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Cellegy Pharmaceuticals (CLGY) Reports September 30, 2006 Quarter Financial Results



11/16/2006 1:05:20 PM

QUAKERTOWN, Penn., Nov. 15 /PRNewswire-FirstCall/ -- Cellegy Pharmaceuticals, Inc. (CLGY.OB) announced its third quarter 2006 financial results today.

Revenues for the three months ended September 30, 2006 were $172,000 compared to $1,738,000 during the same period in 2005. Prior year revenues for the third quarter included $1,252,000 in Biosyn grant revenue, $257,000 in product sales and $109,000 in licensing revenues.

Revenues for the nine months ended September 30, 2006 were $2,635,000 compared to $10,804,000 for the same period in 2005. These included licensing revenues of $452,000 and $6,950,000 for the nine months ended September 30, 2006 and 2005, respectively.

Research and development expenses for the three months ended September 30, 2006 and 2005, were $338,000 and $1,816,000, respectively. The decrease was primarily attributable to reduction in research and development salary expense, professional fees and clinical testing expenses.

Research and development expenses for the nine months ended September 30, 2006 and 2005 were $2,244,000 and $6,855,000, respectively. The decrease was primarily attributable to current period reductions in research and development salary expense, professional fees and clinical testing fees.

Selling, general and administrative expenses for the quarter ended September 30, 2006 and 2005 were $955,000 and $2,471,000, respectively. The decrease of $1,350,000 was primarily attributable to current period reductions in SG&A salary expense and operating expenses.

For the nine months ended September 30, 2006 and 2005, selling, general and administrative expenses were $4,526,000 and $6,764,000, respectively. The decrease resulted primarily from a reduction in litigation and other related expenses.

Net loss from continuing operations for the quarter ended September 30, 2006 was $1,640,000 or ($0.05) per basic and diluted common share based on 29,833,000 shares. Cellegy had a net loss of $2,867,000 or ($0.10) per basic and diluted common share based on 29,832,000 shares during the same three- month period in 2005.

The Company had cash and cash equivalents of $830,000 at September 30, 2006 compared to $2,251,000 at December 31, 2005 and $2,305,000 at September 30, 2005.

Due to its cash position and negative operating cash flows, Cellegy received a going concern qualification in the report of its independent registered public accounting firm included in the Annual Report on Form 10-K for the year ended December 31, 2005. Cellegy believes that available cash resources will be adequate to satisfy its capital needs through at least the end of November 2006. Subject to the terms and conditions of the Asset Purchase Agreement with Strakan International Limited, the Company has agreed to sell to ProStrakan all of its right, title and interest in and to the assets used in connection with or relating to the research, development and commercialization of nitroglycerin/nitric oxide and other related pharmacological products for pain management applications and testosterone gels for treatment of male hypogonadism, and for certain female sexual dysfunction conditions, as currently conducted and as currently proposed to be conducted by Cellegy, including those assets relating to Cellegy's nitroglycerin/nitric oxide and related pharmacological products marketed under the name Rectogesic(R) and proposed to be marketed under the name Cellegesic(R) and Cellegy's testosterone gels marketed under the name Tostrex(TM) and proposed to be marketed under the names Tostran(TM) or Fortigel(TM) and Cellegy's product candidate Tostrelle.

A special meeting of stockholders to consider and vote on the proposed transaction with ProStrakan is scheduled to be held on November 22, 2006. There is no assurance that the proposed transaction will be approved by the shareholders. If the proposed transaction is not approved by the shareholders, a significant portion of the Company's liabilities would become immediately due and payable, including promissory notes reflecting amounts due to PDI, Inc. and ProStrakan. In this event, the Company would most likely be unable to meet its obligations to its creditors.

About Cellegy

Cellegy Pharmaceuticals is a specialty biopharmaceutical company that develops and commercializes prescription drugs for the treatment of women's health care conditions, including sexual dysfunction, HIV prevention and gastrointestinal disorders. Savvy(R) (C31G vaginal gel), a novel microbicide gel product for contraception and the reduction in transmission of HIV in women, is currently undergoing a Phase 3 clinical study in the United States for contraception.

Forward-Looking Statements

This press release contains forward-looking statements. Investors are cautioned that these forward-looking statements are subject to numerous risks and uncertainties, known and unknown, which could cause actual results and developments to differ materially from those expressed or implied in such statements. For more information regarding risk factors, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and other filings with the Securities and Exchange Commission.

Where to find additional information about the transaction

Cellegy has filed a definitive proxy statement with the Securities and Exchange Commission in connection with the proposed transaction with ProStrakan. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, CELLEGY'S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION CAREFULLY AND IN ITS ENTIRETY BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders may obtain free copies of the proxy statement and other relevant documents (when they become available) and other documents filed with the Securities and Exchange Commission at the Securities and Exchange Commission's web site at: www.sec.gov. In addition, investors and stockholders may obtain free copies of the documents filed with the Securities and Exchange Commission by Cellegy by contacting the persons identified below. Cellegy's directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed transaction. Information regarding the interests of directors and executive officers in the transaction is included in the proxy statement of the Company. Additional information regarding directors and executive officers of Cellegy is also included in the Company's annual report on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission, which is available as described above.

CELLEGY PHARMACEUTICALS, INC. SUMMARY OF FINANCIAL RESULTS SEPTEMBER 30, 2006 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands) Period from Three Months Nine Months June 26, 1989 Ended Ended (inception) to September 30, September 30, September 30, 2006 2005 2006 2005 2006 Total revenues $172 $1,738 $2,635 $10,804 $25,832 Costs and expenses: Cost of product sales -- 197 257 241 1,945 Research and development 338 1,816 2,244 6,855 92,207 Selling, general and administrative 955 2,471 4,526 6,764 50,624 Equipment FMV adjustment 276 -- 276 -- 276 Acquired in-process technology -- -- -- -- 22,332 Total costs and expenses 1,569 4,484 7,303 13,860 167,384 Operating income (loss) (1,397) (2,746) (4,668) (3,054) (141,552) Interest and other income 99 17 114 121 7,144 Interest and other expense (487) (217) (924) (478) (3,082) Derivative revaluation 145 79 170 243 1,250 Net income (loss) (1,640) (2,867) (5,308) (3,169) (136,240) Non-cash Preferred Dividends -- -- -- -- (1,449) Net income (loss) from continuing operations applicable to common stockholders $(1,640) $(2,867) $(5,308) $(3,169) $(137,689) Net income (loss) per common share: Basic $(0.05) $(0.10) $(0.18) $(0.11) Diluted $(0.05) $(0.10) $(0.18) $(0.11) Weighted average number of common shares used in per share calculations: Basic 29,833 29,832 29,832 28,048 Diluted 29,833 29,832 29,832 28,048 CELLEGY PHARMACEUTICALS, INC. SUMMARY OF FINANCIAL RESULTS SEPTEMBER 30, 2006 CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) September 30, December 31, 2006 2005 Assets Current assets: Cash and investments $830 $2,262 Other assets 415 4,188 Total assets $1,245 $6,450 Liabilities and Stockholders' Deficit Total current liabilities $9,120 $9,437 Deferred revenue 3,349 3,084 Other long-term payable and derivative instrument 310 405 Stockholders' deficit (11,534) (6,477) Total liabilities and stockholders' deficit $1,245 $6,450

Cellegy Pharmaceuticals, Inc.

CONTACT: Robert J. Caso, +1-215-529-6084, Vice President, Finance & CFO,or Richard C. Williams, Chairman and Interim CEO, both of CellegyPharmaceuticals


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