Somaxon Pharmaceuticals Inc. (SOMX, Financial) filed Quarterly Report for the period ended 2010-09-30.
Somaxon Pharmaceuticals Inc. has a market cap of $118 million; its shares were traded at around $3.36 .
Distribution Service Fees. We pay distribution service fees to each wholesaler for distribution and inventory management services. We accrued for the fees based on contractually defined terms with each wholesaler and recognized a reduction of revenue. At September 30, 2010 and December 31, 2009, the accrual for distribution service fees was $383,000 and $0, respectively.
We recognized net product sales of $38,000 for 2010 for product sales representing product dispensed through prescriptions which we estimated using an analysis of third-party information. We had no product sales in 2009 as sales of Silenor commenced in the third quarter of 2010. Reductions from gross to net product sales, which include allowances for discounts, stocking incentives, patient discount programs and distribution service fees totaled $9,000 for 2010, compared to $0 in the same period in 2009. As a percentage of gross sales, the reductions were 19.1% for 2010.
Selling and marketing expenses totaled $8.6 million and $0.2 million for 2010 and the comparable period in 2009, respectively. The increase of $8.4 million was due to the costs associated with the commercial launch of Silenor. Launch costs included the training and deployment of Somaxons sales representatives, sample and sample distribution expenses, other consulting costs, and promotional spending costs.
General and administrative expenses totaled $3.3 million and $1.1 million for 2010 and 2009, respectively. The increase of $2.2 million was due to an increase in salary and personnel-related expenses due to an increase in overall headcount and share-based compensation expense due to vesting of performance based equity awards associated with the execution of the co-promotion agreement with Procter & Gamble.
We recognized net product sales of $38,000 for 2010 for product sales representing product dispensed through prescriptions which we estimated using an analysis of third-party information. We had no product sales in 2009 as sales of Silenor commenced in the third quarter of 2010. Reductions from gross to net product sales, which include allowances for discounts, stocking incentives, patient discount programs and distribution service fees totaled $9,000 for 2010, compared to $0 in the same period in 2009. As a percentage of gross sales, the reductions were 19.1% for 2010.
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Somaxon Pharmaceuticals Inc. has a market cap of $118 million; its shares were traded at around $3.36 .
Highlight of Business Operations:
We are unable to reliably estimate returns at this time. Therefore, we have determined that shipment of product to wholesale distributors does not meet the criteria for revenue recognition at the time of shipment. Until we are able to reliably estimate returns, we will defer revenue recognition until the right of return no longer exists, which is the earlier of Silenor being dispensed through patient prescriptions or the expiration of the right of return. We estimate patient prescriptions dispensed using an analysis of third-party information. For the three and nine months ended September 30, 2010, we recognized product revenue of $38,000, which was net of estimated product sales discounts and allowances. At September 30, 2010, we had a deferred revenue balance of $4.4 million which was also recorded net of estimated product sales discounts and allowances. We have also deferred the related cost of product sales and recorded such amount as finished goods inventory held by others, which was $0.4 million as of September 30, 2010.Distribution Service Fees. We pay distribution service fees to each wholesaler for distribution and inventory management services. We accrued for the fees based on contractually defined terms with each wholesaler and recognized a reduction of revenue. At September 30, 2010 and December 31, 2009, the accrual for distribution service fees was $383,000 and $0, respectively.
We recognized net product sales of $38,000 for 2010 for product sales representing product dispensed through prescriptions which we estimated using an analysis of third-party information. We had no product sales in 2009 as sales of Silenor commenced in the third quarter of 2010. Reductions from gross to net product sales, which include allowances for discounts, stocking incentives, patient discount programs and distribution service fees totaled $9,000 for 2010, compared to $0 in the same period in 2009. As a percentage of gross sales, the reductions were 19.1% for 2010.
Selling and marketing expenses totaled $8.6 million and $0.2 million for 2010 and the comparable period in 2009, respectively. The increase of $8.4 million was due to the costs associated with the commercial launch of Silenor. Launch costs included the training and deployment of Somaxons sales representatives, sample and sample distribution expenses, other consulting costs, and promotional spending costs.
General and administrative expenses totaled $3.3 million and $1.1 million for 2010 and 2009, respectively. The increase of $2.2 million was due to an increase in salary and personnel-related expenses due to an increase in overall headcount and share-based compensation expense due to vesting of performance based equity awards associated with the execution of the co-promotion agreement with Procter & Gamble.
We recognized net product sales of $38,000 for 2010 for product sales representing product dispensed through prescriptions which we estimated using an analysis of third-party information. We had no product sales in 2009 as sales of Silenor commenced in the third quarter of 2010. Reductions from gross to net product sales, which include allowances for discounts, stocking incentives, patient discount programs and distribution service fees totaled $9,000 for 2010, compared to $0 in the same period in 2009. As a percentage of gross sales, the reductions were 19.1% for 2010.
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