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POZEN Reports First Quarter 2014 Results

Net Income Increases to $2.9 Million on Rise in VIMOVO U.S. Royalty

CHAPEL HILL, N.C.--(BUSINESS WIRE)--May 8, 2014-- POZEN Inc. (NASDAQ: POZN), a pharmaceutical company committed to transforming medicine that transforms lives, today announced results for the first quarter ended March 31, 2014.

Corporate Highlights

  • POZEN reported net income of $2.9 million for the first quarter and expects to be profitable for the year, based upon current projections.
  • Royalty revenue for Q1 2014 was $4.5 million, an increase of $2.9 million over the prior quarter and $3.1 million over Q1 of 2013.
  • POZEN remains committed to controlling expenses and recorded a reduction of $2.6 million compared to Q1 2013. As part of the expense control, the Company has reduced its R&D staff and other costs and will continue to reduce staff not required to support our ongoing business activities.
  • POZEN announced that its drug candidates PA8140/PA32540 (aspirin and omeprazole) delayed release tablets received a complete response letter (CRL) from the U.S. Food and Drug Administration (FDA). A CRL is issued by the FDA when the review of the file is completed and questions remain that preclude the approval of the new drug application (NDA) in its current form. In the CRL, the FDA noted that, during an inspection of the manufacturing facility of an active ingredient supplier, inspection deficiencies were found. There were no clinical or safety deficiencies noted with respect to either PA8140 or PA32540 and no other deficiencies were noted in the CRL.

First Quarter Results

For the first quarter of 2014, POZEN reported total revenue of $7.5 million, resulting from $4.5 million VIMOVO®(naproxen / esomeprazole magnesium) royalty and $3.0 million from the amortization of the $15 million upfront fee for the licensing of PA. For the first quarter of 2013, the Company reported total revenue of $1.4 million of VIMOVO royalty.

Operating expenses for the first quarter of 2014 totaled $4.7 million, as compared to $7.2 million for the comparable period in 2013. The decrease in operating expenses in the first quarter of 2014 was primarily a result of having paid the PA PDUFA fee in Q1 of 2013 and the strategic decision to reduce staffing and undertake new development projects only if fully funded by a partner.

The Company reported net income of $2.9 million, or $0.09 per share on a diluted basis for the first quarter of 2014, compared to net loss of $(5.8) million, or $(0.19) loss per share, for the first quarter of 2013.

Balance Sheet

At March 31, 2014, cash and cash equivalents totaled $27.1 million. Accounts receivable totaled $4.5 million.

2014 Strategic Direction

The Company was pleased to return $1.75 per share of surplus corporate cash to stockholders in December 2013. For 2014, the Company’s areas of strategic focus are: obtaining FDA approval for PA8140/PA32540; transitioning all licensed know-how relating to PA in the United States and fulfilling all contractual obligations to Sanofi US; completing study PA10040-102, an additional Phase 1 pharmacodynamics study; preparing the regulatory filing document for PA product candidates in the European Union; finding partners for the PA asset in ex-U.S. territories; and controlling expenses. We have made the strategic decision not to start new development programs that are not fully funded by a partner. As a result, we have reduced our staff to sixteen employees and plan to make future reductions. Our board of directors and management team continue to explore potential ways to return value to our stockholders, including future cash distributions when we accumulate surplus cash as a result of receiving milestones and royalties from our commercial partners.

First Quarter Results Webcast

POZEN will host a webcast to present first quarter 2014 results and management’s outlook on Thursday, May 8, 2014 at 11:00 a.m. (ET). The webcast can be accessed live and will be available for replay at www.pozen.com.

About POZEN

POZEN Inc. is a small pharmaceutical company that specializes in developing novel therapeutics for unmet medical needs and licensing those products to other pharmaceutical companies for commercialization. By utilizing a unique in-source model and focusing on integrated therapies, POZEN has successfully developed and obtained FDA approval of two self-invented products. Funded by these milestones/royalty streams, POZEN has created a portfolio of cost-effective, evidence-based integrated aspirin therapies designed to enable the full power of aspirin by reducing its GI damage.

POZEN is currently seeking strategic partners to help maximize the opportunities for its portfolio assets.

The Company's common stock is traded under the symbol “POZN” on The NASDAQ Global Market. For more detailed company information, including copies of this and other press releases, please visit www.pozen.com.

About PA

POZEN has created a portfolio of investigational integrated aspirin therapies - the PA product platform. The products in the PA portfolio are being developed with the goal of significantly reducing GI ulcers and other GI complications compared to taking enteric-coated or plain aspirin alone.

The first candidates are PA8140, containing 81 mg of aspirin, and PA32540, containing 325 mg of aspirin. Both products are a coordinated-delivery tablet combining immediate-release omeprazole (40 mg), a proton pump inhibitor, layered around a pH-sensitive coating of an aspirin core. This novel, patented product is intended for oral administration once a day and an indication is being sought for use for the secondary prevention of cardiovascular disease in patients at risk for aspirin-induced gastric ulcers.

