POZEN reports $16.2M net income for second-quarter 2010

Aug 3 2010

POZEN Inc. (NASDAQ:POZN), a pharmaceutical company committed to transforming medicine that transforms lives, today announced results for the second quarter ended June 30, 2010.

“The FDA's approval of VIMOVO was a very significant milestone for POZEN, and represents two drug approvals in two years. This success clearly demonstrates both our clinical expertise and ability to execute against our strategic plan”

Corporate Highlights Include:

• The U.S. Food and Drug Administration (FDA) approved VIMOVO™ (naproxen and esomeprazole magnesium) (see About VIMOVO), and POZEN transferred ownership of the U.S. regulatory filings to AstraZeneca.
• POZEN completed enrollment for the PA32540 long-term safety study and continues to enroll patients in the two pivotal studies, targeting a New Drug Application (NDA) submission in 2012.

Financial Highlights Include:

• POZEN received a $20.0 million milestone payment from AstraZeneca in connection with the FDA's approval of VIMOVO, resulting in a profitable quarter.

"The FDA's approval of VIMOVO was a very significant milestone for POZEN, and represents two drug approvals in two years. This success clearly demonstrates both our clinical expertise and ability to execute against our strategic plan," said John R. Plachetka, Chairman, President and Chief Executive Officer of POZEN. "Our ongoing royalty revenue streams, combined with recent and anticipated future milestone payments, have provided us with the necessary resources to embark on this next phase of our corporate strategy, namely the development and commercialization of our PA family of products. We plan to start two Phase 3 studies for our higher dose aspirin product later this year after agreeing on our development plan with the FDA and to continue to progress our PA32540 Phase 3 program for secondary prevention of cardiovascular events in patients who are at risk for gastric ulcers.

"Liz Cermak, POZEN's Chief Commercial Officer, joined us last September to help drive that evolution of our strategy and model and determine how best we can maximize the value of our products, particularly our PA assets. In her first year with us, Liz has already made a great impact at POZEN and is developing the strategic roadmap for POZEN's commercialization activities, which will contain key elements that will underpin POZEN's continuing success in the years ahead."

Second Quarter Results

For the second quarter of 2010, POZEN reported revenue of $28.2 million, resulting from royalty on sales of Treximet^® (sumatriptan/naproxen sodium) of $4.1 million, the amortization of upfront payments received pursuant to the collaboration agreement with AstraZeneca of $4.1 million, and the $20.0 million milestone payment from AstraZeneca resulting from the FDA's approval of VIMOVO. Revenue for the second quarter ended June 30, 2009 totaled $4.9 million, resulting from royalty on sales of Treximet of $0.9 million, $0.9 million of revenue for development work performed under POZEN's collaboration agreement and the amortization of upfront payments of $3.1 million.

Operating expenses for the second quarter of 2010 totaled $12.1 million as compared to $9.3 million for the comparable period in 2009. The higher operating expenses in Q2 2010 were primarily due to increases in costs associated with the PA32540 development program and ongoing patent litigation expenses.

The Company reported net income of $16.2 million, or $0.53 per share on a diluted basis, for the second quarter of 2010, compared to a net loss of $(4.3) million, or $(0.14) per share on a diluted basis, for the second quarter of 2009. The improved results for 2010 include the $20.0 million milestone payment from AstraZeneca for the FDA's approval of VIMOVO.

Six Month Results

For the six months ended June 30, 2010, POZEN reported revenue of $35.2 million compared to $13.7 million for the same period in 2009. The increase in revenue is due to receipt of the $20.0 million milestone payment from AstraZeneca and the increase in the Treximet royalty rate to 18% starting in 2010.

Operating expenses for the six months ended June 30, 2010 were $22.0 million compared to $21.8 million in the same period in 2009. The increase in operating expenses is primarily due to higher patent litigation costs.

The Company reported net income of $13.2 million, or $0.44 per share on a diluted basis for the six month period ended June 30, 2010, compared to a net loss of $(7.7) million, or $(0.26) per share on a diluted basis, for the same period in 2009.

Balance Sheet

The Company's balance sheet strengthened in the second quarter as a result of the $20.0 million milestone payment. At June 30, 2010, cash, cash equivalents and short-term investments totaled $50.4 million compared to $46.7 million at December 31, 2009. The Company has an accounts receivable balance of $4.2 million from GlaxoSmithKline and AstraZeneca at June 30, 2010.

Outlook

The Company anticipates a net loss in the range of $3 to $5 million for the full year ending December 31, 2010. This loss assumes Treximet annual net sales will be in the range of $85 to $90 million, royalties from the launch of VIMOVO will not contribute significantly to revenues, two PA65020 Phase 3 studies will be initiated in Q4 and patent litigation expenses will be approximately $7 million for the full year.

The Company expects its cash balance at December 31, 2010 to be in the range of $35 to $37 million. The Company's estimated full year 2010 net loss and cash assumptions exclude the potential benefit of the $25.0 million milestone payment that would become due if VIMOVO were to receive marketing approval in a major ex-U.S. market (including pricing and reimbursement approval).

Source POZEN Inc.