POZEN third quarter revenue increases to $4.9 million

Nov 3 2011

POZEN Inc. (NASDAQ: POZN), a pharmaceutical company committed to transforming medicine that transforms lives, today announced results for the third quarter ended September 30, 2011.

Corporate Highlights

• The PA32540 Phase 3 pivotal studies have been fully enrolled. The primary endpoint in both studies is the cumulative incidence of gastric ulcers following administration of either PA32540 or 325 mg enteric-coated aspirin in subjects at risk for developing aspirin-associated gastric ulcers. Completion of the 6-month studies is anticipated in 1H 2012 and the New Drug Application (NDA) submission is targeted for Q3 2012.
• The long term safety study, a 12-month, Phase 3 study to evaluate the long-term safety of PA32540 in subjects who are at risk for developing aspirin-associated gastric ulcers has been completed. In the study, adverse events were as expected and consistent with what would be expected in this population of patients requiring cardio-aspirin therapy and with the known safety profile of the PA components.
• As previously announced, the Company selected Keelin Reeds LLC to assist in the strategic partner search for PA32540 for both the U.S. and globally. Keelin Reeds is a global expert in helping life sciences companies value pipeline assets, develop business development strategies and execute partnership transactions.
• Year-to-date net sales of Treximet^® (sumatriptan / naproxen sodium) were $68.0 million, generating a year-to-date royalty of $12.2 million.
• Year-to-date net sales of VIMOVO™ (naproxen / esomeprazole magnesium) delayed-release tablets were $19.8 million, generating a year-to-date royalty of $1.7 million. VIMOVO has now been launched in a total of 25 countries including the U.S.
• The United States District Court for the Eastern District of Texas issued a favorable verdict in the litigation between POZEN and several generic pharmaceutical companies which had filed Abbreviated New Drug Applications (ANDAs) seeking approval from the U.S. Food and Drug Administration (FDA) to market generic copies of Treximet. Treximet is marketed by POZEN's exclusive U.S. licensee, GlaxoSmithKline (GSK). Each of the defendants has appealed the decision to the U.S. Court of Appeals for the Federal Circuit.

Third Quarter Results

For the third quarter of 2011, POZEN reported revenue of $4.9 million, comprised of royalty on sales of Treximet of $4.1 million and VIMOVO royalty of $0.8 million. For the third quarter of 2010, the Company reported total revenue of $4.3 million, resulting from royalty on sales of Treximet of $3.9 million, and $0.4 million from royalty on sales of VIMOVO.

Operating expenses for the third quarter of 2011 totaled $12.0 million, as compared to $13.0 million for the comparable period in 2010. The decreased operating expenses in the third quarter of 2011 were primarily due to $2.6 million less in patent litigation expenses, partially offset by higher PA32540 development and pre-commercialization expenses.

The Company reported a net loss of ($7.1) million, or ($0.24) per share on a diluted basis, for the third quarter of 2011, compared to net loss of ($8.6) million, or ($0.29) per share on a diluted basis, for the third quarter of 2010.

Nine Month Results

For the nine months ended September 30, 2011, POZEN reported revenue of $14.0 million compared to $39.5 million for the same period in 2010. The decrease in revenue is due to the prior year receipt of a $20.0 million milestone payment from AstraZeneca and the prior year amortization of upfront payments received pursuant to the collaboration agreement with AstraZeneca.

Operating expenses for the nine months ended September 30, 2011 were $33.2 million compared to $35.0 million in the same period in 2010. The decrease in operating expenses is due to $7.2 million less in patent litigation costs, partially offset by higher PA32540 development and pre-commercialization costs.

The Company reported a net loss of ($19.2) million, or ($0.64) per share on a diluted basis for the nine month period ended September 30, 2011, compared to a net income of $4.6 million, or $0.15 per share on a diluted basis, for the same period in 2010.

Balance Sheet

At September 30, 2011, cash, cash equivalents and short-term investments totaled $46.4 million compared to $64.1 million at December 31, 2010. The Company had an accounts receivable balance of $4.9 million from GlaxoSmithKline and AstraZeneca at September 30, 2011.

Outlook

As previously announced on October 4, 2011, we are estimating 2011 revenue to be in the range of $18-$19 million. We are estimating 2011 operating expenses to be in the range of $45.5-$47.5 million and estimating a full year net loss of $27-$29 million. At the end of the year, we project our cash and short-term investment balance to be in the range of $39-$41 million.

In 2012, we expect that our R&D costs will be substantially lower due to the completion of our PA32540 Phase 3 studies and our current plan targets a 2012 year-end cash and short-term investment balance of greater than $30 million.