Dimethaid announces first quarter financial results
TORONTO, Sept. 20 /CNW/ - Pharmaceutical developer Dimethaid Research
Inc. (TSX: DMX) today reported consolidated fiscal 2005 results for the first
quarter ended August 31, 2004. Unless specified otherwise, all amounts are in
US dollars.
Dimethaid recorded significant revenue growth in the first quarter of
fiscal 2005. For the first quarter ended August 31, 2004, operating revenue
grew to $1.7 million, up 115 percent from the same period a year ago. This
robust growth was due primarily to a 120 percent increase in year-over-year
Pennsaid sales.
"We see Canadian physicians looking to Pennsaid more and more often as a
result of rising concern about the side effects of competing COX-2
medications," said Patrick Gushue, director, marketing and sales. "Publication
of Pennsaid's first clinical paper in the Canadian Medical Association Journal
this August has finally provided peer-reviewed results to support the Pennsaid
promotional campaign."
Developments During the Quarter
- The U.S. Food and Drug Administration approved the protocol for a
Phase I/II clinical trial with Penecure, the company's topical
antifungal treatment.
- As part of a long-standing succession plan to enhance the core
expertise already on the board, the company announced the
appointment of Diane J. Kalina, an international licensing
consultant, Jeffrey H. Berg, a prominent, U.S. pharmaceutical
industry analyst, and Edward E. McCormack, an independent business
consultant and former chief financial officer of Novopharm Ltd.
- The Canadian Medical Association Journal has published results
from a clinical trial demonstrating the efficacy and safety of
Pennsaid, the country's first prescription anti-arthritic lotion.
- Dimethaid completed a special warrant private placement financing,
raising proceeds of $2.7 million US after commissions.
- The company was notified that regulatory authorities in Trinidad &
Tobago intend to approve Pennsaid distribution.
Operating Results
-----------------
Dimethaid recorded significant revenue growth in the first quarter of
fiscal 2005. For the first quarter ended August 31, 2004, operating revenue
grew to $1.7 million, an increase of $905,000 or 115% from the same period a
year ago. Total Pennsaid revenue grew to $1.5 million for the first quarter,
up 120 percent from the same period last year and up 16% from the fourth
quarter of fiscal 2004, reflecting the establishment of Pennsaid in the
Canadian, UK and Italian markets.
Dimethaid received the first Pennsaid order from Portuguese partner Jaba
Farmacêutica, which will be shipped in late September.
Gross profit for the first quarter was $988,000 or 79 percent of net
revenue, compared to $672,000 or 85 percent of net revenue, for the same
period a year ago. The slight decrease in margin percentage due to revenue
allocation with our co-promotion partner in Canada is significantly offset by
revenue growth.
Total operating expenses increased to $4.2 million for the first quarter
versus $2.7 million for the same period last year. Selling and marketing
expenses increased during the first quarter to $2.7 million, up from
$1.3 million for the comparable period last year. This increase is mostly due
to continued investment in Pennsaid marketing in the U.K. and the commencement
of two post-marketing Pennsaid clinical trials. Research and development
expenses increased to $471,000 for the first quarter ended August 31, 2004, up
from $397,000 for the comparable period last year due to the addition of
regulatory affairs resources. Dimethaid's administrative expenses include were
relatively flat, while manufacturing expenses increased by $41,000 reflecting
higher production volumes. Compared with the fourth quarter of fiscal 2004,
total operating expenses decreased $536,000 primarily in research and
development spending.
Depreciation increased by $65,000 for the first quarter due to packaging
machinery acquired for the Varennes production facility. Amortization of
intangibles decreased $95,000 this quarter versus the same period last year,
reflecting a partial write-down of intangibles on May 31, 2004.
For the first quarter of fiscal 2005, the company incurred a net loss of
$3.8 million, or $0.07 per share, compared to $2.5 million, or $0.07 per
share, for the comparable period last year.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents at the end of the first quarter totaled
$654,000, compared to $305,000 at the end of the same period last year.
Working capital has improved by $1,077 primarily due to extending terms
on trade accounts payable, and deferring payments on the previously recorded
arbitration award. As a result, accounts payable balances increased by $1,060.
The improvement in collections of accounts receivable was $119, due to
increasing Pennsaid sales (resulting days sales outstanding improved to
34 days from 54 days in the prior year). Inventory balances increased $181.
Funds used in operating activities totaled $2.2 million compared to
$2.3 million for the same period last year, reflecting the company's continued
investment in marketing its lead product, Pennsaid.
During the first quarter, the company completed a special warrant private
placement financing resulting in net proceeds of $2.7 million.
Outstanding Share Data
----------------------
The number of common shares outstanding as at September 20, 2004 is
83,317,727 and has increased by 7,349,812 since May 31, 2004 due to the
exercise of 7,285,341 special warrants issued under the special warrant
private placement and the settlement of directors fees by the issuance of
64,471 common shares.
The total number of options and warrants outstanding as at September 20,
2004 is 10,679,359 (an increase of 8,089,459 since May 31, 2004). This amount
includes 671,450 options issued to employees, management and directors,
231,600 options expiring and 7,649,609 common share warrants issued in
connection with the special warrant private placement completed on June 10,
2004 (see note 2 to the consolidated financial statements).
Subsequent Events
-----------------
The company has an immediate need for interim financing to reduce
accounts payable balances, which current management intends to address
immediately following the September 21st Annual General Meeting. The company
is also exploring various longer term financing options to implement the
international commercialization of Pennsaid and for the continued development
of its product pipeline.
Solvay Pharma Inc. has served the Company with a notice dated
September 16, 2004 to terminate its co-promotion agreement with the Company,
effective December 10, 2004, unless Solvay revokes this decision. The Company
expects to work with Solvay to remedy the situation. Regardless of the
outcome, the Company will continue to promote and distribute Pennsaid in
Canada. |
