Exhibit 99.1
Critical Therapeutics Reports Third Quarter 2006 Financial Results
LEXINGTON, Mass.--(BUSINESS WIRE)--Nov. 9, 2006--Critical
Therapeutics, Inc. (Nasdaq: CRTX) today reported financial results for
the quarter ended September 30, 2006. For the three months ended
September 30, 2006, the Company posted a net loss of $8.9 million, or
$0.26 per share, based on approximately 34.3 million weighted average
shares outstanding. This compares with a net loss of $14.0 million, or
$0.41 per share, for the same period in 2005, based on approximately
34.0 million weighted average shares outstanding. Financial results
for 2006 reflect the adoption of Statement of Financial Accounting
Standards No. 123R (SFAS 123R), related to employee stock-based
compensation expense.
Product sales of ZYFLO(R) (zileuton tablets), net of returns,
increased approximately four percent over the second quarter of 2006,
accounting for approximately $1.9 million of total revenue during the
third quarter of 2006, compared with $1.8 million during the second
quarter of 2006. Total revenue for the third quarter of 2006 was $4.4
million, compared with $3.5 million in the second quarter of 2006. The
increase in total revenue was primarily attributable to higher revenue
recognized under the Company's collaboration agreements.
Cash and short-term investments as of September 30, 2006 totaled
$40.2 million, compared with $52.2 million at June 30, 2006. Net cash
expenditures during the third quarter of 2006 were $12.0 million. This
compares with net cash expenditures of $12.4 million in the second
quarter of 2006.
Recent Developments:
Since the end of the second quarter of 2006, Critical
Therapeutics:
-- Announced a new strategy designed to focus its resources
toward the successful commercialization of the twice daily,
controlled-release formulation of zileuton (zileuton CR) for
chronic asthma and the clinical development of intravenous
zileuton for acute asthma. Part of the Company's new
initiative involves reducing net cash expenditures through the
elimination of 63 positions by year-end. The majority of these
positions will come from the respiratory sales force marketing
ZYFLO and the research and development group.
-- Completed a registered direct offering with institutional
investors for the sale of $20.0 million of common stock and
warrants. The Company sold 7.5 million shares of common stock
and warrants to purchase 3.7 million shares of common stock at
an exercise price of $2.62 per share of common stock. The
offering generated net proceeds of approximately $18.5 million
after fees and expenses. The proceeds from this offering are
not included in the Company's cash balance at September 30,
2006 as the closing occurred in the fourth quarter of 2006.
-- Received acceptance for review of a New Drug Application (NDA)
submitted to the U.S. Food and Drug Administration (FDA) for
zileuton CR. The NDA is supported by results from two
previously completed Phase III clinical trials that evaluated
the safety and efficacy of zileuton CR and three
pharmacokinetic studies conducted by Critical Therapeutics.
Pending FDA approval, the Company is targeting the launch of
zileuton CR for the second half of 2007.
-- Completed its double-blind, placebo-controlled, single dose
Phase I/II clinical trial of the intravenous formulation of
zileuton (zileuton IV) in patients with asthma. The trial was
designed to evaluate the safety, tolerability and
pharmacokinetics of zileuton IV. In this trial, zileuton IV
was well tolerated at all dosage levels and provided a
positive impact on lung function measurements. The Company
plans to initiate a Phase IIb clinical trial in the first half
of 2007.
"Our restructuring plan, while extremely difficult, was necessary
to redirect our new and existing capital toward the launch of
controlled-release zileuton and other value opportunities for our
pipeline assets," said Critical Therapeutics President Frank Thomas.
"While ZYFLO's four-times daily dosing regimen has proved a
significant challenge over the past year, we have learned much about
the market in the process. We believe we can be successful if we use
that knowledge to effectively align our sales and marketing strategy
for zileuton CR more closely to the specific needs of physicians and
asthma patients."
Financial Results for the Three Months Ended September 30, 2006
and 2005
Total revenue for the three months ended September 30, 2006 was
$4.4 million, compared with $1.3 million for the same period in 2005.
Critical Therapeutics' HMGB1 collaboration with MedImmune, Inc. and
its license agreement with Beckman Coulter, Inc. to develop diagnostic
assays accounted for $2.5 million in revenue during the third quarter
of 2006 and all of the Company's revenue during the third quarter of
2005. Critical Therapeutics began selling ZYFLO in the U.S. in October
2005.
