Columbia Laboratories Reports Third Quarter 2009 Financial Results

November 5, 2009 7:10 AM EST

Management Will Host Investor Conference Call at 11:00 AM ET Today

LIVINGSTON, N.J.--(BUSINESS WIRE)-- Columbia Laboratories, Inc. (Nasdaq: CBRX) today reported financial results for the three- and nine-month periods ended September 30, 2009.

Highlights for the quarter and subsequent events included:

    --  Total progesterone sales increased 11% and domestic sales of CRINONE(R)
        8% (progesterone gel) also rose 11% versus the immediately preceding
        quarter.
    --  Net revenues were $7.9 million as compared to $11.1 million for the
        third quarter of 2008. The 2008 period included a one-time recognition
        of $2.9 million of previously deferred revenues relating to the
        termination of the STRIANT(R) (testosterone buccal system) license for
        Europe due to the bankruptcy of the Company's licensee; without those
        revenues, net revenues for the 2009 third quarter decreased 4% from 2008
        levels.
    --  PREGNANT Study enrollment continues to rise with six sites added in the
        third quarter and an additional 11 sites thus far in the fourth quarter,
        bringing the total number of sites to 51. The Company confirmed its plan
        to file with the FDA for PROCHIEVE(R) 8% (progesterone gel) in the short
        cervix population near year-end 2010, assuming positive data.
    --  Four presentations of new data supporting the use of CRINONE(R) 8% over
        other progesterone formulations were given at the annual meeting of the
        American Society of Reproductive Medicine, heightening the peer-to-peer
        dialogue among the Company's infertility targets. Of particular note was
        the Brigham and Women's Hospital presentation of the results of the
        largest prospective, randomized clinical study demonstrating that
        CRINONE is equally effective and significantly better tolerated than
        intramuscular injections of progesterone for luteal phase support in In
        Vitro Fertilization and Embryo Transfer cycles.
    --  On October 28, 2009, Columbia strengthened its balance sheet with $10.7
        million dollars in net proceeds raised through the sale of common stock
        and warrants. These funds will enable the Company to complete the
        PREGNANT Study and to develop next-generation progesterone products,
        both critical to delivering long-term returns.

"CRINONE 8% revenues and prescriptions have grown quarter over quarter in 2009 despite the economic downturn and its lingering impact on decisions to proceed with infertility treatments. We remain focused on growing this business by emphasizing that CRINONE is clinically proven to be as effective as other progesterones and widely preferred by patients for its once-daily convenience and needle-free application," stated Robert S. Mills, Columbia's president and chief executive officer.

"Enrollment in the PREGNANT Study increased in the third quarter of 2009 with the addition of six new clinical sites. We maintain our conviction that if study outcomes are positive, we will file with the FDA for PROCHIEVE 8% in the short cervix population near the end of 2010 and, assuming approval, pave the way for significant long-term growth," Mills concluded.

Third Quarter Financial Results

Net revenues for the third quarter of 2009 were $7.9 million, compared to $11.1 million for the third quarter of 2008. The 2008 third quarter included $2.9 million in previously deferred revenues.

Total net revenues from Progesterone Products decreased 2% to $6.3 million in the third quarter of 2009 as compared to $6.5 million in the third quarter of 2008. This reflects lower domestic sales of CRINONE(R) 8% and PROCHIEVE(R), partially offset by higher sales of CRINONE in foreign markets. Comparing the three months ended September 30, 2009 with the same period in 2008:

    --  CRINONE net revenues from non-U.S. sales were 70% higher. The increase
        was largely a result of a 7% increase in unit volumes in 2009 coupled
        with a $0.6 million decrease in the third quarter of 2008 foreign
        CRINONE revenues for estimated sales price adjustments.
    --  Net revenues from domestic CRINONE sales decreased 17%, with unit volume
        accounting for about 15% of the decrease. Total prescriptions for
        CRINONE for the three months ended September 30, 2009 were 6% higher
        than for the same period in 2008. This increase in prescriptions was
        achieved despite a major economic downturn impacting patients' decisions
        to postpone or forego elective infertility procedures that are not
        reimbursed in many major markets, including states such as California.
    --  Net revenues for PROCHIEVE, which the Company is no longer promoting for
        infertility, were $0.4 million lower than for the same period in 2008.

Net revenues from the Company's Other Products were $1.6 million in the third quarter of 2009. This compares to $4.7 million in the third quarter of 2008, during which the Company recognized $2.9 million in previously deferred revenue as a result of the termination of the STRIANT(R) license for Europe. Net revenues for Replens(R) increased by $0.3 million while net revenues for RepHresh(R) and STRIANT declined by $0.3 million and $0.2 million, respectively.

Gross profit was $5.3 million in the third quarter of 2009 compared to $8.3 million in the third quarter of 2008, primarily due to the acceleration of the previously deferred revenue as a result of the termination of the STRIANT license for Europe in 2008. Without the acceleration of the previously deferred revenue, gross profit would have remained essentially the same.

