CARY, N.C., Nov. 4 /PRNewswire-FirstCall/ -- Cornerstone
Therapeutics Inc. (NASDAQ:CRTX), a specialty pharmaceutical company
focused on acquiring, developing and commercializing significant
products primarily for the respiratory and related markets, today
reported financial results for the three and nine months ended
September 30, 2009. Recent Highlights -- Third quarter net revenues
increased $2.5 million to $23.1 million, or 12%, compared to the
third quarter of 2008 -- Non-GAAP income from operations(1) for the
third quarter of $2.8 million, based on a GAAP basis loss from
operations of $1 million adjusted primarily for additional expenses
related to the strategic transaction with Chiesi Farmaceutici SpA
-- Closed acquisition of commercial rights to Factive® -- Completed
transaction with Chiesi to acquire rights to Curosurf® and $15.5
million in cash -- FDA accepted for review the Company's filing for
an extended-release antitussive product candidate (CRTX 067) (1)
Non-GAAP income from operations is a non-GAAP financial measure
that excludes stock-based compensation, amortization of product
rights and acquisition-related expenses. See reconciliation tables
below for full details. "In the third quarter, we continued to
execute our strategy with the additions of Curosurf and Factive to
our product portfolio," said Craig A. Collard, Cornerstone's
Chairman and Chief Executive Officer. "We are excited about the
potential these products have in the hands of our sales force, and
expect them to be strong long-term contributors to our success. In
addition, we are pleased that the regulatory filing for our
extended-release antitussive product candidate, CRTX 067, was
submitted to the FDA in July and has been accepted for review."
Third Quarter Financial Results Net revenues for the third quarter
increased $2.5 million over the same period in 2008, or 12%, to
$23.1 million. Net product sales were $23.1 million in the third
quarter, compared to $20.1 million in the same period of 2008, an
increase of $3.0 million, or 15%. AlleRx® Dose Pack family of
products net product sales for the three months ended September 30,
2009 decreased by $2.6 million, or 42%, to $3.5 million compared to
the three months ended September 30, 2008. The decline in product
sales was due primarily to decreased volume of the AlleRx PE and
the AlleRx DF formulations as a result of increased competition.
Curosurf net product sales were $2.2 million for the three months
ended September 30, 2009. The Company acquired the Curosurf product
rights from Chiesi during the third quarter of 2009 and began
promoting and selling Curosurf in September 2009. Factive net
product sales were $91,000 for the three months ended September 30,
2009. Factive product rights and related inventory were acquired on
September 9, 2009. The Company began earning revenues from Factive
in September 2009, but did not initiate marketing and promotional
activities until October 2009. HyoMAX® net product sales decreased
$4.9 million, or 39%, to $7.6 million for the three months ended
September 30, 2009 compared to the corresponding period of 2008.
This decrease was primarily due to increased competition from other
manufacturers in the marketplace. Spectracef® net product sales
increased $1.9 million for the three months ended September 30,
2009 compared to the corresponding period of 2008 primarily due to
the enhanced promotion of Spectracef by the Company's sales force
to targeted physicians. Zyflo CR® and Zyflo® net product sales were
$5.0 million for the three months ended September 30, 2009. As
noted below, the Company's historical financial results for the
three and nine months ended September 30, 2008 do not include sales
of Zyflo CR and Zyflo by Critical Therapeutics prior to the
completion of our October 31, 2008 merger. Gross profit (exclusive
of royalty agreement revenues and amortization of product rights)
was $18.9 million for the quarter ended September 30, 2009 compared
to $18.5 million in the corresponding period of 2008. Gross margin
was 82% and 92% for the three months ended September 30, 2009 and
2008, respectively. The reduction in gross margin resulted
primarily from a change in the mix of products comprising net
product sales. Sales and marketing expenses increased $4.5 million
during the three months ended September 30, 2009 compared to the
corresponding period of 2008. This increase was primarily
attributable to growth of the sales force and management team;
marketing and promotional spending; and co-promotion, travel and
consulting-related expenses. General and administrative expenses
increased $3.7 million for the three months ended September 30,
2009 compared to the same period in 2008. This increase was
primarily due to increases in our workforce; an increase in legal
and accounting costs, most of which relate to increased
requirements as a result of becoming a public company and costs
associated with the Chiesi transaction; FDA regulatory-related
fees; and product liability and other insurance-related expenses.
