$100 Million EGI Investment to Close in September, Subject to Stockholder
Approval; Company Prepares for Potential Launch of MOXATAG(TM)
GERMANTOWN, Md., Aug. 14 /PRNewswire-FirstCall/ -- MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK), a pharmaceutical company focused on developing and commercializing novel anti-infective products, today announced financial and operational results for the quarter ended June 30, 2008.
MiddleBrook reported second quarter 2008 revenue of $2.5 million, compared to revenue of $2.4 million in the first quarter of 2008 and $2.7 million in the second quarter of 2007. Revenue for the first six months of 2008 increased to $4.9 million, from revenue of $4.5 million for the first six months of 2007.
The Company reported research and development (R&D) expenses in the second quarter of $3.6 million, compared to first quarter 2008 R&D expenses of $3.7 million and second quarter 2007 R&D expenses of $5.4 million. Total operating expenses for the second quarter of 2008 were $7.9 million, down from $9.1 million in the first quarter of 2008 and $12.2 million in the second quarter of 2007. Total operating expenses for the first half of 2008 decreased to $17.0 million, down from total operating expenses of $27.7 million for the first half of 2007. The Company also recorded a $1.7 million noncash gain in the second quarter of 2008 resulting from the change in the contractual fair value of the Company's warrant liability.
Net loss was $3.7 million for the second quarter, compared to a net loss of $13.8 million in the first quarter of 2008 and a net loss of $9.5 million in the second quarter of 2007. Net loss for the first six months of 2008 was $17.5 million, down from a net loss of $23.1 milrolling
interest $(3,644,376) $(9,477,927) $(17,686,783) $(23,140,917)
interest (62,875) - 180,030 -
Net loss $(3,707,251) $(9,477,927) $(17,506,753) $(23,140,917)
Basic and diluted
net loss per share $(0.07) $(0.21) $(0.32) $(0.57)
Shares used in
basic and diluted
net loss per share 56,024,953 45,348,396 54,660,128 40,890,735
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2008 December 31, 2007
Cash and cash equivalents $10,254,039 $1,951,715
Marketable securities 2,372,483 -
Accounts receivable, net 703,655 687,787
Inventories, net 456,173 687,933
Prepaid expenses and other current assets 1,961,526 1,142,905
Total current assets 15,747,876 4,470,340
Property and equipment, net 9,316,781 10,928,659
Restricted cash 872,180 872,180
Deposits and other assets 111,599 174,965
Intangible assets, net 6,640,813 7,219,651
Total assets $32,689,249 $23,665,795 LIABILITIES, NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable $1,468,170 $1,659,752
Accrued expenses 5,344,762 5,613,544
Total current liabilities 6,812,932 7,273,296
Warrant liability 7,860,000 2,100,000
Deferred contract revenue 11,625,000 11,625,000
Deferred rent and credit on lease
concession 990,746 1,177,840
Total liabilities 27,288,678 22,176,136
Noncontrolling interest 7,157,781 7,337,811
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, undesignated - -
Common stock, par value 560,763 467,488
Capital in excess of par value 210,523,235 189,019,188
Accumulated deficit (212,841,581) (195,334,828)
Accumulated other comprehensive
income 373 -
Total stockholders' equity
(deficit) (1,757,210) (5,848,152)
noncontrolling interest and
stockholders' equity (deficit) $32,689,249 $23,665,795
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
Cash flows from operating activities:
Net loss $(17,506,753) $(23,140,917)
Adjustments to reconcile net income
to net cash in operating
Loss attributable to
noncontrolling interest (180,030) -
Depreciation and amortization 1,841,675 1,929,978
Change in fair value of warrant 5,760,000 -
Stock-based compensation 791,908 1,290,286
Deferred rent and credit on lease
concession (187,094) (25,889)
Amortization of premium on
marketable securities (8,244) (60,642)
Loss on disposal of fixed assets 17,174 -
Accounts receivable (15,868) (2,467,478)
Inventories 231,760 244,566
Prepaid expenses and other
current assets (818,622) 49,456
Deposits other than on property
and equipment, and other assets 63,366 37,843
Accounts payable (191,582) 216,562
Accrued expenses (268,782) (3,239,993)
Deferred product revenue - 1,989,644
Net cash used in operating
activities (10,471,092) (23,176,584)
Cash flows from investing activities:
Purchases of marketable securities (2,363,866) (5,867,518)
Sale and maturities of marketable
securities - 500,000
Purchases of property and equipment - (19,592)
Deposits on property and equipment - (1,150,625)
Proceeds from sale of fixed assets 331,867 -
Net cash used in investing
activities (2,031,999) (6,537,735)
Cash flows from financing activities:
Proceeds from private placement of
common stock, net of issue costs 19,915,002 22,412,260
Payments on lines of credit - (1,333,333)
Proceeds from exercise of common
stock options 726,431 58,073
Proceeds from exercise of common
stock warrants 163,982 -
Net cash provided by financing
activities 20,805,415 21,137,000
Net increase (decrease) in cash and
cash equivalents 8,302,324 (8,577,319)
Cash and cash equivalents, beginning
of period 1,951,715 14,856,738
Cash and cash equivalents, end of
period $10,254,039 $6,279,419lion in the first six months of 2007.
