Process to Explore Strategic Alternatives Ongoing; Company Prepares for Potential 2008 Launch of MOXATAG; Keflex Product Sales Total $2.4 Million in Quarter GERMANTOWN, Md., May 13
GERMANTOWN, Md., May 13 /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 March 31, 2008.
MiddleBrook reported first quarter 2008 revenue of $2.4 million, compared
to revenue of $2.9 million in the fourth quarter of 2007 and $1.8 million in
the first quarter of 2007. The Company reported research and development (R&D)
expenses in the first quarter of $3.7 million, compared to fourth quarter 2007
R&D expenses of $3.5 million and first quarter 2007 R&D expenses of $7.5
million. Total operating expenses for the first quarter of 2008 were $9.1
million, down from $9.8 million in the fourth quarter of 2007 and $15.5
million in the first quarter of 2007.
Net loss was $13.8 million for the first quarter, compared to a net loss
of $9.1 million in the fourth quarter of 2007 and a net loss of $13.7 million
in the first quarter of 2007. The Company recorded a $7.4 million noncash
warrant expense in the first quarter of 2008 resulting from the change in the
contractual fair value of outstanding warrants which were marked to market as
of quarter-end. The Company incurred a $2.1 million noncash warrant expense in
the fourth quarter of 2007; however, there were no such expenses in prior
periods.
Net loss per share applicable to common stockholders during the first
quarter of 2008 was ($0.26), compared to a net loss per share of ($0.19) in
the prior quarter, and a net loss per share of ($0.38) in the comparable
quarter of last year.
"Since receiving FDA approval for MOXATAG in January, we have been working
closely with our contract manufacturer preparing for a potential commercial
launch of MOXATAG by as early as the fourth quarter," stated Edward M. Rudnic,
Ph.D., president and CEO of MiddleBrook. "Also, we intend to conclude our
ongoing strategic process over the coming months."
OPERATIONAL HIGHLIGHTS
Keflex(R) Capsules (Cephalexin, USP) - Commercialization Update
During the first 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 first quarter of 2008
were 68,064 prescriptions, compared to fourth quarter 2007 prescriptions of
79,628.
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 Approval - January 23,
2008
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 first 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 fourth quarter of 2008,
pending the outcome of its ongoing strategic evaluation.
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.
Equity Financing in January 2008 Raises $21 Million in Gross Proceeds
On January 28, 2008, MiddleBrook closed a private placement of common
stock and warrants to institutional investors, resulting in the receipt of
approximately $19.9 million in net proceeds. The transaction included the
private placement of 8.75 million shares of MiddleBrook common stock and
five-year warrants to purchase an additional 3.5 million shares of common
stock.
The Company intends to use the proceeds from the financing to support the
manufacture of MOXATAG, and for working capital and general corporate
purposes. In addition, the financing is designed to provide the Company with
additional financial flexibility in its ongoing strategic discussions.
Process to Explore Strategic Alternatives Ongoing
In February 2008, MiddleBrook announced that it engaged Morgan Stanley as
its strategic advisor in the Company's ongoing strategic evaluation process.
MiddleBrook is evaluating a full range of available strategic alternatives
intended to further enhance shareholder value.
Strategic alternatives the Company may pursue could include, but are not
limited to, continued execution of the Company's operating plan, the sale of
some or all of the Company's assets, partnering or other collaboration
agreements, or a merger or other strategic transaction. There can be no
assurance that the exploration of strategic alternatives will result in any
agreements or transactions, or that, if completed, any agreements or
transactions will be successful or on attractive terms. The Company does not
intend to disclose developments with respect to this process unless and until
the evaluation of strategic alternatives has been completed.
FINANCIAL DETAILS
-- Total revenue, resulting entirely from net Keflex product sales, was
$2.4 million in the first quarter of 2008, compared to revenue of $2.9
million in the prior quarter, and $1.8 million for the first quarter of
2007. Increased product sales in the first quarter versus the prior
year were mainly attributable to growth in sales of the Company's
Keflex 750 mg strength capsules.
-- 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 $3.7 million in the first quarter of 2008, compared
to $3.5 million in the previous quarter and $7.5 million in the first
quarter of 2007. Reduced R&D expenses in the first quarter compared to
the prior year resulted mainly from the elimination of expenses
associated with the Company's completed MOXATAG clinical trial.
Selling, general and administrative (SG&A) expenses totaled $4.8
million in the first quarter of 2008, down from $5.6 million in the
fourth quarter of 2007, and $7.7 million in the first quarter of 2007.
First quarter SG&A costs declined due to lower third-party costs
associated with the reduced size of Company's contract sales force.
-- Loss from operations for the first quarter of 2008 was $6.7 million,
down from $6.9 million in the prior quarter and $13.7 million in the
first quarter of last year. Reduced operating loss in the quarter
resulted primarily from lower operating expenses in the first quarter
of 2008 compared to prior periods.
-- Other expenses for the first quarter of 2008 included a $7.4 million
noncash expense for the contractual fair value of warrants issued to
Deerfield Management in the fourth quarter of 2007. The Company
recorded a $2.1 million noncash warrant expense in the fourth quarter
of 2007. There were no such expenses in prior periods.
-- Net loss for the first quarter of 2008 was $13.8 million. This compares
to a net loss of $9.1 million in the fourth quarter of 2007, and $13.7
million in the first quarter of 2007. The net loss for the three months
ended March 31, 2008, was reduced by $0.2 million attributable to the
loss 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."
