NEOPHARM Announces Second Quarter 2006 Financial Results.WAUKEGAN, Ill. -- Please replace the release with the following corrected version due to multiple revisions.The corrected release reads: NEOPHARM ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS NEOPHARM, Inc. (Nasdaq:NEOL) today announced a second quarter 2006 net loss of approximately $9.8 million, or $0.35 per basic and diluted share, and a first half 2006 net loss of approximately $17.5 million, or $0.63 per basic and diluted share. Second Quarter 2006 Results The second quarter 2006 net loss of approximately $9.8 million, or $0.35 per basic and diluted share, represents a $2.1 million increase compared to the $7.7 million net loss, or $0.32 per basic and diluted share, in the second quarter of 2005. The second quarter 2005 results include the effect of the receipt of $2.5 million in settlement of a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. previously deemed impaired. As of June 30, 2006, the Company had cash, cash equivalents, and short-term investments on hand of $50.6 million, compared to cash, cash equivalents and short-term investments on hand of $59.8 million as of March 31, 2006. Net cash used in the second quarter of $9.2 million was $0.1 million, or 1.0%, lower than the $9.3 million used in the first quarter of 2006. Six Months Ended June 30, 2006 Results Net loss for the six months ended June 30, 2006 of approximately $17.5 million, or $0.63 per basic and diluted share, represents an improvement of approximately $1.0 million compared to the $18.5 million net loss, or $0.79 per basic and diluted share in the six month period ended June 30, 2005. The first half 2005 results include the effect of the receipt of $2.5 million in settlement of a note receivable previously deemed impaired. "We continue to make positive progress on the execution of our commercial, regulatory and financial strategy," said Guillermo A. Herrera, NEOPHARM's President 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. . "In June, the PRECISE Trial independent Data Monitoring Committee recommended that we proceed to the final efficacy analysis at 215 deaths, and we continue our work to prepare for a potential BLA BLA abbr. Bachelor of Liberal Arts submission and commercial launch of CINTREDEKIN BESUDOTOX in the event that we are successful in meeting our endpoint in PRECISE. Additionally, two key executives were hired, Ronald Pauli as our Chief Financial Officer, and Jack Waterman as our VP of Regulatory Affairs and Quality Assurance. These appointments reflect our commitment to align our talent needs with our strategic needs. We began a Phase II trial for LE-SN38 and are planning for a Phase III LEP-ETU trial. Furthermore, we expect our financial results to continue to improve in the second half of this year as we realize the effects of the previously announced cost reduction actions we implemented during the second quarter. The second quarter 2006 results have begun to reflect our transition into a fully integrated biopharmaceutical company in the process of preparing for the potential commercial launch of its first product." Key Milestones Key milestones achieved by the Company since the end of the first quarter of 2006 include: --Completion of the interim efficacy analysis in the PRECISE trial, --Initiation of a Phase II clinical trial Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II for LE-SN38, --Addition of Ron Pauli as the Company's new Executive VP, CFO See Chief Financial Officer. and Corporate Secretary, --Addition of Jack Waterman as the Company's new VP of Regulatory Affairs and Quality Assurance, and --Assignment of unique CPT CPT See: Carriage Paid To and ICD-9 procedure codes by The American Medical Association American Medical Association (AMA), professional physicians' organization (founded 1847). Its goals are to protect the interests of American physicians, advance public health, and support the growth of medical science. (AMA (Automatic Message Accounting) The recording and reporting of telephone calls within a telephone system. It includes the calling and called parties and start and stop times of the call. ) and the Centers for Medicare and Medicaid Services The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS) that administers the Medicare program and (CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. ), respectively, for Convection Enhanced Delivery (CED (Capacitance Electronic Disc) An earlier videodisc technology from RCA that was released in 1981 and abandoned five years later. Like phonograph records, the analog disc contained grooves that a stylus rode over. ) catheter implantation, a novel drug delivery technique used to administer CINTREDEKIN BESUDOTOX directly into the brain. PRECISE Update Enrollment in the PRECISE Trial for CINTREDEKIN BESUDOTOX was completed in December 2005. In June 2006, after conducting the trial's interim efficacy analysis, the independent Data Monitoring Committee (DMC DMC Devil May Cry (video game) DMC Detroit Medical Center DMC Darryl McDaniels (rapper) DMC Destination Management Company DMC Del Mar College (Corpus Christi, TX) ) recommended that the PRECISE Trial continue as planned under the approved protocol. The DMC observed no treatment or catheter placement related adverse or serious adverse events that differed from those seen in the Phase I/II trials, and observed that, consistent with the previous report after 100 patient deaths, compliance with