MiddleBrook Pharmaceuticals Reports Third Quarter 2007 Results
Keflex Product Sales Total $3.1 Million in Quarter; Amoxicillin PULSYS NDA
Review Ongoing - PDUFA Date in January 2008
GERMANTOWN, Md., Nov. 14 /PRNewswire-FirstCall/ -- MiddleBrook
Pharmaceuticals, Inc. (Nasdaq: MBRK), a pharmaceutical company focused on
developing and commercializing novel anti-infective products, today announced
financial and operational results for the quarter ended September 30, 2007.
MiddleBrook reported third quarter 2007 revenue of $3.1 million, up from
revenue of $2.7 million in the second quarter of 2007 and from $2.4 million in
the third quarter of 2006. Revenue for the first nine months of 2007 increased
to $7.6 million, from revenue of $3.6 million for the first nine months of 2006.
MiddleBrook reported research and development (R&D) expenses in the third
quarter of $5.5 million, compared to second quarter 2007 R&D expenses of $5.4
million and third quarter 2006 R&D expenses of $5.7 million. Total expenses for
the third quarter of 2007 were $13.2 million, compared to $12.2 million in the
second quarter of 2007 and $12.2 million in the third quarter of 2006.
Net loss was $10.1 million for the third quarter, compared to a net loss
of $9.5 million in the second quarter of 2007 and a net loss of $9.9 million in
the third quarter of 2006. Net loss for the first nine months of 2007 was $33.2
million, compared to a net loss of $28.2 million in the first nine months of the
prior year.
Net loss per share applicable to common stockholders during the third
quarter of 2007 was ($0.22), compared to a net loss per share of ($0.21) in the
prior quarter, and a net loss per share of ($0.33) in the comparable quarter of
last year. Net loss per share applicable to common stockholders during the first
nine months of 2007 was ($0.78), down from a net loss per share of ($0.93) in
the first nine months of 2006.
"We believe the Amoxicillin PULSYS NDA review process has progressed very
well thus far and we look forward to continuing to work with the FDA throughout
the remainder of their review," stated Edward M. Rudnic, Ph.D., president and
CEO of MiddleBrook.
OPERATIONAL HIGHLIGHTS
Amoxicillin PULSYS NDA Review -- PDUFA Date January 23, 2008
On May 22, 2007, MiddleBrook's New Drug Application (NDA) for its once-
daily Amoxicillin PULSYS product was accepted for filing by the U.S. Food and
Drug Administration (FDA). MiddleBrook has worked closely with the FDA
throughout the subsequent review process and anticipates a decision on the
application on its Prescription Drug User Fee Act (PDUFA) target action date of
January 23, 2008.
Amoxicillin is currently not approved for once-daily dosing to treat
pharyngitis. If approved for marketing, physicians prescribing Amoxicillin
PULSYS would have available the first once-daily product in the aminopenicillin
class for the treatment of pharyngitis while utilizing approximately one-half
the amount of amoxicillin currently used. About 15 million patients annually
seek relief of sore throat symptoms in the United States.
Keflex(R) Capsules (Cephalexin, USP) -- Commercialization Update
During the third quarter, MiddleBrook continued the commercialization of
its 750 mg strength Keflex capsules through a targeted and dedicated national
contract sales force and MiddleBrook district sales managers. Based on
prescription data from IMS Health, total prescriptions filled for Keflex 750 mg
capsules in the third quarter of 2007 were 83,767 prescriptions, up from second
quarter 2007 total prescriptions of 82,621.
MiddleBrook recently conducted a review of its Keflex sales initiatives
and as a result reduced the size of its sales force to approximately 30 contract
sales representatives and three MiddleBrook district sales managers.
Financing Raises Up To an Additional $10 Million in Gross Proceeds
As announced on November 7, 2007, MiddleBrook closed an agreement with
Deerfield Management, a healthcare investment fund and one of the Company's
largest equity shareholders, raising up to $10 million in cash through the sale
of the Company's cephalexin assets, which the Company will have the option to
repurchase in the future.
