Monday, August 10, 2009

CombinatoRx notes Q2 profit, new Neuromed merger

By Julie M. Donnelly

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CombinatoRx, a cash-strapped Cambridge-based biotechnology company, announced it swung to profitability in the second quarter, due to dramatic cost cuts, discontinued operations and new collaborations. The day after the quarter ended, the company entered into a merger with the Canadian biotech company, Neuromed.

CombinatoRx Inc. is reporting that revenues for the second quarter of 2009 are $3.3 million, up slightly from $2.9 million for the same time period last year. The company swung to profitability, with a profit of $8 million for the second quarter, versus a loss of $17.6 million in the second quarter of 2008. And it realized a gain of $15.1 million from discontinued operations in the second quarter.

The company burned through $7.1 million for the second quarter this year, down from $16.1 million during the corresponding time period last year. The company cut research and development costs dramatically, to $6.1 million for the quarter, from $15.7 million for the second quarter of 2008. CombinatoRx also reduced its headquarters space by 63 percent, which saves the company $2 million in annual rent.

The company entered into an agreement with Cambridge-based Novartis Institutes of Biomedical Research and received a $4 million upfront payment from Novartis. The total deal could be worth up to $58 million.

CombinatoRx had $5.3 million of cash on hand on June 30, down from $6 million on March 31. The company merged with Canada-based Neuromed the following day. Neuromed has submitted its pain-management drug target, Exalgo, to the U.S. Food and Drug Administration for approval, and it is set to be reviewed by the end of the year. Mansfield-based medical technology firm Covidien plc has bought the rights to Exalgo and has paid $15 million in upfront payments to Neuromed, with a potential for $40 million.