Nutrition 21 Reports Reduced Losses and Increased Gross Profits with Release of Second Quarter Results.PURCHASE, N.Y. -- Company Prepares to Enter Global Diabetes Care Market and Expands Discussions with Disease Management Providers and Clinicians Nutrition 21, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : NXXI), the leading developer and marketer of chromium-based nutritional supplements Nutritional Supplements Definition Nutritional supplements include vitamins, minerals, herbs, meal supplements, sports nutrition products, natural food supplements, and other related products used to boost the nutritional content of the diet. , today reported the results from operations for the company's second quarter ended December 31, 2004. Revenues for the second quarter of fiscal 2005 totaled $3.7 million as compared to $2.3 million for the same period last year. Net loss for the quarter narrowed to $0.3 million, or ($0.01) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as compared to a net loss of $1.2 million or ($0.03) per diluted share for the second quarter of fiscal 2004. Year to date revenues for the period ending December 31, 2004 were $6.4 million as compared to $4.8 million for the same period last year. Net loss for the first half of fiscal 2005 was reduced to $1.5 million or ($0.04) per diluted share compared to a net loss of $2.3 million or ($0.06) per diluted share for the same period in the prior year. Results for the second quarter and for the year to date reflect a $1 million reduction in net loss attributable to a one-time non-refundable $1 million payment received from ImmuCell Corporation. In consideration of this payment, the company waived its remaining rights to receive potential milestone and royalty payments for a majority of the animal health applications covered by its patented nisin nisin an antibiotic substance isolated from cultures of lactic acid producing streptococci and reputed to have antibacterial activity against gram-positive bacteria. technology. "This was a significant quarter for our company on many fronts," commented Gail Montgomery, President and Chief Executive Officer of Nutrition 21. "While we saw a growth in our year over year ingredient revenues and gross profits, net of the one time revenue item, the bigger news relates to the achievement of several milestones during the quarter. We believe these achievements will help us to continue our positive momentum at an increasing pace. The achievements, domestically and abroad, include: --Confirmation of the safety of chromium chromium (krō`mēəm) [Gr.,=color], metallic chemical element; symbol Cr; at. no. 24; at. wt. 51.996; m.p. about 1,857°C;; b.p. 2,672°C;; sp. gr. about 7.2 at 20°C;; valence +2, +3, +6. picolinate by The UK Food Standards Agency The Food Standards Agency is a non-ministerial government department of the Government of the United Kingdom. It is responsible for protecting public health in relation to food throughout the United Kingdom and is led by an appointed board that is intended to act in the public (FSA FSA Financial Services Authority FSA Food Standards Agency (UK) FSA Farm Service Agency (USDA) FSA Financial Services Agency (Japan) ), an international government regulatory agency regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. , --Recognition by the US Congress of the potential role that chromium picolinate may play in mitigating the public health crisis associated with the increased risk of diabetes and its risk factors, --The publication in Diabetes Care of an epidemiological study An Epidemiological study is a statistical study on human populations, which attempts to link human health effects to a specified cause. conducted by Harvard School of Public Health The Harvard School of Public Health is (colloquially, HSPH) is one of the professional graduate schools of Harvard University. Located in Longwood Area of the Boston, Massachusetts neighborhood of Mission Hill, next to Harvard Medical School and Cambridge, Massachusetts, researchers, linking low levels of chromium with an increased risk of diabetes and cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease , and --The first sale of Chromax chromium picolinate as a GRAS GRAS - A public domain graph-oriented database system for software engineering applications from RWTH Aachen. (generally recognized as safe Generally Recognized as Safe (GRAS) is a United States of America Food and Drug Administration (FDA) designation that a chemical or substance added to food is considered safe by experts, and so is exempted from the usual Federal Food, Drug, and Cosmetic Act (FFDCA) food ) food ingredient to a leading US beverage company for inclusion in a popular consumer beverage product." Montgomery commented further, "By far our most important second quarter milestone was the successful completion of our pivotal Diachrome study. We announced positive study results in collaboration with XL Health, a leading disease management company, in January of this year. The compelling outcomes of this study have already been submitted for consideration at key scientific meetings . We are confident that we will have an opportunity to present our findings at one or more of these meetings before the close of our fiscal year. Presentation at these meetings represents a critical objective for our company. The presentations allow us to further disclose our findings and should serve to draw increased attention from the scientific community as to the benefits of chromium." The company indicated that under confidentiality agreements, it has shared Diachrome study data with key medical experts at XL Health and within the Native American community where higher than normal rates of diabetes have been diagnosed. "We are encouraged by their feedback," Montgomery reported, "as a result we have entered into discussions with XL Health to initiate a medically supervised pilot program using Diachrome as a component of diabetes care. We have also agreed to initiate a physician managed pilot program to use Diachrome in clinical practice at a tribal health center. This program is expected to begin before the end of our fiscal year. These are both important steps in securing wide scale adoption of Diachrome for use in medical practice." Montgomery continued, "According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the International Diabetes Federation The International Diabetes Federation (IDF) is a worldwide alliance of 200 diabetes associations in more than 150 countries, who have come together to enhance the lives of people with diabetes everywhere. For over 50 years, IDF has been at the vanguard of global diabetes advocacy. , there are currently more than 194 million people with diabetes worldwide. Without action, this number is expected to exceed 333 million by 2025. There is a great need for safe, effective and affordable solutions to the global diabetes epidemic. Given our research findings