Exhibit 99.1
Critical Therapeutics Reports Third Quarter 2005 Financial Results
LEXINGTON, Mass.--(BUSINESS WIRE)--Nov. 3, 2005--Critical
Therapeutics, Inc. (Nasdaq: CRTX), a biopharmaceutical company focused
on the discovery, development and commercialization of products for
respiratory, inflammatory and critical care diseases, today reported
financial results for the third quarter ended September 30, 2005.
For the three months ended September 30, 2005, the Company posted a net loss
of $14.0 million, or $0.41 per common share, based on approximately 34.0 million
weighted average common shares outstanding. This compares with a net loss of
$6.6 million, or $0.28 per common share, for the same period in 2004, based on
approximately 23.6 million weighted average common shares outstanding.
Cash and short-term investments as of September 30, 2005 totaled $97.3
million, compared with $108.1 million at June 30, 2005 and $78.8 million at
December 31, 2004. Net cash expenditures for the third quarter of 2005 were
$10.8 million and were lower than previous guidance due to the timing of certain
expenses and favorable changes to the Company's working capital accounts.
Recent Highlights
Since the end of the second quarter of 2005, Critical Therapeutics:
-- Received U.S. Food and Drug Administration (FDA) approval of its
supplemental New Drug Application to manufacture and market ZYFLO(R)
(zileuton tablets) for the prevention and chronic treatment of asthma in
patients 12 years of age and older. ZYFLO is the first and only approved
drug in a class of 5-lipoxygenase (5-LO) inhibitors approved for
marketing by the FDA.
-- Launched ZYFLO and began marketing it to approximately 8,000-10,000
physicians, including allergists, pulmonologists and other respiratory
specialists, through the Company's 80-person specialty sales force.
Critical Therapeutics believes that this initial target group of
specialists will give the sales force access to at least 500,000
patients with severe persistent or difficult-to-treat asthma.
-- Presented two scientific posters at the American College of Chest
Physicians (ACCP) CHEST 2005 meeting in Montreal, Canada demonstrating,
in a retrospective analysis, that zileuton significantly improved the
lung function of patients with severe persistent asthma while reducing
their need for rescue medications and oral corticosteroids. In addition,
Critical Therapeutics sponsored a symposium on the 5-lipoxygenase
pathway at the medical conference.
-- Was selected by the American College of Allergy, Asthma & Immunology
(ACAAI) to present research on the efficacy of ZYFLO in moderate to
severe asthmatics. A poster will be presented November 5-6 at the
ACAAI's 2005 Annual Meeting in Anaheim, California. In addition,
Critical Therapeutics was selected to sponsor a symposium on the 5-LO
pathway at this medical meeting.
Financial Results for the Three Months Ended September 30, 2005
and 2004
Revenue for the three months ended September 30, 2005 was $1.3 million,
compared with $1.9 million for the same period in 2004. Critical Therapeutics
generated revenue from its ongoing HMGB1 collaboration with MedImmune, Inc. and
from its license agreement with Beckman Coulter, Inc. to develop diagnostic
assays.
Total operating expenses for the three months ended September 30, 2005
increased $7.2 million, or 82 percent, to $16.0 million, compared with $8.8
million for the same period in 2004. The change in operating expenses resulted
principally from increases in the following areas:
-- Research and development (R&D) expenses increased $2.9 million, or
approximately 47 percent, to $8.9 million in the third quarter of 2005,
compared with $6.0 million for the same period in 2004. Higher R&D
expenses primarily reflect milestone payments of $750,000 each to Abbott
Laboratories and SkyePharma PLC, an increase in R&D headcount, and an
increase in stock-based compensation expense due to the increase in the
Company's stock price on the valuation of unvested non-employee stock
options.
-- Sales and marketing (S&M) expenses increased to $4.0 million in the
third quarter of 2005, compared with $288,000 for the same period in
2004. Higher S&M expenses primarily reflect expenses related to the
hiring of the Company's 80-person specialty sales force and sales
management team and the marketing preparation for the launch of ZYFLO.
-- General and administrative (G&A) expenses increased $660,000, or 27
percent, to $3.1 million in the third quarter of 2005, compared with
$2.4 million for the same period in 2004. The higher G&A expenses
primarily reflect an increase in G&A headcount to support the Company's
overall larger employee base, as well as commercial efforts for ZYFLO.