Net loss per share applicable to common stockholders during the second quarter of 2008 was ($0.07), compared to a net loss per share of ($0.26) in the prior quarter, and a net loss per share of ($0.21) in the comparable quarter of last year. Net loss per share applicable to common stockholders during the first half of 2008 was ($0.32), down from a net loss per share of ($0.57) in the first half of 2007.
"Having concluded our strategic review process over the second quarter, we are now working to close the Equity Group transaction and prepare for the potential commercial launch of MOXATAG," stated Edward M. Rudnic, Ph.D., president and CEO of MiddleBrook. "The entire MiddleBrook team is excited to now have the opportunity to introduce once-daily MOXATAG, our first proprietary PULSYS product, into the marketplace by as early as the first half of next year."
Strategic Review Process Concluded with Agreement for $100 Million Equity Investment
On July 1, 2008, MiddleBrook announced that it had concluded its previously announced review of strategic alternatives with an agreement for a $100 million equity investment in the Company by EGI-MBRK L.L.C. (EGI), an affiliate of Equity Group Investments, L.L.C. On July 1, 2008, MiddleBrook entered into a securities purchase agreement with EGI for the sale of 30,303,030 shares of MiddleBrook common stock at $3.30 per share and a five- year warrant to purchase a total of 12,121,212 shares of common stock at an exercise price of $3.90 per share.
As part of the agreement with EGI and as previously announced, a new, commercially-focused executive management team will be appointed. Proceeds from the transaction are expected to allow the Company to move forward with the commercial launch of MOXATAG(TM) and to continue the development of its clinical pipeline.
The issuance of the new shares and the warrant is subject to approval by MiddleBrook's common stockholders, and other customary closing conditions, and assuming stockholder approval is obtained, is expected to close promptly following the special meeting of stockholders scheduled for September 4, 2008.
Keflex(R) Capsules (Cephalexin, USP) - Commercialization Update
During the second quarter, MiddleBrook continued the commercialization of its 750 mg strength Keflex capsules through a targeted and dedicated national contract sales force. Based on prescription data from IMS Health, total prescriptions filled for Keflex 750 mg capsules in the second quarter of 2008 were 66,811 prescriptions, compared to first quarter 2008 prescriptions of 68,064.
MiddleBrook is currently marketing Keflex 750 mg capsules through its sales force of approximately 30 contract sales representatives and three MiddleBrook district sales managers.
MOXATAG(TM) (amoxicillin extended-release) Tablets
On January 23, 2008, MiddleBrook received U.S. Food and Drug Administration (FDA) approval of the Company's New Drug Application (NDA) for its once-daily amoxicillin PULSYS(R) product, under the trade name, MOXATAG(TM) (amoxicillin extended-release) Tablets. MOXATAG is approved for the treatment of pharyngitis and/or tonsillitis secondary to Streptococcus pyogenes (strep throat) in adults and pediatric patients 12 years or older.
During the second quarter, MiddleBrook was actively engaged in the commercial manufacture, testing and validation of its MOXATAG scaled-up tablet production process in cooperation with its contract manufacturer, STADA Production in Clonmel, Ireland. The Company believes it will be prepared for a potential commercial launch of MOXATAG during the first half of 2009, assuming the closing of the EGI transaction in September 2008.