Under the terms of the agreement, the Company received $7.5 million, less
a $0.5 million payment to Deerfield, with an additional $2.5 million to become
available, if necessary, if and when the Company receives FDA approval of
Amoxicillin PULSYS.
The agreement is designed to provide the Company with the financial
flexibility to continue its ongoing strategic discussions through the PDUFA date
for Amoxicillin PULSYS. The cash provided from the Deerfield agreement also
allowed MiddleBrook to repay in full its outstanding loan facility with Merrill
Lynch and eliminate the associated interest and principal payments.
Process to Explore Strategic Alternatives Ongoing
As previously announced, MiddleBrook's board of directors authorized the
Company to evaluate various strategic alternatives to further enhance
shareholder value. Subsequently, MiddleBrook retained Pacific Growth Equities,
LLC, an investment bank focused on the life sciences industry, to assist in the
evaluation of a full range of strategic alternatives available to the Company.
Strategic alternatives the Company may pursue could include, but are not
limited to, continued execution of the Company's operating plan, the sale of
some or all of the Company's assets, partnering or other collaboration
agreements, or a merger or other strategic transaction. There can be no
assurance that the exploration of strategic alternatives will result in any
agreements or transactions, or that, if completed, any agreements or
transactions will be successful or on attractive terms. The Company does not
intend to disclose developments with respect to this process unless and until
the evaluation of strategic alternatives has been completed.
FINANCIAL DETAILS
-- Total revenue, resulting entirely from net Keflex product sales, was
$3.1 million in the third quarter of 2007, up from revenue of $2.7
million in the prior quarter, and $2.4 million for the third quarter
of 2006. Revenue for the quarter included $1.8 million that had been
deferred in the previous quarter, as well as one month's actual
sales in the quarter as the company resumed shipments of product in
September upon completion of relabeling. Revenue during the first
nine months of 2007 was $7.6 million, up from revenue of $3.6
million during the first nine months of 2006. Increased product
sales were mainly attributable to the Company's Keflex 750 mg
strength capsules which were launched during the third quarter of
2006.
-- Operating expenses. Third quarter research and development expenses,
primarily consisting of salaries, stock-based compensation, and
related expenses for personnel and the costs of the Company's
clinical trials and research initiatives, were $5.5 million,
compared to $5.4 million in the previous quarter and $5.7 million in
the third quarter of 2006. Additional costs of $0.8 million were
incurred in the third quarter as the Company consolidated operations
into a single site, but these were offset by lower personnel costs
and reduced spending on developing the Company's amoxicillin
manufacturing facility.
Selling, general and administrative (SG&A) expenses totaled $6.5
million in the third quarter of 2007, up from $6.3 million in the
second quarter of 2007, and $6.1 million in the third quarter of
2006. SG&A expenses increased in the third quarter of 2007 versus
the second quarter of 2007 primarily due to costs associated with
consolidating operations into a single site.
Stock-based compensation recorded in the third quarter 2007 was a
total of $0.7 million, consisting of $0.2 million recorded in R&D
expense and $0.5 million recorded in SG&A expense. In the second
quarter 2007 and third quarter 2006, total stock-based compensation
was an expense of $0.7 million and $1.1 million, respectively.
-- Net loss for the third quarter of 2007 was $10.1 million. This
compares to a net loss of $9.5 million in the second quarter of
2007, and $9.9 million in the third quarter of 2006. Net loss for
the first nine months of 2007 was $33.2 million, compared to a net
loss of $28.2 million for the first nine months of 2006.
-- Net loss per share applicable to common stockholders for the third
quarter of 2007 was ($0.22), compared to a loss per common share of
($0.21) in the prior quarter and ($0.33) in the third quarter of
2006.
Per share figures were computed on the basis of an average of 46.7
million shares outstanding in the third quarter of 2007, 45.3
million shares outstanding in the second quarter of 2007, and 30.3
million shares outstanding in the third quarter of 2006.
-- Cash and marketable securities decreased by $6.3 million during the
third quarter. Changes were composed of $10.0 million of operating
losses, $0.7 million in loan payments; offset by $2.2 million for
non- cash expenses and $2.2 million for working capital changes and
other items.
