Oral heparin and oral insulin very alive, according to management. Seeking partner on both programs.
Press Release Source: Emisphere Technologies, Inc.
Emisphere Technologies Reports Results for Third Quarter of 2002
Wednesday November 6, 7:01 am ET
TARRYTOWN, N.Y., Nov. 6 /PRNewswire-FirstCall/ -- Emisphere Technologies, Inc. (Nasdaq: EMIS - News) today announced results for the third quarter ended September 30, 2002.
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The net loss for the three months ended September 30, 2002 was $13.0 million, or $0.72 per share, compared to a net loss of $17.0 million, or $0.96 per share, respectively, for the same period last year. Excluding a $0.3 million restructuring charge and loss on impairment of assets, the net loss for the third quarter of 2002 was $12.7 million, or $0.70 per share. The restructuring charge that was incurred in the third quarter relates to the planned disposition of Emisphere's Farmington, Connecticut research facility. The June 5, 2002 press release included updated financial guidance that stated management's intent to evaluate the consolidation of operations. During the third quarter of 2002, management reached the decision to dispose of its Farmington, Connecticut research facility.
The net loss for the nine months ended September 30, 2002 was $59.3 million, or $3.32 per share compared to $36.9 million, or $2.08 per share, respectively, for the same period last year. Excluding restructuring charges and asset impairment losses, the net loss for the nine months ended September 30, 2002 was $ 53.3 million, or $2.98 per share.
Total operating expenses before the restructuring charge and loss on impairment of assets for the third quarter decreased by $5.8 million compared with the same quarter last year, primarily due to the discontinuation of the oral liquid heparin programs. Total research costs decreased by $6.5 million, primarily as a result of a $6.3 million decrease in expenses related to all oral liquid heparin programs in the third quarter of 2002. The $6.3 million decrease consisted of a $5.7 million reduction in clinical trial expenses and $0.6 million reduction in other expenses. Partially offsetting the lower research cost is a $0.3 million increase in general and administrative expenses and a $0.4 million increase in depreciation expense. The increased general and administrative cost was related to the hiring and relocation of a company officer. Depreciation costs increased due to the expansion of research facilities in Tarrytown prior to the outcome of the PROTECT Trial.
In late May 2002, following the conclusion of the PROTECT Trial, Emisphere implemented a restructuring plan, scaling back its infrastructure associated with the oral liquid heparin program, which resulted in a staff reduction of approximately 30%. A related $5.7 million (charge) associated with the restructuring plan and loss on impairment of assets was reported in the second quarter 2002.
Also, in the second quarter of 2002, the company reported that further reorganization of its operations at its two locations in Tarrytown, New York and Farmington, Connecticut was under consideration. During the third quarter of 2002, the company decided to sell its research facility in Connecticut, which resulted in an additional restructuring charge of approximately $0.2 million, attributed to severance and related costs. The operations in Connecticut will cease in mid-November and close in mid-December. Of the 38 personnel currently employed at this facility, 32 will be terminated.
Emisphere is in discussions with potential buyers of the facility with proposals ranging from continued operations as a research facility to selling the facility and the 29 acres of land surrounding the facility. Based on current estimates of expected proceeds, an impairment loss of the carrying value of the land and building has not been triggered as of September 30, 2002. Any impairment of the equipment in the Connecticut facility has not yet been determined as of September 30, 2002, given the wide range of potential uses that buyers have proposed. By closing the facility, the company's cash expenditures are expected to decrease by $3.5 million annually and by a further $1.6 million annually after the facility is sold.
Revenues for the third quarter of 2002 remained flat at $0.7 million as compared to the same quarter of 2001, and consisted of cost reimbursement primarily related to the initiation of oral recombinant human growth hormone (rhGH) human testing and ongoing development work related to oral parathyroid hormone (PTH 1-34) for Eli Lilly and Company.
For the third quarter of 2002, Emisphere's cash usage was approximately $13.6 million; and, as of September 30, 2002, the company held cash and investments totaling approximately $83.6 million.
For the nine months ended September 30, 2002, there were approximately 17.9 million weighted average shares outstanding and Emisphere employed 159 people.
Alan W. Dunton, M.D., President and Chief Operating Officer of Emisphere Technologies, commented, "We remain confident that we have the cash to adequately fund our current partnered and unpartnered programs. In addition, we believe that the disposition of the Connecticut research facility will allow us to strategically re-allocate our funds into these programs and maintain the momentum gained during the third quarter."
PROGRAM UPDATES
Emisphere has entered an improved version of an oral solid formulation of heparin (in tablet form) into clinical testing, following recent primate data that demonstrated a viable solid formulation could be achieved using a new formulation process. The improved oral solid formulation uses the EMISPHERE® delivery agent, SNAC (Sodium N-[8-(2 hydroxybenzoyl)amino] caprylate), which has an established safety profile based on the results of Emisphere's Phase III PROTECT Trial. The Chairman of the PROTECT Steering Committee and lead investigator for the study, Russell D. Hull, M.B.B.S., M.Sc., Professor of Medicine and Director, Thrombosis Research Unit, University of Calgary, submitted the PROTECT study for peer review, and received approval to present the results from the study as a podium presentation at the American Society of Hematology (ASH) Conference in Philadelphia, PA, on December 9, 2002.
Emisphere completed the evaluation of the pharmacokinetics, pharmacodynamics and blood glucose response levels in Type 2 diabetics of an oral formulation of insulin using a selected EMISPHERE® delivery agent following the ingestion of a standardized solid meal. Emisphere has provided these data to potential partners as additional proof of the viability of Emisphere's oral insulin formulation.
Emisphere continues to evaluate an oral formulation of cromolyn for potential use in allergic conditions and asthma. To date, promising pharmacokinetics of the oral formulation have been observed in humans. Additional effort is being focused on the appropriate Phase II study design to expeditiously determine the safety and definitive efficacy for systemically delivered cromolyn.
Emisphere and partner, Novartis AG (NYSE: NVS - News) have completed dosing a three-month Phase IIa study to evaluate an oral form of salmon calcitonin using a selected EMISPHERE® delivery agent, as well as 12-month toxicology studies in preclinical models. The results from the long-term toxicology study support further development of this product candidate.
Emisphere and partner, Eli Lilly and Company (NYSE: LLY - News), are engaged in ongoing Phase I studies to evaluate an oral formulation of recombinant human growth hormone. The rhGH program is the second program with Lilly to enter clinical testing. This is the largest protein ever evaluated in humans with Emisphere's technology.
In addition, Emisphere continued to conduct proof-of-concept studies related to feasibility partnership agreements.
Michael M. Goldberg, M.D., Chairman and Chief Executive Officer of Emisphere, concluded, "Emisphere has made excellent progress during the third quarter in its active programs, both partnered and unpartnered, including entering human studies with improved solid dosage forms of oral heparin, completing the dosing for a three month Phase IIa study evaluating our oral salmon calcitonin product candidate with Novartis, beginning a clinical study with our second Lilly compound, rhGH, and, completing an additional clinical study with oral insulin, and completing some feasibility studies and initiating others. In addition, we have completed the manufacture of GMP material for use in human testing in our recently completed GMP facility. I am proud of our team's success in advancing a variety of programs and partnerships while effectively managing our cash resources." |