MOXATAG is the first and only once-daily aminopenicillin therapy approved by the FDA to treat strep throat. Physicians prescribing MOXATAG would be able to provide their patients the convenience of once-daily dosing while utilizing approximately one-half the amount of amoxicillin currently used. According to prescription data from IMS Health, more than 30 million prescriptions were written for strep throat, pharyngitis and tonsillitis in the U.S. in 2007.
-- Total revenue, resulting entirely from net Keflex product sales, was $2.5 million in the second quarter of 2008, compared to revenue of $2.4 million in the prior quarter, and $2.7 million for the second quarter of 2007.
-- Operating expenses. Research and development expenses, which primarily consist of salaries, stock-based compensation, and related expenses for personnel and the costs of the Company's clinical trials and research initiatives, were $3.6 million in the second quarter of 2008, compared to $3.7 million in the previous quarter and $5.4 million in the second quarter of 2007. Reduced R&D expenses in the second quarter compared to the prior year resulted mainly from lower personnel and related costs associated with reductions in research staff over the year.
Selling, general and administrative (SG&A) expenses totaled $3.9 million in the second quarter of 2008, down from $4.8 million in the first quarter of 2008, and $6.3 million in the second quarter of 2007. Second quarter SG&A costs declined from the prior periods due to lower third-party costs associated with the reduced size of Company's contract sales force.
-- Loss from operations for the second quarter of 2008 was $5.4 million, down from $6.7 million in the prior quarter and $9.5 million in the second quarter of last year. Reduced operating loss in the quarter resulted primarily from lower operating expenses in the second quarter of 2008 compared to prior periods.
-- Other income and expenses for the second quarter of 2008 included a $1.7 million noncash unrealized gain for the adjustment related to the contractual fair value of warrants issued to Deerfield Management in the fourth quarter of 2007. The Company recorded a $7.4 million noncash warrant expense in the first quarter of 2008. There were no such gains or expenses in the second quarter of 2007.
-- Net loss for the second quarter of 2008 was $3.7 million. This compares to a net loss of $13.8 million in the first quarter of 2008, and $9.5 million in the second quarter of 2007. The net loss for the three months ended June 30, 2008, was increased by $0.1 million attributable to the gain from noncontrolling interest in two companies affiliated with Deerfield Management pursuant to the fourth quarter 2007 Keflex transaction, resulting from MiddleBrook's consolidation of the two affiliates under Financial Accounting Standards Board Interpretation No. 46 (revised 2003) "Consolidation of Variable Interest Entities." The net loss for the three months ended March 31, 2008, was reduced by $0.2 million attributable to the loss from noncontrolling interest during that quarter and there were no such gains or losses for the second quarter of 2007.
-- Net loss per share applicable to common stockholders for the second quarter of 2008 was ($0.07), compared to a loss per common share of ($0.26) in the prior quarter and ($0.21) in the second quarter of 2007.
Per share figures were computed on the basis of an average of 56.0 million shares outstanding in the second quarter of 2008, 53.3 million shares outstanding in the first quarter of 2008, and 45.3 million shares outstanding in the second quarter of 2007.
-- Cash and marketable securities decreased by $5.4 million during the second quarter. Changes were composed of $5.4 million of operating losses in the quarter, and $1.4 million for working capital changes and other items; offset by $1.2 million for non-cash expenses in the quarter and $0.2 million from the exercise of stock options.
-- The Balance Sheet at June 30, 2008 reflected $12.6 million of unrestricted cash, cash equivalents and marketable securities, compared to $18.0 million at March 31, 2008 and $2.0 million as of year-end 2007.
Total revenue guidance for 2008 is unchanged from prior forecasts and is expected to be approximately $10 million to $12 million, resulting from Keflex product sales and assuming no generic competition to Keflex 750 mg capsules occurs during the year. MiddleBrook intends to issue additional financial guidance for 2008 following the completion of its anticipated financing transaction with EGI.
ABOUT MIDDLEBROOK PHARMACEUTICALS:
MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK) is a pharmaceutical company focused on the development and commercialization of anti-infective drug products that fulfill substantial unmet medical needs in the treatment of infectious disease. The Company is developing anti-infective drugs based on its novel biological finding that bacteria exposed to antibiotics in "pulses" are killed more efficiently and effectively than those under standard treatment regimens. Based on this finding, MiddleBrook has developed a proprietary, once-a-day pulsatile delivery technology called PULSYS(R). The Company currently markets the Keflex(R) brand of cephalexin and has received regulatory approval for MOXATAG(TM) -- the first and only once-daily amoxicillin product approved for marketing in the U.S. For more on MiddleBrook, please visit http://www.middlebrookpharma.com.
