WAKEFIELD, MA, Feb. 14 /PRNewswire-FirstCall/ - NUCRYST Pharmaceuticals Corp. today announced that for the year ended December 31, 2006, it recorded a net loss of $10.5 million, or 58 cents per share on revenues of $24.4 million, compared to a net loss of $2.6 million, or 27 cents per share on revenues of $23.6 million in the previous year. The 2005 results were aided by a $5-million milestone payment whereas no milestone was earned in 2006.
The higher net loss for the year is attributable to higher general and administrative costs as a result of becoming a public company in December 2005 and higher research and development costs relating to the continuation into the third quarter of 2006 of the second Phase 2 dermatological clinical study that commenced in the third quarter of 2005.
For the three months ended December 31, 2006, the company posted a net loss of $1.6 million, or 9 cents per share, on revenues of $4.5 million compared to a net loss of $2.8 million, or 29 cents per share, on revenues of $4.8 million in the fourth quarter of 2005.
At December 31, 2006, NUCRYST had $19 million in cash and cash equivalents.
“2006 represented our first year as a publicly traded company,” said Scott H. Gillis, President & CEO of NUCRYST. “Our wound care manufacturing business continued to grow through our relationship with Smith & Nephew plc. In 2007, we will continue with our pharmaceutical gastrointestinal program and plan to pursue short and medium term product opportunities for our unique, patent-protected nanocrystalline silver.”
In the fourth quarter of 2006, NUCRYST reported cancellation of the clinical program for topical formulation of NPI 32101 as a pharmaceutical candidate for the treatment of atopic dermatitis. In response to this outcome, NUCRYST intends to implement a limited restructuring of the company’s operations in the first quarter of 2007 to preserve its cash position. This will include shifting the focus of research and development efforts from clinical work towards preclinical work for NUCRYST’s nanocrystalline technology and exploring near term revenue opportunities.
As the first near term opportunity, NUCRYST is pursuing a 510(k) clearance to market a moisturizing cream containing NPI 32101, NUCRYST’s patent-protected nanocrystalline silver, as a barrier to infection. The company filed a 510(k) application with the US Food & Drug Administration in December 2006. The NPI 32101 cream has a good safety profile, a stable formulation and is cosmetically-acceptable. If FDA clearance is received, NUCRYST intends to seek a partner with a specialized dermatology sales force to bring the product to market.
NUCRYST Pharmaceuticals develops, manufactures and commercializes medical products that fight infection and inflammation using its patented atomically disordered nanocrystalline silver technology. Smith & Nephew plc sell a range of advanced wound care products under their Acticoat(TM) trade mark. Acticoat(TM) products incorporate NUCRYST’s SILCRYST(TM) coatings and are sold in over 30 countries. NUCRYST is also developing pharmaceutical products to address medical conditions that are characterized by both infection and inflammation. The Company has developed its proprietary nanocrystalline silver in a powder form for use as an active pharmaceutical ingredient, referred to as NPI 32101.
A more detailed discussion of NUCRYST’s 2006 year end results can be found in the 2006 Consolidated Financial Statements and Management’s Discussion and Analysis, which will be available at www.sec.gov/edgar.com and www.sedar.com. NUCRYST filings are also available at www.nucryst.com/Regulatory_Filings.htm.
All amounts in US dollars SILCRYST(TM) is a trademark of NUCRYST Pharmaceuticals Corp. Acticoat(TM) is a trademark of Smith & Nephew plc The financial results in this news release are unaudited, and are not a complete disclosure of our quarterly or annual financial results.
Some of the statements above may constitute forward-looking statements within the meaning of securities legislation in the United States and Canada (collectively “forward looking statements”). The words “intends”, “will”, and “plan” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements in this news release include, but are not limited to, statements about: prospects and plans for the development of future products containing our nanocrystalline silver, plans for our gastrointestinal program, plans for restructuring our operations, regulatory approval of our barrier cream, and plans and prospects for our barrier cream. With respect to the forward-looking statements contained in this news release, readers are cautioned that numerous risks, uncertainties and other factors could cause our actual results to differ materially from those indicated in these statements including, but not limited to: difficulties or delays in the initiation, timing, progress and results of our preclinical trials and research and development programs; we may not be able to obtain and retain regulatory approval for our barrier cream and any future products; our ability to maintain our collaboration with Smith & Nephew; our reliance on sales of Acticoat(TM) products with our SILCRYST(TM) coatings by Smith & Nephew; we may not be able to establish or maintain sales and marketing collaborations for our barrier cream; we may not be able to attract and retain collaborations relating to the development and commercialization of future products; our restructuring plans may not be sufficient to conserve cash and control expenses; competition from other silver-based pharmaceutical or medical device companies; our ability to raise additional financing required to fund further research and development, clinical studies and obtain regulatory approvals, on commercially acceptable terms or at all; our ability to protect our intellectual property rights and to not infringe on the intellectual property rights of others; our ability to comply with governmental regulations and standards; changes in general economic conditions; other risks and uncertainties unidentified at this time; management’s response to these factors; and other factors described under “Risk Factors” in our Quarterly Report on 10-Q for the quarter ended September 30, 2006, filed with the U.S. Securities and Exchange Commission at www.sec.gov and with securities authorities in Canada at www.sedar.com. All forward-looking statements are expressly qualified in their entirety by this cautionary statement and NUCRYST disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future developments or otherwise after the date hereof.