Total operating expenses were $8.8 million in the third quarter of 2009 compared to $8.3 million in the prior year period. The increase breaks down as follows:

    --  Selling and distribution expenses were $3.1 million in the third quarter
        of 2009, an 11% decrease from $3.5 million in 2008, reflecting primarily
        lower marketing costs.
    --  General and administrative costs were $2.1 million in the third quarters
        of both 2009 and 2008.
    --  Research and development costs increased to $2.3 million in the third
        quarter of 2009 from $1.5 million in 2008, reflecting higher clinical
        trial expenses for the PREGNANT Study due to increased patient
        enrollment levels.
    --  The Company amortized $1.3 million of the acquisition cost for the U.S.
        license rights to CRINONE 8% in the third quarters of both 2009 and
        2008.

Other income and expense for the third quarter of 2009 aggregated to a net expense of $2.4 million versus a net expense of $2.0 million in the third quarter of 2008.

As a result, the Company reported a net loss of $5.9 million, or $0.11 per basic and diluted share, for the third quarter of 2009 as compared to a net loss of $2.1 million, or $0.04 per basic and diluted share, for the third quarter of 2008.

Cash and Equivalents

As of September 30, 2009, Columbia had cash and cash equivalents of $7.3 million. This compares to cash and cash equivalents of $9.2 million at June 30, 2009 and $12.5 million at December 31, 2008. On October 28, 2009, the Company raised $10.7 million in net proceeds from the sale of 10,900,000 shares of common stock and warrants to purchase 5,450,000 shares of common stock in a registered direct offering. With an exercise price of $1.52, the warrants have the potential to generate an additional $8.3 million. Furthermore, this transaction will enable the Company to complete the ongoing PREGNANT Study and to develop its next-generation progesterone products whether or not it proceeds with a partnership.

Quarterly Conference Call

As previously announced, Columbia Laboratories will discuss financial results of the third quarter ended September 30, 2009, on a conference call as follows:

Date:             Thursday, November 5, 2009

Time:             11:00 AM ET

Dial-in numbers:  888-515-0224 (U.S. & Canada) or 201-526-1837

Live webcast:     www.cbrxir.com, under "Events"

The teleconference replay will be available two hours after completion through Thursday, November 12, 2009, at 888-632-8973 (U.S. & Canada) or 201-499-0429. The replay passcode is 41415078. The archived webcast will be available for one year on the Company's investor website, www.cbrxir.com, under "Events."

About Columbia Laboratories

Columbia Laboratories, Inc. is a specialty pharmaceutical company focused on developing and commercializing products for the women's healthcare and endocrinology markets that use its novel bioadhesive drug delivery technology. Columbia's U.S. sales organization markets CRINONE(R) 8% (progesterone gel) in the United States for progesterone supplementation as part of an Assisted Reproductive Technology treatment for infertile women with progesterone deficiency and STRIANT(R) (testosterone buccal system) for the treatment of hypogonadism in men. The Company's partners market CRINONE(R) 8%, STRIANT(R) and three other products to additional U.S. and foreign markets.

The Company is conducting, in collaboration with the NIH, the PREGNANT (PROCHIEVE(R) Extending GestatioN A New Therapy) Study, a randomized, double blind, placebo controlled 450-patient Phase III clinical trial evaluating the ability of PROCHIEVE(R) 8% (progesterone gel) to reduce the risk of preterm birth in women with a cervical length between 1.0 and 2.0 centimeters as measured by transvaginal ultrasound at mid-pregnancy. The primary endpoint of the study is a reduction in the incidence of preterm birth at less than or equal to 32 weeks gestation vs. placebo.

For more information, please visit www.columbialabs.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements about Columbia Laboratories, Inc.'s expectations regarding the Company's strategic direction, prospects and future results, and clinical research programs, which statements are indicated by the words "will," "plan," "expect" and similar expressions. Such forward-looking statements involve certain risks and uncertainties; actual results may differ materially from those projected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of November 5, 2009, the date on which they were made. Factors that might cause future results to differ include, but are not limited to, the following: the successful marketing of CRINONE(R) 8% (progesterone gel) and STRIANT(R) (testosterone buccal system) in the U.S.; the successful marketing of CRINONE(R) 8% by Merck Serono; the timely and successful development of PROCHIEVE(R) 8% to reduce the risk of preterm birth in women with a short cervix in mid-pregnancy; the timely and successful completion of the ongoing Phase III PREGNANT (PROCHIEVE(R) Extending GestatioN A New Therapy) Study of PROCHIEVE(R) 8% in short cervix patients; success in obtaining acceptance and approval of the short cervix indication for PROCHIEVE 8% by the U.S. Food and Drug Administration and international regulatory agencies; whether we elect to exercise our right to extend the balance due on the PharmaBio royalty agreement to 2011; our ability to obtain financing in order to fund our operations and repay our debt as it comes due; the impact of competitive products and pricing; the strength of the U.S. dollar relative to international currencies, particularly the Euro; competitive economic and regulatory factors in the pharmaceutical and healthcare industry; general economic conditions; and other risks and uncertainties that may be detailed, from time-to-time, in Columbia's reports filed with the Securities and Exchange Commission. Columbia Laboratories undertakes no obligation to publicly update any forward-looking statements.

