March 04, 1999 17:28
Pharmos Corporation's Fourth Quarter Net Improves 39%; Full Year
Net Loss Reduced 43% Due to Product Revenues and Expense
Management
ISELIN, N.J., March 4 /PRNewswire/ -- Pharmos Corporation (Nasdaq: PARS) today reported a net loss of
$1,127,542, or $0.03 per share for the fourth quarter ended December 31, 1998, compared to a net loss of
$1,857,379, or $0.06 per share, in the fourth quarter of 1997. For the twelve-month period ended
December 31, 1998, Pharmos reported a net loss of $4,663,347, or $.15 per share, compared to a net
loss of $8,233,547 before an extraordinary gain, or $.32 per share, for 1997. The most important factors
behind the Company's improved 1998 performance included the commercial launch of its first two
ophthalmic products at mid year, savings from the closure of the R&D facilities in Alachua, Florida at the
end of 1997, and the approval of a $309,000 grant from the FDA for a waiver in relation to application filing
fees for Lotemax(R) and Alrex(TM).
As previously reported, revenue from product sales totaled $204,379 for the fourth quarter and $1,188,278
for the full year. Fourth quarter product revenue grew 125% over third quarter 1998. Inventory draw-down at
wholesalers and distributors continued during the quarter. Shipments during 1999 are expected to reflect
the level of retail product sales.
"We are very pleased to have improved our operating performance in 1998," commented Haim Aviv, Ph.D.,
Chairman and CEO of Pharmos Corporation. "The commencement of product revenues beginning in June
contributed to our financial stability. With a full year of product revenues, the stage is set for a great year
in 1999."
Preparations for the clinical trial of LE-Tobramycin the Company's third ophthalmic product, were
completed during the December quarter. The trial reached full enrollment in January and is expected to
lead to a new drug application (NDA) submission. As with Lotemax(R) and Alrex(TM), Bausch & Lomb will
market LE-Tobramycin once it receives FDA approval.
The Company is also gearing up for Phase III trials in the US and Europe for dexanabinol, its lead
compound for neurological diseases and disorders. In a presentation at the Congress of Neurological
Surgeons' conference in Seattle on October 7, 1998, Phase II clinical trials indicated that dexanabinol
may be an effective treatment for severe head trauma. Twenty of thirty patients planned for Phase II's third
group, which is receiving 200mg dosage levels of dexanabinol, have been enrolled. Management is
seeking to enter into a strategic agreement with an experienced partner to develop and commercialize this
late-stage product, and other compounds in this family, for a variety of clinical applications. Active
discussions with a number of prospective partners are underway.
"1998 was a watershed year for Pharmos," according to Robert W. Cook, Pharmos' Vice
President-Finance and Chief Financial Officer. "From a business standpoint, we launched our first
products into the marketplace. From a scientific standpoint, we achieved successful results from the
dexanabinol Phase II clinical trial. From an operational point of view, we completed a major corporate
restructuring and relocation from Florida to New Jersey and recruited new regulatory, financial and investor
relations professionals, all during which we kept a tight rein on expenses. In 1998 we were an early stage
biotech company. 1999 is the year we move closer to becoming a profitable operating company."
Pharmos Corporation Financial Highlights
Condensed Consolidated Statement of Operations For the Three Months Ending
December 31, 1998 December 31, 1997
Revenues
Product Sales $204,379 $--
Cost of goods sold 65,414 --
Gross Margin 138,965 --
Operating Expenses
R&D, net (including patent) $799,058 $1,297,108
Selling, general
and administrative 423,700 572,529
Depreciation & amortization 100,127 40,400
Total Operating Expenses 1,322,885 1,910,037
Other income, net 56,378 52,658
Net Loss (1,127,542) (1,857,379)
Preferred dividends
and embedded discount (62,500) (116,598)
Net loss attributable
to common shareholders ($1,190,042) ($1,973,977)
Net loss per share
applicable to common
shareholders -- basic
and diluted ($0.03) ($0.06)
Condensed Consolidated Statement of Operations
For the Years Ending
December 31, 1998 December 31, 1997
Revenues
Product Sales $1,188,278
License Fee 351,663
1,539,941 --
Gross margin 1,102,228 --
Operating Expenses
R&D, net (including patent) $3,705,325 $5,674,824
Selling, general
and administrative 2,136,641 2,632,477
Depreciation & amortization 267,844 255,718
Total Operating Expenses 6,109,810 8,563,019
Other income, net 344,235 329,472
Net loss before
extraordinary gain (4,663,347) (8,233,547)
Extraordinary gain
from forgiveness of debt -- 416,248
Net loss (4,663,347) (7,817,299)
Preferred dividends
and embedded discount (936,547) (2,193,142)
Net loss attributable
to common shareholders ($5,599,894) ($10,010,441)
Weighted Average
Shares Outstanding 37,277,186 32,442,981
Net loss per share applicable
to common shareholders
- basic and diluted ($0.15) ($0.31)
Condensed Consolidated Balance Sheets at
December 31, 1998 December 31, 1997
Cash & cash equivalents $3,452,916 $4,423,389
Inventory 1,727,096 1,804,627
Other current assets 1,016,338 552,287
Total current assets $6,196,350 $6,780,303
Total Assets $8,066,670 $8,421,841
Accounts Payable $936,899 $2,576,968
Accrued Expenses 679,737 809,869
Other current liabilities 2,292,806 1,456,538
Total current liabilities $3,909,442 $4,843,375
Total Liabilities $6,600,465 $8,943,375
Shareholders' Equity $1,466,205 ($521,534)
In its Report on Form 1O-Q for the period ended September 30, 1998, the Company classified the
unconverted amount of its Series C redeemable convertible preferred stock outside the Shareholders'
equity section of the balance sheet due to the existence of certain redemption provisions that are beyond
the control of the Company. The Holders of the Series C redeemable convertible preferred stock agreed in
December to waive those provisions of the convertible preferred stock that necessitated such accounting
treatment. The Company has therefore included the unconverted amount of the Series C redeemable
convertible preferred stock in the Shareholders' equity section of the balance sheet as of December 31,
1998. The unconverted amount of Series C redeemable convertible stock as of December 31, 1998 was
1,500 shares having a liquidation preference of $1,500,000. The reclassification had no effect on the
Company's statement of operations.
Pharmos Corporation is a pharmaceutical company specializing in the modification of existing molecules
through proprietary techniques to reduce undesirable side effects and/or enhance efficacy.
This news release contains forward-looking statements that involve risk and uncertainties. The
development of the company's products may differ materially from the company's expectations. Among
the factors that could result in a materially different outcome are the inherent uncertainties accompanying
new product development, action of regulatory authorities and the results of further trials.
SOURCE Pharmos Corporation
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