Cornerstone Therapeutics Inc. Reports First Quarter 2013 Financial Results  
5/9/2013 11:04:23 AM

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CARY, NC--(Marketwired - May 09, 2013) -

Cornerstone Therapeutics Inc. (NASDAQ: CRTX)

  • Net revenue increased 71% compared to first quarter of 2012
  • Net income per share, diluted of $0.09, up $0.16 compared to first quarter of 2012
  • License of exclusive U.S. rights of PERTZYE® (pancrelipase) on May 9, 2013, to market to Cystic Fibrosis patients

Cornerstone Therapeutics Inc. (NASDAQ: CRTX), a specialty pharmaceutical company focused on commercializing products for the U.S. hospital and adjacent specialty markets, today announced results for the first quarter ended March 31, 2013.

Total net product sales were $38.0 million for the first quarter of 2013 compared to $22.2 million in the first quarter of 2012, an increase of 71%. Net sales of the ZYFLO® (zileuton) family of products amounted to $14.6 million for the first quarter of 2013, an increase of 17% over the first quarter of 2012. CUROSURF® (poractant alfa) net product sales totaled $9.5 million during the quarter, representing an increase of 25% compared to the first quarter of 2012. CARDENE® I.V. (nicardipine hydrochloride) net sales were $13.8 million for the first quarter of 2013. There were no comparable sales for CARDENE I.V. in the first quarter of 2012 as Cornerstone acquired the product rights to CARDENE I.V. as a result of its acquisition of EKR in June 2012.

Net income for the first quarter of 2013 was $2.4 million, or $0.09 per diluted share, compared to a net loss of $1.8 million, or $(0.07) per diluted share, in the first quarter of 2012. On a non-GAAP basis, net income for the first quarter was $7.1 million, or $0.24 per diluted share, up from $1.3 million, or $0.05 per diluted share, in the first quarter of 2012.

Non-GAAP net income and net income per diluted share exclude stock-based compensation expense, amortization of product rights, transaction-related expenses, acquisition adjustments related to inventory sold, the change in acquisition-related contingent payments and the gain on the divestiture of certain product rights.

"In the first quarter, we gained momentum as a result of executing our strategic plan to focus exclusively on the hospital and related market segments. We believe that strategy is starting to really pay off," said Craig A. Collard, Cornerstone's Chief Executive Officer. "Increased sales of our products in addition to improved gross margins and profitability show that our strategy is working. We are confident that Cornerstone is well positioned for continued growth."

A breakdown of net revenues by product for the three months ended March 31, 2013 (in thousands, except percentages) follows:

                                    Three Months Ended                      
                                         March 31,             Change       
                                   -------------------- ------------------- 
                                      2013       2012       $          %    
                                   ---------  --------- ---------  -------- 
Net product sales                                                           
  CARDENE I.V. product family      $  13,839  $       - $  13,839       100%
  CUROSURF                             9,520      7,613     1,907        25 
  ZYFLO product family                14,624     12,448     2,176        17 
  Other products                          (3)     2,096    (2,099)     (100)
                                   ---------  --------- ---------           
  Total net product sales             37,980     22,157    15,823        71 
License and royalty agreement                                               
 revenues                                  -          4        (4)     (100)
                                   ---------  --------- ---------           
Net revenues                       $  37,980  $  22,161    15,819        71 
                                   =========  ========= =========           

Gross margin (exclusive of license and royalty agreement revenues and amortization of product rights) for the first quarter of 2013 was 68%, up from 61% in the comparable quarter of 2012. This sharp increase was primarily due to the addition of CARDENE I.V., whose gross margin significantly exceeds CUROSURF's gross margin. A decrease in estimated rates of chargebacks and price adjustments for CUROSURF also aided gross margin.

Selling, general and administrative expenses were $13.1 million during the first quarter of 2013, a 20% increase over $10.9 million in the comparable quarter of 2012. This was driven by increases in compensation, travel and other related employee benefits due to the continued growth of the company's products and related sales force, as well as an increase in advertising and promotional expenses related to CARDENE I.V. and the anticipated launch of BETHKIS® (tobramycin inhalation solution).

As of March 31, 2013, Cornerstone had $63.4 million in cash and cash equivalents, an increase of $7.1 million from December 31, 2012.

"We remain focused on growing revenue organically and expanding our product offerings through licensing and acquisition opportunities that align with our vision for growth," continued Mr. Collard. "This is evident in our acquisition of the exclusive U.S. rights to market PERTZYE. We believe that the combination of PERTZYE and BETHKIS, which is scheduled to launch later this year, will represent a strong product portfolio addressing needs of cystic fibrosis patients. We plan to promote these products using a specialized group within our hospital sales force. These are the types of synergies you can expect to see from Cornerstone."

