Management Comments

“We are pleased about the recent completion of screening activities in our current Phase 2a study and the continued progress of our Nasulin clinical program. We look forward to presenting data from our earlier trials at the Ninth Annual Diabetes Technology Meeting taking place this week in San Francisco” stated John A. Sedor, CPEX President and Chief Executive Officer. “We are also encouraged by Serenity’s advancement of their compound for the treatment of nocturia into Phase 3 studies. This drug addresses a large urology indication with few treatment options. This is an exciting opportunity for CPEX and Serenity and we look forward to updating you on the future of this program.”




CPEX Pharmaceuticals, Inc. and Subsidiaries

Unaudited Condensed Consolidated and Combined Statements of Operations


(in thousands, except per share data) For the Three Months Ended
September 30,


For the Nine Months Ended
September 30,

2009 2008 2009 2008

Royalties and other revenue $ 4,951 $ 3,945 $ 13,435 $ 11,343

Operating expenses:
General and administrative 2,340 2,574 6,276 5,023
Research and development 3,332 2,249 9,324 6,778
Separation costs — — — 2,502
Depreciation and amortization 175 171 505 514

Total operating expenses 5,847 4,994 16,105 14,817

Loss from operations (896
) (1,049 ) (2,670 ) (3,474 )

Other income (expenses):
Interest income 25 44 128 270
Interest expense (1 ) (1 ) (2 ) (4 )

Net loss $ (872 ) $ (1,006 ) $ (2,544 ) $ (3,208 )

Net loss per common share:
Basic and diluted $ (0.34 ) $ (0.43 ) $ (1.02 ) $ (1.40 )

Weighted average common shares
outstanding:

Basic and diluted 2,529 2,334 2,503 2,294



CPEX Pharmaceuticals, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets


(in thousands, except per share data) September 30,
2009
December 31,
2008

Assets

Current assets:
Cash and cash equivalents $ 13,752 $ 15,211
Receivables 5,033 4,445
Prepaid expenses and other 1,010 583

Total current assets 19,795 20,239

Non-current assets:
Fixed assets, net 2,943 2,832
Intangible assets, net 2,314 2,394
Restricted cash 1,000 1,000
Other 8 8

Total non-current assets 6,265 6,234
Total assets $ 26,060 $ 26,473

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable $ 1,261
$ 1,096
Accrued expenses 1,690 1,534
Total current liabilities 2,951 2,630

Commitments and contingencies

Stockholders’ equity:
Series A Preferred stock, $0.01 par value, authorized 1,000
shares, issued and outstanding, none — —
Common stock, $0.01 par value, authorized 35,000 shares,
issued and outstanding, 2,535 shares and 2,484, respectively 25 25
Additional paid-in capital 26,342 24,532
Accumulated deficit (3,258 ) (714 )
Total stockholders’ equity 23,109 23,843
Total liabilities and stockholders’ equity $ 26,060 $ 26,473