For the three months ended September 30, 2006, net shipments of
ZYFLO to wholesalers, third-party distributors and pharmacies totaled
approximately $2.1 million. Revenue from sales of ZYFLO is recognized
when prescriptions are filled, net of any discounts or rebates, rather
than when the product is shipped to third parties. The Company
currently estimates prescriptions filled based on distribution channel
data provided by external sources. This accounting treatment resulted
in approximately $1.9 million being recorded as net product sales in
the third quarter of 2006, with $1.3 million remaining as deferred
product revenue on the Company's balance sheet at September 30, 2006.
The number of total prescriptions recorded during the third quarter of
2006 was 8,763. The number of total prescriptions recorded in the
second quarter of 2006 was 8,921, which included 792 mail order and
non-retail prescriptions that related to the period from launch in
October 2005 to the end of the first quarter of 2006. Revenue per
prescription increased nearly 5 percent in the third quarter of 2006
compared with the second quarter of 2006 as a result of less
discounting and rebating.
Total operating expenses for the three months ended September 30,
2006 decreased $2.2 million to $13.8 million, compared with $16.0
million for the same period in 2005. Total operating expenses for the
third quarter included:
-- Cost of products sold in the third quarter of 2006 totaled
$267,000. Included in the cost of products sold was
approximately $55,000 related to the write-down of certain
ZYFLO inventory that was nearing its expiration date and a
credit of $132,000 for product that failed during
manufacturing.
-- Research and development (R&D) expenses decreased $2.1 million
to $6.7 million in the third quarter of 2006, compared with
$8.9 million for the third quarter of 2005. The decrease was
primarily due to a reduction in preclinical and manufacturing
costs for zileuton IV and a decrease in manufacturing costs
for ZYFLO and zileuton CR.
-- Sales and marketing expenses totaled $3.9 million in the third
quarter of 2006, compared with $4.0 million in the third
quarter of 2005. This decrease was primarily associated with
the reduction in force implemented in May 2006, partially
offset by higher stock-based compensation expenses.
-- General and administrative expenses totaled $2.9 million in
the third quarter of 2006, compared with $3.1 million in the
third quarter of 2005. This decrease was primarily
attributable to lower accounting and audit fees related to
Sarbanes-Oxley compliance.
Financial Results for the Nine Months Ended September 30, 2006
Total revenue for the nine months ended September 30, 2006
increased $6.0 million to $10.1 million, compared with $4.1 million
for the same period in 2005. Critical Therapeutics' HMGB1
collaboration with MedImmune and its license agreement with Beckman
Coulter to develop diagnostic assays accounted for $5.4 million in
revenue during the first three quarters of 2006 and all of the
Company's revenue during the first three quarters of 2005. Product
sales of ZYFLO accounted for $4.7 million of revenue during the first
three quarters of 2006.
Total operating expenses for the nine months ended September 30,
2006 were $52.1 million, compared with $38.0 million for the same
period in 2005. This increase was primarily due to costs associated
with the commercialization of ZYFLO. The net loss for the nine months
ended September 30, 2006 was $40.0 million, or $1.17 per share, based
on approximately 34.2 million weighted average common shares
outstanding. This compares with a net loss of $32.4 million, or $1.17
per share, for the nine months ended September 30, 2005, based on
approximately 27.7 million weighted average common shares outstanding.
Stock-based compensation expense for the nine months ended
September 30, 2006 totaled $6.0 million, as calculated under SFAS
123R. Stock-based compensation expense for the same period in 2005
totaled $1.9 million, as calculated under Accounting Principles Board
Opinion No. 25.
Financial Guidance
Critical Therapeutics expects to record restructuring charges of
$3 million to $4 million in the fourth quarter of 2006. For the fourth
quarter of 2006, the Company expects that net cash expenditures will
be between $12 million and $14 million based on research and
development expenses of between $6.5 million and $7.5 million, sales
and marketing expenses of between $3.0 million and $4.0 million, and
general and administrative expenses of between $2.0 million and $3.0
million. These estimates include the impact of the restructuring and
expensing stock options to employees under SFAS 123R. The non-cash
charges related to stock-based compensation expense for employees and
non-employees are projected to be approximately $2.0 million in the
fourth quarter of 2006. The Company expects to end 2006 with between
$45 million and $47 million of cash and short-term investments.
