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"We are extremely optimistic about Nuvo's future. We have a post-Phase IIIproduct that is unlicensed for the large and growing U.S. OA market and weremain confident that we will be in a position to file a complete resubmissionof our application for Pennsaid approval in early 2009," said HenrichGuntermann, President and Chief Executive Officer, "In addition, our highthroughput screening and MMPE technology is creating a promising pipeline oftransdermal drug candidates."
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Revenue for the three-months ended March 31, 2008 increased 128% to $2.2million compared with $1.0 million for the three-months ended March 31, 2007.The increase was primarily attributable to a $1.1 million increase in Pennsaidproduct sales to the Company's Greek distributor which launched the productduring the second quarter of 2007 and a 65% increase in sales of WF10 basedproducts to $0.2 million. Overall product sales for Pennsaid increased 214% to$1.7 million compared to $0.6 million in 2007. As a result of the increasedsales volumes gross margin on product sales improved to $0.9 million duringthe first quarter of 2008 as compared to a loss of $0.1 million in the firstquarter of 2007.
Total operating expenses, excluding foreign currency gains and losses, forthe three-months ended March 31, 2008 of $3.7 million were unchanged versus ayear ago. While unchanged in aggregate the change in mix between categories ofexpenditures highlights the impact of the Company's efforts during the thirdand fourth quarters of 2007 to focus its resources on research activitiesrather than administrative costs. During the first quarter of 2008, researchand development expenditures represented 57% of operating expenses (beforecurrency gains and losses) versus 47% in the first quarter of 2007.
Research and development costs were $2.1 million for the three-monthsended March 31, 2008 an increase of 21% compared with $1.7 million for thethree-months ended March 31, 2007. The majority of spending for the periodrelated to the on-going studies to address the conditions raised by the FDA inthe Pennsaid Approvable Letter and the costs of the Company's researchfacility in San Diego as it expands its capabilities. During the firstquarter, the Company made excellent progress towards completing several of theShort and Long Term Studies required for its resubmission. The Company expectsthat it will spend approximately $12 million on external costs to address allapprovable letter issues. However, as the FDA has agreed to allow the longeststudy to be completed post approval, a portion of these costs will be spentafter the approval of Pennsaid. To date, the Company has spent approximately$5 million, of which $1 million was expensed in the quarter ended March 31,2008.
SG&A expenses decreased by 22% to $1.1 million for the three-months endedMarch 31, 2008, compared to $1.4 million for the three-months ended March 31,2007. The decrease is primarily attributable to activities undertaken duringthe third and fourth quarters of 2007 including the closure of the Company'sinternational marketing office in Barbados and staff reductions at thecorporate head office.
The net loss for the three-months ended March 31, 2008 declined by 35% to$2.3 million from $3.5 million for the three-months ended March 31, 2007. TheCompany was able to reduce the net loss as the increased margin generated fromhigher product sales, foreign currency gains and reductions in SG&A costs morethan offset higher research and development expenditures.
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