8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 4, 2010

Cornerstone Therapeutics Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction
of Incorporation) 000-50767
(Commission
File Number) 04-3523569
(IRS Employer
Identification No.)

1255 Crescent Green Drive, Suite 250, Cary, NC
(Address of Principal Executive Offices) 27518
(Zip Code)

Registrant’s telephone number, including area code: (919) 678-6611

Not applicable
(Former Name or Former Address, if Changed Since Last Report)

          Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 4, 2010, Cornerstone Therapeutics Inc. (the “Company”) announced its financial results for the three and nine months ended September 30, 2010. A copy of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under either the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

      See the Exhibit Index attached hereto.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CORNERSTONE THERAPEUTICS INC.
Date: November 4, 2010	By:	/s/ Andrew K. W. Powell
		Andrew K. W. Powell
		Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description of Document
Exhibit 99.1	Press release dated November 4, 2010.

EX-99.1

Exhibit 99.1

Cornerstone Therapeutics Reports Third Quarter 2010 Financial Results

• Third quarter net revenues of $27.9 million, a 21% increase year-over-year

• Third quarter GAAP earnings increased $1.3 million from a net loss of $538,000 in the third quarter of 2009 to a net income of $764,000 in the third quarter of 2010

• Third quarter non-GAAP earnings increased $2.1 million or 119% year-over-year

• Percentage of revenues derived from strategic products increased from 38% to 63%

CARY, N.C., November 4, 2010 — Cornerstone Therapeutics Inc. (Nasdaq: CRTX) today reported net income of $0.8 million, or $0.03 per diluted share, for the third quarter of 2010, compared to a net loss of $0.5 million, or ($0.03) per diluted share, for the third quarter of 2009. On a non-GAAP basis, net income was $3.8 million, or $0.15 per diluted share, for the third quarter of 2010, compared to non-GAAP net income of $1.8 million, or $0.08 per diluted share, for the third quarter of 2009. Non-GAAP net income and EPS for the third quarter exclude amortization of product rights, acquisition-related expenses in connection with the Chiesi transaction, and stock-based compensation.

Total net revenues were $27.9 million for the third quarter of 2010, representing a 21% increase over the $23.1 million reported for the third quarter last year. Total net revenues for the first nine months of 2010 were $92.8 million compared to the $78.8 million for the first nine months of 2009.

Net product sales from strategic products were 63% of total net revenues, or $17.7 million, for the third quarter of 2010, a substantial increase from the 38% of total net revenues, or $8.8 million, for the third quarter of 2009.

“We continue to be pleased with the overall growth of the company, the advancement of our development projects and our movement away from legacy products,” said Craig A. Collard, Cornerstone’s President and Chief Executive Officer. “We continue to focus on building a portfolio of approved products with long-term growth potential which will enable us to provide enhanced value to patients and shareholders.”

A breakdown of product sales for the third quarter (in thousands) follows:

	Three Months Ended
	September 30,					Change
	2010			2009		$			%
Net product sales
Curosurf®	$	8,051		$	2,153	$	5,898			274	%
Factive®		850			91		759			834
Spectracef® product family		1,194			1,554		(360	)		(23	)
Zyflo® product family		7,574			5,034		2,540			50
AlleRx® Dose Pack products		3,812			3,541		271			8
HyoMax® product family		2,002			7,616		(5,614	)		(74	)
Propoxyphene/acetaminophen products		2,935			2,949		(14	)	NM
Other products		(8	)		140		(148	)		(106	)
Total net product sales		26,410			23,078		3,332			14
License and royalty agreement revenues		1,522			—		1,522		NM
Net revenues		27,932			23,078		4,854			21

Gross margin was 71% for the third quarter, compared to 82% for the comparable period of 2009. The lower gross margin compared to the prior period was due to a relatively higher portion of our net product sales in 2010 derived from products that have lower gross margins, primarily Curosurf.

