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Cardiome Pharma (CRME)
Q4 2012 Earnings Call
March 15, 2013 8:15 am ET
Jennifer Archibald - Chief Financial Officer
William L. Hunter - Interim Chief Executive Officer, Director, Chairman of Nomination Committee and Member of Compensation Committee
Karim Lalji - Chief Commercial Officer
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Before proceeding with the call, I will first read the company's forward-looking statement disclaimer.
Statements contained during this conference call relating to future results, events and expectations are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company or industry results to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, those described in the company's annual report on Form 20-F.
I would now like to turn the meeting over to Ms. Jennifer Archibald, Chief Financial Officer of Cardiome. Ms. Archibald, please go ahead.
The net loss for the year ended December 31, 2012, with $18.3 million compared to a net loss of $27.9 million for the year ended December 31, 2011. The net loss for 2012 was largely due to restructuring charges, expenditures spent on clinical development efforts and preclinical research projects, as well as other operating costs. The loss in 2012 was partially offset by the recognition of an $11.2 million gain on the settlement of debt to Merck. The net loss for 2011 was largely due to expenditures incurred on clinical development efforts, preclinical research projects and other normal operating costs.
The revenue for 2012 was $0.8 million, a decrease of $0.7 million from $1.5 million in 2011.
Research and development expenditures were $6 million for 2012, as compared to $15.2 million for 2011. R&D expenditures consist of clinical development expenditures and research expenditures. Clinical development expenditures for 2012 were $0.9 million, as compared to $6.5 million for 2011. The decrease of $5.6 million in expenditures was primarily due to reduced costs for vernakalant IV as a result of the termination of the ACT 5 clinical trial.
Research expenditures for 2012 were $5.2 million, as compared to $8.7 million for 2011. The decrease of $3.5 million in expenditures was primarily due to the restructuring initiatives which eliminated our internal research activity.
General and administration expenditures for 2012 were $9.6 million compared to $11.5 million for 2011. The decline was primarily due to a decrease in wages and benefits as a result of our workforce reductions during 2012.
Amortization was $1.2 million for 2012, as compared to $1.1 million for 2011. Interest expense for 2012 and '11 was $4.3 million and $2.2 million, respectively. The increase in interest expense was due to a higher outstanding balance owing to Merck during fiscal 2012 as a result of our $25 million draw.
Related balance sheet items to note. We ended the year with cash and cash equivalents of $41.3 million, accounts receivable of $978,000, accounts payable and accrued liabilities of $4.4 million.
2012 highlights. Notice of termination from Merck. We -- Merck gave us a notice, termination of both our collaboration and license agreements. The terminations will be effective after the notice period pursuant to the terms of the collaboration and license agreements. The transition of vernakalant from Merck to us is a multi-step process, and the activities relating to this transaction is ongoing. We expect these activities to continue throughout 2013. Upon the effective dates of the terminations, we will have exclusive global rights to vernakalant IV and vernakalant oral.
Strategic realignment of our company from an R&D-focused to a commercially focused company. Restructuring charges related to our restructuring include employee termination benefits, idle-use expenses and asset impairment due to redundant assets.
And lastly, the settlement of debt -- of our debt with Merck. In December 2012, we reached an agreement with Merck to settle our debt obligation. Under the terms of the settlement agreement, we will pay Merck $20 million on or before March 31 to settle our outstanding debt of $50 million, plus accrued interest of $2 million owed to Merck. The settlement between us and Merck will terminate the credit facility, and upon payment of the $20 million settlement amount, we'll release and discharge the collateral security taken in respect of the advances under the line of credit. We paid $7 million of the $20 million settlement amount to Merck during 2012, which settles $17.5 million of the original outstanding debt obligation. And as a result on that settlement, $11.2 million gain was recorded.
Subsequent to yearend, the settlement agreement was further amended, which allowed us to pay the remaining balance of the settlement amount. On March 1, 2013, the company paid the remaining $13 million of the debt settlement amount to Merck, resulting in an additional gain on debt settlement of $20.8 million. With this final payment, all outstanding debt obligations are extinguished and Merck has released and discharged the collateral security taken in respect of the advances under the line of credit.