Financial Results for the Nine Months Ended September 30, 2005 and
2004
For the nine months ended September 30, 2005, revenue increased to $4.1
million, compared with $3.5 million for the same period in 2004. Critical
Therapeutics generated revenue from its ongoing HMGB1 collaboration with
MedImmune, Inc. and its license agreement with Beckman Coulter, Inc. Operating
expenses for the nine months ended September 30, 2005 were $38.0 million,
compared with $24.0 million for the same period in 2004. The change in operating
expenses resulted principally from increases in the following areas:
-- R&D expenses for the nine months ended September 30, 2005 increased $5.5
million to $22.2 million, compared with $16.7 million for the same
period in 2004. Higher R&D expenses primarily reflect costs associated
with the Company's completed Phase II clinical trial of ZYFLO for
moderate to severe inflammatory acne, costs related to the initiation of
the open-label study in patients with asthma or mastocytosis, an
increase in R&D headcount, and an increase in stock-based compensation
expense due to the increase in the Company's stock price on the
valuation of unvested non-employee stock options.
-- Sales and marketing (S&M) expenses increased to $7.0 million in the
first nine months of 2005, compared with $599,000 for the same period in
2004. Higher S&M expenses primarily reflect expenses related to the
hiring of the Company's 80-person specialty sales force and sales
management team and the marketing preparation for the launch of ZYFLO.
-- General and administrative (G&A) expenses increased to $8.8 million in
the first nine months of 2005, compared with $6.7 million for the same
period in 2004. The increase in G&A expenses is primarily due to an
increase in G&A headcount to support the commercial efforts for ZYFLO
and costs associated with being a public company.
The net loss available to common stockholders for the nine months ended
September 30, 2005 was $32.4 million, or $1.17 per share, based on approximately
27.7 million weighted average common shares outstanding. This compares with a
net loss available to common stockholders for the same period in 2004 of $22.1
million, or $1.91 per share, based on approximately 11.6 million weighted
average common shares outstanding. The increase in common shares outstanding
reflects the Company's initial public offering and the conversion of all
outstanding preferred stock to common stock in May 2004 and the private
placement of approximately 9.9 million common shares in June 2005.
Stock-based compensation expense amounted to $2.0 million in the nine months
ended September 30, 2005 compared with $2.1 million for the same period in 2004.
Stock-based compensation expense includes non-cash charges related to both
employee stock grants made prior to the Company's initial public offering and
non-employee stock options and restricted stock grants that have not fully
vested.
Business Outlook
"I commend the entire Critical Therapeutics team for successfully bringing
ZYFLO to market. Our launch has been well orchestrated and positions us for
success in a significantly underserved segment of the asthma market," said
President and Chief Executive Officer Paul Rubin, M.D.
"Complementing our launch of ZYFLO, we are developing controlled release and
intravenous formulations of zileuton. Scale up of the controlled release
formulation is complete and manufacturing of registration batches is underway.
We expect to initiate a comparative bioavailability study in healthy volunteers
shortly, putting us on track to submit a New Drug Application (NDA) for the
controlled-release formulation in mid 2006, pending agreement from the U.S. Food
and Drug Administration to allow us to submit with six months of stability data.
For our intravenous formulation, which is being developed for acute asthma
exacerbations, we have completed toxicology studies and expect to submit an IND
by the end of this year. We are also investigating new oral formulations of
zileuton with improved properties as part of a life cycle management strategy,"
Dr. Rubin said.
Pipeline Update
The Company's three development programs focusing on modulating cytokine
response are all progressing. HMGB1 Program: Collaborative efforts with
MedImmune, Inc. have resulted in reproducible effects and significant protection
in rodent models of rheumatoid arthritis and sepsis with fully human monoclonal
antibodies. CTI-01 (ethyl puyruvate) Program: Enrollment continues in the
Company's Phase II trial of patients who are at high risk of complications,
including organ damage, because they are undergoing cardiac surgery involving
the cardiopulmonary bypass machine. The Company expects to conduct an interim
analysis of the study following enrollment of 75 patients. In the October issue
of Stroke, investigators published research on ethyl pyruvate, concluding that
the compound provides up to 25 percent protection in a rodent stroke injury
model when administered as late as 24 hours after occlusion. Alpha-7 Program:
The Company is in the process of selecting a clinical candidate and anticipates
that it could file an Investigational New Drug (IND) application in 2006.
Financial Guidance
Critical Therapeutics expects total operating expenses for the fourth
quarter 2005 to be between $19 million and $21 million and the weighted average
common shares for the fourth quarter are projected to be approximately 34.1
million. The Company expects that this level of expense, combined with the
effect of changes in working capital, milestones achieved under our
collaboration agreements and revenues from product sales of ZYFLO, should allow
the Company to end 2005 with between $76 million and $79 million in cash and
investments.
