Thursday November 12, 12:56 pm Eastern Time
Company Press Release
SOURCE: GalaGen Inc.
Galagen Inc. Reports Third Quarter Results
ARDEN HILLS, Minn., Nov. 12 /PRNewswire/ -- GalaGen Inc. (Nasdaq: GGEN - news) today announced financial results for the third quarter ended September 30, 1998.
The Company reported a net loss for the third quarter of 1998 of $(878,881) or $(0.11) per share compared to a net loss of $(1,282,943) or $(0.18) per share in the third quarter of 1997. The Company ended the third quarter of 1998 with $4,992,350 in cash, cash equivalents and available-for- sale securities.
For the nine months ended September 30, 1998 the net loss was $(3,701,751) or $(0.46) per share compared to $(4,316,437) or $(0.60) per share for the same period in 1997.
GalaGen's president and CEO, Robert A. Hoerr, M.D., Ph.D., said: ''We are pleased that our recent asset purchase agreement and marketing agreement with Nutrition Medical, Inc. has begun to generate revenues for the Company beginning September 1998. We believe that this purchase will generate significant revenues for the Company in 1999 and be a valuable channel for our clinical nutrition product line.'' Hoerr further added that: ''Additionally, our recent announcement of the Company's nutritional product collaboration with Wyeth-Ayerst to commercialize a proprietary immune-enhancing ingredient for use in infant formula and other nutritional products positions GalaGen for entrance into rapidly growing consumer markets.''
Nutrition Medical, Inc. Asset Purchase
In September 1998, the Company entered into an asset purchase agreement with Nutrition Medical, Inc. (Nasdaq: NMED - news) to acquire NMED's developed line of critical care enteral nutrition products and formulas. The products were recently introduced and are being sold to the hospital and home healthcare industries.
The asset purchase is subject to Nutrition Medical shareholder approval that is expected late 1998. According to the terms of the Agreement, GalaGen will purchase substantially all of NMED's critical care enteral nutrition products and formulas, all related inventory and certain other assets including the existing customer base of over 500 hospitals and home healthcare facilities.
In addition, the two companies have entered into a marketing agreement that provides GalaGen the rights to commence selling the purchased products in September 1998. The terms of the interim marketing agreement will terminate upon closing. The sales and marketing group from NMED has joined GalaGen to provide continuity in operations and an essential marketing base.
Wyeth-Ayerst Collaboration and License Agreement
In October 1998, the Company entered into a collaboration and license agreement and a manufacturing and supply agreement with Wyeth-Ayerst, a division of American Home Products (NYSE: AHP - news). The two companies will develop and commercialize a proprietary ingredient with unique immune- enhancing properties for use in infant formula and other nutritional products. The companies will collaborate during the research and development phase of the product and Wyeth-Ayerst will have financial and oversight responsibilities for all clinical trials and regulatory compliance related to the use of the ingredient in infant formula products.
GalaGen Inc. is a nutritional products company that is utilizing its proprietary immune boosting technology and patented manufacturing processes to commercialize health-promoting foods and beverages. The Company continues to expand applications for its Proventra Brand Natural Immune Components technology and is developing a portfolio of Proventra-based products that target the needs of consumers and the healthcare market.
Except for historical information, matters discussed in this press release are forward-looking statements that involve risk and uncertainties, including, but not limited to, risks associated with entering new markets, consumer acceptance, regulation of nutritional products including infant formula and dietary supplements, competitive pressures and other important factors detailed in the Company's annual report on Form 10-K for fiscal 1997 filed with the Securities and Exchange Commission.
GALAGEN INC.
(A Development Stage Company)
FINANCIAL HIGHLIGHTS
SUMMARY FINANCIAL DATA
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
1998 1997 1998 1997
Revenues $160,890 $-- $173,699 $--
Cost of goods sold 60,447 -- 66,852 --
Gross Margin 100,443 -- 106,847 --
Research and
development expense 235,736 902,283 1,654,245 3,057,849
Selling, general and
administrative
expense 675,765 436,673 1,896,832 1,545,768
Operating loss (811,058) (1,338,956) (3,444,230) (4,603,617)
Interest income 42,928 96,664 235,204 327,831
Interest expense (110,751) (40,651) (492,725) (40,651)
Net loss applicable
to common
shareholders $(878,881) $(1,282,943) $(3,701,751) $(4,316,437)
Net loss per share,
basic and diluted $(0.11) $(0.18) $(0.46) $(0.60)
Shares used in
computing net loss
per share, basic
and diluted 8,284,673 7,186,180 8,115,654 7,173,078
BALANCE SHEET DATA
(unaudited)
September 30
1998
Assets:
Cash & cash equivalents $2,608,911
Available-for-sale-securities 2,383,439
Other current assets 87,993
Total current assets 5,080,343
Property and equipment, net 341,840
Other assets 124,778
Total assets $5,546,961
Liabilities and stockholders' equity:
Current liabilities $686,229
Long-term obligations 471,999
Total liabilities 1,158,228
Total stockholders' equity 4,388,733
Total liabilities and stockholders'
equity $5,546,961
SOURCE: GalaGen Inc.
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