InKine Reports Third Quarter Financial Results; Implements Significant Cost Reductions.Business Editors BLUE BELL, Pa.--(BUSINESS WIRE)--Oct. 30, 2001 InKine Pharmaceutical Company, Inc. (Nasdaq: INKP) today reported net losses of $4,623,000 and $10,703,000 or $0.13 and $0.31 per share for the three and nine-month periods ended September 30, 2001 as compared to $8,225,000 and $11,954,000 or $0.25 and $0.39 per share for the same periods a year ago. The Company previously announced the revision of its third quarter net loss per share expectation to a range of $0.14 to $0.16 due to the slowing growth trend of Visicol as a result of the visualization Using the computer to convert data into picture form. The most basic visualization is that of turning transaction data and summary information into charts and graphs. Visualization is used in computer-aided design (CAD) to render screen images into 3D models that can be viewed from all of microcrystalline cellulose Microcrystalline cellulose (E460) is an excipient used in the formulation of tablets and capsules. It can be used as a binding agent, due to its excellent compression properties. (MCC (The Microelectronics and Computer Technology Corporation, Austin, TX) The first high-tech research and development consortium in the U.S., created in 1982 by leading companies within the electronics industry. ) in certain patients receiving Visicol. The Company recently took significant steps to ensure its financial stability into 2003. Such steps include the elimination of 35% of its employee positions, the majority of which were in non-clinical and non-commercial areas. InKine also terminated their Innovex contract sales organization agreement, which will result in a significant decrease in selling expenses. In addition to the personnel reductions and sales organization restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , other operating costs operating costs npl → gastos mpl operacionales will be reduced in areas such as executive pay, bonuses, and pre-clinical scientific programs. It is estimated that the implementation of these cost-cutting measures will result in savings of approximately $5.0 million through 12/31/02. Additionally, after extensive discussions with InKine's co-promotion partner Procter and Gamble Pharmaceuticals (P&GP), the Company has decided not to internalize internalize To send a customer order from a brokerage firm to the firm's own specialist or market maker. Internalizing an order allows a broker to share in the profit (spread between the bid and ask) of executing the order. its sales force for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Instead, it will rely on P&GP's 63 person GI sales force to detail Visicol. "Patient acceptance of Visicol continues to be strong. Additionally, physicians are gaining experience and confidence based on increasing numbers of physicians who have prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). Visicol," said Timothy C. Harrison, Director U.S. Pharmaceutical Customer Business Development, Procter and Gamble Pharmaceuticals. "InKine and P&GP have built a close and effective working relationship. We appreciate the confidence that InKine has in our abilities allowing them to rely on P&GP as an instrumental arm in the promotion of Visicol." Leonard S Leon·ard , Ray Charles Known as "Sugar Ray." Born 1956. American boxer who won the 1976 Olympic light welterweight title. He held five world titles as both a welterweight and middleweight between 1979 and 1987. Noun 1. . Jacob, M.D., Ph.D., Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented "It is always difficult to terminate any employee. However, the cost reductions described above are necessary. These cost savings will provide us the necessary capital to achieve our long term strategic goals." Net revenues for Visicol totaled $965,000 and $4,320,000 for the three and nine-month periods ended September 30, 2001 as compared to no net revenues for the same periods a year ago. Product revenue is sales to pharmaceutical wholesalers and large drug store chains, net of reserves for potential returns and allowances. Also included in net revenue for the current quarter is $500,000 of revenue from an agreement with the Zeria Pharmaceutical Company, Ltd. of Tokyo to license Visicol for Japan. Gross profit was $739,000 and $2,670,000 for the three and nine-month periods ended September 30, 2001, as compared to no gross profit for the same periods a year ago. Included in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold are both distribution and royalty costs totaling $78,000 and $271,000 for the three and nine-month periods ended September 30, 2001. Distribution cost includes expenses related to contract warehousing, tracking, and shipping of product to Visicol customers. Royalty cost represents amounts due to the inventor INVENTOR. One who invents or finds out something. 