Conference Call Information
Critical Therapeutics will hold a conference call for investors to discuss
the Company's third quarter 2005 financial results, strategy and upcoming
milestones. Investors and other interested parties can access the call as
follows:
Date: Thursday, November 3, 2005
Time: 5:00 p.m. ET
Dial-in: (800) 289-0730 (domestic)
(913) 981-5509 (international)
Confirmation Code: 6979240
Webcast Information: www.crtx.com
A live and archived audio webcast of the conference call also will be
available on the "Investors" section of the Critical Therapeutics website. From
the home page, click on "Investors" and then on "Webcasts & Presentations."
About ZYFLO
ZYFLO is indicated for the prevention and chronic treatment of asthma in
adults and children 12 years of age and older. ZYFLO is not indicated for use in
the reversal of broncospasm in acute asthma attacks, including status
asthmaticus. Patients with active liver disease or liver enzymes that are
elevated should not take ZYFLO. For full prescribing information for ZYFLO,
please visit www.crtx.com/pat_pi.html or call the Company's toll free telephone
number 1-866-835-8216 to request medical information.
About Critical Therapeutics
Critical Therapeutics, Inc. is a biopharmaceutical company focused on the
discovery, development and commercialization of products for respiratory,
inflammatory and critical care diseases. The Company owns worldwide rights to
the asthma drug ZYFLO(R) (zileuton tablets), as well as other formulations of
zileuton. ZYFLO is the only 5-lipoxygenase inhibitor approved for marketing by
the U.S. Food and Drug Administration. The Company's commercialization efforts
for ZYFLO are carried out by its 80-person specialty sales force. Critical
Therapeutics also is developing treatments directed toward the severe
inflammatory response in acute diseases and conditions that lead to admission to
the emergency room or intensive care unit, and acute exacerbations of other
chronic diseases that frequently lead to hospitalization. For more information,
please visit www.crtx.com.
Forward-Looking Statements
Any statements in this press release about future expectations, plans and
prospects for Critical Therapeutics, Inc., including, without limitation,
statements regarding possible therapeutic benefits and market acceptance of
ZYFLO; the progress and timing of our drug development programs and related
trials; the timing and success of regulatory approvals and product launches; the
efficacy of our drug candidates; our strategy, future operations, financial
position, future revenues, projected costs, including our net cash expenditures
for the third quarter 2005 and the full year 2005, prospects, plans and
objectives of management; and all other statements that are not purely
historical in nature, constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Without limiting the
foregoing, the words "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "project," "should," "will," "would" and similar
expressions are intended to identify forward-looking statements. Actual results
may differ materially from those indicated by such forward-looking statements as
a result of various important factors, including risks and uncertainties
relating to: the extent of market acceptance of ZYFLO; our ability to maintain
regulatory approvals to market and sell ZYFLO; our ability to develop and
maintain the necessary sales, marketing, distribution and manufacturing
capabilities to commercialize ZYFLO; patient, physician and third-payer
acceptance of ZYFLO as a safe and effective therapeutic product; adverse side
effects experienced by patients taking ZYFLO; conducting clinical trials,
including difficulties or delays in the completion of patient enrollment, data
collection or data analysis; the results of preclinical studies and clinical
trials with respect to our products under development and whether such results
will be indicative of results obtained in later clinical trials; the timing and
success of submission, acceptance and approval of our regulatory filings,
including, without limitation, the NDA submission for the controlled-release
formulation of zileuton and the IND filing for the IV formulation of zileuton;
our heavy dependence on the commercial success of ZYFLO and the
controlled-release formulation of zileuton; our ability to obtain the
substantial additional funding required to conduct our research, development and
commercialization activities; our dependence on our strategic collaboration with
MedImmune, Inc.; and our ability to obtain, maintain and enforce patent and
other intellectual property protection for ZYFLO, our drug candidates and our
discoveries. These and other risks are described in greater detail in the
"Factors That May Affect Future Results" section of our most recent Quarterly
Report on Form 10-Q and other filings that we make with the Securities and
Exchange Commission. If one or more of these factors materialize, or if any
underlying assumptions prove incorrect, our actual results, performance or
achievements may vary materially from any future results, performance or
achievements expressed or implied by these forward-looking statements.
In addition, the statements in this release reflect our expectations and
beliefs as of the date of this release. We anticipate that subsequent events and
developments will cause our expectations and beliefs to change. However, while
we may elect to update these forward-looking statements publicly at some point
in the future, we specifically disclaim any obligation to do so, whether as a
result of new information, future events or otherwise. These forward-looking
statements should not be relied upon as representing our views as of any date
subsequent to the date of this release.
ZYFLO(R) is a registered trademark of Critical Therapeutics, Inc.