-- The Balance Sheet at the end of the third quarter of 2007 reflected
$5.9 million of unrestricted cash, cash equivalents and marketable
securities, compared to $12.2 million as of June 30, 2007, and $12.6
million as of September 30, 2006. Following the third quarter of
2007, MiddleBrook entered into an agreement with Deerfield
Management resulting in the addition of $7.5 million of gross
proceeds to the Company. MiddleBrook used a portion of the proceeds
from this financing to retire the Company's outstanding credit
facility of approximately $4.6 million.
-- Deferred product revenue. Due to the Company's corporate name change
on June 28, 2007, inventories of products on hand at that time were
required to be relabeled. At the end of the second quarter 2007, the
Company offered a one-time incentive to wholesalers to purchase up
to a two-month supply of Keflex products, to avoid stock-out
situations at wholesalers during the relabeling process. This
incentive offer resulted in orders of approximately $2.0 million of
gross sales. Revenue recognition for this transaction was deferred
as of June 30, 2007, and the Company recognized net revenue of $1.8
million during the third quarter of 2007, the period when the
related product was sold by the wholesalers.
FINANCIAL GUIDANCE AND FUTURE CASH REQUIREMENTS
As previously announced, in order to preserve corporate resources, the
Company has undertaken cost reductions during 2007, including personnel
reductions, postponement of PULSYS clinical development programs other than
Amoxicillin PULSYS for adults, and elimination of other discretionary spending.
Total revenue for 2007 is expected to be approximately $10 million to $12
million, resulting from Keflex product sales. Total cash used in operating
activities and capital expenditures in 2007 is estimated to be between $33 and
$35 million.
Assuming the Company's expectations for continued sales of its Keflex 750
mg product and anticipated level of R&D spending and other obligations,
MiddleBrook believes that its current funds, together with expected Keflex
product sales, will be sufficient to support its currently planned operations
through the Company's PDUFA action date of January 23, 2008. These 2007
estimates are forward-looking statements that involve risks and uncertainties,
and actual results could vary materially.
CONFERENCE CALL
The Company has scheduled a conference call for today, Wednesday, November
14, 2007 at 10:30 AM ET. During the call, Dr. Edward Rudnic, president and CEO,
and Robert Low, vice president, finance and CFO, will discuss quarterly results
and other corporate activities. Investors can call 1-800-813-8504 (domestic) and
1-706-643-7752 (international) prior to the 10:30 AM start time and ask for the
MiddleBrook Pharmaceuticals conference call hosted by Dr. Rudnic. A replay of
the call will be available on November 14, 2007 beginning at 12:30 PM ET and
will be accessible until Wednesday, November 21, 2007 at 5:00 PM ET. The replay
call-in number is 1-800-642-1687 for domestic callers and 1-706-645-9291 for
international callers. The access number is 23072308.
The conference call will also be broadcast simultaneously on the Company's
website, http://www.middlebrookpharma.com. Investors should click on the
Investor Relations tab and are advised to go to the website at least 15 minutes
early to register, download, and install any necessary audio software. The call
will also be archived on the MiddleBrook website.
About Middlebrook Pharmaceuticals:
MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK, formerly Advancis
Pharmaceutical Corporation) is a pharmaceutical company focused on the
development and commercialization of anti-infective drug products that fulfill
substantial unmet medical needs in the treatment of infectious disease. The
Company is developing a portfolio of anti-infective drugs based on its novel
biological finding that bacteria exposed to antibiotics in front-loaded staccato
bursts, or "pulses," are killed more efficiently and effectively than those
under standard treatment regimens. Based on this finding, MiddleBrook has
developed a proprietary, once-a-day pulsatile delivery technology called
PULSYS(TM). By examining the resistance patterns of bacteria and applying its
delivery technologies, MiddleBrook has the potential to redefine infectious
disease therapy and significantly improve drug efficacy, shorten length of
therapy, and reduce drug resistance versus currently available antibacterial
products. For more on MiddleBrook, please visit
http://www.middlebrookpharma.com.