2. The patent laws of the United States authorize a patent to be issued to the original inventor; if the invention is suggested by another, he is not the inventor within the meaning of those laws; but in that of Visicol based on product sales. Research and development expenses were $1,576,000 and $3,515,000 for the three and nine-month periods ended September 30, 2001 as compared to $924,000 and $3,260,000 for the same periods a year ago. The increase for the three-month period is mostly attributable to approximately $300,000 in costs associated with the reformulation of Visicol and approximately a $300,000 increase in costs associated with the development of Colirest. Martin Rose, M.D., J.D., Executive Vice President, Research and Development of InKine, said, "We have recently entered into discussions with the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. to determine what steps are necessary to gain the approval of a "new and improved" Visicol containing significantly less microcrystalline cellulose. Early clinical results of the reformulated Visicol appear encouraging." Sales and marketing costs of $2,732,000 and $6,959,000 were incurred for the three and nine-month periods ended September 30, 2001, as compared to $275,000 for the three and nine-month periods ended September 30, 2000. The cost of the Company's contract sales force was approximately $1,100,000 and $3,000,000 for the three and nine-month periods ended September 30, 2001. The Company also incurred costs related to its co-promotion agreement with Procter and Gamble Pharmaceuticals of $600,000 and $1,400,000 for the three and nine-month periods ended September 30, 2001. In addition, the Company paid royalty and other expenses totaling $200,000 in the third quarter of 2001 related to the Zeria Pharmaceutical license agreement. The balance of sales and marketing costs for the three and nine-month periods ended September 30, 2001 were for marketing activities associated with Visicol. Sales and marketing costs are expected to decrease due to the termination of the Innovex sales force agreement and other cost control measures. "Since we will not be internalizing our sales force at the present time, we are exploring other strategic alternatives to bring our second product, IBStat, to the marketplace for the treatment of acute irritable bowel syndrome irritable bowel syndrome (IBS), condition characterized by frequently alternating constipation and diarrhea in the absence of any disease process. It is usually accompanied by abdominal pain, especially in the lower left quadrant, bloating, and flatulence. ," added Dr. Jacob. General and administrative expenses were $887,000 and $2,871,000 for the three and nine-month periods ended September 30, 2001, as compared to $1,231,000 and $2,840,000 for the same periods a year ago. The decrease for the three-months ended September 30, 2001 is related to reduced fees for investor relations Investor relations The process by which the corporation communicates with its investors. consulting and reduced non-cash amortization of deferred compensation. The increase for the nine-month period ended September 30, 2001 is the result of increased administrative personnel and other administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. resulting from the expanded scale of operations associated with the launch of Visicol. Included in general and administrative expenses is amortization of deferred compensation of $298,000 and $885,000 for the three and nine-month periods ended September 30, 2001, as compared to $411,000 and $970,000 for the three and nine-month periods ended September 30, 2000. Cash and investment balance at September 30, 2001 was approximately $15.5 million, which included net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from a private placement of convertible subordinated notes of $9,250,000 and warrant and option exercises of $713,000 for the nine-month period ended September 30, 2001. The Company will be hosting a conference call today at 10:00 AM EST EST electroshock therapy. EST abbr. electroshock therapy to further discuss the third quarter 2001 financial results. To participate, please dial (800) 618-9692 five to ten minutes prior to the initiation of the teleconference. International participants please dial (415) 908-6231. The conference call will also be available on replay starting today at 12:00 noon EST and ending at 12:00 noon EST on October 31, 2001. For the replay, please dial (800) 633-8284 (confirmation No. 19939282). The access number for the replay for international callers is (858) 812-6440 (confirmation No. 19939282). About InKine Pharmaceutical InKine Pharmaceutical Company, Inc. is a publicly traded biopharmaceutical company focused on the diagnosis and treatment of cancer and autoimmune diseases Autoimmune diseases A group of diseases, like rheumatoid arthritis and systemic lupus erythematosus, in which immune cells turn on the body, attacking various tissues and organs. Mentioned in: Complement Deficiencies, Premature Menopause . The Company's development strategy is to acquire late-stage drug candidates