MOXATAG(TM) (amoxicillin extended-release) Tablets are a once-a-day extended-release formulation of amoxicillin for oral administration consisting of three components: one immediate-release and two delayed-release. The three components are combined in a specific ratio to prolong the release of amoxicillin from MOXATAG compared to immediate-release amoxicillin. MOXATAG is intended to provide a lower treatment dose, once-daily alternative to currently approved penicillin and amoxicillin regimens for the treatment of adults and pediatric patients 12 years and older with tonsillitis and/or pharyngitis.
Keflex(R) (cephalexin capsules, USP) is a first-generation cephalosporin antibiotic shown to be active against strains of both gram-positive and gram- negative aerobes in vitro and in clinical infections. Keflex is indicated for treatment of the following infections: respiratory tract infections, otitis media, skin and skin structure infections, bone infections, and genitourinary tract infections. More information on Keflex and prescribing information are available at http://www.middlebrookpharma.com/products_antibiotics/keflex_antibiotics.aspx.
This announcement contains historical financial information as of and for three-month and six-month periods ended June 30, 2008 and June 30, 2007 that is unaudited, and MiddleBrook assumes no obligation to update this information based on new information or future performance except as may be specifically required by applicable law or regulation. The unaudited annual financial information is subject to audit by independent accountants on an annual basis following the close of each calendar year.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on MiddleBrook's current expectations and assumptions. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties that would cause actual results to differ materially from those anticipated. The words, "believe," "expect," "intend," "anticipate," and variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward- looking. Statements in this announcement that are forward-looking include, but are not limited to, statements about the Company's product development and commercialization schedule, including, particularly, future plans with respect to its Amoxicillin PULSYS products; any statements regarding Dr. Rudnic's comments and expectations concerning the Company; the Company's initiatives to develop improved antibiotics; the Company's existing and anticipated collaborative agreements; and any financial forecasts and projections for 2008 and thereafter included under the Financial Guidance section of this announcement.
The actual results realized by MiddleBrook could differ materially from
these forward-looking statements, depending in particular upon the risks
and uncertainties described in the Company's filings with the Securities
and Exchange Commission. These include, without limitation, risks and
uncertainties relating to the Company's financial results and the ability
of the Company to (1) raise additional capital and continue as a going
concern, (2) maintain its Keflex 750 sales, (3) retain marketing approval
for its MOXATAG product, (4) successfully reduce costs, (5) reach
profitability, (6) prove that the preliminary findings for its product
candidates are valid, (7) receive required regulatory approvals, (8)
successfully conduct clinical trials in a timely manner, (9) establish its
competitive position for its products, (10) develop and commercialize
products that are superior to existing or newly developed competitor
products, (11) develop products without any defects, (12) have sufficient
capital resources to fund its operations, (13) protect its intellectual
property rights and patents, (14) implement its sales and marketing
strategy, (15) successfully attract and retain collaborative partners, (16)
successfully commercialize and gain market acceptance for its Keflex
products, (17) successfully obtain sufficient manufactured quantities of
its drug products at acceptable rates, and (18) retain its senior
management and other personnel. Existing and prospective investors are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of today's date. MiddleBrook undertakes no obligation
to update or revise the information in this announcement, whether as a
result of new information, future events or circumstances or otherwise.
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
Product sales $2,522,255 $2,680,558 $4,916,265 $4,453,595
Costs and expenses:
Cost of product
sales 374,177 447,236 995,617 680,871
development 3,627,051 5,447,199 7,354,910 12,976,071
administrative 3,937,109 6,309,553 8,690,435 13,998,205
Total expenses 7,938,337 12,203,988 17,040,962 27,655,147
Loss from operations (5,416,082) (9,523,430) (12,124,697) (23,201,552)
Interest income 89,806 221,173 215,088 355,200
Interest expense - (175,670) - (369,565)
Change in fair value
of warrant 1,680,000 - (5,760,000) -
(expense) 1,900 - (17,174) 75,000
|SOURCE MiddleBrook Pharmaceuticals, Inc.|
Copyright©2008 PR Newswire.
All rights reserved