catheter placement guidelines was over 80%. The final efficacy analysis, triggered at 215 deaths, is currently expected to occur in the first quarter of 2007. The PRECISE protocol does not require CINTREDEKIN BESUDOTOX to show a predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: improvement in median survival over Gliadel Wafer(R). Rather, the endpoint of the trial is to provide evidence of a statistically significant improvement in overall survival for CINTREDEKIN BESUDOTOX versus Gliadel Wafer, with a secondary endpoint of overall product safety. NeoLipid(R) Platform Update In April 2006, the Company announced a reprioritization of the NeoLipid(R) platform. As the Company continues its transition from research to development and commercialization of its products, it has streamlined its operations to focus development on its two most promising NeoLipid(R) drug product candidates, LE-SN38 and LEP-ETU. The Company has initiated a Phase II clinical trial for LE-SN38 being conducted by Cancer and Leukemia Group B Cancer and Leukemia Group B (CALGB) is a cancer research cooperative group in the United States. CALGB research is focused on seven major disease areas: leukemia, lymphoma, breast cancer, lung cancer, gastrointestinal malignancies, genito-urinary malignancies, and melanoma. (CALGB CALGB Cancer and Leukemia Group B ), an oncology clinical research group sponsored by the National Cancer Institute (NCI See Liberate. ). Further, the Company is moving ahead with plans to initiate a Phase III clinical trial Noun 1. phase III clinical trial - 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 for LEP-ETU which is intended to demonstrate non-inferiority with superiority advantage over Taxol. Financial Projections The Company currently projects a net loss range for 2006 of approximately $36 million to $38 million, or approximately $1.30 to $1.37 per share. The Company also currently estimates that the 2006 projected net loss will result in cash used in operations of less than $34 million. These estimates reflect the effects of the reduction in workforce completed in the second quarter of 2006. NEOPHARM believes that the cash and short-term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has as of June 30, 2006, can support the Company's activities into 2008 at current and projected levels of development and general corporate activity. Conference Call NEOPHARM will host a conference call to discuss these financial results on:
Wednesday, August 9, 2006 at 11:00 a.m. Eastern/8:00 a.m. Pacific
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Domestic: 866-510-0676, passcode 92520350
International: 617-597-5361, passcode 92520350
Audio replays will be available through August 16, 2006.
Domestic: 888-286-8010, passcode 71266312
International: 617-801-6888, passcode 71266312
The live call and replay will also be available via webcast at www.neopharm.com. About Glioblastoma Multiforme glioblastoma mul·ti·for·me n. A virulent brain cancer that is usually fatal. Glioblastoma multiforme (GBM GBM 1 Glioblastoma multiforme, see there 2. Glomerular basement membrane ) is the most common type of malignant primary brain tumor primary brain tumor Neurology A tumor that arises in the brain–eg, ependymoma, astrocytoma grade 3 or 4, glioblastoma multiforme, glioma, medulloblastoma, meningioma, neuroglioma, oligodendroglioma. See Metastatic brain tumor. in adults. According to the Central Brain Tumor Brain Tumor Definition A brain tumor is an abnormal growth of tissue in the brain. Unlike other tumors, brain tumors spread by local extension and rarely metastasize (spread) outside the brain. Registry of the United States (www.cbtrus.org), GBM tumors usually affect men more commonly than women, particularly men between the ages of 60 and 85 years. According to the CBTRUS, approximately 10,000 people are diagnosed annually with malignant glioma glioma /gli·o·ma/ (gli-o´mah) a tumor composed of neuroglia in any of its states of development; sometimes extended to include all intrinsic neoplasms of the brain and spinal cord, as astrocytomas, ependymomas, etc. (GBM and anaplastic an·a·plas·tic adj. 1. Relating to the surgical restoration of a lost or absent part. 2. Of, relating to, or characterized by cells that have become less differentiated. anaplastic 1. astrocytoma astrocytoma /as·tro·cy·to·ma/ (as?tro-si-to´mah) a tumor composed of astrocytes; the most common type of primary brain tumor and also found throughout the central nervous system, classified on the basis of histology or in order of ) and this disease is eventually fatal for most patients. Survival time for GBM patients ranges from six months for recurrent disease to 12 months with newly diagnosed disease despite aggressive treatments including surgery, radiation therapy and chemotherapy. GBM tumors mainly arise in the cerebral hemispheres (the main portions of the brain), but they can also occur in the brainstem, cerebellum cerebellum (sĕr'əbĕl`əm), portion of the brain that coordinates movements of voluntary (skeletal) muscles. It contains about half of the brain's neurons, but these particular nerve cells are so small that the cerebellum accounts for , or spinal cord spinal cord, the part of the nervous system occupying the hollow interior (vertebral canal) of the series of vertebrae that form the spinal column, technically known as the vertebral column. . Symptoms of a GBM can include headaches that are caused by increased intracranial