Chelsea Therapeutics Reports Third Quarter 2009 Results

November 2, 2009 4:15 PM EST

CHARLOTTE, N.C., Nov. 2, 2009 (GLOBE NEWSWIRE) -- Chelsea Therapeutics International, Ltd. (Nasdaq: CHTP) reported financial results for the third quarter 2009. Chelsea's management team will host a conference call this afternoon to discuss these results and present a quarterly update on the Company's development programs at 4:30 PM EST.

Third Quarter Operational Highlights

 -- Reported preliminary Phase III data of Droxidopa for treatment of
    symptomatic neurogenic orthostatic hypotension (NOH)

 -- Achieved target enrollment in second pivotal phase III trial of
    Droxidopa in neurogenic orthostatic hypotension

 -- Completed $13.3 million registered direct offering

 -- Appointed William Rueckert to Board of Directors

"Our operational focus during the third quarter was primarily on the completion of our two Phase III trials of Droxidopa in neurogenic orthostatic hypotension and these efforts resulted in the reporting of our first study and reaching our target enrollment in the second," commented Dr. Simon Pedder, President and CEO of Chelsea. "While we did not achieve statistical significance on our primary endpoint in Study 302, data from the study clearly demonstrate activity, support the symptomatic and functional benefits, and validate safety and tolerability of Droxidopa in neurogenic orthostatic hypotension. We are currently scheduled to meet with the FDA later this month to solicit feedback on the results of Study 302, discuss what, if any, changes could be made to strengthen then outcome of Study 301, and determine the best course of action to secure approval of Droxidopa for the treatment of symptomatic NOH in the US."

Financial Results for the Third Quarter

Chelsea reported a net loss for the three months ended September 30, 2009 of $7.1 million or ($0.22) per share versus a net loss of $10.1 million or ($0.34) per share for the same period in 2008. The net loss for the third quarter of 2008 included an impairment charge of $2.1 million, or ($0.07) per share related to student loan backed auction rate securities (ARS), excluding this 2008 impairment charge and on a non-GAAP basis, net loss of $7.1 million for the third quarter of 2009 compares to a net loss of $8.0 million or ($0.27) per share for the comparable prior year period.

For the first nine months of 2009, Chelsea reported a net loss of $19.8 million or ($0.64) per share compared to a net loss of $26.1 million or ($0.87) per share for the first half of 2008. Excluding the 2008 ARS impairment charges and the associated gain in 2009, Chelsea's net loss, on a non-GAAP basis, of $24.2 million for the first nine months of 2009 increased by approximately $1.8 million from the net loss of $22.4 million for the prior-year period.

Research and development expenses for the third quarter 2009 were $5.4 million, compared to $7.0 million for the same period in 2008. Total research and development expenses decreased primarily as a result of decreased clinical activity resulting from our Phase III program in neurogenic orthostatic hypotension nearing conclusion, the completion of Chelsea's Phase II trial of Droxidopa in intradialytic hypotension, Phase II evaluation of CH-1504 versus methotrexate in rheumatoid arthritis, and Phase I trial of CH-4051. For the nine months ended September 30, 2009, research and development expenses of $20.0 million were in line $19.9 million for the comparable period in 2008.

Selling, general and administrative expenses of $1.7 million for the three months ended September 30, 2009 were up from $1.2 million in the third quarter 2008. Similarly, for the nine months ended September 30, 2009, selling, general and administrative expenses of $4.4 million increased $0.4 million over the $4.0 million reported for the first nine months of 2008.

Chelsea ended the quarter with $30.1 million in cash and cash equivalents after using $22.6 million to fund operations through the first nine months of the year. This reflects a net increase of $8.5 million from December 31, 2008 resulting from the favorable ARS settlements and proceeds from a registered direct offering completed in July 2009, which, after deducting related expenses, resulted in gross proceeds of $12.4 million.

Financial Guidance

Chelsea expects to end the year with cash and cash equivalents of approximately $20 million and anticipates that available cash and cash equivalents should fund the company's current and planned development programs into the third quarter of 2010.

Conference Call Today at 4:30 PM ET

Chelsea will discuss its third quarter results and provide an update on its clinical development programs in a conference call today at 4:30 PM Eastern Time. Interested investors may participate in the conference call by dialing 877-856-1968 (domestic) or 719-325-4781 (international). A replay will be available for one week following the call by dialing 888-203-1112 for domestic participants or 719-457-0820 for international participants and entering passcode 6879497 when prompted. Participants may also access both the live and archived webcast of the conference call on Chelsea's web site at www.chelseatherapeutics.com.

