Quigley Corporation Reports Second Quarter Results - Continues Its Investing For The Future In Pharmaceutical R&D -
DOYLESTOWN, Pa., July 27 /PRNewswire-FirstCall/ -- The Quigley Corporation today reported net sales of $6.2 million, for the second quarter ended June 30, 2006, compared to $8.8 million reported for the same period in 2005. For the six-months ended June 30, 2006, net sales were $16.4 million compared to $20.6 million reported for the same period in 2005.
Net sales of the Company's Health and Wellness and Contract Manufacturing segments recorded declines in the second quarter of 2006 as compared to 2005 that averaged approximately $1.0 million each, and $600,000 for the Cold Remedy segment. For the six-months ended June 30, 2006, the Health and Wellness and Contract Manufacturing segments recorded declines that averaged approximately $1.5 million each, and $1.1 million for the Cold Remedy segment.
Net sales declines for the quarter and six months ended June 30, 2006 for the Cold-Remedy segment as compared to the same periods in 2005 were the result of a shift in buying patterns by our customers and the end consumers. Changes in buying patterns are impacted by seasonal factors including the incidence of colds and anticipated consumer demand by our customers. In addition, sales have been affected by the increased competition from certain widely promoted vitamin-based products from well known celebrities, which lack clinical efficacy data.
Guy J. Quigley, Chairman, President and Chief Executive Officer stated, "We are confident in the COLD-EEZE(R) brand's strength and that it will appeal to a growing array of consumers who want Natural Common Cold remedies that demonstrate proven clinical efficacy and safety unlike other unproven natural remedies. As such, our ongoing marketing will feature COLD-EEZE(R) clinical effectiveness in double-blind placebo controlled studies. We remain well positioned to further enhance our household penetration, with the goal to garner greater market share, and improve the sales performance of our COLD- EEZE Cold Remedy products."
The Health and Wellness segment reflects the continued reduction in the number of active independent distributor representatives. Corrective operating and legal actions necessary to address the changes in active independent distributor representatives continue to be the focus for this segment.
The change in net sales of the Contract Manufacturing segment is attributed to an OTC company that utilized this segment's manufacturing capabilities in 2005 and discontinued its product in the marketplace in 2006, thereby reducing sales for this segment. While the primary purpose of the Contract Manufacturing segment is to manufacture COLD-EEZE, other contract manufacturing is performed for non-related third party entities to compensate for the necessary fixed costs associated with this segment.
Net loss for the second quarter ended June 30, 2006 was $2.6 million, or ($0.21) per share compared to a net loss of $1.8 million, or ($0.15) per share, for the same period last year. Net loss for the six-months ended June 30, 2006 was $4.1 million, or ($0.34) per share, compared to a net loss of $1.9 million, or ($0.17) per share, for the same period last year.
The increase in net loss for the second quarter ended June 30, 2006 is principally attributed to reduced gross profits from the related net sales decline in all operating segments of the Company and increased operating expenses of the Contract Manufacturing segment.
The net loss increase for the six-months ended June 30, 2006 reflects a reduction in gross profits from the related net sales decline in all operating segments of the Company, particularly the Cold Remedy segment, which has a greater gross profit percentage and dollar margin and fewer fixed and directly variable costs than the other operating segments. In addition, increases in operating expenses for advertising, promotions, costs associated with insurance and legal fees relative to the lawsuits for the Company's discontinued nasal spray products also added to this net loss increase.
Gross profit percentages for the Cold Remedy segment for 2006 increased due to the expiration in May 2005 of the founder's commission and the gross profit percentages of the Health Wellness segment slightly improving. Also, due to the lost revenues from a major OTC company that utilized the manufacturing abilities of the Contract Manufacturing segment, its gross profit percentage also declined. As this segment already has a substantially lower gross profit margin then the other operating segments, reducing profitable manufacturing operations thereby amplifies the inability to absorb the necessary fixed cost relative to manufacturing operations at a time which is not during the cold remedy season, thereby reducing production.
No tax benefits to reduce losses are provided for the quarters and six months ended June 30, 2006 and 2005, except for any limitations imposed by the federal alternative minimum taxes or for compliance with state tax regulations, since the Company is in a net operating loss carry-forward position.
"We are pleased with the progress of our Pharma research and formulation development, and continue to implement strategic initiates to further capitalize on the growth potential of Quigley Pharma, our wholly-owned Ethical Pharmaceuticals subsidiary. For example, human studies have begun on our topical compound for the treatment of Diabetic Peripheral Neuropathy; a poultry study was conducted evaluating our antiviral compound in a medical feed for potential use against Avian Flu; and we continue to make progress in developing natural-source potential prescription products for Systemic Radiation, Rheumatoid Arthritis and Ocular and Genital Herpes," continued Mr. Quigley.
We will continue to research and develop potential ethical pharmaceutical drugs as part of our ongoing efforts to generate future growth, as we continue to make progress with the goal to bring our current compounds to market," concluded Mr. Quigley.
The following is a summary of major ethical pharmaceutical events that occurred during the second quarter of 2006:
Diabetic Neuropathy - QR-333: An IND was granted and human studies have begun, evaluating this topical compound for the treatment of Diabetic Peripheral Neuropathy. After initial patient screening, testing on the investigational new drug QR-333 began in May 2006, as patients suffering from diabetic peripheral neuropathy were given doses in an escalating fashion to provide pharmacokinetics data. This study was conducted at The Diabetes & Glandular Disease Research Center in San Antonio, under the supervision of Dr. Sherwyn Schwartz.