pressure increased intracranial pressure Intracranial hypertension, see there , neurological deficits such as weakness, sensory loss, coordination difficulties, visual impairment Visual Impairment Definition Total blindness is the inability to tell light from dark, or the total inability to see. Visual impairment or low vision is a severe reduction in vision that cannot be corrected with standard glasses or contact lenses and , cognitive impairment affecting memory and language, seizures, and personality changes. About CINTREDEKIN BESUDOTOX CINTREDEKIN BESUDOTOX is a recombinant protein recombinant protein Molecular biology A protein encoded by recombinant DNA or generated from a recombinant gene. See Recombinant pharmacology. consisting of a single molecule composed of two parts: a tumor-targeting molecule (Interleukin-13 or IL13) and a cytotoxic agent (Pseudomonas Pseudomonas A genus of gram-negative, nonsporeforming, rod-shaped bacteria. Motile species possess polar flagella. They are strictly aerobic, but some members do respire anaerobically in the presence of nitrate. Exotoxin exotoxin /exo·tox·in/ (ek´so-tok?sin) a potent toxin formed and excreted by the bacterial cell, and free in the surrounding medium. , or PE38). IL13 receptors are present in appreciable numbers on malignant glioma cells, but only to a minimal amount if at all on healthy brain cells. The IL13 portion is designed to bind to to contract; as, to bind one's self to a wife s>. See also: Bind receptors on tumor cells like a key fits into a lock. The cancer cell appears to latch onto and absorb the IL13 and the attached PE38, causing destruction of the cancer cell. Healthy brain cells appear to be unharmed because they do not 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. the PE. The drug is delivered via Convection Enhanced Delivery (CED), a novel drug delivery system using catheters placed following tumor resection (removal), in areas with microscopic tumor spread or at risk of tumor spread around the tumor resection cavity. CINTREDEKIN BESUDOTOX has received Orphan Drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the designation and Fast Track designation from the U.S. Food and Drug Administration (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. ). CINTREDEKIN BESUDOTOX was also accepted into FDA's Pilot 2 Program for continuous marketing applications. CINTREDEKIN BESUDOTOX has also received Orphan Drug designation in Europe. Promising data for this potential therapeutic advance in the treatment of GBM has been observed in Phase I/II trials, the results of which have been previously reported by the Company. In addition, the importance of adequate catheter positioning in order to achieve effective distribution of CINTREDEKIN BESUDOTOX in brain tissue was assessed in these Phase I/II trials, leading to specific guidelines for catheter positioning and deferred catheter placement used in the Company's ongoing Phase III PRECISE Trial. Improved catheter placement translated into a better patient outcome for the 45 (complete Phase I/II patient set) recurrent GBM patients treated post-tumor resection in the Phase I/II trials, with an overall median survival of 44.0 weeks (95% Confidence Interval confidence interval, n a statistical device used to determine the range within which an acceptable datum would fall. Confidence intervals are usually expressed in percentages, typically 95% or 99%. (CI): 36.1-55.6) including 42 percent of patients with less than 2 optimally positioned catheters, while patients with greater than or equal to 2 catheters optimally positioned surviving with a median of 53.6 weeks (95% CI: 36.1-70.3). Separately, one-year and two-year survival rates for recurrent GBM patients were 40 percent and 13 percent respectively. Pivotal Phase III Trial - PRECISE PRECISE, an acronym for Phase III Randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. Evaluation of Convection Enhanced Delivery of IL13-PE38QQR with Survival Endpoint, www.precisetrial.com, is a randomized, controlled Phase III clinical trial. It was designed to enroll up to 300 patients in order to obtain 270 patients with confirmed GBM at first recurrence at study entry surgical resection for the intent-to-treat patient population, and compare overall survival, drug safety and quality of life of patients receiving CINTREDEKIN BESUDOTOX with patients receiving Gliadel Wafer in the treatment of first recurrent GBM following surgical tumor resection. PRECISE achieved the 270 patient intent-to-treat milestone (276 intent-to-treat) in early December after enrolling 294 patients. Patients were randomized so that 2 patients received CINTREDEKIN BESUDOTOX via CED for every 1 patient that received Gliadel Wafer placed in the resection cavity at the time of resection. The primary efficacy analysis of the trial will be based on the comparison of the overall patient survival curves of the two treatment groups. In June 2006, after conducing the trial's interim efficacy analysis after 160 patient deaths, the DMC recommended that the PRECISE Trial continue as planned under the approved protocol. The DMC reported no treatment related adverse or serious adverse events that differed from previous reports and those normally associated with GBM and reported that compliance in terms of catheter placement guidelines was over 80%. The final efficacy analysis is currently expected to occur in the first quarter of 2007. NEOPHARM's Commitment to Oncology