viewColumbia Laboratories Inc

Columbia Laboratories Q4 revenue up, but down in FY; awaiting study results


 Columbia Laboratories (NASDAQ: CBRX) reported a 21% increase in net revenues to U$8.5m in the fourth quarter, however for the full year net revenues decreased by 11% to U$32.2m. Last week, the company announced a deal to sell its progesterone related assets to Watson Pharmaceuticals (NYSE: WPI) for a total consideration of up to US$92.5m.

The company is now awaiting results of the on-going PREGNANT (PROCHIEVE Extending GestatioN A New Therapy) study for its PROCHIEVE progesterone gel, which will trigger the Watson deal’s first milestone payment.

For the periods ended 31 December 2009, the company reported widening losses compared with last year’s comparatives with a US$5.4m net loss in Q4 and a US$21.9m net loss for the year, against 2008’s losses of US$3.5m and US$14.1m respectively. The reproductive health specialist said the loss was due to the combination of lower revenues and higher operating expenses, including higher costs of the PREGNANT Study. According to Columbia research and development spending increased by 38% to US$8.6m, which primarily relates to the PREGNANT study.

On March 3 2010, Columbia agreed the terms of a deal to sell all of its progesterone related assets and issue 11.2m shares to Watson for a US$47m upfront payment, plus royalties of between 10-20% of annual net sales of certain progesterone products. 

Upon completion of the disposal, Columbia's business will consist of domestic and international royalties and milestone payments, manufacturing revenues from CRINONE, PROCHIEVE and STRIANT sales. As well as its bioadhesive drug delivery technologies, which include bioadhesive vaginal gel, buccal system and progressive hydration tablet delivery mechanisms.

Columbia said that expenses relating to sales, marketing, and related support functions will be eliminated, the company also retain certain assets and rights to its progesterone business, including all rights necessary to perform its obligations under its agreement with Merck Serono SA.

"[During 2009] We continued to invest in the PREGNANT study of PROCHIEVE 8% to reduce the risk of preterm birth in women with a short cervix at mid-pregnancy. 393 of the planned 450 patients are now enrolled and we are seeing very strong monthly enrolment rates”, Columbia's interim chief executive Frank C Condella Jr commented.

Under the terms of the Watson deal, Columbia may potentially receive additional payments up to US$45.5m by the successful completion of clinical development milestones in the PREGNANT study, regulatory filings, receipt of regulatory approvals and product launches.

The results of the study are expected this summer with an FDA filing scheduled for next year, subject to results. “We remain confident that this study will be fully enrolled in the second quarter of 2010. We look forward to reporting results shortly after the last infant is born and the analysis of results is completed in late 2010 and, if positive, to filing with the FDA in 2011 for this promising new indication", Condella Jr added.

Also last week, Columbia entered into a contingent agreement with PharmaBio Development, an affiliate of Quintiles Transnational Corp, to pre-pay the approximately US$16m balance of the minimum royalty payments on US net sales of Columbia’s STRIANT product due in November 2010. Similarly, Columbia also agreed to pre-pay its US$40m convertible notes, which are due December 31 2011 and note holders will, in aggregate, receive US$26m in cash, US$10 million in Columbia shares and warrants to purchase a further 7.75m Columbia shares.

As of December 31 2009, Columbia had cash and cash equivalents of US$14.8m, compared to US$7.3 million at September 30 2009 and US$12.5m at December 31 2008. Columbia raised US$10.7m from the sale of 10.9m shares and warrants. The company noted that it cash position should be sufficient to cover projected cash needs for at least the next 12 months.

“We believe this agreement with Watson Pharmaceuticals represents the best interests of the company and our stockholders ... Columbia will emerge debt-free with a stronger balance sheet, ongoing royalty revenues and potential milestone revenues, significantly lower operating costs, and a clear path to profitability", concluded Condella.

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