Exhibit 99.1
For Immediate Release: Company Contact:
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April 27, 2004 Nancy C. Broadbent
Chief Financial Officer
(215) 579-7388
Investor Relations:
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Lisa M. Wilson
In-Site Communications
(212) 759-3929
CollaGenex Pharmaceuticals Reports Revenues and Earnings for the
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First Quarter of 2004
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Net Loss Allocable to Common Stockholders of $0.03
per Share Reflects $0.14 per Share One-time Charge Relating to
Mutual Settlement
Newtown, PA, April 27, 2004 - CollaGenex Pharmaceuticals, Inc. (Nasdaq: CGPI)
today reported financial results for the first quarter ended March 31, 2004.
Total revenues increased 10% to $13.4 million compared to $12.2 million in the
first quarter of 2003. Net product sales were $13.3 million in the first quarter
of 2004, a 17% increase over net product sales of $11.4 million recorded in the
first quarter of 2003.
During the first quarter of 2004, the Company reported a net loss of
$34,000 compared to net income of $1.2 million during the first quarter of 2003.
Net loss allocable to common stockholders for the first quarter of 2004 was
$434,000, or $0.03 per basic and diluted share, compared to net income of
$828,000, or $0.07 per basic and diluted share, in the first quarter of 2003.
The net loss in the first quarter of 2004 included a charge of $2.0 million, or
$0.14 per basic and diluted share, for a one-time payment to URL/Mutual
Pharmaceuticals Company, Inc. ("Mutual") in connection with the settlement of
all outstanding litigation between Mutual and CollaGenex announced on April 8,
2004. CollaGenex is entitled to deduct costs incurred in defense of its patents,
including this payment, from current and future royalties due to the State
University of New York on sales of Periostat(R).
"Our first quarter 2004 net product sales and earnings before the one-time
Mutual settlement charge were significantly higher than the first quarter of
2003," said Colin W. Stewart,
president and chief executive officer of CollaGenex. "The most significant
development in the quarter was the successful resolution of the outstanding
litigation between CollaGenex and Mutual Pharmaceuticals. This agreement removes
the risk of a possible adverse outcome and allows us to move forward and execute
our strategic plan in both the dental and dermatology sectors of our business.
In addition, we can now move forward aggressively to invest in our R&D portfolio
and the long term growth of our company."
During the first quarter of 2004, the Company announced the positive
results of a 134-patient Phase III clinical trial that evaluated the efficacy of
Periostat to treat rosacea, a disease characterized by inflammatory lesions and
erythema (skin redness) affecting the nose, cheeks and forehead. The clinically
and statistically significant results showed that the patients who had been
administered Periostat during the 16-week course of the trial improved markedly
better than the patients on placebo. The data and information generated from
this trial form the basis for designing two Phase III trials to evaluate
Periostat MR in the treatment of rosacea. These studies are expected to begin
during the second quarter of 2004.
CollaGenex recently initiated patient screening and enrollment of a Phase
III clinical study to evaluate the efficacy of Periostat MR for the treatment of
adult periodontitis. The periodontitis study will enroll more than 200 patients
and provides for nine months of dosing with either Periostat MR or placebo and
will analyze the changes in clinical attachment level and periodontal pocket
depth. The initiation of this study is an important milestone in CollaGenex's
efforts to improve patient compliance with its once-daily formulation and extend
the patent life of Periostat.
CollaGenex also recently announced the realignment of its sales force into
two dedicated units, one focused on dentistry and the other on dermatology.
Prior to the reorganization, virtually all of CollaGenex's 115-person
pharmaceutical sales force called on both dentists and dermatologists to market
the Company's products. After the restructuring, CollaGenex will be covering
virtually the same number of doctors with a 56-person dental sales force calling
on a highly targeted group of 10,000 high prescribing dentists and a 33-person
dermatology sales force calling on the 5,600 dermatologists who are the highest
prescribers of acne, rosacea and dermatitis products.
"The realignment of our sales organization into dedicated dental and
dermatology sales forces will focus our representatives' time on the top decile
prescribers in each therapeutic area. This should increase our yield on each
call and maintain sales growth with fewer representatives. It will also
significantly reduce our selling, general and administrative cost base,"
commented Nancy C. Broadbent, CollaGenex's chief financial officer. "The savings
from this reorganization, coupled with lower expected legal expenses following
our settlement with Mutual, will reduce our 2004 selling, general and
administrative expenses, excluding the one-time charge for the Mutual
settlement, to approximately $30 million compared to $33.7 million during 2003."
"We believe that our sales force realignment will also facilitate the
addition of in-licensed and/or co-promoted products," continued Ms. Broadbent.
"Our co-promotion agreements with Merck, Novartis and Sirius Laboratories
expired in accordance with their terms or were mutually terminated at the end of
2003, which accounts for the drop in contract revenues from the first quarter of
2003 to the first quarter of 2004. We are in discussions with several potential
marketing partners to add new products to our portfolio, and our formation of
dedicated dental and dermatology sales forces has been viewed very positively by
these potential partners."
CollaGenex continued its commitment to research and development in the
first quarter of 2004. "We invested in our pipeline by increasing our R&D
spending compared to the first quarter of 2003 by about $366,000, or more than
35%, primarily to fund the clinical development of Periostat MR and the
development of products based on our Restoraderm(R) technology platform. This is
consistent with our stated plans to increase our investment in the development
of our proprietary product pipeline. We anticipate our total R&D investment
during 2004 to be in the range of $8.5 to $9.0 million compared to $5.5 million
in 2003," continued Ms. Broadbent.
