Zonagen Reports Third Quarter 2005 Financial Results and Provides Update on Proellex and Androxal Clinical Development Programs.THE WOODLANDS, Texas -- Zonagen, Inc. (Nasdaq:ZONA)(PCX (1) A bitmapped graphics file format that handles monochrome, 2-bit, 4-bit, 8-bit and 24-bit color and uses RLE to achieve compression ratios of approximately 1.1:1 to 1.5:1. Images with large blocks of solid colors compress best under the RLE method. See PC Paintbrush. :ZONA) today reported financial results for the three-month and nine-month periods ended September 30, 2005 and provided an update on its clinical development efforts for Proellex(TM) and Androxal(TM). "We continue to move toward our goal of initiating three clinical trials by year end 2005 which include a U.S. 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 trial of Androxal for male testosterone testosterone (tĕstŏs`tərōn), principal androgen, or male sex hormone. One of the group of compounds known as anabolic steroids, testosterone is secreted by the testes (see testis) but is also synthesized in small quantities in the deficiency, a U.S. efficacy trial of Proellex for uterine fibroids Uterine Fibroids Definition Uterine fibroids (also called leiomyomas or myomas) are benign growths of the muscle inside the uterus. They are not cancerous, nor are they related to cancer. and a European Phase II trial of Proellex for endometriosis endometriosis (ĕn'dəmē'trē-ō`sĭs), a condition in which small pieces of the endometrium (the lining of the uterus) migrate to other places in the pelvic area. ," said Joseph Podolski, 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. of Zonagen, Inc. He continued, "We anticipate initial data from these three trials during the summer of 2006." Zonagen is preparing a submission supporting a Phase III study for its drug Androxal. The Company also hopes to submit the documents necessary for initiation of the study to 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. within the next few weeks and believes that it will commence the study before year end 2005. The study will consist of approximately 200 patients at up to 20 clinical sites in the U.S. and abroad. The Phase III study is being designed to collect additional safety data on Androxal for the treatment of testosterone deficiency in men with secondary hypogonadism Hypogonadism Definition Hypogonadism is the condition more prevalent in males in which the production of sex hormones and germ cells are inadequate. . Additional endpoints addressing certain clinical symptoms associated with low testosterone will also be assessed in the trial. The study will also compare Androxal against Androgel, the gold standard for patients suffering from low testosterone. We believe that at least two additional Phase III pivotal studies beyond the currently planned study will be required before an NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any can be submitted. A contract has been awarded to a clinical research organization (CRO) to begin the Phase III study as soon as the FDA has reviewed and accepted the submission. Initial review of the Company's special protocol assessment (SPA) filing for its first Phase III pivotal study of efficacy has been completed by the FDA, and the Company is in the process of responding to their comments. The FDA has suggested that certain endpoints suggested by Zonagen in its SPA filing, such as reduced libido libido (lĭbē`dō, –bī`–) [Lat.,=lust], psychoanalytic term used by Sigmund Freud to identify instinctive energy with the sex instinct. , need to be validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. as clinical endpoints In a research trial, a clinical endpoint refers to a disease, symptom, or sign that constitutes one of the target outcomes of the trial. The results of a clinical trial generally indicate the number of people enrolled who reached the pre-determined clinical endpoint during the before being used in a Phase III pivotal study. The Company plans on complying with the FDA's request, and revising its Phase III pivotal protocol to incorporate the FDA's suggestions, before continuing under the SPA. A decision on commencement of the SPA protocol is dependent on successful completion or progress on the above described Phase III study. In May 2005 the Company held a pre-IND meeting with the FDA regarding the next clinical study to be conducted in the U.S. using Proellex for the treatment of uterine fibroids. The Company believes that the meeting with the FDA constructively identified the requirements that must be completed before the Company can file an IND and begin a clinical study by year end 2005. The Company completed its 23 volume IND submission which included extensive preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. animal data supporting the safety of Proellex as well as a final study report for the previously reported trial of Proellex in women with uterine fibroids and delivered the submission to the FDA on November 10, 2005. The Company can not begin its Proellex Phase II clinical study until the FDA has reviewed and accepted the submission. A contract has been awarded to a CRO to begin the Phase II study as soon as the FDA has reviewed and accepted the submission. Financial Results Total revenues and other income for the three-month period ended September 30, 2005 increased to $175,000 as compared to $29,000 for the same period in the prior year and increased to $460,000 for the nine-month period ended September 30, 2005 as compared to $228,000 for the same period in the prior year. The primary increase in revenues is due to an increase in interest rate yields and an increase in cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. which the Company received from its public offering in February 2005 offset by a reduction in SBIR SBIR Small Business Innovation Research (program/grant) SBIR Space Based Infra-Red SBIR Speaker-Boundary Interference SBIR Site Backsurface-referenced Ideal Plane/Range (silicon wafers) grant revenue which is due to its anticipated conclusion and is essentially depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d . Research and development ("R&D") expenses primarily consist of clinical regulatory affairs Regulatory Affairs (RA), also called Government Affairs, is a profession within regulated industries, such as pharmaceuticals, medical devices, energy, and banking. Regulatory Affairs professionals usually have responsibility for the