About Keflex:
Keflex(R) (cephalexin capsules, USP) is a first-generation cephalosporin
antibiotic shown to be active against strains of both gram-positive and gram-
negative aerobes in vitro and in clinical infections. Keflex is indicated for
treatment of the following infections: respiratory tract infections, otitis
media, skin and skin structure infections, bone infections, and genitourinary
tract infections. More information on Keflex and prescribing information are
available at
http://www.middlebrookpharma.com/products_antibiotics/keflex_antibiotics.aspx.
This announcement contains historical financial information as of and for
three-month and nine-month periods ended September 30, 2007 and September 30,
2006 that is unaudited, and MiddleBrook assumes no obligation to update this
information based on new information or future performance except as may be
specifically required by applicable law or regulation. The unaudited annual
financial information is subject to audit by independent accountants on an
annual basis following the close of each calendar year.
This announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended. These statements are based on
MiddleBrook's current expectations and assumptions. These statements are not
guarantees of future performance and are subject to a number of risks and
uncertainties that would cause actual results to differ materially from those
anticipated. The words, "believe," "expect," "intend," "anticipate," and
variations of such words, and similar expressions identify forward-looking
statements, but their absence does not mean that the statement is not forward-
looking. Statements in this announcement that are forward-looking include, but
are not limited to, statements about the Company's product development and
commercialization schedule, including, particularly, future plans with respect
to its Amoxicillin PULSYS products; any statements regarding Dr. Rudnic's
comments and expectations concerning the Company; the Company's initiatives to
develop improved antibiotics; the Company's existing and anticipated
collaborative agreements; and any financial forecasts and projections for 2007
and thereafter included under the Financial Guidance section of this
announcement.
The actual results realized by MiddleBrook could differ materially from
these forward-looking statements, depending in particular upon the risks and
uncertainties described in the Company's filings with the Securities and
Exchange Commission. These include, without limitation, risks and uncertainties
relating to the Company's financial results and the ability of the Company to
(1) raise additional capital and continue as an ongoing concern, (2) increase
Keflex 750 sales, (3) obtain FDA approval for its Amoxicillin PULSYS product
candidate, (4) successfully reduce costs, (5) maintain compliance with
provisions under its financing arrangements, (6) reach profitability, (7) prove
that the preliminary findings for its product candidates are valid, (8) receive
required regulatory approvals, (9) successfully conduct clinical trials in a
timely manner, (10) establish its competitive position for its products, (11)
develop and commercialize products that are superior to existing or newly
developed competitor products, (12) develop products without any defects, (13)
have sufficient capital resources to fund its operations, (14) protect its
intellectual property rights and patents, (15) implement its sales and marketing
strategy, (16) successfully attract and retain collaborative partners, (17)
successfully commercialize and gain market acceptance for its Keflex products,
(18) successfully obtain sufficient manufactured quantities of its drug products
at acceptable rates, and (19) retain its senior management and other personnel.
Existing and prospective investors are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of today's date.
MiddleBrook undertakes no obligation to update or revise the information in this
announcement, whether as a result of new information, future events or
circumstances or otherwise.