Costs associated with the Chiesi transaction during the three
months ended September 30, 2009 included $1.5 million of additional
stock-based compensation expense due to the accelerated vesting of
certain stock options and shares of restricted stock and $0.3
million of legal, accounting and related expenses. Financial
Results for Nine Months Ended September 30, 2009 Net revenues for
the nine months ended September 30, 2009 increased $34.7 million
over the same period in 2008, or 79%, to $78.8 million. Net product
sales were $78.5 million for the nine months ended September 30,
2009, compared to $42.9 million in the same period of 2008, an
increase of approximately $35.7 million, or 83%. For the nine
months ended September 30, 2009, net product sales of the AlleRx
Dose Pack family of products increased by $4.0 million, or 21%, to
$23.0 million compared to the nine months ended September 30, 2008.
This increase was due primarily to higher AlleRx Legacy
prescription volume offset by decreased volume of the AlleRx PE and
the AlleRx DF formulations as a result of competition. HyoMAX net
product sales increased $8.0 million, or 47%, to $25.0 million for
the nine months ended September 30, 2009 compared to the
corresponding period of 2008. This increase was primarily due to
the fact that our HyoMAX products were launched in May, June and
July 2008, and, therefore, had at most five months of sales during
the first nine months of 2008. Spectracef net product sales
increased $5.4 million, or 370%, to $6.9 million for the nine
months ended September 30, 2009 compared to the nine months ended
September 30, 2008. This increase was primarily due to the launch
of the Spectracef 400 mg Dose Packs in late 2008. Zyflo CR and
Zyflo net product sales were $13.8 million for the nine months
ended September 30, 2009. Gross profit (exclusive of royalty
agreement revenues and amortization of product rights) was $68.3
million in the nine months ended September 30, 2009 compared to
$39.8 million in the corresponding period of 2008. Gross margin was
87% and 93% for the nine months ended September 30, 2009 and 2008,
respectively. The reduction in gross margin resulted primarily from
a change in the mix of products comprising net product sales. Sales
and marketing expenses increased $8.8 million for the nine months
ended September 30, 2009 compared to the nine months ended
September 30, 2008. This increase was primarily attributable to
growth of the sales force and management team; marketing and
promotional spending; and co-promotion, travel and
consulting-related expenses. General and administrative expenses
increased $8.8 million for the nine months ended September 30, 2009
compared to the nine months ended September 30, 2008. This increase
was primarily due to increases in our workforce; an increase in
legal and accounting costs, most of which relate to increased
requirements as a result of becoming a public company and costs
associated with the Chiesi transaction; FDA regulatory-related
fees; and product liability and other insurance-related costs.
Costs associated with the Chiesi transaction during the nine months
ended September 30, 2009 included $1.5 million of additional
stock-based compensation expense due to the accelerated vesting of
certain stock options and shares of restricted stock and $1.8
million of legal, accounting and related expenses. Key Financial
Metrics Three Months Ended Nine Months Ended September 30,
September 30, 2009 2008 2009 2008 GAAP (loss) income from
operations $(1,042) $6,383 $12,404 $10,768 Non-GAAP income from
operations(1) $2,865 $6,579 $19,652 $11,981 GAAP net (loss) income
$(538) $3,307 $7,515 $6,131 Non-GAAP net income(2) $1,482 $3,414
$11,944 $6,896 GAAP net (loss) income per share, diluted $(0.03)
$0.48 $0.46 $0.89 Non-GAAP net income per share, diluted(3) $0.07
$0.49 $0.74 $1.00 (1) Non-GAAP income from operations is a non-GAAP
financial measure that excludes stock-based compensation,
amortization of product rights and acquisition-related expenses.