Financial Tables Follow
CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
in thousands except Three Months Ended Nine Months Ended
share and per share September 30, September 30,
data 2005 2004 2005 2004
- ----------------------------------------------------------------------
Revenue under
collaboration
agreements $1,335 $1,886 $4,125 $3,472
Operating expenses:
Research and
development 8,873 6,037 22,188 16,677
Sales and marketing 4,049 288 7,042 599
General and
administrative 3,103 2,443 8,777 6,717
Total operating
expenses 16,025 8,768 38,007 23,993
Operating loss (14,690) (6,882) (33,882) (20,521)
Other income
(expense):
Interest income 794 327 1,619 690
Interest expense (61) (29) (140) (84)
Total other
income 733 298 1,479 606
Net loss (13,957) (6,584) (32,403) (19,915)
Accretion of dividends
and offering costs
on preferred stock - - - (2,209)
Net loss available to
common stockholders ($13,957) ($6,584) ($32,403) ($22,124)
- ----------------------------------------------------------------------
Net loss per share
available to common
stockholders ($0.41) ($0.28) ($1.17) ($1.91)
- ----------------------------------------------------------------------
Basic and diluted
weighted-average
common shares
outstanding 33,976,026 23,638,852 27,664,953 11,574,494
- ----------------------------------------------------------------------
Sales and marketing expenses were previously recorded as part of General and
administrative expenses.
Certain reclassifications of historical information were made to conform to
current year presentation.
CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
in thousands 2005 2004
- -----------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents $55,206 $11,980
Amount due under collaboration
agreement 439 16
Short-term investments 42,080 66,849
Inventory 1,309 -
Prepaid expenses and other 2,028 1,851
------- ------
Total current assets 101,062 80,696
------- ------
Fixed assets, net 3,438 2,205
Other assets 167 213
------- ------
Total assets $104,667 $83,114
- -----------------------------------------------------------------
Liabilities and Stockholders' Equity:
Current liabilities:
Current portion of long-term debt
and capital lease obligation $896 $837
Accounts payable 4,652 4,218
Accrued expenses 5,423 2,741
Revenue deferred under
collaboration agreements 5,963 8,543
------- ------
Total current liabilities 16,934 16,339
------- ------
Long-term debt and capital lease
obligation, less current portion 1,133 1,367
Stockholders' equity:
Preferred stock, par value $0.001;
authorized 5,000,000 shares; no
shares issued and outstanding - -
Common stock, par value $0.001;
authorized 90,000,000 shares;
issued and outstanding 34,080,604 and
24,085,481 shares at September
30, 2005 and December 31, 2004,
respectively 34 24
Additional paid-in capital 182,124 130,374
Deferred stock-based compensation (4,450) (6,101)
Accumulated deficit (90,930) (58,527)
Accumulated other comprehensive
loss (178) (362)
------- ------
Total stockholders' equity 86,600 65,408
------- ------
Total liabilities and stockholders'
equity $104,667 $83,114
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CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
in thousands 2005 2004
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Cash flows from operating activities:
Net loss ($32,403) ($19,915)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization expense 566 944
Amortization of premiums on
short-term investments 791 555
Loss on disposal of fixed assets - 278
Stock-based compensation expense 1,983 2,080
Forgiveness of notes receivable - 185
Changes in assets and liabilities:
Amount due under collaboration agreement (423) 1,554
Inventory (1,309) -
Prepaid expenses and other (177) (1,147)
Other assets 46 259
Accounts payable 434 718
Accrued expenses 2,682 (1,739)
Revenue deferred under
collaboration agreements (2,580) (1,988)
------- ------
Net cash used in operating activities (30,390) (18,216)
------- ------
Cash flows from investing activities:
Purchases of fixed assets (1,674) (1,844)
Proceeds from sales and
maturities of short-term investments 55,423 28,150
Purchases of short-term investments (31,261) (98,172)
------- ------
Net cash provided by (used in)
investing activities 22,488 (71,866)
------- ------
Cash flows from financing activities:
Net proceeds from private
placement of common stock 51,362 -
Proceeds from exercise of stock
options 66 143
Net proceeds from the initial
public offering of common stock - 37,817
Net proceeds from issuance of
convertible preferred stock - 28,050
Proceeds from long-term debt - 1,412
Repayments of long-term debt and
capital lease obligation (300) (442)
------- ------
Net cash provided by financing
activities 51,128 66,980
------- ------
Net increase (decrease) in cash
and cash equivalents 43,226 (23,102)
Cash and cash equivalents at
beginning of period 11,980 40,078
------- ------
Cash and cash equivalents at end
of period $55,206 $16,976
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CONTACT: Critical Therapeutics, Inc.
Linda S. Lennox, 781-402-5708
Director, Corporate Communications
llennox@crtx.com