with short time lines to commercialization. Support of early-stage product opportunities comes through its university-based sponsored research. The Company's first product, Visicol(TM), was launched in January 2001 and is the first and only tablet purgative purgative /pur·ga·tive/ (purg´it-iv) cathartic (1, 2). pur·ga·tive n. An agent used for purging the bowels. adj. Tending to cause evacuation of the bowels. preparation indicated for bowel cleansing prior to colonoscopy Colonoscopy Definition Colonoscopy is a medical procedure where a long, flexible, tubular instrument called the colonoscope is used to view the entire inner lining of the colon (large intestine) and the rectum. . InKine's portfolio also includes three late-stage product candidates, IBStat(TM) in development for the treatment of spasm in the colon, Hematrol(TM), in Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA trials for the treatment of idiopathic thrombocytopenic purpura Idiopathic Thrombocytopenic Purpura Definition Idiopathic thrombocytopenic purpura, or ITP, is a bleeding disorder caused by an abnormally low level of platelets in the patient's blood. and Colirest(TM), advancing to pivotal clinical trials for the treatment of Crohn's disease
The treatment of Crohn's disease is sequential: to treat acute disease, and then to maintain remission. Treatment initially involves the use of medications to treat any infection and to reduce inflammation. and completed Phase II trials for the treatment of ulcerative colitis This article concerns the treatment of ulcerative colitis, a form of inflammatory bowel disease (IBD). Ulcerative colitis is a form of colitis, a disease of the intestine, specifically the large intestine or colon, that includes characteristic ulcers, or open sores, in the colon. . In addition, the Company is developing preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. compounds from its two platform technologies, including Angiocidin(TM), a potent and specific angiogenesis inhibitor angiogenesis inhibitor Oncology A chemotherapy adjuvant which inhibits the angiogenesis required for tumor growth and survive, especially for metastastatic tumors See CAI, CM101, IFN-alpha, IL-12, Marimastat, Pentosan polysulfate, Platelet factor 4, Thalidomide, TNP-470. for potential use in cancer patients. For further information, please visit InKine on their web site http://www.inkine.com. In addition to historical facts or statement of current condition, this press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Forward-looking statements provide InKine's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, development of potential pharmaceutical products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, sales and earnings projections, and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. InKine's performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties such as those set forth in its reports on Form 10-Q Form 10-Q See 10-Q. and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, InKine does not intend (and it is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. ) to update publicly any forward-looking statements. This discussion is permitted by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995.
InKine Pharmaceutical Company, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(amounts in thousands, except per share amounts)
Three-Months Ended Nine-Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ----- ----
Product revenue, net $ 465 $ - $3,820 $ -
License revenue 500 - 500 -
---- ---- ----- ----
Revenue, net 965 - 4,320 -
Cost of goods sold (226) - (1,650) -
---- ---- ----- ----
Gross profit 739 - 2,670 -
Research and development 1,576 924 3,515 3,260
Sales and marketing 2,732 275 6,959 275
General and administrative 887 1,231 2,871 2,840
Performance based
stock expense - 6,055 - 6,055
------ ------- ----- ------
Operating expenses 5,195 8,485 13,345 12,430
------ ------- ----- ------
Loss from
operations (4,456) (8,485) (10,675) (12,430)
Other income and expenses (167) 260 (28) 476
------ ------- -------- ------
Net loss $(4,623) $(8,225) $(10,703) $(11,954)
======== ======== ========= =========
Net loss per share -
basic and diluted $ (0.13) $ (0.25) $ (0.31) $ (0.39)
======== ======== ========= =========
Weighted average
shares outstanding -
basic and diluted 34,444 32,883 34,179 30,899
CONDENSED BALANCE SHEETS
(amounts in thousands)
September 30, December 31,
2001 2000
---- ----
(unaudited)
ASSETS
Cash and investments $ 15,506 $ 11,520
Accounts receivable, net 142 -
Inventory, net 304 686
Prepaid expenses and other assets 1,094 743
Fixed assets, net 440 451
--------- ---------
Total assets $ 17,486 $ 13,400
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and
accrued expenses $ 3,158 $ 623
Line of credit 2,366 1,752
Convertible subordinated notes 9,767 -
Shareholders' equity 2,195 11,025
----------- ----------
Total liabilities and
shareholders' equity $ 17,486 $ 13,400
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