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Articles 

Adolor Corp. Reports Operating Results (10-Q)

November 10, 2011 | About:

Adolor Corp. (ADLR) filed Quarterly Report for the period ended 2011-09-30.

Adolor Corp. has a market cap of $214.2 million; its shares were traded at around $4.61 with and P/S ratio of 8.4.

Highlight of Business Operations:

For the nine months ended September 30, 2011, our total revenues and net loss were $48.1 million and $0.2 million, respectively. Net loss was favorably impacted by $20.1 million of additional amortization of deferred revenue resulting from the Termination Agreement with Glaxo. Net sales of ENTEREG for the nine months ended September 30, 2011 were $23.5 million. We will need net sales of ENTEREG to increase significantly beyond current levels before we will be able to achieve profitability and positive cash flow from operations. Ultimately, we may never generate sufficient revenues from ENTEREG for us to reach profitability, generate positive cash flow or sustain, on an ongoing basis, our current or projected levels of operations. In addition, our long-term success is highly dependent on the successful development of ADL5945, our most advanced development candidate. Although our Phase 2 clinical trials of ADL5945 demonstrated statistically significant and clinically relevant efficacy, our currently available resources are insufficient to fund a Phase 3 clinical program for ADL5945 without securing a collaboration partner or raising proceeds in the capital markets.

Net product sales are derived solely from ENTEREG. ENTEREG was approved by the FDA in May 2008 and product shipments to hospitals began in June 2008. Net sales of ENTEREG were $7.8 million and $6.5 million for the three months ended September 30, 2011 and 2010, respectively, and $23.5 million and $18.1 million for the nine months ended September 30, 2011 and 2010, respectively. The increases in net product sales during 2011 as compared to the same periods in 2010 were driven primarily by an increase in the number of hospitals ordering ENTEREG and increased penetration within existing hospital customers, as well as the impact of pricing changes.

Cost of product sales was $0.9 million and $0.7 million for the three months ended September 30, 2011 and 2010, respectively, and $2.7 million and $2.0 million for the nine months ended September 30, 2011 and 2010, respectively, and consisted of royalty payments under certain alvimopan license agreements, FDA fees and manufacturing costs. The increases in cost of product sales were primarily due to increased sales of ENTEREG and higher FDA fees. Cost of product sales as a percentage of net product sales was 12% and 11% for the three and nine months ended September 30, 2011 and 2010, respectively.

Our selling, general and administrative expenses were $9.1 million and $7.8 million for the three months ended September 30, 2011 and 2010, respectively. The increase was primarily due to the expansion of our sales force in conjunction with the Termination Agreement. In addition, as a result of the Termination Agreement, we incurred aggregate expenses of $0.3 million related to royalties payable to Glaxo and amortization of our intangible asset during the three months ended September 30, 2011. These increases were partially offset by lower profit-sharing expenses of $0.4 million under the Glaxo collaboration agreement as a result of only two months of activity during the third quarter of 2011 due to the Termination Agreement becoming effective on August 31, 2011.

Our selling, general and administrative expenses were $26.4 million and $26.0 million for the nine months ended September 30, 2011 and 2010, respectively. Included in selling, general and administrative expenses for the nine months ended September 30, 2011 and 2010 were $8.2 million and $5.4 million, respectively, of profit-sharing expenses under the Glaxo collaboration agreement. The higher profit-sharing expenses were driven by improved profitability resulting primarily from increased sales of ENTEREG. Remaining selling, general and administrative expenses decreased for the nine months ended September 30, 2011 as compared to the same period in 2010 primarily due to a reduction in general and administrative expenses as a result of our July 2010 restructuring and lower marketing expenses.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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