See reconciliation tables below for full details. (2) Non-GAAP net
income is a non-GAAP financial measure that excludes stock-based
compensation, amortization of product rights and
acquisition-related expenses, and the income tax effects of these
items. See reconciliation tables below for full details. (3)
Non-GAAP net income per share, diluted is a non-GAAP financial
measure that is calculated as non-GAAP net income divided by the
diluted weighted-average common shares. See reconciliation tables
below for full details. 2009 Outlook Based on expected
contributions from Curosurf and Factive in the fourth quarter,
Cornerstone is increasing its revenue guidance from in excess of
$95 million to in excess of $104 million for the full-year 2009. In
addition, the Company anticipates achieving income from operations
on a GAAP basis of $15 million and on a non-GAAP basis of $26.1
million, as shown below. (in millions) 2009 Outlook ------------
------------ GAAP income from operations $15.0 Add: stock-based
compensation(1) 1.4 Add: amortization of product rights 6.1 Add:
acquisition-related expenses 3.6 --- Non-GAAP income from
operations $26.1 ------------------------------- ----- (1) Excludes
stock-based compensation charges incurred in connection with the
Chiesi transaction, which are included in acquisition-related
expenses. Conference Call Information Cornerstone Therapeutics will
host a conference call today at 8:30 AM ET to discuss its financial
results for the three and nine months ended September 30, 2009 and
to provide an update on its strategy, operations and product
development pipeline. To participate in the live conference call,
please dial 866-831-6270 (U.S. callers) or 617-213-8858
(international callers), and provide passcode 70654905. A live
webcast of the call will also be available through the "Investors
-- Webcasts & Presentations" section of the Company's website
at http://www.crtx.com/. Please allow extra time prior to the
webcast to register for the webcast and to download and install any
necessary audio software. The webcast will be archived for 30 days,
and a telephone replay of the call will be available for seven
days, beginning today at 10:30 AM ET, by dialing 888-286-8010 (U.S.
callers) or 617-801-6888 (international callers), and providing
passcode 27145476. Use of Non-GAAP Financial Measures This press
release highlights the Company's financial results on both a GAAP
and a non-GAAP basis. The GAAP results include certain costs and
charges that are excluded from non-GAAP results. By publishing the
non-GAAP financial measures, management intends to provide
investors with additional information to further analyze the
Company's performance, core results and underlying trends.
Management evaluates results and makes operating decisions using
both GAAP and non-GAAP measures included in this press release.
Non-GAAP results are not prepared in accordance with GAAP, and
non-GAAP information should be considered a supplement to, and not
a substitute for, financial statements prepared in accordance with
GAAP. Investors and potential investors are encouraged to review
the reconciliation of non-GAAP financial measures to their most
directly comparable GAAP measures attached to this press release.
Items excluded from the non-GAAP measures are as follows: Three
Months Ended Nine Months Ended September 30, September 30, (in
thousands) 2009 2008 2009 2008 ------------- ---- ---- ---- ----
Stock-based compensation (included in general and
administrative)(1) $231 $64 $1,012 $189 Stock-based compensation
(included in sales and marketing)(1) 74 23 145 67 Amortization of
product rights 1,507 109 2,528 957 Acquisition-related expenses (2)
2,095 - 3,563 - -------------------------------- ----- --- -----
--- (1) Stock-based compensation excludes stock-based compensation
charges incurred in connection with the Chiesi transaction, which
are included in acquisition-related expenses. (2)
Acquisition-related expenses include stock-based compensation
charges and legal, accounting and related costs that resulted from
or were incurred in connection with the Chiesi transaction. For the
three and nine months ended September 30, 2009, acquisition-related
stock-based compensation charges include $1.5 million and $0.3
million of charges that were included in general and administrative
and sales and marketing expenses, respectively, in the Company's
statements of operations. About Cornerstone Therapeutics
Cornerstone Therapeutics Inc. (NASDAQ:CRTX), headquartered in Cary,
N.C., is a specialty pharmaceutical company focused on acquiring,
developing and commercializing significant products primarily for
the respiratory and related markets. The Company currently promotes
multiple marketed products in the United States to
respiratory-focused physicians and key retail pharmacies with its
specialty sales force. The Company also has a late-stage clinical
pipeline with a recent regulatory submission filing and four
additional regulatory approval submissions targeted within the next
three years. Key elements of the Company's strategy are to
in-license or acquire rights to underpromoted, patent-protected,
branded respiratory or related pharmaceutical products, or
late-stage product candidates; implement life cycle management
strategies to maximize the potential value and competitive position
of the Company's currently marketed products, newly acquired
products and product candidates that are currently in development;
grow product revenue through the Company's specialty sales force
which is focused on the respiratory and related markets; and
maintain and strengthen the intellectual property position of the
Company's currently marketed products, newly acquired products and
product candidates. Pre-Merger Financial Results As previously
disclosed, Critical Therapeutics, Inc. and Cornerstone BioPharma
Holdings, Inc. (Cornerstone BioPharma) completed their merger on
October 31, 2008, and the combined company was renamed Cornerstone
Therapeutics Inc. (the Company). Cornerstone BioPharma was deemed
to be the acquiring company for accounting purposes and the
transaction was accounted for as a reverse acquisition in
accordance with generally accepted accounting principles.