PROCHIEVE(R), CRINONE(R) and STRIANT(R) are registered trademarks of Columbia Laboratories, Inc.

COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                 Nine Months Ended                   Three Months Ended

                 September 30,                       September 30,

                   2009              2008              2009             2008

NET REVENUES     $ 23,647,848      $ 29,177,914      $ 7,902,957      $ 11,117,358

COST OF            6,680,929         8,769,496         2,561,560        2,859,590
REVENUES

Gross profit       16,966,919        20,408,418        5,341,397        8,257,768

OPERATING
EXPENSES:

Selling and        8,999,177         9,809,695         3,096,810        3,494,083
distribution

General and        7,708,514         6,628,649         2,147,515        2,079,201
administrative

Research and       6,206,028         5,051,949         2,258,656        1,510,186
development

Amortization
of licensing       3,783,546         3,783,546         1,261,182        1,261,182
right

Total
operating          26,697,265        25,273,839        8,764,163        8,344,652
expenses

Loss from          (9,730,346  )     (4,865,421  )     (3,422,766 )     (86,884    )
operations

OTHER INCOME
(EXPENSES):

Interest           33,801            249,496           5,057            58,836
income

Interest           (6,275,439  )     (5,871,513  )     (2,070,104 )     (1,998,832 )
expense

Other, net         (438,576    )     (82,915     )     (365,449   )     6,792

Total other        (6,680,214  )     (5,704,932  )     (2,430,496 )     (1,933,204 )
expenses

Loss before        (16,410,560 )     (10,570,353 )     (5,853,262 )     (2,020,088 )
taxes

State income       (16,930     )     (54,750     )     -                (30,048    )
taxes

NET LOSS         $ (16,427,490 )   $ (10,625,103 )   $ (5,853,262 )   $ (2,050,136 )

NET LOSS PER
COMMON SHARE:

Basic and        $ (0.30       )   $ (0.20       )   $ (0.11      )   $ (0.04      )
diluted

WEIGHTED
AVERAGE NUMBER
OF

COMMON SHARES
OUTSTANDING:

Basic and          54,397,545        52,073,900        54,455,731       52,613,653
diluted

COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

                                             September 30       December 31

                                               2009               2008

                                             (Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents of which           $ 7,331,577        $ 12,497,382
$4,228,668 and

$12,099,318 is interest bearing

Accounts receivable, net of allowances for     3,228,851          3,562,277

doubtful accounts of $100,000 and $100,000

Inventories                                    2,312,211          2,377,139

Prepaid expenses and other current assets      386,475            1,102,525

Total current assets                           13,259,114         19,539,323

Property and equipment, net                    744,667            821,857

Intangible assets - net                        20,031,514         23,815,060

Other assets                                   1,853,631          1,446,249

TOTAL ASSETS                                 $ 35,888,926       $ 45,622,489

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities:

Current portion of financing agreements      $ 134,526          $ 168,034

Accounts payable                               2,482,689          2,085,463

Accrued expenses                               4,855,400          4,980,643

Total current liabilities                      7,472,615          7,234,140

Notes payable                                  32,207,556         30,074,966

Deferred revenue                               267,298            305,433

Long-term portion of financing agreements      14,679,091         13,126,210

TOTAL LIABILITIES                              54,626,560         50,740,749

COMMITMENTS AND CONTINGENCIES

Contingently Redeemable Series C Preferred
Stock,

600 and 775 shares issued and outstanding
in 2009 and 2008, respectively                 600,000            775,000
(liquidation preference of $600,000 and
$775,000)

SHAREHOLDERS' DEFICIT:

Preferred stock, $.01 par value; 1,000,000
shares authorized

Series B Convertible Preferred Stock, 130
shares issued and outstanding                  1                  1
(liquidation preference of $13,000)

Series E Convertible Preferred Stock,
59,000 shares issued and                       590                590
outstanding (liquidation preference of
$5,900,000)

Common Stock $.01 par value; 100,000,000
shares

authorized; 54,849,986 and 54,007,579
shares issued in 2009 and 2008,                548,499            540,076
respectively

Capital in excess of par value                 231,726,951        228,686,942

Less cost of 131,935 and 63,644 treasury       (280,813     )     (189,229     )
shares

Accumulated deficit                            (251,537,195 )     (235,109,705 )

Accumulated other comprehensive income         204,333            178,065

Shareholders' deficit                          (19,337,634  )     (5,893,260   )

TOTAL LIABILITIES AND SHAREHOLDERS'          $ 35,888,926       $ 45,622,489
DEFICIT

    Source: Columbia Laboratories, Inc.

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