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Cardiome Pharma (CRME)
Q1 2013 Earnings Call
May 13, 2013 4:15 pm ET
Jennifer Archibald - Chief Financial Officer
William L. Hunter - Chief Executive Officer, President, 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. Archibald, Chief Financial Officer of Cardiome. Please go ahead, Ms. Archibald.
Thank you. Good afternoon, everyone, and welcome to today's call. Earlier today, Cardiome issued its first quarter 2013 financial results. The financial result press release has been posted on our website at cardiome.com. A replay of this conference call will be available later today on the Investor Relations section of our website.
I will now provide an overview of our first quarter 2013 financial results. Amounts, unless specified otherwise, are expressed in U.S. dollars and in accordance with Generally Accepted Accounting Principles used in the United States of America.
As of March 31, 2013, Cardiome had cash and cash equivalents of $25.7 million compared to $41.3 million at December 31, 2012. We had no debt outstanding as of March 31, 2013, since we paid the remaining $13 million of the $20 million agreed-upon debt settlement payment to Merck on March 1.
During the first quarter of 2013, Cardiome recognized revenue of $0.1 million compared to $0.4 million in the first quarter of 2012. Revenue in the first quarter of 2013 was entirely comprised of licensing and other fees, which includes royalty revenue from the sales of BRINAVESS.
Research and development expenditures for the first quarter of 2013 were $0.4 million compared to $2.9 million for the first quarter of 2012. The decrease in research and development expenditures was primarily due to the restructuring initiatives in the third quarter of 2012, which eliminated our internal research activity.
Selling, general and administrative expenses were $2.2 million for the first quarter of 2013 compared to $2.6 million for the first quarter of 2012. The decrease in these expenditures was primarily due to a decrease in rent, as well as wages and benefit expenses as a result of our workforce reductions in the prior year. This decrease was partially offset by an increase in COGS associated with our sales and marketing efforts in preparation for the commercialization of BRINAVESS.
Other income includes a gain of $20.8 million in the first quarter of 2013 related to the settlement of debt owed to Merck. We recorded net income of $18.4 million for the first quarter of 2013 compared to net loss of $7 million for the first quarter of 2012. The net income for the first quarter of 2013 was primarily due to the recognition of the gain on the settlement of debt owed to Merck. The net loss for the first quarter of 2012 was due to restructuring charges, clinical development efforts, preclinical research projects, as well as other operating costs.
Highlights for this quarter include the significant expense reduction we achieved through our restructuring efforts, which were substantially complete in 2012. This reduction was partially offset by costs associated with activities to support the commercialization of BRINAVESS.
With the final settlement payment having been made to Merck during this quarter, we are now debt free.
For the remainder of 2013, we expect our selling, general and administrative expenditures to increase as a result of our transition activities with Merck, worldwide sales and marketing efforts, as well as other related costs required to support the commercialization of BRINAVESS.
We will continue to support preclinical research and development work externally through collaboration. Costs are expected to be significantly lower than in prior years. Our forecasted total expenditures for the year are expected to be greater than our revenues from the sales of BRINAVESS and any licensing, research, collaborative and other fees we may earn. We believe that our cash position and anticipated cash inflows from the sales of BRINAVESS will be sufficient to finance our operational and capital needs for at least 24 months.
I will now provide an overview of our share consolidation and a NASDAQ listing update. On April 3, 2013, our shareholders approved the consolidation of our issued and outstanding common shares on the basis of 1 post-consolidation common share for every 5 pre-consolidation common shares.
At the special general meeting, 95.7% of the shareholders of the company voted in favor of the consolidation. Our common shares began trading on a post-consolidation basis on the NASDAQ and TSX on April 12, 2013.