-- Net loss per share applicable to common stockholders for the first
quarter of 2008 was ($0.26), compared to a loss per common share of
($0.19) in the prior quarter and ($0.38) in the first quarter of 2007.
Per share figures were computed on the basis of an average of 53.3
million shares outstanding in the first quarter of 2008, 46.7 million
shares outstanding in the fourth quarter of 2007, and 36.4 million
shares outstanding in the first quarter of 2007.
-- Cash and marketable securities increased by $16.0 million during the
first quarter. Changes were composed of $19.9 million raised from the
sale of common stock and warrants, $1.5 million for non-cash expenses,
$0.7 million from the exercise of stock options and warrants, $0.3
million from the sale of fixed assets, and $0.3 million for working
capital changes and other items; offset by $6.7 million of operating
losses in the quarter.
-- The Balance Sheet at March 31, 2008 reflected $18.0 million of
unrestricted cash, cash equivalents and marketable securities, compared
to $2.0 million as of year-end 2007.
FINANCIAL GUIDANCE
MiddleBrook's financial guidance remains unchanged from prior forecasts.
Total revenue for 2008 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. Total cash used
in operating activities and capital expenditures in 2008 is estimated to be
between $17 and $19 million. These forecasts also assume no financial impact
from the Company's recently approved MOXATAG product, pending the outcome of
its ongoing strategic process.
Assuming the Company's expectations for continued sales of its Keflex 750
mg product and anticipated level of R&D spending and other obligations,
MiddleBrook believes that its current funds, together with expected Keflex
product sales, will be sufficient to support its currently planned operations
into 2009. These 2008 estimates are forward-looking statements that involve
risks and uncertainties, and actual results could vary materially.
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
front-loaded staccato bursts, or "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.
ABOUT MOXATAG:
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.
ABOUT KEFLEX:
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 period ended March 31, 2008 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
(Unaudited)
Three Months Ended March 31,
2008 2007
Product sales $2,394,010$1,773,037
Costs and expenses:
Cost of product sales 621,440 233,635
Research and development 3,727,859 7,528,872
Selling, general and administrative 4,753,326 7,688,652
Total expenses9,102,62515,451,159
Loss from operations (6,708,615) (13,678,122)
Interest income 125,282 134,027
Interest expense- (193,895)
Warrant expense(7,440,000)-
Other income (expense)(19,074) 75,000
Loss including noncontrolling
interest $(14,042,407) $(13,662,990)
Loss attributable to noncontrolling
interest 242,905 0
Net loss (13,799,502) (13,662,990)
Basic and diluted net loss per share $(0.26) $(0.38)
Shares used in calculation of basic
and diluted net loss per share53,295,30336,383,312
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $17,957,034 $1,951,715
Accounts receivable, net 765,003 687,787
Inventories, net 373,324 687,933
Prepaid expenses and other
current assets794,2571,142,905
Total current assets 19,889,6184,470,340
Property and equipment, net 9,928,402 10,928,659
Restricted cash 872,180 872,180
Deposits and other assets 132,324 174,965
Intangible assets, net 6,930,2327,219,651
Total assets$37,752,756 $23,665,795
LIABILITIES, NONCONTROLLING INTEREST,
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable$2,121,411 $1,659,752
Accrued expenses 4,690,2125,613,544
Total current liabilities 6,811,6237,273,296
Warrant liability 9,540,0002,100,000
Deferred contract revenue 11,625,000 11,625,000
Deferred rent and credit on
lease concession 1,151,1731,177,840
Total liabilities29,127,796 22,176,136
Noncontrolling interest 7,094,9067,337,811
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock,
undesignated--
Common stock, par value559,706 467,488
Capital in excess of par
value 210,104,678 189,019,188
Accumulated deficit (209,134,330)(195,334,828)
Total stockholders' equity
(deficit)1,530,054 (5,848,152)
Total liabilities and
stockholders' equity $37,752,756 $23,665,795
MIDDLEBROOK PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2008 2007
Cash flows from operating activities:
Net loss $(13,799,502) $(13,662,990)
Adjustments to reconcile net loss
to net cash in operating
activities:
Loss attributable to non-
controlling interest(242,905) -
Depreciation and amortization 940,635951,897
Warrant expense 7,440,000 -
Stock-based compensation 537,735580,711
Deferred rent and credit on
lease concession (26,667) (11,661)
Amortization of premium on
marketable securities - 8,953
Loss on disposal of fixed assets 19,074 -
Changes in:
Accounts receivable (77,216) (763,807)
Inventories 314,609(87,862)
Prepaid expenses and other
current assets 348,648 47,891
Deposits other than on
property and equipment, and
other assets42,641194,087
Accounts payable461,659 4,763,592
Accrued expenses (923,332) (270,989)
Net cash used in
operating activities (4,964,621)(8,250,178)
Cash flows from investing activities:
Proceeds from sale of fixed assets 329,967 -
Purchases of property and equipment -(19,592)
Deposits on property and equipment- (397,876)
Net cash provided by
investing activities 329,967 (417,468)
Cash flows from financing activities:
Proceeds from private placement
of common stock 19,915,002 -
Payments on lines of credit - (666,667)
Proceeds from exercise of common
stock options 560,989 7,690
Proceeds from exercise of common
stock warrants 163,982 -
Net cash provided by
(used in) financing
activities 20,639,973 (658,977)
Net increase (decrease) in cash and
cash equivalents 16,005,319 (9,326,623)
Cash and cash equivalents,
beginning of period1,951,715 14,856,738
Cash and cash equivalents, end of
period $17,957,034 $5,530,115
SOURCE MiddleBrook Pharmaceuticals, Inc.