Selling, general and administrative expenses decreased $0.3 million, or 3%, in the third quarter of 2010 compared to the third quarter of 2009. The decrease in selling, general and administrative expenses was primarily due to lower stock compensation and reduced legal and consulting costs, as compared to the third quarter of 2009 when we incurred significant expenses related to the Chiesi transaction. The decrease was partially offset by costs related to additions to our hospital sales force in September 2009, co-promotion expenses relating to Zyflo CR^® and certain propoxyphene/acetaminophen products, as well as increased market research.

Royalty expenses decreased $2.0 million, or 43%, during the third quarter of 2010 compared to the third quarter of 2009. The reduction in royalty expense was primarily due to the reduction in net revenue from one of our legacy products, offset by increased royalties for Zyflo CR.

As of September 30, 2010, the Company had $49.7million in cash and cash equivalents, an increase of $30.8 million compared to December 31, 2009.

Conference Call Information

Cornerstone Therapeutics will host a conference call today at 4:30 PM ET to discuss its financial results for the quarter and nine months ended September 30, 2010. Management will also provide an update on the Company’s strategy, operations and product development pipeline. To participate in the live conference call, please dial 866-804-6927 (U.S. callers) or 857-350-1673 (international callers), and provide passcode 19358387. A live webcast of the call will also be available through the “Investors—Webcasts & Presentations” section of the Company’s website at http://www.crtx.com. Please allow extra time prior to the webcast to register for the webcast and to download and install any necessary audio software.

The conference call and the webcast will be archived for 30 days. The telephone replay of the call will be available today at 07:30 PM ET, by dialing 888-286-8010 (U.S. callers) or 617-801-6888 (international callers), and providing passcode 43083287.

About Cornerstone Therapeutics

Cornerstone Therapeutics Inc. (Nasdaq: CRTX), headquartered in Cary, N.C., is a specialty pharmaceutical company focused on acquiring, developing and commercializing products primarily for the respiratory and related markets. The Company currently promotes multiple marketed products in the United States to respiratory-focused physicians, key retail pharmacies and hospitals with its specialty sales forces. The Company also has a late-stage clinical pipeline with a recent regulatory submission filing and four additional regulatory approval submissions targeted within the next three years. Key elements of the Company’s strategy are to pursue acquisition or licensing transactions to acquire the rights to patent-protected, branded respiratory or related pharmaceutical products, or late-stage product candidates; to implement life cycle management strategies to maximize the potential value and competitive position of the Company’s currently marketed products, newly acquired products and product candidates that are currently in development; to grow product revenue through the Company’s specialty sales forces; and to maintain and strengthen the intellectual property position of the Company’s currently marketed products, newly acquired products and product candidates.

Use of Non-GAAP Financial Measures

This press release highlights the Company’s financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs and charges that are excluded from non-GAAP results. By publishing the non-GAAP financial measures, management intends to provide investors with additional information to further analyze the Company’s performance and underlying trends. Management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

Safe Harbor Statement

Statements in this press release regarding the progress and timing of our product development programs and related trials; our future opportunities; our strategy, future operations, anticipated financial position, future revenues and projected costs; our management’s prospects, plans and objectives; and any other statements about management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Any statements that are not statements of historical fact (including, without limitation, statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “target,” “will,” “would” and similar expressions) should also be considered to be forward-looking statements.

There are a number of important factors that could cause our actual results or events to differ materially from those indicated by such forward-looking statements, including risks relating to our ability to develop and maintain the necessary sales, marketing, supply chain, distribution and manufacturing capabilities to commercialize our products; our ability to replace the revenues from our marketed unapproved products, which we plan to cease manufacturing and distributing at the end of 2010; the possibility that the Food and Drug Administration (the FDA) will take enforcement action against us or one or more of our marketed drugs that do not have FDA-approved marketing applications prior to the end of 2010; patient, physician and third-party payor acceptance of our products as safe and effective therapeutic products; our ability to maintain regulatory approvals to market and sell our products with FDA-approved marketing applications; our ability to obtain FDA approval to market and sell our products under development; our ability to develop and commercialize our product candidates before our competitors develop and commercialize competing products; difficulties relating to clinical trials, including difficulties or delays in the completion of patient enrollment, data collection or data analysis; the results of preclinical studies and clinical trials with respect to our products under development and whether such results will be indicative of results obtained in later clinical trials; and the other factors described in Item 1A (Risk Factors) of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 4, 2010 and in our subsequent filings with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this press release reflect our expectations and beliefs as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. However, while we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or

investments that we may make or enter into. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this release.