Systemic Radiation - QR-336: Quigley Pharma entered into an agreement with Dr. William H. McBride, Vice Chair of Research, Department of Oncology at UCLA to help develop an appropriate animal model radio protective research program for QR-336 to comply with New Food and Drug Administration animal efficacy rules for radio-protective pharmacological compounds. QR-336 is a naturally derived radio protective compound designed to address the lethal effects of ionizing radiation.
Avian Flu Compound - QR-441(a): A study in healthy chickens was initiated evaluating the tolerability of QR441(a) in a medical feed, a first step in considering this compound for combating avian flu in chickens. The Company is investigating QR-441(a) as a potential first response agent in safeguarding perimeter zones around a possible Avian Flu outbreak in the United States. Following this initial healthy chicken medical feed study, the Company plans to conduct challenge studies in chickens infected with avian H5N1 virus. A compound such as QR-441 (a) may provide the poultry industry and government agencies an additional method to safeguard our nation's food supply
Ocular and Genital Herpes - QR-444: Studies have been ongoing, evaluating the antiviral efficacy and toxicity of the naturally-derived compound on various viruses causing ocular diseases. The studies are being conducted at The Campbell Ophthalmic Microbiology Laboratory at the University of Pittsburgh. In recently pre-clinical studies, the antiviral formulation demonstrated potent antiviral activity against Ocular and Genital Herpes, indicating a new research and development path for the versatile compound. The studies were designed to determine the in vitro inhibitory activity of the compound vs. two ocular isolates of Herpes Simplex Virus - 1 (HSV-1) and 2 non-ocular isolates of Herpes Simplex Virus -2 (HSV-2). The pre-clinical studies of this compound demonstrated reproducible antiviral activity against an ocular isolate of HSV-1. It also demonstrated similar activity against a second ocular isolate of HSV-1 and multiple genital isolates of HSV-2.
The Quigley Corporation makes no representation that the US Food and Drug Administration or any other regulatory agency will grant an Investigational New Drug ("IND") or take any other action to allow its formulations to be studied or/and for any Investigational New Drug to be marketed. Furthermore, no claim is made that potential medicine discussed herein is safe, effective, or approved by the Food and Drug Administration. Additionally, data that demonstrates activity or effectiveness in animals or in vitro tests do not necessarily mean the formula test compound, referenced herein will be effective in humans. Safety and effectiveness in humans will have to be demonstrated by means of adequate and well controlled clinical studies before the clinical significance of the formula test compound is known. Readers should carefully review the risk factors described in filings the Company files from time to time with the Securities and Exchange Commission.
About The Quigley Corporation
The Quigley Corporation is a diversified natural health medical science company. Its Cold Remedy segment is a leading marketer and manufacturer of the COLD-EEZE(R) family of lozenges, gums and sugar free tablets clinically proven to cut the common cold nearly in half. COLD-EEZE customers include leading national wholesalers and distributors, as well as independent and chain food, drug and mass merchandise stores and pharmacies. The Quigley Corporation has several wholly owned subsidiaries. Darius International markets health and wellness products through its wholly owned subsidiary, InnerLight Inc. Quigley Manufacturing Inc. consists of two FDA approved facilities to manufacture COLD- EEZE(R) lozenges as well as fulfill other contract manufacturing opportunities. Quigley Pharma Inc. (http://www.QuigleyPharma.com) conducts research in order to develop and commercialize a pipeline of patented botanical and naturally derived prescription drugs.
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risk, uncertainties and other factors that may cause the Company's actual performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statement. Factors that impact such forward-looking statements include, among others, changes in worldwide general economic conditions, changes in interest rates, government regulations, and worldwide competition.
CONTACT: George J. Longo Carl Hymans Vice President, CFO G.S. Schwartz & Co. (215) 345-0919 (212) 725-4500 firstname.lastname@example.org Consolidated Statements of Operations (Unaudited) The following represents condensed financial data (in thousands) except per share data: Three-Months Three-Months Six-Months Six-Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 ($) ($) ($) ($) Net Sales 6,182 8,844 16,449 20,597 Gross profit 2,310 3,034 7,622 8,736 Sales & marketing expenses 1,079 1,067 3,514 2,902 Administrative expenses 3,100 2,987 6,806 5,981 Research & development 858 841 1,642 1,909 Income taxes (benefit) 89 - 89 - Net loss (2,618) (1,790) (4,073) (1,945) Diluted loss per share: Net loss ($0.21) ($0.15) ($0.34) ($0.17) Diluted weighted average common shares outstanding: 12,386,640 11,655,995 12,050,390 11,655,396 Consolidated Balance Sheets (Unaudited)
The following represents condensed financial data (in thousands) at June 30, 2006 and December 31, 2005:
2006 2005 ($) ($) Cash & cash equivalents 16,060 16,885 Accounts receivable, net 1,181 7,880 Inventory 4,797 3,900 Total current assets 23,356 30,248 Total assets 28,707 35,976 Total current liabilities 5,817 9,566 Long-term debt - 1,036 Total stockholders' equity 22,830 25,320The Quigley Corporation
CONTACT: George J. Longo, Vice President, CFO, +1-215-345-0919; CarlHymans, G.S. Schwartz & Co., +1-212-725-4500, email@example.com