About VIMOVO

VIMOVO® (naproxen / esomeprazole magnesium) is a fixed-dose combination of delayed-release enteric-coated naproxen, a non-steroidal anti-inflammatory drug (NSAID), and immediate-release esomeprazole, a stomach acid-reducing proton pump inhibitor (PPI), approved for the relief of signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, and to decrease the risk of developing gastric ulcers in patients at risk of developing NSAID-associated gastric ulcers. VIMOVO is not recommended for use in children younger than 18 years of age. VIMOVO is not recommended for initial treatment of acute pain because the absorption of naproxen is delayed compared to absorption from other naproxen-containing products. Controlled studies do not extend beyond 6 months. VIMOVO should be used at the lowest dose and for the shortest amount of time as directed by your health care provider.

For Full Prescribing Information see www.vimovo.com.

Forward-Looking Statements

Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should be aware that our actual results, our ability to return value to our stockholders, including any cash distributions, and our future prospects could differ materially from those contained in the forward-looking statements, which are based on current market data and research (including third party and POZEN sponsored market studies and reports), management’s current expectations and are subject to a number of risks and uncertainties, including, but not limited to, our inability to further license our PA product candidates on terms and timing acceptable to us, our failure to successfully commercialize our product candidates; costs and delays in the development and/or FDA approval of our product candidates, including as a result of the need to conduct additional studies or due to issues with third-party manufacturers, or the failure to obtain such approval of our product candidates for all expected indications, including as a result of changes in regulatory standards or the regulatory environment during the development period of any of our product candidates; uncertainties in clinical trial results or the timing of such trials, resulting in, among other things, an extension in the period over which we recognize deferred revenue or our failure to achieve milestones that would have provided us with revenue; our inability to maintain or enter into, and the risks resulting from our dependence upon, collaboration or contractual arrangements necessary for the development, manufacture, commercialization, marketing, sales and distribution of any products, including our dependence on AstraZeneca and Horizon for the sales and marketing of VIMOVO®, our dependence on Sanofi US for the sales and marketing of PA8140/PA32540 in the United States, if approved, and our dependence on Patheon for the manufacture of PA8140/PA32540; competitive factors; our inability to protect our patents or proprietary rights and obtain necessary rights to third party patents and intellectual property to operate our business; our inability to operate our business without infringing the patents and proprietary rights of others; general economic conditions; the failure of any products to gain market acceptance; our inability to obtain any additional required financing; technological changes; government regulation; changes in industry practice; and one-time events, including those discussed herein and in our Annual Report on Form 10-K for the period ended December 31, 2013. We do not intend to update any of these factors or to publicly announce the results of any revisions to these forward-looking statements.

POZEN Inc.

Statements of Operations

(Unaudited)

 
Three Months Ended

March 31,

2014   2013
Revenue:
Royalty revenue $ 4,548,676 $ 1,415,000
Licensing revenue 3,000,000

Total revenue 7,548,676 1,415,000
Operating expenses:
Selling, general and administrative 2,823,518 3,634,043
Research and development 1,827,878 3,583,940
Total operating expenses 4,651,396 7,217,983
Other income:
Interest and other income, net 7,411 25,051
Net income / (loss) attributable to common stockholders $ 2,904,691 $ (5,777,932 )
 
Basic net income / (loss) per common share $ 0.09 $ (0.19 )
 
Shares used in computing basic net income / (loss) per common share 30,743,966 30,336,398
 
Diluted net income / (loss) per common share $ 0.09 $ (0.19 )
 
Shares used in computing diluted net income / (loss) per common share 32,489,969 30,336,398

POZEN Inc.

Balance Sheets

(Unaudited)

     
March 31, December 31,
2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 27,143,450 $ 32,827,732
Accounts receivable 4,548,676 1,673,000
Prepaid expenses and other current assets 711,047 794,665
Total current assets 32,403,173 35,295,397
Equipment, net of accumulated depreciation 34,024 38,979
Total assets $ 32,437,197 $ 35,334,376
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 457,363 $ 1,500,671
Accrued compensation 1,016,274 3,132,468
Accrued expenses 883,330 1,655,212
Deferred revenue 8,257,300 11,257,300
Total current liabilities 10,614,267 17,545,651
 
 
Total stockholders’ equity 21,822,930 17,788,725
Total liabilities and stockholders’ equity $ 32,437,197 $ 35,334,376

Source: POZEN Inc.

POZEN Inc.
Bill Hodges, Chief Financial Officer
919-913-1030
or
Stephanie Bonestell
Manager, Investor Relations & Public Relations
919-913-1030