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CYGNUS ANNOUNCES SECOND QUARTER FINANCIAL RESULTS

 REDWOOD CITY, Calif., July 16 /PRNewswire/ -- Cygnus Therapeutic Systems (NASDAQ: CYGN), reported today total revenues of $5.1 million for the quarter ended June 30, 1993, compared to $2.3 million for the second quarter of 1992. Cygnus posted a net loss of $2.2 million 16 cents per share) for the second quarter of 1993, compared to a net loss of $4.5 million (36 cents per share) in the second quarter of 1992.
 For the second quarter of 1993, total revenues increased to $5.1 million, or 122 percent over total revenues of $2.3 million during the second quarter of 1992. This increase primarily reflects a significantly greater level of NICOTROL(R) shipments (which were initiated in June 1992) and the receipt of royalty income from the sale of Nicotrol in Europe. Product sales during the second quarter of 1993 were $2.5 million as compared to $0.4 million of product sales in the second quarter of 1992. Royalties for the second quarter of 1993 aggregated $1.0 million, and were attributed to sales of Nicotrol in Europe, primarily in the United Kingdom. Contract revenues for the second quarter of 1993 totaled $1.7 million which remained at relatively the same level as the second quarter of 1992.
 Costs of products sold were $2.7 million for the quarter ended June 30, 1993, resulting in a negative product margin of approximately 8 percent. The company experienced negative product margins in both the first and second quarters of 1993, as compared to the positive margins achieved in the fourth quarter of 1992, as lower production volumes prevented the company from absorbing the fixed costs associated with Nicotrol manufacturing. The company believes the product margins in future periods will be largely determined by the volume of Nicotrol sales.
 Research and development expenses were $3.1 million in the second quarter of 1993, as compared to $2.9 million for the same period in 1992. Research and development expenses for the second quarter of 1992 included validation and start-up costs as the company began Nicotrol manufacturing. While these expenses did not recur in 1993, the company increased its overall level of research and development activities to pursue new products and technologies which accounted for the increase during the second quarter of 1993. Marketing, general and administrative expenses in the second quarter of 1993 remained relatively stable at the level of $1.8 million as compared to the second quarter of 1992.
 The company's results of operations vary significantly from quarter to quarter and depend on, among other factors, demand for and shipments of its Nicotrol product, the costs associated with manufacture of Nicotrol, the signing of new product development agreements, and the timing of recognizing license fees and milestone payments made by licensees. In addition, the level of revenues in any given period is not necessarily indicative of expected revenues in future periods.
 Cygnus is a leader in the development of advanced transdermal drug delivery systems. The company's primary focus is on developing products for the smoking cessation, hormone replacement, glucose monitoring and consumer products markets. Cygnus has two products in Phase III clinical trials: a seven-day estradiol transdermal system for treatment of menopausal symptoms and a fentanyl patch for moderate to severe post- operative pain management. The company has more than a dozen other products in various stages of development. These products include six transdermal products that address the hormone replacement therapy market, a portfolio of second generation nicotine replacement products and two oral hygiene consumer products.
 CYGNUS THERAPEUTIC SYSTEMS
 Consolidated Statements of Operations
 (Unaudited, in thousands, except per-share data)
 Three Months Six Months
 Ended June 30: 1993 1992 1993 1992
 Product sales $ 2,468 $ 438 $ 4,762 $ 438
 Contract revenues 1,667 1,818 2,868 2,918
 Royalty income 1,014 -- 1,254 --
 Total revenues 5,149 2,256 8,884 3,356
 Costs and expenses:
 Costs of products sold 2,655 2,372 5,026 2,372
 Research and development 3,072 2,871 5,828 8,832
 Marketing, general and
 administrative 1,818 1,840 3,302 3,956
 Total costs and expenses 7,545 7,083 14,156 15,160
 Loss from operations (2,396) (4,827) (5,272) (11,804)
 Interest income 365 336 705 571
 Interest expense (132) (48) (237) (95)
 Net loss $ (2,163) $ (4,539) $ (4,804) $(11,328)
 Loss per share $ (0.16) $ (0.36) $ (0.35) $ (0.93)
 Shares used in computation
 of net loss per share 13,724 12,686 13,700 12,156
 -0- 7/16/93
 /CONTACT: Craig Carlson, vice president of corporate communications, or Anthony Chan, chief financial officer and vice president of finance, both of Cygnus, 415-369-4300/
 (CYGN)


CO: Cygnus Therapeutic Systems ST: California IN: MTC SU: ERN

GT-TB -- SJ001 -- 2745 07/16/93 20:37 EDT
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Date:Jul 16, 1993
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