QNCX - NASDAQ

Ladies and gentlemen, thank you for standing by. And welcome to the Cornerstone Therapeutics Third Quarter 2013 Financial Results Call. [Operator Instructions] As a reminder, today's call is being recorded. With that said, I will turn the call over to Amy Diebler of Cornerstone Therapeutics.

Thank you, operator. Good morning, everyone, and welcome to Cornerstone Therapeutics' conference call to discuss our third quarter 2013 results. We are glad to have you with us. I am Amy Diebler, Senior Director of Corporate Finance and Development for Cornerstone Therapeutics. We are joined by Craig Collard, Cornerstone's Chief Executive Officer; and Alastair McEwan, Cornerstone's Chief Financial Officer. Craig will provide perspective on both the quarter and on our 2013 outlook, and Alastair will cover the financial and operational results. Both Craig and Alastair will be available to answer your questions. We issued a press release this morning containing financial results for the quarter ended September 30, 2013. Before we proceed with the call, please let me remind everyone that the following discussions and responses to your questions reflect management's view only as of today, November 7, 2013. Any statements about future expectations, plans and prospects, including, without limitation, statements regarding our business strategy, future operations, financial position, anticipated regulatory approval of our products, possible therapeutic benefits, market acceptance, prospects and management's plans and objectives, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results and events may differ materially from those indicated by our forward-looking statements. Additional information about factors that could cause actual results or events to differ materially from those indicated by our forward-looking statements is included in the Safe Harbor statement in today's press release and in our filings with the Securities and Exchange Commission, including Item 1A to our annual report on Form 10-K filed on March 14, 2013, and in our subsequent Form 10-Q and other filings with the SEC. Cornerstone disclaims any obligation to update its forward-looking statements except as required by law. In addition, please note that Cornerstone's remarks contain supplementary non-GAAP financial measures, including non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share diluted. A reconciliation of these measures to the comparable GAAP numbers is included in the press release, which is posted on our website. With that, I will now turn the call over to Craig.

Thank you, Amy, and good morning, everyone. We appreciate you joining us on this call. This was another successful quarter for Cornerstone as we posted record revenue for the third consecutive quarter. Each of our products performed well and with the addition of PERT

Thanks, Craig. And good morning, everyone. As Craig indicated, we are very happy with our performance this quarter, strong top and bottom line growth and cash generation. Net revenues grew 43% year-over-year, bringing us to $53.7 million compared with $37.5 million in the third quarter of 2012. I should mention that this is a first report in quarter this year, that compares directly with the equivalent quarter of 2012 in terms of Cornerstone's structure and focus pulling our acquisition of EKR at the end of Q2 2012. Looking now to the market products that Craig mentioned, for CARDENE net product sales were $20.7 million for the quarter, compared to sales of $12.8 million for the third quarter of 2012. As Craig mentioned, this significant increase in sales largely reflects our ability to supply the market while generic manufacturers continue to experience product shortages. This is the second consecutive quarter during which we benefited from the generic shortage. While we expect sales to return to normal levels at some point in future, this shortage continues and we have no foresight into when it will end. CARDENE sales were also impacted by reduction in our estimated rate of chargebacks and adjustment to reduce our estimate of product returns, which were partially offset by increases in our estimated rates for price adjustments. CUROSURF net product sales totaled $11.2 million during the quarter, representing an increase of 13% compared to third quarter of 2012. This increase was driven by greater unit volume along with decreases in our estimated rates for price adjustments and chargebacks due to an increase in contract prices. The

Thanks, Alastair. As you can see, we believe that our continued progress demonstrates that we have the right strategy in place and that our company can successfully execute within this market. In addition to our market products, we develop and maintain a pipeline of products and are working diligently to move these products forward to approval and commercial launch. I would like to now give you some updates on the products currently in our pipeline. Starting with RETAVASE, as we shared on previously quarterly calls, there was an unknown inherent stability failure. The team is making good progress on our work to address such matters and generate new stability data. Our focus is on both improving the supply chain and streamlining the overall process as much as possible. We believe that our work in this area, will allow us to both achieve a target relaunch in late 2015 and to develop a more robust process. Currently, we are on track to finalize our first set of batches utilizing our new process in February of 2014. In parallel, we find a move forward with Retaflo, our catheter clearance program utilizing Reteplase, the active ingredient in RETAVASE. If approved RETAVASE will give us the opportunity to further strenghen our relationships with the cardiology community and aid in our long-term growth plan for the hospital market. In regards to LIXAR, in September, we submitted our request for a meeting with the division of cardiovascular and renal drug products to the FDA, to discuss the contents of the Complete Response Letter received on October 31, 2012, for the LIXAR NDA. That meeting is scheduled for December 5, 2013, and following that meeting, we will determine our next steps regarding the LIXAR problem. Before close, I want to update you on legal matters regarding CARDENE. On July 24, 2013, we filed a complaint in the United States District Court for the District of Delaware as we received notice that Exela had filed as a supplemental New Drug Application seeking approval to market a ready-to-use injectable formulation of the nicardipine hydrochloride. The complaint alleges that the Exela product infringes our patents related to CARDENE. Also on August 19, 2013, we filed an amended complaint in the United States District Court, for the District of Delaware alleging that Exela infringed on an additional patent we have for CARDENE. Separately, on August 15, 2013, we received notice that Sandos had filed an abbreviated New Drug Application seeking approval to market generic version of ready-to-use CARDENE. In response, on September 25, 2013, we filed a complaining of Sandos in the United States Distric Court, the District of New Jersey alleging that Sandos proposed generic product will infringe our CARDENE patents. Our legal responses are consistent with our stated intention to vigorously enforce intellectual property rights to protect our innovative products and technologies. We believe our patents are valid and will protect our product. By filing these lawsuits, we have automatically triggered a 30-month stay under the Hatch-Waxman Act. This will prevent the FDA from approving the Exela or Sandos product until 30 months of the lapse from the date of receipt of the corresponding those letters, or until an earlier court decision inverse to our patents. Lastly in connection with the proposed Chiesi merger now from September 16, we filed a primarily proxy material with the SEC on October 17, 2013. We have been notified by the SEC that the review is underway and will proceed with due process. We urge you to read the definitive proxy statement and any other documents filed with the SEC in connection with proposed Chiesi merger or incorporated by reference in the proxy statement when they become available because they will contain important information about the proposed Chiesi merger. As these matters are still in process, we don't plan to take questions or provide any additional details about the proposed merger today. With this, we are ready to take your questions. Operator?

[Operator Instructions] And this time, we have no further questions at this time.

I would like to thank everyone for joining the call and we look forward to talking to everyone next quarter. Thank you.