Trademarks

Tussionex® is a registered trademark of UCB, Inc. Curosurf® is owned by Chiesi Farmaceutici S.p.A. Factive® is owned by LG Life Sciences, Ltd. Curosurf and Factive are licensed to Cornerstone Therapeutics for sales and marketing purposes in the United States and, with respect to Factive®, certain other countries.

FINANCIAL TABLES FOLLOW

CONTACT: Investor Relations Contacts: Westwicke Partners, John Woolford, +1-443-213-0506, john.woolford@westwicke.com or Westwicke Partners, Stefan Loren, Ph.D., +1-443-213-0507, sloren@westwicke.com; Media Relations Contact: Fleishman-Hillard, Andrea Moody, +1-919-457-0743, andrea.moody@fleishman.com

###

CORNERSTONE THERAPEUTICS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(Unaudited)						(Unaudited)
Net revenues	$	27,932		$	23,078		$	92,803		$	78,776
Costs and expenses:
Cost of product sales (exclusive of amortization of product rights)		7,742			4,143			22,714			10,245
Selling, general and administrative		12,850			13,186			38,089			34,023
Royalties		2,600			4,593			9,846			16,535
Research and development		1,047			691			3,748			3,041
Amortization of product rights		3,595			1,507			10,785			2,528
Total costs and expenses		27,834			24,120			85,182			66,372
Income (loss) from operations		98			(1,042	)		7,621			12,404
Other expenses:
Interest (expense) income, net		(37	)		1			(47	)		(113	)
Other expense, net		(25	)		—			(25	)		—
Total other (expenses) income		(62	)		1			(72	)		(113	)
Income (loss) before income taxes		36			(1,041	)		7,549			12,291
Benefit from (provision for) income taxes		728			503			(2,172	)		(4,776	)
Net income (loss)	$	764		$	(538	)	$	5,377		$	7,515
Net income (loss) per share, basic	$	0.03		$	(0.03	)	$	0.21		$	0.50
Net income (loss) per share, diluted	$	0.03		$	(0.03	)	$	0.21		$	0.46
Weighted-average common shares, basic		25,430,785			20,741,322			25,395,506			15,009,285
Weighted-average common shares, diluted		26,056,928			20,741,322			26,017,288			16,249,578

CORNERSTONE THERAPEUTICS INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

	September 30,		December 31,
	2010		2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	49,672	$	18,853
Accounts receivable, net		15,845		16,548
Inventories, net		19,762		18,106
Prepaid and other current assets		3,024		4,808
Income tax receivable		991		—
Deferred income tax asset		3,858		3,507
Total current assets		93,152		61,822
Property and equipment, net		1,587		1,312
Product rights, net		116,271		126,806
Goodwill		13,231		13,231
Amounts due from related parties		38		38
Other assets		374		113
Total assets	$	224,653	$	203,322
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,344	$	7,172
Accrued expenses		28,582		23,703
Current portion of license agreement liability		1,227		1,019
Current portion of capital lease		81		10
Income taxes payable		—		1,606
Deferred revenue		9,195		—
Total current liabilities		48,429		33,510
License agreement liability, less current portion		1,341		1,341
Capital lease, less current portion		167		39
Deferred income tax liability		3,496		4,564
Total liabilities		53,433		39,454
Stockholders’ equity
Preferred stock — $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock — $0.001 par value, 90,000,000 shares authorized; 25,442,596 and 25,022,644 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively		25		25
Additional paid-in capital		159,720		157,745
Retained earnings		11,475		6,098
Total stockholders’ equity		171,220		163,868
Total liabilities and stockholders’ equity	$	224,653	$	203,322

