Dimethaid announces first quarter financial results
via COMTEX
September 15, 2003
TORONTO, Sep 15, 2003 (Canada NewsWire via COMTEX) --
Specialty pharmaceutical developer, Dimethaid Research Inc. (TSX: DMX) today reported consolidated fiscal 2004 results for the first quarter ended August 31, 2003. Unless specified otherwise, all amounts are in US dollars.
Dimethaid recorded significant revenue growth in the first quarter of fiscal 2004. For the first quarter ended August 31, 2003, operating revenue grew to $790,000 ($1.1 million CDN), up 618 percent from the same period a year ago.
'With the first full quarter of PENNSAID(R) sales in hand, we are thrilled with the reception from physicians and patients,'said Rebecca E. Keeler, Dimethaid's president and CEO. 'The unsolicited feedback is extremely encouraging, and we expect the momentum to continue growing.'
Developments During the Quarter
- Dimethaid's Italian marketing and distribution partner,
Italchimici SpA, officially launched PENNSAID in June 2003.
Italchimici's opening order was reflected in the Company's fiscal
2003 year-end financial statements. Dimethaid is pleased with the
additional orders we are continuing to receive.
- At the European Congress of Rheumatology in June, Dimethaid presented
results from a double-blinded equivalence trial comparing oral
diclofenac to topical PENNSAID. The study showed that PENNSAID works
as well as the oral medication in relieving the symptoms associated
with osteoarthritis of the knee, while demonstrating a much safer
side effects profile.
- Under the European Mutual Recognition Procedure (MRP) the Company received additional PENNSAID approvals in Greece, Iceland and Portugal.
- Dimethaid received notification of an intent to grant wholly owned
subsidiary, Oxo Chemie AG, additional patents for its immune
regulating technology in nineteen European countries. The new patents
extend existing European protection to cover a much broader range of
disease applications and will remain in force until 2018.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis covers the consolidated interim financial statements of Dimethaid Research Inc. (the 'Company') for the three-month period ended August 31, 2003. This report should be read in conjunction with the attached financial statements for the first quarter ended August 31, 2003 together with the notes thereto.
All amounts in this discussion and analysis and financial statements are expressed in US dollars, unless otherwise noted.
Operating Results
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Dimethaid recorded significant revenue growth in the first quarter of fiscal 2004. For the first quarter ended August 31, 2003, revenue grew to $790,000 ($1.1 million CDN), up 618 percent from the same period a year ago. This increase is primarily attributable to PENNSAID revenue growth of $704,000 ($970,000 CDN) following product launches in Canada (May 2003) and Italy (June 2003).
Gross profit for the first quarter of fiscal 2004 was $672,000 or 85% of sales, up from $35,000 or 32% of sales, for the same period a year ago. The considerable increase in margin stems from the growth in PENNSAID revenue during the quarter. The Company's strategy of using its own sales force for direct distribution and promotion in Canada has also contributed to the increased gross margin percentages.
Total operating expenses increased to $2.7 million for the first quarter versus $2.1 million for the same period last year. Selling and marketing expenses increased during the first quarter to $1.3 million, an increase of $837,000 compared to the same period last year primarily due to advertising and promotional costs associated with marketing PENNSAID to Canadian physicians. Research and development expenses decreased to $397,000 for the first quarter ended August 31, 2003, from $707,000 for the comparable period last year, in line with reduced spending on clinical trials. Dimethaid's administrative expenses remained relatively flat quarter over quarter.
For the first quarter of fiscal 2004, the Company incurred a net loss of $2.4 million, or $0.07 per share, compared to $2.5 million, or $0.09 per share, for the first quarter last year.
Liquidity and Capital Resources
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Funds used in operating activities for the first quarter of fiscal 2004 totaled $2.3 million compared to $2.0 million for the same period last year, reflecting the Company's investment in marketing its lead product, PENNSAID, in the Canadian market.
During the first quarter, the company arranged a credit facility up to $2.0 million CDN, of which $1.5 million CDN was drawn as at August 31, 2003. The Company is in advanced discussions with a view to raising additional equity financing.
Conference Call Details
Media, members of the financial community and shareholders are invited to listen to the Company's quarterly earnings conference call Monday, September 15, 2003, at 4:15 p.m. (EST) through a live audio webcast available at www.dimethaid.com and www.newswire.ca/webcast/. Please connect to either Web site at least 15 minutes before the conference call to ensure adequate time for any required software downloads. A replay of the webcast will be available shortly after completion of the call at www.dimethaid.com and www.newswire.ca/webcast/. Please note this is an analyst call and at the end of the presentation we will invite questions from analysts only. A replay will also be available by telephone from approximately 6:15 p.m. Eastern time on September 15 through to September 22, 2003. To access the telephone replay, dial 1-877-289-8525 and enter reservation number 21018393.
