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May 3 2006, 7:00 AM EST

CollaGenex Pharmaceuticals Reports Financial Results For the First Quarter of 2006

News source: Business Wire

CollaGenex Pharmaceuticals, Inc. (NASDAQ:CGPI) today reported financial results for the quarter ended March 31, 2006. Total revenues for the first quarter of 2006 were approximately $3.7 million compared to approximately $12.0 million in the first quarter of 2005, reflecting significantly reduced sales of Periostat(R) following the introduction of generic competition in May 2005.

Net loss allocable to common stockholders for the first quarter of 2006 was approximately $9.3 million, or $0.54 per basic and diluted share, compared to net loss allocable to common stockholders of approximately $2.5 million, or $0.17 per basic and diluted share, in the first quarter of 2005. Net loss allocable to common stockholders in the first quarter of 2006 includes non-cash compensation expense of approximately $800,000 in accordance with SFAS No. 123R, Share-Based Payment, which the Company adopted as of January 1, 2006. Non-cash compensation expense is not included in net loss allocable to common stockholders for the first quarter of 2005.

Selling, general and administrative (S,G&A) expense increased by 10% to approximately $8.5 million in the first quarter of 2006 compared to approximately $7.7 million in the first quarter of 2005. The increase in S,G&A is primarily attributable to non-cash compensation under SFAS No. 123R, Share-Based Payment. S,G&A expense of approximately $8.5 million for the quarter ended March 31, 2006 reflects the expansion and training of the Company's dermatology sales force from 33 sales representatives and managers as of December 31, 2005 to 75 as of March 31, 2006 in anticipation of a favorable review by the FDA of the Company's NDA submission for Oracea(TM) in the second quarter 2006 and an expected product launch in the third quarter of 2006. Research and development (R&D) expenses decreased by 9% to approximately $3.7 million in the first quarter of 2006 compared to approximately $4.1 million in the first quarter of 2005. These expenses are related to continued investment in the Company's dermatology product pipeline.

Nancy C. Broadbent, chief financial officer of CollaGenex, commented, "Our financial results for the first quarter of 2006 were in line with our expectations, and we are reaffirming our 2006 financial guidance. As expected, S,G&A expenses have increased in the first quarter as we prepare to launch our first proprietary product in dermatology. Our investment in R&D is on track and reflects our commitment to the development of our product pipeline, which includes Oracea for the treatment of rosacea, incyclinide for the treatment of acne, and Col-118 for the treatment of erythema, or skin redness."

Colin Stewart, president and chief executive officer of CollaGenex, stated, "During the first quarter of 2006, we focused on continuing to develop the commercial infrastructure and product pipeline that we believe is necessary to build a long-term, sustainable business. I am very pleased with the quality and experience of the sales professionals we have been able to recruit, virtually all of whom have prior dermatology sales experience. Our entire sales force is now fully trained and calling on dermatologists."

Mr. Stewart added, "Our R&D programs are all proceeding on schedule. We have received and responded to routine questions from the FDA on our Oracea NDA and continue to anticipate a favorable review on our PDUFA date of May 31, 2006. During the first quarter, we received a notice of allowance from the European Patent Office for the use of sub anti-microbial doxycycline in the treatment of acne and rosacea, including Oracea, which further contributes to the value for a potential European partner to market Oracea in Europe. Our Phase II dose-finding trial for incyclinide is on plan, and we expect this trial to be concluded by the end of 2006 with results available in early 2007."

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