third quarter of 2009. This compares to $4.7 million in the third quarter of 2008, during which the Company recognized $2.9 million in previously deferred revenue as a result of the termination of the STRIANT^® license for Europe. Net revenues for Replens^® increased by $0.3 million while net revenues for RepHresh^® and STRIANT declined by $0.3 million and $0.2 million, respectively.

Gross profit was $5.3 million in the third quarter of 2009 compared to $8.3 million in the third quarter of 2008, primarily due to the acceleration of the previously deferred revenue as a result of the termination of the STRIANT license for Europe in 2008. Without the acceleration of the previously deferred revenue, gross profit would have remained essentially the same.

Total operating expenses were $8.8 million in the third quarter of 2009 compared to $8.3 million in the prior year period. The increase breaks down as follows:

• Selling and distribution expenses were $3.1 million in the third quarter of 2009, an 11% decrease from $3.5 million in 2008, reflecting primarily lower marketing costs.
• General and administrative costs were $2.1 million in the third quarters of both 2009 and 2008.
• Research and development costs increased to $2.3 million in the third quarter of 2009 from $1.5 million in 2008, reflecting higher clinical trial expenses for the PREGNANT Study due to increased patient enrollment levels.
• The Company amortized $1.3 million of the acquisition cost for the U.S. license rights to CRINONE 8% in the third quarters of both 2009 and 2008.

Other income and expense for the third quarter of 2009 aggregated to a net expense of $2.4 million versus a net expense of $2.0 million in the third quarter of 2008.

As a result, the Company reported a net loss of $5.9 million, or $0.11 per basic and diluted share, for the third quarter of 2009 as compared to a net loss of $2.1 million, or $0.04 per basic and diluted share, for the third quarter of 2008.

Cash and Equivalents

As of September 30, 2009, Columbia had cash and cash equivalents of $7.3 million. This compares to cash and cash equivalents of $9.2 million at June 30, 2009 and $12.5 million at December 31, 2008. On October 28, 2009, the Company raised $10.7 million in net proceeds from the sale of 10,900,000 shares of common stock and warrants to purchase 5,450,000 shares of common stock in a registered direct offering. With an exercise price of $1.52, the warrants have the potential to generate an additional $8.3 million. Furthermore, this transaction will enable the Company to complete the ongoing PREGNANT Study and to develop its next-generation progesterone products whether or not it proceeds with a partnership.