CPEX reports loss, but revenues up


CPEX Pharmaceuticals lost nearly $1 million in the first quarter of the year, despite increased revenues of $1.3 million, the company reported Wednesday.The Exeter-based alternative drug delivery firm blamed the loss on increased expenses, including advisory and consulting services – apparently in response to a hostile takeover attempt – and research and development into Nasulin, a product the company has since abandoned and was one of the stated reasons behind that takeover attempt.CPEX has yet to show a profit since it spun off from Bentley Pharmaceuticals in the summer of 2008. This quarter, it posted a net loss of $940,000, or 37 cents a share, more than double the size of the loss it posted in the first quarter of 2009.The company did see an increase in royalties from the sale of Testim, a dermal application of testosterone and the company’s only product, to $5.3 million, a 33 percent increase.But expenses rose 39 percent to $6.3 million, including $3.6 million in research and development -- about a $1 million increase, primarily for the development of Nasulin -- and $2.5 million in general and administrative expenses, about a $750,000 increase.The development of Nasulin, a nasal spray for insulin, was one of the major selling points to investors when the company went public, but became a major target of Richard Rofe, a Great Neck, N.Y.,-based activist shareholder sharply critical of the company’s management, who said he wanted to buy the company at $14 a share, get on the board of directors and drop its pursuit of Nasulin.Rofe increased his holdings to 12.2 percent, driving up the share price, then sold off most of it, while still retaining a 4.9 percent share of the company CPEX dropped Nasulin last month -- citing discouraging clinical trials -- and Rofe, who claimed it was an vindication, abandoned his board run for a vacant seat but upped his tender offer to $16 a share. The offer, however, is largely symbolic, since the company has a poison pill provision to prevent hostile takeover. But it did drive the price even higher.On Friday, the company appointed Robert Forrester, Rofe’s would-be opponent, to the board of directors before he would be elected to the vacant spot in the company’s annual meeting on May 26. The company expanded the board temporarily to do so.CPEX has about $13.3 million in cash, about $350,000 less than at the beginning the quarter. Shareholder equity was 22.5 million, down by $500,000. The company's stock rice closed at $23.50, unchanged. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
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