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Nov 6 2007, 6:00 AM EST

CollaGenex Pharmaceuticals Reports Financial Results for the Third Quarter of 2007

News source: Business Wire

CollaGenex Pharmaceuticals, Inc. (NASDAQ:CGPI) today reported financial results for the third quarter and nine months ended September 30, 2007.

Net revenues were $15.9 million in the third quarter of 2007 compared to $5.6 million in the third quarter of 2006, reflecting significantly higher net product sales of Oracea(R), the only FDA-approved systemic treatment for rosacea. Net sales of Oracea were $13.1 million in the third quarter of 2007 compared to $2.2 million in the third quarter of 2006. Total deductions from gross sales for managed care, government and patient rebates, wholesale distribution fees, trade cash discounts and estimated product returns were 14.7% of Oracea gross sales in the third quarter of 2007. Wholesaler inventories were within the Company's target range of 3 to 5 weeks of sales.

Selling, general and administrative (S,G&A) expenses increased slightly to approximately $10.9 million in the third quarter of 2007 compared to approximately $10.6 million in the third quarter of 2006. Research and development (R&D) expenses increased by approximately 12% to approximately $4.5 million in the third quarter of 2007 compared to approximately $4.0 million in the third quarter of 2006. These expenses are related to continued investment in the Company's dermatology product pipeline.

Net loss allocable to common stockholders for the third quarter of 2007 was $1.6 million, or $0.07 per basic and diluted share, compared to a net loss allocable to common stockholders of $10.4 million, or $0.59 per basic and diluted share, for the third quarter of 2006. The weighted average shares used in computing per share amounts increased to approximately 21.4 million during the third quarter of 2007 from approximately 17.5 million in the third quarter of 2006, primarily due to the issuance of 3.5 million shares in the Company's common stock offering completed in November 2006.

Colin W. Stewart, president and chief executive officer, said, "We believe that our solid financial performance in the third quarter of 2007 reflects the considerable strides we have made in the commercialization of Oracea. We have continued to drive market share gains each month since Oracea was launched in July 2006, making Oracea the most prescribed oral drug for the treatment of rosacea."

Mr. Stewart continued, "During the third quarter of 2007, we also reported the findings of two Phase 2 clinical development programs. The results of the Phase 2 dose-finding study for Col-118 for the treatment of erythema were highly favorable, with strong statistical significance. Following a recent guidance meeting with the FDA, we expect to begin our Phase 3 testing in mid-2008. However, we also announced disappointing results from a large Phase 2 study of incyclinide for the treatment of rosacea. On the basis of these results, we ceased further clinical development of incyclinide in rosacea patients. Following a detailed cost, benefit and risk analysis of the incyclinide acne program, we have now decided to discontinue this development work and focus our resources and energies on those projects in our pipeline with the greatest commercial potential. We are very enthusiastic about the potential of Col-118 to be the first effective treatment for erythema, which we estimate to be a $300 million market, and becocalcidiol, a compound that could address a $600 million market for psoriasis treatments."

For the nine months ended September 30, 2007, net revenues were $46.6 million compared to $13.1 million during the first nine months of 2006, reflecting significantly higher net product sales from Oracea. Net loss allocable to common stockholders for the first nine months of 2007 was approximately $11.4 million, or $0.53 per basic and diluted share, compared to a net loss allocable to common stockholders during the f

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