CPEX reports $500k loss


CPEX Pharmaceuticals Inc. ended the year with a $500,000 loss for the quarter (20 cents a share) and a $3 million loss for the year, the first full year since the Exeter, N.H.-based developer of alternate drug delivery methods was spun off by Bentley Pharmaceuticals.Losses in the quarter and year came despite more than a 20 percent increase in revenue, which was hurt by increased litigation costs to protect CPEX’s only product -- Testim, which delivers testosterone through the skin -- and to develop another product, Nasulin, a nasal insulin spray.The loss is sure to feed criticism from the company’s largest outside shareholder, who says he wants the company to settle the litigation and abandon development of Nasulin in order to concentrate on selling the company’s existing product.Sales of Testim helped the company boost revenue 23 percent in the fourth quarter of 2009 to $5.2 million, thanks to a 13.2 percent increase in Testim prescriptions.But operating expenses increased, resulting in a losses of $498,000, compared to net income of $292,000 in the last quarter of 2008. Litigations expenses increased $1.1 million over the previous year’s quarter due to a patent lawsuit against Upsher-Smith that began in August 2009. CPEX also spent nearly $3 million in research and development during the quarter, $627,000 more than the same quarter the previous year.Annual expenses were partly offset by a $494,000 decrease in share-based executive compensation. Total compensation cost was not broken out in the earnings release.“Excessive” executive compensation, along with increasing litigation and R&D expenses, are the major criticisms lobbed by Richard Rofé, managing director of Arcadia Capital Advisors, CPEX‘s largest outside shareholder. Rofé says he would like to buy the company, but has been rebuffed by management. Rofé, a Great Neck, N.Y., activist investor, is running for a spot on the CPEX Board, and says he wants to pay $14 a share for all outstanding stock on a contingency-free offer but has been prevented from doing so by “poison pill” provisions in company bylaws to prevent hostile takeovers.CPEX contends that Rofé has not demonstrated that it has enough financing to make good on such an offer. His latest move has been an attempt to get access to shareholders for the upcoming proxy vote at the company’s next annual meeting. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
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