Accordingly, the Company's financial statements for periods prior
to the merger reflect the historical results of Cornerstone
BioPharma, and not Critical Therapeutics, and Cornerstone
Therapeutics' financial statements for all subsequent periods
reflect the results of the combined company. In addition, unless
specifically noted otherwise, the Company's financial results do
not include the historical financial results of Critical
Therapeutics (including sales of Zyflo CR and Zyflo) prior to the
completion of the merger. 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," "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 ability to develop and maintain the
necessary sales, marketing, supply chain, distribution and
manufacturing capabilities to commercialize our products; the
possibility that the Food and Drug Administration (the FDA) will
take enforcement action against us or one or more of our marketed
drugs that do not have FDA-approved marketing applications;
patient, physician and third-party payor 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 that do have FDA-approved marketing
applications; our ability to enter into additional strategic
licensing, collaboration or co-promotion transactions on favorable
terms, if at all; 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
products under development and whether such results will be
indicative of results obtained in later clinical trials; our
ability to satisfy FDA and other regulatory requirements; 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
Securities and Exchange Commission (the SEC) on March 26, 2009 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 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.
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. Zyflo CR®, Zyflo®, AlleRx® and HyoMAX® are trademarks
of Cornerstone Therapeutics Inc. All other trademarks are the
property of their respective owners. FINANCIAL TABLES FOLLOW
CORNERSTONE THERAPEUTICS INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) (In thousands, except share and per share
data) Three Months Ended Nine Months Ended September 30, September
30, -------------------- ------------------- 2009 2008 2009 2008
---- ---- ---- ---- Net revenues $23,078 $20,591 $78,776 $44,103
Costs and expenses: Cost of product sales (exclusive of
amortization of product rights) 4,143 1,604 10,245 3,102 Sales and
marketing 8,226 3,775 20,145 11,309 Royalties 4,593 6,844 16,535
11,648 General and administrative 4,950 1,273 13,837 5,084 Research
and development 691 568 3,041 1,173 Amortization of product rights
1,507 109 2,528 957 Other charges 10 35 41 62 --- --- --- --- Total
costs and expenses 24,120 14,208 66,372 33,335 ------ ------ ------
------ (Loss) income from operations (1,042) 6,383 12,404 10,768
------ ----- ------ ------ Other expenses: Interest expense, net 1
(333) (113) (1,055) --- ---- ---- ------ Total other expenses 1
(333) (113) (1,055) --- ---- ---- ------ (Loss) income before
income taxes (1,041) 6,050 12,291 9,713 Benefit from (provision
for) income taxes 503 (2,743) (4,776) (3,582) --- ------ ------
------ Net (loss) income $(538) $3,307 $7,515 $6,131 ===== ======
====== ====== Net (loss) income per share, basic $(0.03) $0.56
$0.50 $1.03 ====== ===== ===== ===== Net (loss) income per share,
diluted $(0.03) $0.48 $0.46 $0.89 ====== ===== ===== =====
Weighted-average common shares, basic 20,741,322 5,934,496
15,009,285 5,934,496 ========== ========= ========== =========
Weighted-average common shares, diluted 20,741,322 6,900,105
16,249,578 6,867,157 ========== ========= ========== =========
CORNERSTONE THERAPEUTICS INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data) September 30,
December 31, 2009 2008 (Unaudited) (Audited) ----------- ---------
Assets Current assets: Cash and cash equivalents $10,992 $9,286
Marketable securities - 300 Accounts receivable, net 27,483 12,987
Inventories, net 16,143 11,222 Prepaid and other current assets
3,361 1,754 Deferred income tax asset 5,266 2,428 ----- ----- Total