following general areas: Preparation containing either killed or weakened live microorganisms or their toxins, introduced by mouth, by injection, or by nasal spray to stimulate production of antibodies against an infectious agent. adjuvants and prostate cancer prostate cancer, cancer originating in the prostate gland. Prostate cancer is the leading malignancy in men in the United States and is second only to lung cancer as a cause of cancer death in men. vaccines. The increase in R&D expenses for the nine-month period ended September 30, 2005 as compared to the same period in the prior year is primarily due to an increase of $1.5 million and $1.2 million related to our clinical development programs for Androxal and Proellex, respectively, partially offset by a decrease of $337,000 in costs associated with the 2004 write-off of our patent portfolio related to our vaccine adjuvants, prostate cancer vaccines and hCG immuno-contraceptive vaccine. General and administrative expenses decreased 15% to $461,000 for the three-month period ended September 30, 2005 as compared to $540,000 for the same period in the prior year and increased 8% to $1.4 million for the nine-month period ended September 30, 2005 as compared to $1.3 million for the same period in the prior year. The decrease in expenses for the three-month period ended September 30, 2005 is primarily due to a decrease in costs associated with potential funding activities in the amount of $117,000, offset by an increase in costs associated with strategic administrative fees in the amount of $25,000. The increase in expenses for the nine-month period ended September 30, 2005 is primarily due to an increase in costs associated with strategic administrative fees in the amount of $86,000, personnel costs in the amount of $47,000, legal and accounting services in the amount of $43,000 and investor relations Investor relations The process by which the corporation communicates with its investors. costs in the amount of $37,000, offset by a decrease in costs associated with potential funding activities in the amount of $117,000 and a $27,000 decrease in directors' and officers' insurance. Net loss for the three-month period ended September 30, 2005 was ($1.9) million or ($0.19) per share as compared to a net loss of ($1.4) million or ($0.29) per share for the same period in the prior year. Net loss for the nine-month period ended September 30, 2005 was ($5.1) million or ($0.54) per share as compared to a net loss of ($3.0) million or ($0.57) per share for the same period in the prior year. The increase in loss per share for the three-month and nine-month periods ended September 30, 2005 was primarily due to an increase in clinical research activities relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's two products, Androxal and Proellex. The Company had cash, cash equivalents and 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 of approximately $19.1 million at September 30, 2005 as compared to $5.5 million at December 31, 2004 and had 10,079,601 shares of common stock outstanding on September 30, 2005. Zonagen, Inc. is engaged in the development of pharmaceutical products that address diseases and conditions associated with the treatment of hormonal hormonal, adj/n beneficial component in some essential oils that helps to bring hormone secretions to normal levels. hormonal emanating from or pertaining to hormones. and reproductive system reproductive system, in animals, the anatomical organs concerned with production of offspring. In humans and other mammals the female reproductive system produces the female reproductive cells (the eggs, or ova) and contains an organ in which development of the fetus disorders. A copy of this press release may be obtained via facsimile by dialing 1-888-329-0920 or via the internet by accessing www.zonagen.com. Any statements that are not historical facts contained in this release are 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. that involve risks and uncertainties, including Zonagen's ability to have success in the clinical development of its technologies, Zonagen's ability to raise additional capital on acceptable terms or at all, Zonagen's ability to have success in meeting governmental regulations and the costs and time required to meet such regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , manufacturing uncertainties related to Proellex(TM), uncertainty relating to Zonagen's patent portfolio and such other risks which are identified in Zonagen's Annual Report 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. for the year ended December 31, 2004. The Form 10-K is available at the Company's web site at www.zonagen.com, at the SEC's web site at www.sec.gov or is available by request made to Zonagen's Corporate Secretary. Zonagen disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ZONAGEN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
Three Months Ended Nine Months Ended
----------------------- -----------------------
September 30, September 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues and other
income
Research and
development grants $- $2 $4 $118
Interest income 175 27 456 75
Other Income - - - 35
----------- ----------- ----------- -----------
Total revenues
and other income 175 29 460 228
----------- ----------- ----------- -----------
Expenses
Research and
development 1,641 929 4,231 1,914
General and
administrative 461 540 1,357 1,268
----------- ----------- ----------- -----------
Total expenses 2,102 1,469 5,588 3,182
----------- ----------- ----------- -----------
Net loss $(1,927) $(1,440) $(5,128) $(2,954)
=========== =========== =========== ===========
Net loss per share -
basic and diluted $(0.19) $(0.29) $(0.54) $(0.57)
=========== =========== =========== ===========
Shares used in loss
per share
calculation:
Basic 10,080 4,993 9,501 5,159
Diluted 10,080 4,993 9,501 5,159
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2005 2004
-------------- --------------
(Unaudited)
Cash and cash equivalents $3,000 $736
Marketable securities 16,053 4,800
Other current assets 203 34
Fixed assets (net) 21 18
Other assets 564 1,018
-------------- --------------
Total assets $19,841 $6,606
============== ==============
Accounts payable and accrued expenses $621 $614
Stockholders' equity 19,220 5,992
-------------- --------------
Total liabilities and stockholders'
equity $19,841 $6,606
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