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
-------------- --------------
2007 2006
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ASSETS
Current assets:
Cash and cash equivalents $ 4,987,690 $ 14,856,738
Marketable securities 929,812 522,723
Accounts receivable, net 1,331,764 303,514
Inventories, net 1,088,913 2,077,390
Prepaid expenses and other current assets 1,199,515 1,682,685
-------------- --------------
Total current assets 9,537,694 19,443,050
-------------- --------------
Property and equipment, net 11,533,248 11,764,627
Restricted cash 872,180 872,180
Deposits and other assets 348,006 1,548,585
Intangible assets, net 7,509,070 8,377,327
-------------- --------------
Total assets $ 29,800,198 $ 42,005,769
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,991,269 $ 2,285,736
Accrued expenses and advances 5,898,096 7,817,224
Lines of credit and short-term debt 4,888,889 6,888,889
Note payable -- 75,000
Deferred product revenue -- 189,000
-------------- --------------
Total current liabilities 13,778,254 17,255,849
Deferred contract revenue 11,625,000 11,625,000
Deferred rent and credit on lease concession 1,204,506 1,252,900
-------------- --------------
Total liabilities 26,607,760 30,133,749
-------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, undesignated -- --
Common stock, par value 466,955 363,625
Capital in excess of par value 189,008,385 164,593,930
Accumulated deficit (186,283,158) (153,085,462)
Accumulated other comprehensive income (loss) 256 (73)
-------------- --------------
Total stockholders' equity 3,192,438 11,872,020
-------------- --------------
Total liabilities and stockholders' equity $ 29,800,198 $ 42,005,769
============== ==============
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Sept 30, Nine Months Ended Sept 30,
-------------------------------- --------------------------------
2007 2006 2007 2006
-------------- -------------- -------------- --------------
Product sales $ 3,144,532 $ 2,369,975 $ 7,598,127 $ 3,566,563
Costs and expenses:
Cost of product sales 1,183,772 440,159 1,864,643 517,765
Research and development 5,509,093 5,737,047 18,485,164 19,700,263
Selling, general and administrative 6,475,742 6,069,529 20,473,947 13,001,312
-------------- -------------- -------------- --------------
Total expenses 13,168,607 12,246,735 40,823,754 33,219,340
-------------- -------------- -------------- --------------
Loss from operations (10,024,075) (9,876,760) (33,225,627) (29,652,777)
Interest income 126,655 221,333 481,855 747,921
Interest expense (159,359) (241,735) (528,924) (292,018)
Other income -- -- 75,000 976,815
-------------- -------------- -------------- --------------
Net loss $ (10,056,779) $ (9,897,162) $ (33,197,696) $ (28,220,059)
============== ============== ============== ==============
Basic and diluted net loss per share $ (0.22) $ (0.33) $ (0.78) $ (0.93)
============== ============== ============== ==============
Shares used in calculation of basic
and diluted net loss per share 46,650,833 30,302,628 42,831,867 30,209,948
============== ============== ============== ==============
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
--------------------------------
2007 2006
-------------- --------------
Cash flows from operating activities:
Net loss $ (33,197,696) $ (28,220,059)
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation and amortization 3,447,503 2,949,486
Stock-based compensation 1,971,687 2,861,585
Deferred rent and credit on lease concession (48,393) (4,297)
Amortization of premium on marketable securities (69,242) 222,332
Loss on disposal of fixed assets 23,185
Recognition of advance payment for potential sale of Keflex (1,000,000)
Changes in:
Accounts receivable (1,028,251) (1,255,473)
Inventories 988,477 (1,110,616)
Prepaid expenses and other current assets 483,170 220,484
Deposits other than on property and equipment, and other assets 249,667 --
Accounts payable 705,533 1,215,109
Accrued expenses and advances (1,975,496) 608,590
Deferred product and contract revenue (189,000) 270,061
-------------- --------------
Net cash used in operating activities (28,662,041) (23,219,613)
-------------- --------------
Cash flows from investing activities:
Purchase of marketable securities (5,867,519) (13,274,560)
Sale and maturities of marketable securities 5,530,000 19,655,000
Purchases of property and equipment (246,330) (50,653)
Deposits on property and equipment (1,150,624) (250,000)
Proceeds from sale of fixed assets -- 25,000
Change in restricted cash -- 730,444
-------------- --------------
Net cash provided by (used in) investing activities (1,734,473) 6,835,231
-------------- --------------
Cash flows from financing activities:
Proceeds from issuance of debt, net of issue costs -- 7,792,976
Payments on lines of credit (2,000,000) (1,913,062)
Proceeds from private placement of common stock,
net of issue costs 22,412,260 --
Proceeds from exercise of common stock options 115,206 280,156
-------------- --------------
Net cash provided by financing activities 20,527,466 6,160,070
-------------- --------------
Net decrease in cash and cash equivalents (9,869,048) (10,224,312)
Cash and cash equivalents, beginning of period 14,856,738 18,116,968
-------------- --------------
Cash and cash equivalents, end of period 4,987,690 7,892,656
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