As previously announced, the License and Supply Agreement with Mutual
provides for the shipment during the second quarter of 2004 of an initial
stocking order, including a one-time promotional allowance. CollaGenex expects
this to affect its quarterly sales patterns and profitability during 2004.
Thereafter, the Company anticipates that reported sales will be primarily driven
by end-user demand.
Conference Call
As previously announced, CollaGenex will hold a conference call on Tuesday,
April 27, 2004, at 11:00 a.m. Eastern Daylight Time to discuss the Company's
first quarter 2004 operating and financial results. Investors and other
interested parties can access the conference call by dialing 800-273-1254 in the
U.S. or (706) 679-8592 internationally, or via a live Internet broadcast on the
Company's website at www.collagenex.com.
For those who cannot listen to the live broadcast, a replay will be
available shortly after the call at the aforementioned URL for 90 days.
Additionally, a recording of the call will be available by telephone until 11:59
p.m. on May 11, 2004 by dialing 800-642-1687, (706) 645-9291 internationally and
entering access code 6829241.
Financial Tables Follow
Summary Financial Data
Consolidated Statement of Operations:
(Unaudited)
(In thousands, except share amounts)
Three Months Ended March 31,
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2004 2003
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Revenues:
Net product sales $ 13,328 $ 11,370
Contract revenues 60 550
License revenues 18 237
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Total revenues 13,406 12,157
Operating Expenses:
Cost of product sales 2,001 1,914
Research and development 1,389 1,023
SG&A, Other 8,119 8,017
SG&A, Legal Settlement 2,000 -
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Total operating expenses 13,509 10,954
Other Income (Expense):
Interest income 72 31
Other expense (3) (6)
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Net income (loss) (34) 1,228
Preferred stock dividend 400 400
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Net income (loss) allocable to
common stockholders $ (434) $ 828
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Net income (loss) per basic share
allocable to common stockholders $ (0.03) $ 0.07
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Weighted average shares used in
computing net income (loss) per
basic share allocable to
common stockholders 13,970,730 11,394,226
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Net income (loss) per diluted
share allocable to common stockholders $ (0.03) $ 0.07
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Weighted average shares used in
computing net income (loss) per
diluted share allocable to
common stockholders 13,970,730 12,181,045
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Consolidated Selected March 31, December 31,
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Balance Sheet Data: 2004 2003
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Cash and cash equivalents $ 31,168 $ 32,670
Total current assets 41,804 41,033
Total assets 43,976 43,305
Total current liabilities 8,936 9,023
Long-term liabilities 318 326
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Total liabilities 9,254 9,349
Total stockholders' equity 34,722 33,956
CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company
focused on providing innovative medical therapies to the dental and dermatology
markets. Currently, the Company's professional dental pharmaceutical sales force
markets Periostat, which is indicated as an adjunct to scaling and root planing
for the treatment of adult periodontitis. Periostat is the first and only
pharmaceutical to treat periodontal disease by inhibiting the enzymes that
destroy periodontal support tissues, and by enhancing bone protein synthesis.
The dental sales force also promotes Atridox(R), Atrisorb FreeFlow(R) and
Atrisorb-D FreeFlow(R), Atrix Laboratories, Inc.'s products for the treatment of
adult periodontitis, to the dental market. The Company's professional
dermatology sales force markets Pandel(R), a prescription topical corticosteriod
licensed from Altana, Inc.
Research has shown that certain unique properties of the tetracyclines
discovered during the development of Periostat(R) may be applicable to other
diseases involving inflammation and/or destruction of the body's connective
tissues, including acne, rosacea, meibomianitis and cancer metastases, among
others. CollaGenex is further evaluating Periostat(R), as well as the new
IMPACS(R) compounds, to assess whether they are safe and effective in these
applications. In addition, CollaGenex has licensed the Restoraderm(R)
technology, a unique, proprietary dermal drug delivery system, in order to
develop a range of topical dermatological products with enhanced pharmacologic
and cosmetic properties.
To receive additional information on the Company, please visit our Web site
at www.collagenex.com, which does not form part of this press release.
This press release contains forward-looking statements
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended. Investors are cautioned that forward-looking statements involve risks
and uncertainties, which may affect the Company's business and prospects. The
Company's business of selling, marketing and developing pharmaceutical products
is subject to a number of significant risks, including risks relating to the
implementation of the Company's sales and marketing plans for Periostat and
other products that we market, risks associated with enforcement of our
intellectual property rights, risks inherent in research and development
activities, risks associated with conducting business in a highly regulated
environment and uncertainty relating to clinical trials of products under
development, all as discussed in the Company's periodic filings with the U.S.
Securities and Exchange Commission.
Periostat(R), IMPACS(R), Metastat(R) and Restoraderm(R) are registered
trademarks of CollaGenex Pharmaceuticals, Inc.
All other trade names, trademarks or service marks are the property of their
respective owners and are not the property of CollaGenex Pharmaceuticals, Inc.
or any of our subsidiaries.
Pandel(R) is a trademark of Taisho Pharmaceuticals.
Atridox(R), Atrisorb(R) and Atrisorb-D(R) are registered trademarks of Atrix
Laboratories, Inc.
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