Pharmos Corporation Reports Fourth Quarter and Full Year 2009 Results

ISELIN, N.J., Feb. 22 /PRNewswire-FirstCall/ -- Pharmos Corporation today reported financial results for the fourth quarter and twelve-month period ended December 31, 2009.

The Company recorded net income of $4.3 million, or $0.07 per share, for the fourth quarter 2009 compared to a net loss of $1.0 million, or $(0.04) per share, in the fourth quarter 2008.

General and administrative expenses increased by $157,109 or 57%, from $277,496 in 2008 to $434,605 in 2009. Significant reductions in professional & consulting fees ($171,000) and facility related expenses ($51,000) were offset by increases to miscellaneous expenses of $221,000 as there were credits against miscellaneous income in 2008 which did not occur in 2009, and payroll of $159,000 when comparing 2009 to 2008. Lower professional & consulting fees in 2009 are due to reductions in the utilization of outside counsel of $53,000, reduced audit fees of $74,000 and lower fees of $55,000 related to our Israel entity. The increase in miscellaneous expenses was due to the sale of fixed assets and equipment lease income of $219,000 at our Israel location during 2008. The increase in payroll expenses was the result of an increase in the bonus accrual of $115,000 and higher non cash stock based compensation of $35,000.

The Company's income tax benefit increased by $2,710,355 from $1,204,126 in 2008 to $3,914,481 in 2009. The income tax benefit reflects the sale of a portion of the Company's New Jersey State net operating losses.

Research & development (R&D) gross expenses decreased by $4,606,105 or 51% from $9,028,705 in 2008 to $4,422,600 in 2009 due to the curtailment of research and development activities at the Israel location, which was closed in October 2008 and the completion of the Dextofisopam Phase IIb clinical trial in September 2009. The decline reflects decreases in virtually every research and development category. The primary reductions include $762,000 in payroll, $411,000 in professional fees and consulting, $2,976,000 in clinical trial costs and $457,000 in various facility related expenses.

General and administrative expenses decreased by $428,773 or 22%, from $1,965,243 in 2008 to $1,536,470 in 2009. The decrease in general and administrative expenses is due to a reduction in expenses in almost every expense category. Significant reductions were seen in employee compensation ($200,000), professional & consulting fees ($294,000), facility related expenses ($90,000) and offset by an increase to the miscellaneous expenses of $155,000 when comparing 2009 to 2008. The overall decline in employee headcount from 14 employees at the beginning of 2008 to 4 employees at the end of 2009 accounts for the decline in the employee compensation. Lower professional & consulting fees in 2009 are due to reductions in the utilization of outside counsel of $102,000, reduced audit fees of $71,000 and lower fees of $121,000 related to our Israel entity. Finally we incurred an increase in miscellaneous expenses in 2009 over 2008 as credits against miscellaneous expenses were greater in 2008 than in 2009. In 2008 we recorded gains of fixed assets and equipment lease income of $259,000 and in 2009 we reduced our expenses by $100,000 for an accrued marketing expense that will not be paid.

The Company's income tax benefit increased by $2,710,355 from $1,204,126 in 2008 to $3,914,481 in 2009. The income tax benefit reflects the sale of a portion of the Company's New Jersey State net operating losses.

Pharmos discovers and develops novel therapeutics to treat a range of indications including specific diseases of the nervous system such as disorders of the brain-gut axis (IBS), pain/inflammation, and autoimmune disorders. The Company's lead product in development is Dextofisopam for the treatment of IBS which has been developed through Phase 2b clinical trials. The Company also has a proprietary technology platform focusing on discovery and development of synthetic cannabinoid compounds with a focus on CB2 receptor selective agonists. Various CB2-selective compounds from Pharmos' pipeline have completed preclinical studies targeting pain, multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease and other disorders. These are available for licensing / partnering.

Statements made in this press release related to the business outlook and future financial performance of Pharmos, to the prospective market penetration of its drug products, to the development and commercialization of its pipeline products and to its expectations in connection with any future event, condition, performance or other matter, are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Additional economic, competitive, governmental, technological, marketing and other factors identified in Pharmos' filings with the Securities and Exchange Commission could affect such results.

Pharmos Corporation

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