The Quigley Corporation Reports First Quarter Results; Continues Its Investing For The Future In Pharmaceutical R&D
DOYLESTOWN, Pa., April 27 /PRNewswire-FirstCall/ -- The Quigley Corporation today reported net sales of $10.3 million, for the first quarter ended March 31, 2006, compared to $11.8 million reported for the same period in 2005.
Net sales of the Company's Cold Remedy, Health and Wellness and Contract Manufacturing segments recorded declines in this first quarter of 2006 as compared to 2005 that averaged approximately $500,000 for each segment.
During 2005, the Company's Cold Remedy net sales outpaced its category as the further expansion of the Cold Remedy segment reflected the success of strategic marketing initiatives and advertising with a notable increase in consumer acceptance and expanded household penetration. Sales declines in the first quarter of 2006 may be attributable to a widely disseminated controversial report published in the January 2006 issue of the "Chest," the peer reviewed journal of the American College of Chest Physicians (ACCP), that implied that cough products had limited effectiveness while antihistamines were more effective in reducing coughs. This report had an impact of increasing allergy product sales and depressing cough cold category sales during the traditional peak of the common cold season. Additionally, the brand and category as a whole has faced increased competition from certain vitamin based products that have launched successful public relations campaigns despite the fact that they lack both safety and clinical efficacy data. Ongoing marketing will feature COLD-EEZE(R) clinical effectiveness in two double-blind placebo controlled studies as well as its efficacy studies in adolescents and safety studies with Geriatric patients.
Guy J. Quigley, Chairman, President and Chief Executive Officer stated, "We continue to remain confident in the COLD-EEZE brand and its appeal to a broad range of consumers with a growing interest in Natural Common Cold remedies that demonstrate proven clinical efficacy and safety unlike other natural remedies. We are well positioned to capture market share, enhance our household penetration to be able to increase sales of our COLD-EEZE Cold Remedy products."
The Health and Wellness segment continues to be affected by the shift from the number of active domestic independent distributor representatives, which has outpaced the growth of active international independent distributor representatives or an increase of 30.0% for this segment's international sales as compared to 2005. Corrective actions concerning the shifting in active independent distributor representatives continue to be the focus for this segment.
The Contract Manufacturing segment's prime purpose is for the manufacture of COLD-EEZE, however, other contract manufacturing is performed for third party entities. In comparing 2006 with 2005, an OTC company that utilized manufacturing capabilities of this segment discontinued their product in the marketplace, thereby resulting in the reduced sales for the Contract Manufacturing segment of the Company. Management is reviewing opportunities to replace this lost business with other third party manufacturing contracts.
Net loss for the quarter ended March 31, 2006 was $1.5 million, or ($0.12) per share, compared to net loss of $155,000 or ($0.01) per share, for the same period last year.
The increase in net loss is principally attributed to the decrease in all of the Company's segment sales, especially 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. Additionally, operating expenses increased for advertising, promotions, insurance and legal costs relative to the lawsuits for the Company's discontinued nasal spray product.
Gross profit percentages for the Cold Remedy segment for 2006 increased due to the expiration in May 2005 of the founder's commission with the Health Wellness segment remaining relatively unchanged. 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 declined, which already has a substantially lower gross profit margin then the other operating segments.
No tax or tax benefits to reduce income or losses are provided for the quarters ended March 31, 2006 and 2005, except for any limitations imposed by the alternative minimum, since the Company is in a net operating loss carry- forward position.
"Quigley Pharma, our wholly-owned Ethical Pharmaceuticals subsidiary, represents a significant potential source of growth for the Company. For example, QR-333, our topical compound for the treatment of Diabetic Peripheral Neuropathy, recently filed an IND and commenced plans to begin a Phase II B study to develop the most efficacious dose range of this topical compound on human patients. According to the American Diabetic Association, there are over twenty million people in the United States who have diabetes. They represent a huge market for the product we are developing," continued Mr. Quigley.
"We are striving to capitalize on the growth potential of Quigley Pharma by continuing to develop natural-source potential prescription products for Diabetic Neuropathy, Systemic Radiation, Rheumatoid Arthritis, Avian Flu in animals, and Ocular and Genital Herpes. We will continue to develop and test ethical pharmaceutical drugs as part of our ongoing efforts to generate future growth," concluded Mr. Quigley.