current assets 63,245 37,977 ------ ------ Property and equipment,
net 1,036 895 Product rights, net 130,393 17,702 Goodwill 13,231
13,231 Amounts due from related parties 38 38 Other assets 525 46
--- --- Total assets $208,468 $69,889 ======== ======= Liabilities
and Stockholders' Equity Current liabilities: Accounts payable
$8,102 $10,288 Accrued expenses 29,020 19,052 Current portion of
license agreement liability 971 2,543 Current portion of capital
lease 10 - Income taxes payable 3,165 2,937 ----- ----- Total
current liabilities 41,268 34,820 ------ ------ License agreement
liability, less current portion 2,313 2,313 Capital lease, less
current portion 41 - Deferred income tax liability 5,292 3,330
----- ----- Total liabilities 48,914 40,463 ------ ------
Commitments and contingencies, Note 9 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; 24,727,427 and 12,023,747 shares
issued and outstanding as of September 30, 2009 and December 31,
2008, respectively 25 12 Additional paid-in capital 156,119 33,519
Retained earnings (accumulated deficit) 3,410 (4,105) ----- ------
Total stockholders' equity 159,554 29,426 ------- ------ Total
liabilities and stockholders' equity $208,468 $69,889 ========
======= CORNERSTONE THERAPEUTICS INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine Months
Ended September 30, ------------------ 2009 2008 ---- ---- Cash
flows from operating activities Net income $7,515 $6,131
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: Amortization and depreciation 2,695 1,014
Provision for prompt payment discounts 2,316 1,227 Provision for
inventory obsolescence 506 382 Stock-based compensation 2,970 256
Benefit from deferred income taxes (4,664) - Changes in operating
assets and liabilities: Accounts receivable (16,812) (14,500)
Inventories (5,271) (534) Prepaid expenses and other assets (2,086)
2,061 Accounts payable (2,186) 1,329 Accrued expenses 5,796 9,511
Income taxes payable 228 2,937 --- ----- Net cash (used in)
provided by operating activities (8,993) 9,814 ------ ----- Cash
flows from investing activities Advances to related parties - (9)
Proceeds from sale of marketable securities 300 - Purchase of
property and equipment (250) (24) Purchase of product rights
(5,169) (2,250) Payment of acquisition costs - (1,002) Collection
of deposits - 52 Payment of deposits - (111) --- ---- Net cash used
in investing activities (5,119) (3,344) ------ ------ Cash flows
from financing activities Proceeds from exercise of common stock
options 401 - Proceeds from line of credit - 5,500 Proceeds from
issuance of shares of common stock 15,465 - Payments for
cancellation of warrants (41) - Principal payments on line of
credit - (7,250) Principal payments on notes payable - (460)
Principal payments on capital lease obligation (7) - --- --- Net
cash provided by (used in) financing activities 15,818 (2,210)
------ ------ Net increase in cash and cash equivalents 1,706 4,260
Cash and cash equivalents as of beginning of period 9,286 241 -----
--- Cash and cash equivalents as of end of period $10,992 $4,501
======= ====== Supplemental disclosure of non-cash investing and
financing activities Purchase of product rights $110,050 $-
======== === Reconciliation of Non-GAAP Financial Measures to
Comparable U.S. GAAP Measures (Unaudited) To supplement the
consolidated financial statements presented in accordance with
generally accepted accounting principles, or 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 tables
below provide a reconciliation of each non-GAAP financial measure
used in this earnings release and related conference call to the
most directly comparable GAAP financial measure. Cornerstone's
management regularly uses supplemental non-GAAP financial measures
to understand, manage and evaluate its business and make operating
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 here 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, net income and earnings 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 and acquisition-related expenses.
