Somaxon Pharma Misses EPs Estimates: ($0.42) Vs. ($0.40) (SOMX)

Somaxon Pharmaceuticals SOMX today announced financial results for the full year and fourth quarter ended December 31, 2010. “During 2010, we achieved our key corporate objectives that allowed us to successfully transition from a development stage organization to a commercial specialty pharmaceutical company, including the FDA approval of Silenor®, the commercial launch of Silenor alongside our primary care co-promotion partner, Procter & Gamble, and strengthening our balance sheet,” said Richard W. Pascoe, Somaxon's President and Chief Executive Officer. “In 2011, we intend to build upon our progress as we anticipate growing Silenor revenue, leveraging our commercial infrastructure to broaden our business, extending the Silenor franchise and effectively managing our financial and other corporate resources, with the goal of building a sustainable specialty pharmaceutical business dedicated to delivering long-term shareholder value.” For the full year of 2010, Somaxon recorded shipments of Silenor to its wholesale distributors totaling $6.0 million, of which $1.4 million was recognized as net product sales. For the fourth quarter of 2010, shipments of Silenor to wholesale distributors totaled $0.4 million and Somaxon recognized net product sales of $1.3 million. In accordance with U.S. generally accepted accounting principles, Somaxon defers revenue recognition of the amounts of Silenor shipments to wholesale distributors that are not yet estimated to be dispensed through patient prescriptions. As of December 31, 2010, deferred revenue totaled $3.5 million and is reported net of $0.8 million of associated discounts and allowances on Somaxon's balance sheet. Cost of sales was $0.2 million for both the full year and the fourth quarter of 2010, which represented the costs of product dispensed through prescriptions. Gross profit was $1.1 million for both the full year and the fourth quarter of 2010. Expressed as a percentage of net product sales, gross margin was 82.3% and 82.1% for the full year and the fourth quarter of 2010, respectively. Total operating expenses for the full year of 2010 were $40.1 million, including $6.7 million of non-cash, share-based compensation expense, compared with $14.2 million, including $6.2 million of non-cash, share-based compensation expense, for the full year of 2009. Total operating expenses for the fourth quarter of 2010 were $17.3 million, including $1.4 million of non-cash, share-based compensation expense, compared with $1.9 million, including $0.6 million of non-cash, share-based compensation expense, for the fourth quarter of 2009. These increases in total operating expenses are primarily due to an increase in selling, general and administrative (SG&A) expenses relating to commercialization activities for Silenor. SG&A expense was $36.6 million and $16.7 million for the full year and the fourth quarter of 2010, respectively, compared to $10.9 million and $1.1 million for the full year and the fourth quarter of 2009, respectively. These increases reflected the costs associated with the commercial launch of Silenor and an increase in salary and personnel-related expenses due to an increase in overall headcount. Research and development expense was $3.6 million and $0.6 million for the full year and the fourth quarter of 2010, respectively, compared to $4.3 million and $0.8 million for the full year and the fourth quarter of 2009, respectively. For the full year of 2010, net loss was $38.8 million, or $1.16 per share, compared with $14.4 million, or $0.69 per share, for the full year of 2009. For the fourth quarter of 2010, net loss was $16.0 million, or $0.42 per share, compared with $1.9 million, or $0.08 per share, for the fourth quarter of 2009. At December 31, 2010, Somaxon had cash, cash equivalents and short-term investments totaling $54.8 million, compared to $5.2 million at December 31, 2009. The company believes, based on its current operating plan, that its cash, cash equivalents and short-term investments as of December 31, 2010 will be sufficient to fund its operations through at least the first quarter of 2012. Financial Guidance for Full Year of 2011 For the full year of 2011, total operating expense is expected to be approximately $78 to $83 million, including non-cash, share-based compensation expense. Non-cash, share-based compensation expense is expected to be approximately $4 million. The projected increase compared to the full year of 2010 primarily relates to expected increases in SG&A expense to support a full year of commercial operations. Actual financial results for the full year of 2011 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.
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