CORNERSTONE THERAPEUTICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Nine Months Ended September 30,
	2010			2009
	(Unaudited)
Cash flows from operating activities
Net income	$	5,377		$	7,515
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		11,070			2,695
Provision for prompt payment discounts		2,909			2,316
Provision for inventory allowances		199			506
Loss on sale of fixed assets		25			—
Stock-based compensation		970			2,970
Benefit from deferred income taxes		(1,419	)		(4,664	)
Changes in operating assets and liabilities:
Accounts receivable		(2,206	)		(16,812	)
Inventories		(1,855	)		(5,271	)
Prepaid expenses and other assets		1,523			(2,086	)
Accounts payable		2,172			(2,186	)
Accrued expenses		5,087			5,796
Income taxes payable		(2,597	)		228
Deferred revenue		9,195			—
Net cash provided by (used in) operating activities		30,450			(8,993	)
Cash flows from investing activities
Proceeds from sale of marketable securities		—			300
Proceeds from sale of fixed assets		2			—
Purchase of property and equipment		(361	)		(250	)
Purchase of product rights		(250	)		(5,169	)
Net cash used in investing activities		(609	)		(5,119	)
Cash flows from financing activities
Proceeds from exercise of common stock options		538			401
Proceeds from issuance of shares of common stock		—			15,465
Payments for cancellation of warrants		—			(41	)
Excess tax benefit from stock-based compensation		467			—
Principal payments on capital lease obligation		(27	)		(7	)
Net cash provided by financing activities		978			15,818
Net increase in cash and cash equivalents		30,819			1,706
Cash and cash equivalents as of beginning of year		18,853			9,286
Cash and cash equivalents as of end of year	$	49,672		$	10,992
Supplemental disclosure of non-cash investing and financing activities
Acquisition of product rights through equity issued and liabilities assumed	$	—		$	110,050

CORNERSTONE THERAPEUTICS INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data — unaudited)

The following tables show the non-GAAP financial measures used in this press release reconciled to the most directly comparable GAAP financial measures.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
GAAP income (loss) from operations	$	98		$	(1,042	)	$	7,621		$	12,404
Add: stock-based compensation		315			305			970			1,157
Add: amortization of product rights		3,595			1,507			10,785			2,528
Add: acquisition-related expenses1		—			1,795			—			3,263
Non-GAAP income from operations	$	4,008		$	2,565		$	19,376		$	19,352
GAAP net income (loss)	$	764		$	(538	)	$	5,377		$	7,515
Add: stock-based compensation		315			305			970			1,157
Add: amortization of product rights		3,595			1,507			10,785			2,528
Add: acquisition-related expenses1		—			1,795			—			3,263
Less: tax effects related to above items2		(840	)		(1,316	)		(3,382	)		(2,703	)
Non-GAAP net income	$	3,834		$	1,753		$	13,750		$	11,760
GAAP net income (loss) per share, diluted	$	0.03		$	(0.03	)	$	0.21		$	0.46
Non-GAAP net income per share, diluted	$	0.15		$	0.08		$	0.53		$	0.72
Shares used in diluted net income (loss) per share calculation:
GAAP net income (loss)		26,056,928			20,741,322			26,017,288			16,249,578
Non-GAAP net income		26,056,928			21,679,818			26,017,288			16,249,578

1	Acquisition-related expenses include legal, accounting and related costs that resulted from or were incurred in connection with the Chiesi transaction.
2	Tax effects for the three months ended September 30, 2010 and 2009 are calculated using effective tax rates of 21.5% and 36.5% respectively. Tax effects for the nine months ended September 30, 2010 and 2009 are calculated using effective tax rates of 28.8% and 38.9% respectively.