About Chelsea Therapeutics

Chelsea Therapeutics is a biopharmaceutical development company that acquires and develops innovative products for the treatment of a variety of human diseases. Chelsea's most advanced drug candidate, Droxidopa, is an orally active synthetic precursor of norepinephrine initially being developed for the treatment of neurogenic orthostatic hypotension. In addition to Droxidopa, Chelsea is also developing a portfolio of metabolically inert oral antifolate molecules engineered to have potent anti-inflammatory and anti-tumor activity to treat a range of immunological disorders, including two clinical stage product candidates: CH-1504 and CH-4051. Preclinical and clinical data suggest superior safety and tolerability, as well as increased potency versus methotrexate (MTX).

This press release contains forward-looking statements regarding future events. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include our need to raise operating capital, our history of losses, risks and costs of drug development, risk of regulatory approvals, our reliance on our lead drug candidates Droxidopa and CH-1504, reliance on collaborations and licenses, intellectual property risks, competition, market acceptance for our products if any are approved for marketing and reliance on key personnel including specifically Dr. Pedder.

             CHELSEA THERAPEUTICS INTERNATIONAL, LTD. AND SUBSIDIARY
                         (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (unaudited)

                For the three months ended  For the nine months ended
                       September 30                September 30,
                --------------------------  --------------------------
                    2009          2008          2009          2008
                ------------  ------------  ------------  ------------

 Operating
  expenses:
  Research and
   development  $  5,357,373  $  7,041,343  $ 19,960,065  $ 19,915,204
  Sales and
   marketing         714,064       294,686     1,352,486     1,176,898
  General and
   administrative  1,014,299       940,652     3,039,234     2,797,908
                ------------  ------------  ------------  ------------
 Total
  operating
  expenses         7,085,736     8,276,681    24,351,785    23,890,010
                ------------  ------------  ------------  ------------

 Operating loss   (7,085,736)   (8,276,681)  (24,351,785)  (23,890,010)
 Interest
  income              32,427       306,214       263,925     1,493,260
 Interest
  expense            (40,544)           --      (108,118)           --
 Other income
  (expense)               --    (2,109,927)    4,390,487    (3,676,173)

                ------------  ------------  ------------  ------------
 Net loss       $ (7,093,853) $(10,080,394) $(19,805,491) $(26,072,923)
                ============  ============  ============  ============

 Net loss per
  basic and
  diluted share
  of common
  stock         $      (0.22) $      (0.34) $      (0.64) $      (0.87)
                ============  ============  ============  ============

 Weighted
  average
  number of
  basic and
  diluted
  common
  shares
  outstanding     32,428,692    30,048,839    30,892,371    29,998,676
                ============  ============  ============  ============

                   Chelsea Pharmaceuticals International, Ltd.
                    Condensed Consolidated Balance Sheet Data
                                (unaudited)
                               (in thousands)

                                       September 30,     December 31,
                                           2009              2008
                                       -------------    -------------

 Cash and cash equivalents                  $ 30,050         $ 21,533
 Short-term investments                       11,475           10,306
 Long-term investments                            --           11,329
 Total assets                                 42,253           44,130
 Line of credit payable                       11,475            7,277
 Total liabilities                            23,838           19,582
 Deficit accumulated during the
  development stage                          (89,577)         (69,771)
 Stockholders' equity                         18,415           24,548

A reconciliation of GAAP to non-GAAP loss per share is as follows:

                                For the three         For the nine
                                 months ended          months ended
                                 September 30,         September 30,
                             -------------------   -------------------
                               2009       2008       2009       2008
                             --------   --------   --------   --------
 GAAP loss per share         $  (0.22)  $  (0.34)  $  (0.64)  $  (0.87)
  Net other (income) expense
   related to investments in
   auction rate securities         --       0.07      (0.14)      0.12
                             --------   --------   --------   --------
 Non-GAAP loss per share     $  (0.22)  $  (0.27)  $  (0.78)  $  (0.75)
                             ========   ========   ========   ========

A reconciliation of GAAP to non-GAAP net loss is as follows:

(in thousands)

                          For the three months   For the nine months
                          ended September 30,    ended September 30,
                         ---------------------  ---------------------
                            2009        2008       2009        2008
                         ---------   ---------  ---------   ---------
 GAAP net loss           $  (7,094)  $ (10,080) $ (19,805)  $ (26,073)
  Net other (income)
   expense related to
   investments in
   auction rate
   securities                   --       2,110     (4,390)      3,676
                         ---------   ---------  ---------   ---------
 Non-GAAP loss           $  (7,094)  $  (7,970) $ (24,195)  $ (22,397)
                         =========   =========  =========   =========

To view the Notes to the Company's Financial Statements and Management's Discussion and Analysis, please see the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.

CONTACT:  Chelsea Therapeutics International, Ltd.
          Investors:
          Kathryn McNeil
          718-788-2856
          mcneil@chelseatherapeutics.com

          Hill & Knowlton
          Media:
          Sean Leous
          212-885-0549
          sean.leous@hillandknowlton.com

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