Somaxon second-quarter net loss reduces to $5.7 million

Somaxon Pharmaceuticals, Inc.Aug 12 2010

Somaxon Pharmaceuticals, Inc. (Nasdaq: SOMX), a specialty pharmaceutical company focused on the in-licensing, development and commercialization of proprietary branded pharmaceutical products and late-stage product candidates for the treatment of diseases and disorders in the central nervous system therapeutic area, today announced financial results for the second quarter ended June 30, 2010.

“Efficacy and Safety of Doxepin 6 mg in a Model of Transient Insomnia”

"Since the beginning of the second quarter of 2010, we have made significant progress in preparing for the commercial launch of Silenor® in the U.S. insomnia market," said Richard W. Pascoe, Somaxon's President and Chief Executive Officer. "With the establishment of our commercial team focused on specialists and high-prescribing primary care physicians and the manufacture of our launch quantities of product soon to be completed, we are on track to meet our stated goal of a late September launch. In addition, we continue to engage in discussions with third parties relating to the commercialization of Silenor."

Recent Highlights

Since the beginning of the second quarter of 2010, Somaxon has accomplished a number of objectives:

• Completed the hiring of its internal staff to support the planned commercial launch of Silenor® in late September.
• Completed the hiring of its internal sales management team, including the hiring of Somaxon's Vice President of Sales and 10 field-based regional sales managers.
• Entered into an agreement with Publicis Touchpoint Solutions, Inc., pursuant to which Publicis will provide Somaxon with 110 specialty sales representatives on a contract basis that will exclusively promote Silenor® under the management of Somaxon's internal sales management team.
• Established a co-pay assistance program to help make Silenor® widely available to people with sleep maintenance insomnia that may benefit from therapy.
• Completed the Silenor® Brand Plan, which included conducting physician-focused market research with the approved Silenor® label, completing the core Silenor® marketing materials and submitting those materials for review to the U.S. Food and Drug Administration's Division of Drug Marketing, Advertising and Communications (DDMAC).
• Entered into an agreement with Integrated Commercialization Solutions, Inc. to provide third party logistics services relating to Silenor®, including warehousing, shipping, billing, accounts receivable, returns, rebates and chargeback management.
• Manufactured launch quantities of trade and sample product which is expected to be ready to ship into the distribution channel this quarter.
• Received notice of acceptance for publication of two peer-reviewed journal articles. The article entitled "Efficacy and Safety of Doxepin 1 mg and 3 mg in a 12-week Sleep Laboratory and Outpatient Trial of Elderly Subjects with Chronic Primary Insomnia," which is currently available on-line at www.journalsleep.org, is expected to be published in the medical journal Sleep within the next two months. The other article, entitled "Efficacy and Safety of Doxepin 6 mg in a Model of Transient Insomnia," is expected to be published in the medical journal Sleep Medicine within the next three months.

Second Quarter 2010 Financial Results

For the second quarter of 2010, net loss applicable to common stockholders was $5.7 million, or $0.16 per share, compared with a net loss applicable to common stockholders of $6.1 million, or $0.33 per share, for the second quarter of 2009.

As a development stage pharmaceutical company, Somaxon had no revenues during the second quarter of 2010.

Research and development expense was $0.8 million for the second quarter of 2010, compared with $1.5 million for the second quarter of 2009, reflecting a reduction in share-based compensation expense.

Selling, general and administrative (SG&A) expense was $4.9 million for the second quarter of 2010, compared with $4.6 million for the second quarter of 2009, reflecting an increase in spending associated with the planned commercial launch of Silenor®. The increased spending on market preparation activities during the second quarter of 2010 was mitigated by a reduction in severance costs and share-based compensation expense as compared to the second quarter of 2009.

For the second quarter of 2010, the company recognized a total of $1.3 million of share-based compensation expense, compared with a total of $3.0 million for the second quarter of 2009. Share-based compensation expense for the second quarter of 2009 included the additional cost of the company's one-time stock option exchange program that was completed in June 2009 and the impact of accelerated option vesting arrangements under severance-related agreements.

At June 30, 2010, Somaxon had cash and cash equivalents totaling $54.5 million, compared to $5.2 million at December 31, 2009.

Financial Guidance for the Second Half of 2010

For the second half of 2010, total operating expense is expected to approximate $28.0 to $32.0 million, including non-cash, share-based compensation expense. Share-based compensation expense is expected to approximate $3.0 to $4.0 million. The projected increase compared to the second half of 2009 primarily relates to expected increases in SG&A expense to support commercial operations.

Actual financial results for the second half of 2010 could vary based upon many factors, including but not limited to the rate of growth of Silenor® sales and the actual cost of commercial activities.