which suggest that Diachrome can significantly improve blood glucose blood glucose Diabetology The principal sugar produced by the body from food–especially carbohydrates, but also from proteins and fats; glucose is the body's major source of energy, is transported to cells via the circulation and used by cells in the presence and measures of cardiovascular risk associated with diabetes, as well as our pending international patent protection, we believe we are now well-positioned to participate in the global diabetes care market. We have a robust regulatory strategy that is international in scope. Accordingly, we have begun the process of registering our product for sale in Canada and the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . We are also in discussions with potential licensees for certain international markets as we concurrently prepare for the initial commercialization of Diachrome in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ." "We believe that our improving financial results signal that our chromium communications outreach program is beginning to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. with consumers and healthcare practitioners alike," stated Montgomery. "Our chromium research program has generated exciting outcomes that are slated for presentation and publication in calendar 2005. Two new studies will be presented at the Federation of American Societies for Experimental Biology The Federation of American Societies for Experimental Biology, or FASEB, is a non-profit federation of 21 societies for biomedical research in the United States. Its mission statement is "to advance biological science through collaborative advocacy for research policies that in April 2005, and an oral presentation and a symposium are slated for the American Psychiatric Association The American Psychiatric Association (APA) is the main professional organization of psychiatrists and trainee psychiatrists in the United States, and the most influential world-wide. Its some 148,000 members are mainly American but some are international. meeting in May 2005. We plan to leverage the unveiling of this research to further stimulate the continued growth of the chromium mineral category and our expansion into functional foods" Montgomery concluded. 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. ) Qualified Health Claim (QHC QHC Quality in Health Care (journal) QHC Queens Hospital Center (New York City) QHC Quinte Healthcare Corporation QHC Honorary Chaplain to the Queen (UK) ) Update: The company reported that it has agreed to a request for an additional 60 day extension from the FDA regarding the company's application for QHCs for chromium picolinate. The FDA indicated it was unable to complete its review within the initial extension period. Nutrition 21 applied for qualified health claims associating chromium picolinate with reduced risk of insulin resistance Insulin Resistance Definition Insulin resistance is not a disease as such but rather a state or condition in which a person's body tissues have a lowered level of response to insulin, a hormone secreted by the pancreas that helps to regulate the level , type 2 diabetes type 2 diabetes n. See diabetes mellitus. and related disease conditions in December 2003. About Nutrition 21 Nutrition 21 is a nutrition bioscience company and the maker of chromium-based supplements with health benefits substantiated by clinical research. The Company markets Chromax(R) chromium picolinate, which is the most-studied form of the essential mineral chromium. Nutrition 21 also developed Diachrome(R), which is available through diabetes educators or at www.diachrome.com. Nutrition 21 holds 34 patents for nutrition products and uses, 25 of which are for chromium compounds and their uses. More information is available at http://www.nutrition21.com Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Provision This press release may contain certain 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. . The words "believe," "expect," "anticipate" and other similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, including without limitation: the effect of the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of patents; regulatory issues; uncertainty in the outcomes of clinical trials; changes in external market factors; changes in the Company's business or growth strategy or an inability to execute its strategy due to changes in its industry or the economy generally; the emergence of new or growing competitors; various other competitive factors; and other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission, including its 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. for the year ended June 30, 2004. Actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this press release will in fact occur. Additionally, the Company makes no commitment to disclose any revisions to forward-looking statements, or any facts, events or circumstances after the date hereof that may bear upon forward-looking statements.
NUTRITION 21, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
Dec. 31, June 30,
2004 2004
-------- --------
ASSETS
Current Assets
Cash, cash equivalents and short-term
investments $ 2,715 $ 4,164
Restricted cash 1,225 -----
Accounts receivable, net 1,247 1,342
Other receivables 128 257
Inventories 849 1,163
Prepaid expense and other current assets 356 221
------- -------
Total Current Assets 6,520 7,147
Property and equipment, net 226 314
Patents, trademarks, and other intangibles, net 7,878 8,719
Other assets 187 187
------- -------
Total Assets $14,811 $16,367
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 3,577 $ 3,687
Contingent payments payable 45 47
------- -------
Total Liabilities 3,622 3,734
------- -------
Stockholders' Equity 11,189 12,633
------- -------
Total Liabilities and Stockholders' Equity $14,811 $16,367
======= =======
NUTRITION 21, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ----------------
2004 2003 2004 2003
------- ------- ------- -------
Net Sales $2,642 $2,345 $5,312 $4,653
Other Revenues 1,011 50 1,082 100
------- ------- ------- -------
Total Revenues 3,653 2,395 6,394 4,753
Cost of Goods Sold 672 582 1,282 1,145
------- ------- ------- -------
Gross Profit 2,981 1,813 5,112 3,608
Selling, General and
Administrative Expense 2,228 1,912 4,387 3,753
Research and Development Expense 504 613 1,114 1,041
Depreciation and Amortization 548 540 1,131 1,079
Interest Income, net 17 4 15 4
------- ------- ------- -------
Loss before Income Taxes (282) (1,248) (1,505) (2,261)
Income Taxes 5 -- 9 --
------- ------- ------- -------
Net (loss) $(287) $(1,248) $(1,514) $(2,261)
======= ======= ======= =======
Basic and diluted (loss)
Per Share $(0.01) $(0.03) $(0.04) $(0.06)
======= ======= ======= =======
Weighted Average Number of
Common Shares-Basic
and Diluted 37,992 37,414 37,992 35,557
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