Conference Call Information

Cornerstone Therapeutics will host a conference call today at 8:30 AM ET to discuss financial results for the three months ended March 31, 2013. To participate in the live conference call, please dial 888-523-1228 (U.S. callers) or 719-325-2432 (international callers), and provide passcode 8910700. A live webcast of the call will also be available through the Investor Relations section of the Company's website. Please allow extra time prior to the webcast to register, download and install any necessary audio software.

The conference call and the webcast will be archived for 30 days. The telephone replay of the call will be available approximately two hours after completion of the call by dialing 888-203-1112 (U.S. callers) or 719-457-0820 (international callers), and providing passcode 8910700.


PERTZYE (pancrelipase) is indicated for the treatment of exocrine pancreatic insufficiency due to cystic fibrosis or other conditions.

Fibrosing colonopathy is associated with high-dose use of pancreatic enzyme replacement. Exercise caution when doses of PERTZYE exceed 2,500 lipase units/kg of body weight per meal (or greater than 10,000 lipase units/kg of body weight per day). To avoid irritation of oral mucosa, do not chew PERTZYE or retain in the mouth. Hyperuricemia may develop. Consider monitoring uric acid levels in patients with hyperuricemia, gout, or renal impairment. Exercise caution when administering pancrelipase to a patient with a known allergy to proteins of porcine origin. There is theoretical risk of viral transmission with all pancreatic enzyme products including PERTZYE. The most common adverse reactions (≥ 10% of patients treated with PERTZYE) are diarrhea, dyspepsia, and cough.

PERTZYE full Prescribing Information and Medication Guide are available at


BETHKIS is indicated for the management of cystic fibrosis patients with Pseudomonas aeruginosa. Safety and efficacy have not been demonstrated in patients under the age of six years, patients with FEV1 less than 40% or greater than 80% predicted, or patients colonized with Burkholderia cepacia.

BETHKIS is contraindicated in patients with a known hypersensitivity to any aminoglycoside.

Bronchospasm can occur with inhalation of BETHKIS. Bronchospasm and wheezing should be treated as medically appropriate. Caution should be exercised when prescribing BETHKIS to patients with known or suspected auditory, vestibular, renal, or neuromuscular dysfunction. Audiograms, serum concentration, and renal function should be monitored as appropriate. Avoid concurrent and/or sequential use of BETHKIS with other drugs with neurotoxic or ototoxic potential. BETHKIS should not be administered concurrently with ethacrynic acid, furosemide, urea, or mannitol. Aminoglycosides may aggravate muscle weakness because of a potential curare-like effect on neuromuscular function. Fetal harm can occur when aminoglycosides are administered to a pregnant woman. Apprise women of the potential hazard to the fetus. Common adverse reactions (more than 5%) occurring more frequently in BETHKIS patients are forced expiratory volume decreased, rales, red blood cell sedimentation rate increased, and dysphonia.

BETHKIS full Prescribing Information is available at

About Cornerstone Therapeutics

Cornerstone Therapeutics Inc. (NASDAQ: CRTX), headquartered in Cary, N.C., is a specialty pharmaceutical company focused on commercializing products for the hospital and adjacent specialty markets. Key elements of the Company's strategy are to focus its commercial and development efforts in the hospital and adjacent specialty product sector within the U.S. pharmaceutical marketplace; continue to seek out opportunities to acquire companies, marketed or registration-stage products and late-stage development products that fit within the Company's focus areas; and generate revenues by marketing approved generic products through the Company's wholly-owned subsidiary, Aristos Pharmaceuticals, Inc. For more information, visit

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. The Company's management regularly uses supplemental non-GAAP financial measures to understand, manage and evaluate its business and make operating and compensation decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.

These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The additional non-GAAP financial information presented in this press release should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP (such as operating income (loss), net income (loss) and earnings (loss) per share) and should not be considered measures of the Company's liquidity. These non-GAAP measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures.

The non-GAAP financial measures reflect adjustments for stock-based compensation expense, amortization of product rights, transaction-related expenses, acquisition adjustments related to inventory sold, changes in acquisition-related contingent payments and the gain on the divestiture of certain product rights. Transaction-related expenses consist of (1) costs incurred to complete product or company acquisitions or other strategic transactions, including due diligence and legal, consulting and other related fees; (2) integration costs related to the Company's completed transactions; and (3) transaction-related fees associated with transactions that are not consummated. The Company excludes these expenses from its non-GAAP measures because it believes that their exclusion provides an additional means to assess the extent to which the Company's efforts and execution of its strategy are reflected in its operating results. In particular, stock-based compensation expense is excluded primarily because it is a non-cash expense that is determined based on subjective assumptions; amortization of product rights is excluded because it is not reflective of the cash-settled expenses incurred related to product sales; and the transaction-related expenses, acquisition adjustments related to inventory sold, changes in acquisition contingent payments and the Company's gain on the divestiture of certain product rights are excluded because management believes they have no direct correlation to current operating results. Management believes that these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, enhance investors' and management's overall understanding of the Company's current financial performance and its prospects for the future.