About Dimethaid Research Inc.
Dimethaid Research Inc. is a publicly traded, Canadian, specialty pharmaceutical company headquartered in Markham, Ontario, with manufacturing facilities in Varennes, Quebec and Wanzleben, Germany. The company develops and commercializes targeted therapeutic drugs designed to produce minimal side effects. Dimethaid's two technology platforms focus on immune system regulation and transcellular drug delivery. Products are aimed at expanding treatment options in oncology, immunology, rheumatology and the therapeutic management of chronic viral infections. For more information, please visit www.dimethaid.com.
DIMETHAID RESEARCH INC. CONSOLIDATED BALANCE SHEETS
As at As at
UNAUDITED Aug 31, May 31,
(thousands of U.S. dollars) 2003 2003
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ASSETS
CURRENT
Cash and cash equivalents $ 363 $ 1,524
Accounts receivable 469 459
Inventories 1,401 1,433
Prepaid expenses and other 210 395
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TOTAL CURRENT ASSETS 2,443 3,811
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LONG TERM ASSETS
Property, plant and equipment 6,947 7,173
Intangibles 16,011 16,353
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TOTAL ASSETS $ 25,401 $ 27,337
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LIABILITIES AND SHAREHOLDERS'EQUITY
CURRENT
Accounts payable and accrued liabilities $ 4,663 $ 5,310
Short term loan (note 3) 1,095 -
Current portion of long term debt 39 42
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TOTAL CURRENT LIABILITIES 5,797 5,352
Long term debt 2,301 2,358
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TOTAL LIABILITIES 8,098 7,710
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SHAREHOLDERS'EQUITY
Capital stock 76,122 75,913
Contributed surplus 161 161
Acquisition commitments (note 4) 15,521 13,797
Cumulative translation adjustment 268 343
Deficit (74,769) (70,587)
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TOTAL SHAREHOLDERS'EQUITY 17,303 19,627
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TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY $ 25,401 $ 27,337
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DIMETHAID RESEARCH INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
THREE MONTHS ENDED
UNAUDITED Aug 31 Aug 31
(thousands of U.S. dollars, except per share data) 2003 2002
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REVENUE $ 790 $ 110
Cost of sales 118 75
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GROSS PROFIT 672 35
EXPENSES
Research and development 397 707
Administrative 962 910
Selling and marketing 1,302 465
Foreign currency loss (11) 10
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2,650 2,092
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LOSS BEFORE INTEREST AND AMORTIZATION (1,978) (2,057)
Amortization of property, plant and equipment (98) (89)
Amortization of intangibles (341) (341)
Interest and other income (expense) (40) (48)
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NET LOSS FOR THE PERIOD (2,457) (2,535)
Deficit, beginning of period (70,587) (53,831)
Accretion on acquisition commitments (note 4) (1,725) (1,550)
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DEFICIT, END OF PERIOD $(74,769) $(57,916)
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NET LOSS PER COMMON SHARE $ (0.07) $ (0.09) ------------------------------------------------------------------------- -------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CONTRIBUTED SURPLUS
THREE MONTHS ENDED
UNAUDITED Aug 31 Aug 31 (thousands of U.S. dollars, except per share data) 2003 2002 -------------------------------------------------------------------------
Opening balance $ 161 $ -
Transactions during the quarter - -
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Closing Balance $ 161 $ -
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DIMETHAID RESEARCH INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
UNAUDITED Aug 31 Aug 31 (thousands of U.S. dollars) 2003 2002 -------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the period $ (2,457) $ (2,535)
Add items not affecting cash:
Amortization 439 430
Accretion of interest (note 4) - 50
Employer's portion of share purchase plan - 32
Net change in non-cash working capital balances (256) 37
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CASH USED IN OPERATING ACTIVITIES (2,274) (1,986)
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INVESTING ACTIVITIES
Acquisition of property, plant and equipment (3) (197)
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CASH USED IN INVESTING ACTIVITIES (3) (197)
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FINANCING ACTIVITIES
Issuance of common shares (net of expenses) - 1,614
Short term loan 1,095 -
Term loans advances (repayments) - 18
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CASH PROVIDED BY FINANCING ACTIVITIES 1,095 1,632
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Effect of foreign currency exchange rate changes on cash and cash equivalents 21 (29) -------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents during the period (1,161) (580)
Cash and cash equivalents, beginning of period 1,524 802
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 363 $ 222
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Interest Paid 38 14 ------------------------------------------------------------------------- -------------------------------------------------------------------------
DIMETHAID RESEARCH INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
These unaudited consolidated financial statements have been prepared by
management in accordance with Canadian generally accepted accounting
principles, on a basis consistent with prior years. These statements
should be read in conjunction with the audited consolidated financial
statements for the year ended May 31, 2003. These statements principally
follow the same accounting policies and methods as the most recent annual
financial statements.
