Cellegy Pharmaceuticals Reports June 30, 2006 Quarter Financial Results
Published: Aug 11, 2006
HUNTINGDON VALLEY, Penn., Aug. 10 /PRNewswire-FirstCall/ -- Cellegy Pharmaceuticals, Inc. announced its second quarter 2006 financial results today.
Revenues for the three months ended June 30, 2006 were $1,227,000 compared to $7,613,000 during the same period in 2005. Prior year revenues include $6.5 million in revenue realized in connection with the settlement of the PDI litigation.
Revenues for the six months ended June 30, 2006 were $2,463,000 compared to $9,066,000 for the same period in 2005. These included licensing revenues of $379,000 and $6,759,000 for the six months ended June 30, 2006 and 2005, respectively.
Research and development expenses for the three months ended June 30, 2006 and 2005, were $800,000 and $2,280,000, respectively. The decrease of $1,480,000 was primarily attributable to reduction in research and development salary expense, professional fees and clinical testing expenses.
Research and development expenses for the six months ended June 30, 2006 and 2005 were $1,906,000 and $5,038,000, respectively. The decrease of $3,132,000 was primarily attributable to current period reductions in research and development salary expense of $771,000, professional fees and clinical testing fees of $1,725,000.
Selling, general and administrative expenses for the quarter ended June 30, 2006 and 2005 were $1,472,000 and $378,000, respectively. Prior year's SG&A includes receipt by the Company of a lease termination fee of $1,066,000 from the early vacation of the Company's previous headquarters.
For the six months ended June 30, 2006 and 2005, selling, general and administrative expenses were $3,571,000 and $4,293,000, respectively. The decrease of $1,698,000 represents reduction in litigation and other related expenses.
Net loss from continuing operations for the quarter ended June 30, 2006 was $1,215,000 or ($0.04) per basic and diluted common share based on 29,833,000 shares. Cellegy had a net income of $4,796,000 or $0.17 per basic common share based on 28,135,000 weighted average common shares outstanding or $0.16 per diluted common share based on 30,103,000 shares during the same three-month period in 2005. The net income during the second quarter of 2005 resulted primarily from the recognition of deferred revenue of $6.5 million in connection with the PDI settlement.
The Company had cash and cash equivalents of $651,000 at June 30, 2006 compared to $2,251,000 at December 31, 2005 and $4,145,000 at June 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 mid- September, 2006. The Company's plans with regard to its cash position include raising additional required funds through one or more of the following options: sales of assets, including intellectual property or technologies, seeking partnerships with other pharmaceutical companies to co-develop and fund research and development efforts, pursuing additional out-licensing arrangements with third parties, re-licensing and monetizing future milestone and royalty payments expected from existing licensees, or seeking equity or debt financing.
The Company is engaged in discussions with third parties concerning the options discussed above, but there is no assurance that any of these options will be implemented on a timely basis or that the Company will be able to obtain additional funds required to continue operations. In addition to these options, Cellegy has reduced staffing and will continue to implement further cost reduction programs and reduce discretionary spending to meet its obligations. If we do not obtain required funds from one or more of the above options, we could be forced to file voluntary bankruptcy proceedings or be the subject of an involuntary bankruptcy proceeding filed by creditors.
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 Phase 3 clinical studies in the United States and Africa.
Cellegesic(R) (nitroglycerin ointment), branded Rectogesic(R) outside the United States, is approved and is being marketed in the United Kingdom by ProStrakan, for the treatment of pain associated with chronic anal fissures. A similar formulation of Rectogesic is currently being sold in Australia, New Zealand, Singapore and South Korea.
On July 7, 2006 the U.S. Food and Drug Administration issued an Approvable Letter for Cellegesic(R) indicating that before the Company's New Drug Application ("NDA") may be approved and the product approved for marketing, Cellegy must conduct another clinical trial to demonstrate efficacy at a level deemed statistically significant by the agency. The letter indicated that the agency was requiring an additional study because it believed the results of the three trials conducted to date did not provide substantial evidence that the drug is effective, and provided a number of comments on the results previously presented by Cellegy and recommendations concerning the design and protocol of the additional required study. The Company is presently reviewing its options with respect to Cellegesic and is planning a meeting with the FDA.
Based on its current 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, expressing substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Cellegy believes that available cash resources will be adequate to satisfy its capital needs through at least September 2006.
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. Such risks and uncertainties relate to, among other factors: the timing and outcome of discussions with the FDA regarding the approvable letter issued in July, 2006; completion, timing and outcome of clinical trials, including primarily the Savvy prevention and contraceptive Phase 3 studies; and the need and ability to obtain required additional funds. 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.
CELLEGY PHARMACEUTICALS, INC. SUMMARY OF FINANCIAL RESULTS JUNE 30, 2006 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenues 1,227 7,613 2,463 9,066 Costs and expenses: Cost of product sales - 44 257 44 Research and development 800 2,280 1,906 5,038 Selling, general and administrative 1,472 378 3,571 4,293 Acquired in-process technology - - - - Total costs and expenses 2,272 2,702 5,734 9,375 Operating income (loss) (1,045) 4,911 (3,271) (309) Interest and other income 7 20 15 104 Interest and other expense (224) (241) (437) (261) Derivative revaluation 80 106 26 164 Net income (loss) from continuing operations applicable to common stockholders $(1,182) $4,796 $(3,668) $(302) Net income (loss) per common share: Basic $(0.04) $0.17 $(0.12) $(0.01) Diluted $(0.04) $0.16 $(0.12) $(0.01) Weighted average number of common shares used in per share calculations: Basic 29,833 28,135 29,832 27,141 Diluted 29,833 30,103 29,832 27,141 CELLEGY PHARMACEUTICALS, INC. SUMMARY OF FINANCIAL RESULTS JUNE 30, 2006 CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) June 30, 2006 December 31, 2005 Assets Current assets: Cash and investments $651 $2,262 Other assets 1,182 4,188 Total assets $1,833 $6,450 Liabilities and Stockholders' Deficit Total current liabilities $8,383 $9,437 Deferred revenue 2,956 3,084 Other long-term payable and derivative instrument 426 405 Stockholders' deficit (9,932) (6,477) Total liabilities and stockholders' deficit $1,833 $6,450Cellegy Pharmaceuticals, Inc.
CONTACT: Robert J. Caso, Vice President, Finance & CFO, +1-215-914-0900,ext. 603, or Richard C. Williams Chairman and Interim CEO, +1-650-616-2200,both of Cellegy Pharmaceuticals
Web site: http://www.cellegy.com//