The non-GAAP measures are subject to inherent limitations because (1) they do not reflect all of the expenses associated with the results of operations as determined in accordance with GAAP and (2) the exclusion of these expenses involves the exercise of judgment by management. Even though the Company has excluded stock-based compensation expense, amortization of product rights, transaction-related expenses, acquisition adjustments related to inventory sold, changes in acquisition-related contingent payments and the gain from the divestiture of product rights from the non-GAAP financial measures, stock-based compensation is an integral part of the Company's compensation structure, the acquisition of additional companies and/or product rights and the divestiture of the Company's anti-infective product rights are an important part of its business strategy and transaction-related expenses, whether or not the transaction is successfully closed, may be significant cash expenses.

Safe Harbor Statement

Statements in this press release regarding the progress and timing of our product development programs and related trials; our future opportunities; our strategy, future operations, anticipated financial position, future revenues and projected costs; our management's prospects, plans and objectives; and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Any statements that are not statements of historical fact (including, without limitation, statements containing the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," "target," "will," "would" and similar expressions) should also be considered to be forward-looking statements.

There are a number of important factors that could cause our actual results or events to differ materially from those indicated by such forward-looking statements, including risks relating to our "critical accounting estimates"; our ability to develop and maintain the necessary sales, marketing, supply chain, distribution and manufacturing capabilities to commercialize our products; our ability to replace the revenues from products we no longer market; patient, physician and third-party payer acceptance of our products as safe and effective therapeutic products; our heavy dependence on the commercial success of a relatively small number of currently marketed products; our ability to maintain regulatory approvals to market and sell our products; our ability to obtain U.S. Food and Drug Administration, or FDA, approval to manufacture, market and sell our products and product candidates, including LIXAR® and RETAVASE®; our ability to successfully and effectively launch our Hydrocodone Polistirex and Chlorpheniramine Polistirex Extended Release Suspension product and BETHKIS; our ability to enter into additional strategic licensing, product acquisition, collaboration or co-promotion transactions on favorable terms, if at all; our ability to manage and control unknown liabilities in connection with any acquisitions; our ability to successfully manage growth or integrate acquired businesses and operations; our ability to maintain compliance with NASDAQ listing requirements; adverse side effects experienced by patients taking our products; difficulties relating to clinical trials, including difficulties or delays in the completion of patient enrollment, data collection or data analysis; the results of preclinical studies and clinical trials with respect to our product candidates and whether such results will be indicative of results obtained in later clinical trials; our ability to develop and commercialize our product candidates before our competitors develop and commercialize competing products; our ability to satisfy FDA and other regulatory requirements; our substantial indebtedness and debt covenants; and our ability to obtain, maintain and enforce patent and other intellectual property protection for our products and product candidates and the other factors described in Item 1A (Risk Factors) of our Annual Report on Form 10-K filed with the SEC on March 14, 2013 and in our subsequent filings with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this press release reflect our expectations and beliefs only as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. However, while we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as may be required by law. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or investments that we may make or enter into. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this release.


LIXAR®, ZYFLO CR® and ZYFLO® are registered trademarks of Cornerstone Therapeutics Inc. CARDENE® I.V. and RETAVASE® are registered trademarks of EKR Therapeutics, Inc., Cornerstone Therapeutics' wholly-owned subsidiary. CUROSURF® and BETHKIS® are owned by Chiesi Farmaceutici S.p.A. and licensed to Cornerstone Therapeutics for sales and marketing purposes in the United States. PERTZYE® is a registered trademark of Digestive Care, Inc. and licensed to Cornerstone Therapeutics for sales and marketing purposes in the United States.


