Press Releases & Company News

Cosmo reports good 2009 results

Strategic goals met - Confident outlook for 2010

Lainate, Italy – 19 March 2010 – Cosmo Pharmaceuticals S.p.A. (SIX: COPN) today announced its results for the year ended 31 December 2009.

Financial highlights

• Recurring revenues increased by 3.4% to €24.6 million
• Royalties increased by 69.8% to €6.0 million (2008: €3.5 million)
• Manufacturing of MMX^® based products decreased slightly by 5.0% to €6.8 million (2008: €7.1 million)
• Other contract drug manufacturing revenue decreased by 15.2% to €10.5 million primarily due the discontinuation of a marginally profitable business that would have required new capital investments
• Importantly one time license fees and milestones decreased by 79.8% from €10.4 million to €2.1 million, as expected as no new licensing agreements were signed and there were no milestone events
• Total revenue decreased by 21.9% to €26.7 million (2008: €34.2 million), reflecting an extraordinary milestone payment received in 2008
• Operating costs decreased by 3.2% to €22.2 million (2008: €23 million) reflecting tight cost control at a time of increased late-stage development activity
  • Cost of sales declined by 3.2% to €12.8 million
  • Total research and development costs were €13.8 million (2008: €11 million) of which;
    • €4.0 million reimbursed by partners
    • €4.5 million expensed
    • €5.3 million capitalized
  • Personnel increased by 2.3% to 134 FTEs
• EBITDA of € 6.1 million (2008: € 12.8 million)
• Net profit of €4.0 million, down 56.9% from 2008 due to the one-time milestone received, but significantly above the €0.1 million in 2007
• Total comprehensive income, which includes gains in the value of marketable securities amounted to €16.1 million, an increase on the year of 105.0% (2008: €7.8 million)
• Cash and cash equivalents were at €17.2 million; a decrease of 22.6% on 2008
• Financial assets available for sale increased by 184.3% to €19.2 million

Operational highlights

• Lialda^®, Cosmo’s first marketed MMX^® product, was the fastest growing Ulcerative Colitis drug in the USA in 2009, where it attained an overall market share of 18% of all 5-amino salicylic acids (“5-ASAs”) drugs
• Progress was achieved in all research projects and clinical trials:
  • The last patient has been treated in the EU phase III clinical trial and the last patients are being recruited for the US phase III clinical for Budesonide MMX^®, a corticosteroid developed by Cosmo for the treatment of Ulcerative Colitis
  • CB-03-01, a novel anti-androgen cream to treat Acne successfully completed a phase II proof of concept trial in males
  • Additional preclinical analyses required to get approval as a New Chemical Entity by the FDA were completed for Rifamycin SV MMX^® and the two phase III trials in the EU and USA are about to start
  • The galenic development of an MMX^® tablet for opioid-induced constipation was completed

Strategic highlights

• On 13 November 2009 the Company announced an agreed bid for all of the outstanding shares of BioXell S.p.A. The objectives of the transaction were:
  • Partially pay in shares in order to increase the free float of Cosmo
  • Only pay for liquid assets, thus get additional liquidity reserves
• The BioXell transaction was completed on 12 March 2010
  • 98.96% of the BioXell shares were tendered
  • Cosmo issued 1,120,743 new Cosmo shares as payment and paid a cash consideration of CHF 15.7 million
  • Cosmo issued 1,120,743 put options to put the corresponding amount of Cosmo shares to Cosmo at CHF 21 per share between 1 July 2011 and 31 December 2011
  • Total assets less liabilities of BioXell at closing, amounted to around €27 million

Mauro Ajani, CEO of Cosmo Pharmaceuticals, commented: “We are pleased to have achieved another set of good financial results and, more importantly, substantial progress across our development portfolio in 2009. In an environment where many emerging pharmaceuticals companies have been severely challenged, we delivered on our objectives and are on solid ground, both financially and in our research and development projects. I believe that we have made substantial progress in expanding the scope of our business and transforming Cosmo towards a premier specialty company that develops solutions for patients with colon diseases and also innovates in selected topically treated skin diseases. We expect significant news flow in our late stage clinical pipeline during 2010 and look forward to announcing these developments in due course.”

Key consolidated financial figures

The Annual Report 2009 with further information was published on 19 March and is available for download at:
http://ir2.flife.de/data/cosmo_pharma/igb_html/index.php?bericht_id=1000001&lang=ENG

Confident outlook
Management is confident that sales of Lialda^® in the USA and of Mezavant^®/Mesavancol^® in the EU will continue to show healthy growth and that revenues from royalties and MMX^® manufacturing will continue to increase in 2010. Following a drop in 2009, the Company also expects its contract drug manufacturing business to again grow in 2010. Cosmo is initiating discussions with parties interested in contributing to the development of CB 03-01 and LMW Heparin MMX^® Thus for 2010 the strategy is to determine what the market’s appetite is for such partnerships and to subsequently decide what option has the best risk-reward potential.

In clinical development, the Company anticipates results from its phase III trials for Budesonide MMX^® during the year and may also have results from the EU trials of Rifamycin SV MMX^® by year-end. For CB-03-01 results are expected from the proof of concept trial for Alopecia in H2 2010 and results on the phase I for CB-01-16, the tablet for opioid-induced Constipation, are also expected in H2 2010. Cosmo is planning to move at least one preclinical project into phase I and to identify two new preclinical projects in 2010.

A strong emphasis will remain on cost control. Cost of goods is not expected to increase materially. Cosmo’s partners bear the majority of the cost of the phase III clinical trials for Budesonide MMX^® and Rifamycin SV MMX^®. However, the Company is developing a series of new programmes so the external cost of new clinical trials is likely to be similar to that of 2009. The Company expects to hire additional personnel and selling, general and administrative expenses will grow proportionally. Overall, Cosmo expects to be cash generative and profitable in 2010.

FY09 results presentation and conference call at 11am CET on 19 March 2010
Mauro Ajani, CEO, Luigi Moro, CSO, and Chris Tanner, CFO and Head of Investor Relations, will present the full year results and discuss the outlook for 2010 at a media and analyst conference to be held today at 11am CET in Haus zum Rüden (Limmatquai 42, 8001 Zurich).

The presentation is available for download at: http://www.cosmopharmaceuticals.com/csm/news/presentations/ar09_pres/ar09_pres.pdf

About Cosmo Pharmaceuticals
Cosmo is a speciality pharmaceutical company that aims to become a global leader in the field of optimized therapies for selected Gastrointestinal and topically treated Skin Disorders. The company’s proprietary clinical development pipeline specifically addresses innovative treatments for IBD, such as Ulcerative Colitis and Crohn’s Disease, and Colon Infections. In addition, the Company is developing a new chemical entity for the topical treatment of Acne, Alopecia and Hirsutism. Cosmo’s first MMX^® product that has reached the market is Lialda^®/Mezavant^®/Mesavancol^®, a treatment for IBD that is licensed globally to Giuliani and Shire Limited. Cosmo’s proprietary MMX^® technology is at the core of the Company’s product pipeline and was developed from its expertise in formulating and manufacturing gastrointestinal drugs for international clients at its GMP (Good Manufacturing Practice) facilities in Lainate, Italy. The technology is designed to deliver active ingredients in a targeted manner in the intestines. For further information on Cosmo, please visit the Company’s website: www.cosmopharmaceuticals.com

Contact
Dr. Chris Tanner, CFO and Head of Investor Relations
Cosmo Pharmaceuticals S.p.A.
Tel: +39 02 9333 7614

Some of the information contained in this press release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. Cosmo undertakes no obligation to publicly update or revise any forward-looking statements.

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