The following is a summary of major ethical pharmaceutical events that occurred during the first quarter of 2006:
At the annual meeting of Quigley's Scientific Advisory Board, composed of 12 highly regarded medical professionals and three additional guest attendees, 2005 research and development results were reviewed. The Board was extremely encouraged by the findings and strongly support Quigley Pharma's research and development efforts and advocates their next stage of development.
Diabetic Neuropathy - QR-333: Quigley Pharma filed an IND (Investigational New Drug) application with the FDA for QR-333, a topical compound for the treatment of Diabetic Peripheral Neuropathy and commenced its plans to begin a Phase II B study to develop the most efficacious dose range of this topical compound on human patients. QR-333 had been evaluated in animal model toxicity experiments previous to the IND filing. QR-333 is designed and formulated to decrease oxidative stress that contributes to peripheral diabetic neuropathy and thus alleviate its symptoms. The original proof of concept study completed in France, showed that the topical compound improved the quality of life as well as improved key symptoms associated with this complication of diabetes. The subjects using the compound had 67% of their symptoms improve, suggesting efficacy. According to estimates from the American Diabetes Association, 7.0 percent of US adults or 20.8 million people have diabetes.
Systemic Radiation - QR-336: This naturally derived radio protective compound against ionizing radiation initially received encouraging results in a preliminary non-GLP animal study. A pre-IND meeting was held at the FDA in October of 2004 with the Division of Medical Imaging and Radiopharmaceutical Drug Products. The aforementioned Scientific Advisory Board noted that preliminary evidence demonstrates QR336's potential as a systemic radio protective agent and recommended further studies. Plans are underway to advance an animal model development plan that will comply with New Food and Drug Administration animal efficacy rules for radio-protective pharmacological compounds.
Rheumatoid Arthritis - QR-440: Quigley Pharma received an additional Investigational New Animal Drug (INAD) number from the Center for Veterinary Medicine of the Food and Drug Administration to study its naturally-derived, broad-spectrum anti-inflammatory compound QR-440 on dogs. In previous studies, QR-440 has been shown to reduce inflammation and also suggests possible disease-modifying potential. Canine arthritis afflicts an estimated 70 to 80 percent of dogs in certain breeds, particularly larger breeds.
Avian Flu Compound - QR-441(a): Quigley Pharma initiated plans to test its all natural broad spectrum antiviral compound against Avian Flu in poultry stocks. The company has enlisted noted experts, Dr. Timothy S. Cummings, Clinical Poultry Professor at the College of veterinary medicine at Mississippi State University and Thomas G. Voss, Ph.D. Assistant Professor Tulane University School of Medicine to assist Quigley Pharma in the development of the Investigational New Animal Drug (INAD) bird challenge studies. According to previously announced in vitro testing, QR-441A appears to have the potential to inhibit infectivity of the avian H5N1 virus in poultry populations.
Ocular and Genital Herpes - QR-435: In pre-clinical studies, the antiviral formulation demonstrates 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 QR-435 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 QR-435 demonstrated reproducible potent direct antiviral activity against an ocular isolate of HSV-1. It also demonstrated similar potent direct antiviral activity against a second similar ocular isolate of HSV-1 and multiple clinical 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.
Consolidated Statements of Operations (Unaudited) The following represents condensed financial data (in thousands) except per share data: Three-Months Three-Months Ended Ended March 31, 2006 March 31, 2005 ($) ($) Net Sales 10,266 11,753 Gross profit 5,313 5,703 Sales & marketing expenses 2,435 1,835 Administrative expenses 3,706 2,995 Research & development 784 1,068 Income taxes - - Net loss (1,454) (155) Diluted loss per share: Net loss ($0.12) ( $0.01) Diluted weighted average common shares outstanding: 11,714,140 11,654,796 Consolidated Balance Sheets (Unaudited) The following represents condensed financial data (in thousands) at March 31, 2006 and December 31, 2005: 2006 2005 ($) ($) Cash & cash equivalents 18,190 16,885 Accounts receivable, net 2,686 7,880 Inventory 4,228 3,900 Total current assets 26,337 30,248 Total assets 31,911 35,976 Total current liabilities 7,903 9,566 Long-term debt - 1,036 Total stockholders' equity 23,951 25,320 CONTACT: George J. Longo Carl Hymans Vice President, CFO G.S. Schwartz & Co. (215) 345-0919 (212) 725-4500 email@example.comThe Quigley Corporation
CONTACT: George J. Longo, Vice President, CFO of The Quigley Corporation,+1-215-345-0919; or Carl Hymans of G.S. Schwartz & Co., +1-212-725-4500,firstname.lastname@example.org