Acquisition-related expenses consist of certain expenses which were
incurred in connection with the 2009 transaction with Chiesi,
including additional stock-based compensation due to the
accelerated vesting of certain stock options and shares of
restricted stock resulting from the closing of the transaction. The
Company excludes these expenses from its non-GAAP measures because
management does not believe that they are reflective of the
Company's core 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, product
rights amortization is excluded because it is not reflective of the
cash-settled expenses incurred related to product sales, and
acquisition-related expenses are excluded because they arise from
prior acquisitions and 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 the Company's 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 involved the exercise of judgment by
Cornerstone's management. Even though Cornerstone has excluded
stock-based compensation expense, amortization of product rights
and acquisition-related expenses from the non-GAAP financial
measures, stock-based compensation is an integral part of
Cornerstone's compensation structure, the acquisition of product
rights is an important part of its business strategy and the
transaction with Chiesi resulted in significant cash expenses.
Cornerstone's management compensates for these limitations by using
its non-GAAP measures only in conjunction with, and not as a
substitute for, its GAAP measures. Cornerstone Therapeutics Inc.
Reconciliation of Non-GAAP Financial Measures (In thousands, except
share and per share data - unaudited) The following tables show the
non-GAAP financial measures used in this press release reconciled
to the most directly comparable GAAP financial measures. Three
Months Ended Nine Months Ended September 30, September 30, 2009
2008 2009 2008 ---- ---- ---- ---- GAAP (loss) income from
operations $(1,042) $6,383 $12,404 $10,768 Add: stock-based
compensation(1) 305 87 1,157 256 Add: amortization of product
rights 1,507 109 2,528 957 Add: acquisition-related expenses(2)
2,095 - 3,563 - ----- --- ----- --- Non-GAAP income from operations
$2,865 $6,579 $19,652 $11,981 ====== ====== ======= ======= GAAP
net (loss) income $(538) $3,307 $7,515 $6,131 Add: stock-based
compensation(1) 305 87 1,157 256 Add: amortization of product
rights 1,507 109 2,528 957 Add: acquisition-related expenses(2)
2,095 - 3,563 - Less: tax effects related to above items(3) (1,887)
(89) (2,819) (448) ------ --- ------ ---- Non-GAAP net income
$1,482 $3,414 $11,944 $6,896 ====== ====== ======= ====== GAAP net
(loss) income per share, diluted $(0.03) $0.48 $0.46 $0.89 ======
===== ===== ===== Non-GAAP net income per share, diluted $0.07
$0.49 $0.74 $1.00 ===== ===== ===== ===== Shares used in diluted
net income per share calculation: GAAP net income 20,741,322
6,900,105 16,249,578 6,867,157 ========== ========= ==========
========= Non-GAAP net income(4) 21,679,818 6,900,105 16,249,578
6,867,157 ========== ========= ========== ========= (1) Stock-based
compensation excludes stock-based compensation charges incurred in
connection with the Chiesi transaction, which are included in
acquisition-related expenses. (2) Acquisition-related expenses
include stock-based compensation charges and legal, accounting and
related costs that resulted from or were incurred in connection
with the Chiesi transaction. For the three and nine months ended
September 30, 2009, acquisition-related stock-based compensation
charges include $1.5 million and $0.3 million of charges that were
included in general and administrative and sales and marketing
expenses, respectively, in the Company's statements of operations.
(3) Tax effects for the three and nine months ended September 30,
2009 are calculated using effective tax rates of 48.3% and 38.9%,
respectively. Tax effects for the three and nine months ended
September 30, 2008 are calculated using effective tax rates of
45.3% and 36.9%, respectively. (4) The weighted-average shares used
in the computation of non-GAAP net income per share, diluted,
include the dilutive effect of 1,939,178 potentially dilutive
securities, or 938,496 shares, which were excluded from the
computation of GAAP net income per share, diluted, for the third
quarter of 2009 because such shares would have been anti-dilutive.
DATASOURCE: Cornerstone Therapeutics Inc. CONTACT: Investor
Relations Contacts: Evan Smith, , or Brian Ritchie, , or Media
Relations Contact: Robert Stanislaro, , all of FD, +1-212-850-5600
Web Site: http://www.crtx.com/
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