The Company anticipates that net cash expenditures in 2007 will be
between $28 million and $30 million based on operating expenses of
between $35 million and $37 million and excluding any cash from new
collaborations. Research and development expenses are projected to be
between $18 million and $20 million in 2007.
"The recent financing coupled with the strategic realignment
strengthen the Company's financial position and, based on our current
operating plans, should allow us to fund operations beyond the
anticipated launch of zileuton CR and into the second half of 2008,"
said Thomas.
Conference Call Information
Critical Therapeutics will hold an audio webcast and conference
call today to discuss the Company's third quarter 2006 financial
results, strategy, upcoming milestones and financial guidance.
Investors and other interested parties can access the call as follows:
Date: Thursday, November 9, 2006
Time: 5:00 p.m. EST
Dial-in: (800) 262-1292 (domestic)
(719) 457-2680 (international)
Conference ID: 4280225
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 Critical Therapeutics
Critical Therapeutics, Inc. is developing and commercializing
innovative products for respiratory, inflammatory and critical care
diseases. The Company owns worldwide rights to ZYFLO(R) (zileuton
tablets), which is marketed in the United States for the prevention
and chronic treatment of asthma in patients 12 years of age and older.
Critical Therapeutics is working to expand its zileuton franchise by
introducing a twice daily, controlled-release formulation for the
prevention and chronic treatment of asthma and an intravenous
formulation for acute asthma attacks that lead patients to the
emergency room and other urgent care settings. The Company also is
collaborating with MedImmune, Inc. to design antibody therapies that
treat acute and chronic diseases triggered by the inflammatory
cytokine HMGB1. Research pipeline programs include lifecycle
management to extend the zileuton franchise and an alpha-7 project for
the treatment of inflammation. Critical Therapeutics is located in
Lexington, Mass. 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, market acceptance and future sales of ZYFLO and, if
approved, zileuton CR; the progress, timing and success of our
regulatory filings, regulatory approvals and product launches,
including for zileuton CR; the timing and magnitude of potential cost
savings from our operational restructuring; the progress and timing of
our drug development programs and related trials; our strategy, future
operations, financial position, future revenues, and projected costs,
including the expected timing and amount of restructuring charges, our
net cash expenditures and non-cash stock-based compensation expense
for the fourth quarter of 2006, cash and short-term investments at the
end of 2006, net cash expenditures for 2007 and the anticipated
availability of funds sufficient to fund operations into the second
half of 2008; 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 expected timing and outcome of the NDA for zileuton CR and
related discussions with the FDA, including our ability to rely on
historical data in the NDA, including the sufficiency and
acceptability of the results of the pharmacokinetic studies of
zileuton CR for FDA purposes; our ability to transition our management
team effectively; our ability to successfully enter into strategic
co-promotion, collaboration or licensing transactions on favorable
terms, if at all; our ability to develop and maintain the necessary
sales, marketing, distribution and manufacturing capabilities to
commercialize ZYFLO, and, if approved, zileuton CR; our ability to
successfully market and sell ZYFLO with a reduced sales force; patient
physician and third-party payor acceptance of ZYFLO and, if approved,
zileuton CR, as a safe and effective therapeutic product; adverse side
effects experienced by patients taking ZYFLO and, if approved,
zileuton CR; conducting clinical trials, including difficulties or
delays in the completion of patient enrollment, data collection or
data analysis; our heavy dependence on the commercial success of ZYFLO
and, if approved, zileuton CR; 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 discoveries and drug candidates. These and other risks are
described in greater detail in the "Risk Factors" section of our most
recent Quarterly Report on Form 10-Q and other filings that we make
with the Securities and Exchange Commission (SEC). 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.
CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
in thousands,
except share and
per share data 2006 2005 2006 2005
- ----------------------------------------------------------------------
Revenues:
Net product sales$ 1,879 $ - $ 4,710 $ -
Revenue under
collaboration
agreements 2,499 1,335 5,446 4,125
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Total revenues 4,378 1,335 10,156 4,125
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Costs and
expenses:
Cost of products
sold 267 - 1,662 -
Research and
development 6,736 8,873 23,063 22,188
Sales and
marketing 3,906 4,049 16,476 7,042
General and
administrative 2,907 3,103 10,916 8,777
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Total costs and
expenses 13,816 16,025 52,117 38,007
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Operating loss (9,438) (14,690) (41,961) (33,882)
Other income
(expense):
Interest income 612 794 2,100 1,619
Interest expense (54) (61) (169) (140)
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Total other
income 558 733 1,931 1,479
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Net loss ($8,880) ($13,957) ($40,030) ($32,403)
- ----------------------------------------------------------------------
Net loss per share ($0.26) ($0.41) ($1.17) ($1.17)
- ----------------------------------------------------------------------
Basic and diluted
weighted-average
common shares
outstanding 34,251,656 33,976,026 34,184,551 27,664,953
- ----------------------------------------------------------------------
CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September December
30, 31,
in thousands, except share data 2006 2005
- ----------------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents $35,557 $57,257
Accounts receivable, net 895 1,024
Amount due under collaboration agreements 250 205
Short-term investments 4,638 25,554
Inventory, net 2,863 1,869
Prepaid expenses and other 1,086 2,179
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Total current assets 45,289 88,088
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Fixed assets, net 3,143 3,563
Other assets 168 168
- ----------------------------------------------------------------------
Total assets $48,600 $91,819
- ----------------------------------------------------------------------
Liabilities and Stockholders' Equity:
Current liabilities:
Current portion of long-term debt and capital
lease obligations $1,106 $1,179
Accounts payable 1,508 4,615
Accrued expenses 4,639 4,876
Revenue deferred under collaboration agreements 1,010 5,706
Deferred product revenue 1,262 1,707
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Total current liabilities 9,525 18,083
- ----------------------------------------------------------------------
Long-term debt and capital lease obligations, less
current portion 663 1,489
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
34,295,866 and 34,126,977 shares at September
30, 2006 and December 31, 2005, respectively 34 34
Additional paid-in capital 184,209 181,718
Deferred stock-based compensation (155) (3,794)
Accumulated deficit (145,647) (105,617)
Accumulated other comprehensive loss (29) (94)
- ----------------------------------------------------------------------
Total stockholders' equity 38,412 72,247
- ----------------------------------------------------------------------
Total liabilities and stockholders' equity $48,600 $91,819
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CRITICAL THERAPEUTICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
in thousands 2006 2005
- ----------------------------------------------------------------------
Cash flows from operating activities:
Net loss ($40,030) ($32,403)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense 745 566
Amortization of premiums on short-term
investments and other (72) 791
Loss on disposal of fixed assets 51 -
Reserve for inventory 757 -
Stock-based compensation expense 6,009 1,983
Changes in assets and liabilities:
Accounts receivable 129 -
Amount due under collaboration agreements (45) (423)
Inventory (1,751) (1,309)
Prepaid expenses and other 1,093 (177)
Other assets - 46
Accounts payable (3,107) 434
Accrued expenses (237) 2,682
Revenue deferred under collaboration agreements (4,696) (2,580)
Deferred product revenue (445) -
- ----------------------------------------------------------------------
Net cash used in operating activities (41,599) (30,390)
- ----------------------------------------------------------------------
Cash flows from investing activities:
Purchases of fixed assets (376) (1,674)
Proceeds from sales and maturities of short-term
investments 32,855 55,423
Purchases of short-term investments (11,802) (31,261)
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Net cash provided by investing activities 20,677 22,488
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Cash flows from financing activities:
Net proceeds from private placement of common
stock - 51,362
Proceeds from exercise of stock options 121 66
Repayments of long-term debt and capital lease
obligations (899) (300)
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Net cash provided by (used in) financing
activities (778) 51,128
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Net decrease in cash and cash equivalents (21,700) 43,226
Cash and cash equivalents at beginning of period 57,257 11,980
- ----------------------------------------------------------------------
Cash and cash equivalents at end of period $35,557 $55,206
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CONTACT: Critical Therapeutics, Inc.
Linda S. Lennox, 781-402-5708
Vice President, Investor & Media Relations
llennox@crtx.com