NEOPHARM employees share a common goal: bringing hope to cancer patients and their families through the research and development of new cancer drugs and therapies. The Company's oncology portfolio is built on two novel, proprietary platforms: a tumor-targeting platform, and the NeoLipid(R) Liposomal Drug Delivery platform. Through its research and clinical studies, as well as its work with physicians, scientists, and advocacy groups, NEOPHARM is helping to enhance the lives of cancer patients. About NEOPHARM, Inc. NEOPHARM, Inc., based in Waukegan, Illinois, is a publicly traded biopharmaceutical company dedicated to the research, development and commercialization of new and innovative cancer drugs for therapeutic applications. Additional information, including ongoing clinical trials, can be obtained by visiting NEOPHARM's Web site at www.neopharm.com. Forward Looking Statements - This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company has tried to identify such forward-looking statements by use of such words as "expects," "intends," "hopes," "anticipates," "believes," "could," "may," "evidences" and "estimates," and other similar expressions, but these words are not the exclusive means of identifying such statements. Such statements include, but are not limited to, any statements relating to the Company's drug development program, including, to the Company's ability to make a BLA submission, the initiation, progress and outcomes of clinical trials of the Company's drug product candidates, including, but not limited to, the PRECISE trial,, projections regarding cash used in operations, financial projections, and any other statements that are not historical facts. Such statements involve risks and uncertainties, including, but not limited to, those risks and uncertainties relating to difficulties or delays in financing, development, testing, regulatory approval, production, and marketing of the Company's drug and non-drug compounds including, but not limited to the Company's ability to develop a program for commercializing CINTREDEKIN BESUDOTOX and the liposomal technology drug product candidates, uncertainty regarding the outcomes of ongoing or proposed FDA studies, uncertainty regarding the availability of third party production capacity, the Company's financial guidance and projections, the Company's ability to cut back on its funding of certain of its development projects in order to conserve its cash resources, the ability of the Company to procure additional future sources of financing, unexpected adverse side effects Side effects Effects of a proposed project on other parts of the firm. or inadequate therapeutic efficacy of the Company's drug and non-drug compounds, including, but not limited to, CINTREDEKIN BESUDOTOX and the liposomal technology drug product candidates, that could slow or prevent products coming to market, uncertainty regarding the Company's ability to market its drug and non-drug products, including, but not limited to, CINTREDEKIN BESUDOTOX and the liposomal technology drug product candidates, directly or through independent distributors, the uncertainty of patent protection for the Company's intellectual property or trade secrets, and other risks detailed from time to time in filings the Company makes with the Securities and Exchange Commission including its annual reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Forms 10-Q. Such statements are based on management's current expectations, but actual results may differ materially due to various factors, including those risks and uncertainties mentioned or referred to in this press release. Accordingly, you should not rely on these forward-looking statements as a prediction of actual future results.
NEOPHARM, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three-Months Ended Six-Months Ended
June 30 June 30
------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------- -------------
Revenues $8,670 $454,600 $10,280 $525,900
Expenses:
Cost of
revenues 657 1,060 727 1,350
Research and
development 6,037,143 7,960,917 11,880,902 16,034,678
Selling,
general, and
administrative 4,495,843 3,051,288 7,541,399 6,284,597
Change in fair
value of
derivative
financial
instruments (627,545) - (1,170,673) -
Employee
termination
costs 570,253 - 570,253 -
Recovery of
note
receivable - (2,500,000) - (2,500,000)
------------ ------------ ------------- -------------
Total
expenses 10,476,351 8,513,265 18,822,608 19,820,625
Loss from
operations (10,467,681) (8,058,665) (18,812,328) (19,294,725)
Interest income,
net 676,284 401,364 1,341,970 773,151
------------ ------------ ------------- -------------
Net loss $(9,791,397) $(7,657,301) $(17,470,358) $(18,521,574)
============ ============ ============= =============
Net loss per
share-basic and
diluted $(0.35) $(0.32) $(0.63) $(0.79)
============ ============ ============= =============
Shares used in
computation of
net loss per
share:
Basic and
diluted 27,798,475 23,561,539 27,559,480 23,515,755
============ ============ ============= =============
Balance Sheet Data:
(Unaudited)
June 30, December 31,
2006 2005
-------------- --------------
Cash and cash equivalents $3,140,021 $1,486,172
Short-term investments $47,441,193 $28,776,020
Total assets $52,966,083 $33,369,985
Current liabilities $7,495,501 $9,388,474
Accumulated deficit $(245,495,073) $(228,024,715)
Total stockholders equity $42,844,091 $21,945,324
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