2. Capital Stock
Figures are reported in thousands of dollars.
Thousands
Common Shares of Shares U.S. $
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Balance, May 31, 2002 46,383 61,840
Net proceeds of private placement 806 1,582
Issued under share option plan 16 32
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Balance, August 31, 2002 47,205 63,454
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Balance, May 31, 2003 57,348 75,913
Professional fees settled in shares 163 209
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Balance, August 31, 2003 57,511 76,122
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Aggregate
Option
Thousands Price
Share Purchase Options Outstanding of Options U.S. $
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Balance, May 31, 2002 2,605 7,915
Granted during the period 221 466
Expired during the period (142) (548)
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Balance, August 31, 2002 2,684 7,833
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Balance, May 31, 2003 3,254 9,209
Expired during the period (180) (776)
Foreign exchange variance - (109)
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Balance, August 31, 2003 3,074 8,324
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3. Short Term Loan
The Company arranged a credit facility for up to $2.0 million CDN, which
the Company may draw upon until May 31, 2004. Interest is set at 2.0% per
month, payable monthly. The balance including accrued interest as at
August 31, 2003 is CDN$ 1,517,000 (US$ 1,095,000).
4. Commitments on Acquisition
On May 31, 2002 the Company completed the acquisition of the remaining
80% of Oxo Chemie AG giving the Company 100% ownership. Oxo Chemie AG is
a Swiss-based company committed to the development and commercialization
of proprietary therapeutic products for the treatment of immune
dysfunction diseases. The consideration included the following
outstanding non-interest bearing commitments as at August 31, 2002:
As at August 31, 2003 As at August 31, 2002
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Net Net
Present Present
Principal Value Principal Value
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Current Cash Commitment Nov 30, 2002 - - 500 450
Acquisition Commitments
Nov 30, 2002 - - 4,000 3,600
Nov 30, 2003 4,241 3,817 4,241 2,545
Nov 30, 2004 9,240 5,544 9,240 3,696
Nov 30, 2005 9,241 3,696 9,241 2,464
Nov 30, 2006 9,240 2,464 9,240 1,643
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Total Acquisition Commitments 31,962 15,521 35,962 13,948
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Total Future Consideration 31,962 15,521 36,462 14,398
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Acquisition Commitments can be paid in any combination of cash or common
stock of the Company at the Company's discretion and have been recorded
in Shareholders'Equity on the balance sheet. All of the above non-
interest bearing commitments have been discounted at 50% per annum, which
is estimated to be consistent with other borrowings which have been made
available to the company. These are being accreted up to the principal
values through charges to Operations and Deficit as follows:
Cash Acquisition Total
Commitments Commitments Commitments
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Balance May 31, 2002 400 12,398 12,798
Accretion of Interest 50 - 50
Accretion charged to deficit - 1,550 1,550
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Balance August 31, 2002 450 13,948 14,398
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Cash Acquisition Total
Commitments Commitments Commitments
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Balance May 31, 2003 - 13,797 15,521
Accretion charged to deficit - 1,724 1,724
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Balance August 31, 2003 - 15,521 15,521
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5. Segment Reporting by Geographic Area
The company operates as one industry segment, in three geographic regions. Figures are reported in thousands of U.S. dollars.
THREE MONTHS ENDED
Aug 31 Aug 31
Revenue 2003 2002
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Canada $ 656 $ 61
Europe 95 14
Other 39 35
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$ 790 $ 110
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Net Income (Loss)
Canada $ (1,604) $ (1,779)
Europe (287) (236)
Other (87) (42)
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Loss before interest and amortization (1,978) (2,057)
Amortization (439) (430)
Interest and other income, net (40) (48)
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$ (2,457) $ (2,535)
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As at As at
Aug 31, Aug 31,
Identifiable Assets 2003 2002
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Canada $ 7,448 $ 6,531
Europe 17,758 18,563
Other 195 29
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$ 25,401 $ 25,123
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This release may contain forward-looking statements, subject to risks and uncertainties beyond management's control. Actual results could differ materially from those expressed here. Risk factors are discussed in the Company's annual information form filed with the securities commissions in each of the provinces of Canada. The Company undertakes no obligation to revise forward-looking statements in light of future events.
%SEDAR: 00002418EF
VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION: newswire.ca
For further information: Dimethaid Research Inc., Investor Relations,
Tel: (905) 415-1446, Email: info(at)dimethaid.com;
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