                       CORNERSTONE THERAPEUTICS INC.                        
              (In thousands, except share and per share data)               
                                                     Three Months Ended     
                                                          March 31,         
                                                     2013          2012     
                                                 ------------  ------------ 
Net revenues                                     $     37,980  $     22,161 
Costs and expenses:                                                         
  Cost of product sales (exclusive of                                       
   amortization of product rights)                     12,157         8,686 
  Selling, general and administrative                  13,117        10,922 
  Research and development                                827         1,045 
  Amortization of product rights                        4,155         5,301 
  Change in acquisition-related contingent                                  
   payments                                             2,398             - 
  Transaction-related expenses                            683           742 
  Other operating expenses, net                             -        (1,492)
                                                 ------------  ------------ 
    Total costs and expenses                           33,337        25,204 
                                                 ------------  ------------ 
Income (loss) from operations                           4,643        (3,043)
Other expenses, net:                                                        
  Interest expense, net                                (1,663)           (2)
  Other income (expense), net                             529             - 
                                                 ------------  ------------ 
    Total other expenses                               (1,134)           (2)
                                                 ------------  ------------ 
Income (loss) before income taxes                       3,509        (3,045)
(Provision for) benefit from income taxes              (1,094)        1,220 
                                                 ------------  ------------ 
Net income (loss)                                $      2,415  $     (1,825)
                                                 ============  ============ 
Comprehensive income (loss)                      $      2,415  $     (1,825)
                                                 ============  ============ 
Net income (loss) per share, basic               $       0.09  $      (0.07)
                                                 ============  ============ 
Net income (loss) per share, diluted             $       0.09  $      (0.07)
                                                 ============  ============ 
Weighted-average common shares, basic              26,364,035    25,817,185 
                                                 ============  ============ 
Weighted-average common shares, diluted            30,972,585    25,817,185 
                                                 ============  ============ 
                       CORNERSTONE THERAPEUTICS INC.                        
                        CONSOLIDATED BALANCE SHEETS                         
              (In thousands, except share and per share data)               
                                                  March 31,                 
                                                     2013      December 31, 
                                                 (Unaudited)       2012     
                                                ------------- ------------- 
Current assets:                                                             
  Cash and cash equivalents                     $      63,392 $      56,250 
  Accounts receivable, net                             16,672        14,368 
  Inventories, net                                      9,808        11,384 
  Prepaid expenses                                      4,374         3,343 
  Income tax receivable                                   450         4,094 
  Deferred tax asset                                    2,593         1,614 
  Acquisition-related current assets                    9,655        11,134 
  Other current assets                                    221           379 
                                                ------------- ------------- 
    Total current assets                              107,165       102,566 
                                                ------------- ------------- 
Property and equipment, net                             1,489         1,310 
Product rights, net                                   227,956       232,111 
Goodwill                                               33,180        33,356 
Other assets                                               32            32 
                                                ------------- ------------- 
    Total assets                                $     369,822 $     369,375 
                                                ============= ============= 
Liabilities and Stockholders' Equity                                        
Current liabilities:                                                        
  Accounts payable                              $      11,904 $      12,439 
  Accrued expenses                                     36,920        37,379 
  Acquisition-related contingent payments               7,156         6,846 
  Acquisition-related current liabilities               8,053         9,636 
  Other current liabilities                               641           525 
                                                ------------- ------------- 
    Total current liabilities                          64,674        66,825 
                                                ------------- ------------- 
Acquisition-related contingent payments, less                               
 current portion                                       27,288        26,362 
Long-term debt                                         89,566        89,540 
Deferred tax liability                                 14,110        15,683 
Other long-term liabilities                             4,553         4,792 
                                                ------------- ------------- 
    Total liabilities                                 200,191       203,202 
                                                ------------- ------------- 
Stockholders' equity                                                        
  Preferred stock - $0.001 par value, 5,000,000                             
   shares authorized; no shares issued and                                  
   outstanding                                              -             - 
  Common stock - $0.001 par value, 90,000,000                               
   shares authorized; 26,426,811 and 26,348,470                             
   shares issued and outstanding as of March                                
   31, 2013 and December 31, 2012, respectively            26            26 
  Additional paid-in capital                          168,504       167,461 
  Retained earnings (accumulated deficit)               1,101        (1,314)
                                                ------------- ------------- 
    Total stockholders' equity                        169,631       166,173 
                                                ------------- ------------- 
    Total liabilities and stockholders' equity  $     369,822 $     369,375 
                                                ============= ============= 
                       CORNERSTONE THERAPEUTICS INC.                        
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In thousands)                               
                                                      Three Months Ended    
                                                           March 31,        
                                                       2013         2012    
                                                   -----------  ----------- 
Cash flows from operating activities                                        
Net income (loss)                                  $     2,415  $    (1,825)
Adjustments to reconcile net income (loss) to net                           
 cash provided by (used in) operating activities:                           
  Amortization and depreciation                          4,340        5,455 
  Amortization of debt costs                                26            - 
  Provision for prompt payment discounts                 1,110          664 
  Provision for other receivables                           23            - 
  Provision for inventory allowances                     1,572           12 
  Acquisition accounting adjustment on inventory                            
   sold                                                     29            - 
  Gain on sale of product rights                             -       (1,492)
  Change in acquisition-related contingent                                  
   payments                                              2,398            - 
  Stock-based compensation                                 668          675 
  Deferred revenue                                           -         (608)
  Deferred income taxes                                    932       (1,222)
Changes in operating assets and liabilities:                                
  Accounts receivable                                   (3,368)      (2,770)
  Inventories                                              (25)        (325)
  Prepaid expenses and other assets                     (1,031)       1,424 
  Accounts payable, accrued expenses, and other                             
   liabilities                                            (891)      (2,796)
  Acquisition-related current assets and                          

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