NUCRYST PHARMACEUTICALS CORP. Financial Highlights (unaudited) (thousands of U.S. dollars except share and per share data) ------------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31, December 31, ------------------------- ------------------------- Consolidated Statements of Operations 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenue $ 4,539 $ 4,780 $ 24,369 $ 23,636 (Loss) income from operations (3,020) (1,906) (11,048) 856 Net (loss) income (1,600) (2,835) (10,499) (2,641) Net (loss) income per common share - basic and diluted (0.09) (0.29) (0.58) (0.27) Weighted average number of common shares outstanding - basic 18,301,264 9,874,239 17,964,332 9,764,486 - diluted 18,301,264 9,874,239 17,964,332 9,764,486 ----------------------------------------------- December 31, ------------------------- Consolidated Balance Sheets 2006 2005 ----------------------------------------------- Cash and cash equivalents $ 18,926 $ 35,901 Current assets 33,591 48,992 Total assets 45,892 59,460 Current liabilities 2,306 45,691 Shareholders’ equity 43,586 13,769 ------------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31, December 31, ------------------------- ------------------------- Other Data 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenue Wound care product revenue $ 4,539 $ 4,780 $ 24,369 $ 18,636 Milestone revenue - - - 5,000 ------------ ------------ ------------ ------------ Total revenue $ 4,539 $ 4,780 $ 24,369 $ 23,636 Manufacturing costs $ 2,750 $ 2,739 $ 16,053 $ 10,015 Gross margin excluding milestone revenue $ 1,789 $ 2,041 $ 8,316 $ 8,621 Gross margin percent excluding milestone revenue 39.4% 42.7% 34.1% 46.3% NUCRYST Pharmaceuticals Corp. Consolidated Statements of Operations (unaudited) ------------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31 December 31 (thousands of U.S. ------------------------- ------------------------- dollars except share and per share data) 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenue Wound care product revenue $ 4,539 $ 4,780 $ 24,369 $ 18,636 Milestone revenue - - - 5,000 ------------------------------------------------------------------------- 4,539 4,780 24,369 23,636 Costs Manufacturing 2,750 2,739 16,053 10,015 Research and development 1,862 2,683 11,162 8,520 General and administrative 1,812 1,188 6,723 3,945 Depreciation and amortization 86 76 430 300 Write down of capital assets 1,049 - 1,049 - ------------------------------------------------------------------------- (Loss) income from operations (3,020) (1,906) (11,048) 856 Foreign exchange gains (losses) 1,109 116 (298) 193 Interest income 242 12 1,123 12 Interest expense - (967) (310) (3,540) ------------------------------------------------------------------------- Loss before income taxes and cumulative effect of a change in accounting principle (1,669) (2,745) (10,533) (2,479) Current income tax recovery (expense) 69 (90) 41 (162) ------------------------------------------------------------------------- Loss before cumulative effect of a change in accounting principle (1,600) (2,835) (10,492) (2,641) Cumulative effect of a change in accounting principle - - (7) - ------------------------------------------------------------------------- Net loss $ (1,600) $ (2,835) $ (10,499) $ (2,641) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Loss per common share Net loss - basic and diluted $ (0.09) $ (0.29) $ (0.58) $ (0.27) Weighted average number of common shares outstanding: - basic 18,301,264 9,874,239 17,964,332 9,764,486 - diluted 18,301,264 9,874,239 17,964,332 9,764,486 ------------------------------------------------------------------------- NUCRYST Pharmaceuticals Corp. Consolidated Balance Sheets (unaudited) ------------------------------------------------------------------------- December 31 December 31 (thousands of U.S. dollars, except share data) 2006 2005 ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 18,926 $ 35,901 Accounts receivable - net 7,041 6,401 Inventories 7,297 6,569 Other 327 121 ------------------------------------------------------------------------- 33,591 48,992 Restricted cash 135 130 Capital assets - net 11,350 9,464 Intangible assets - net 816 874 ------------------------------------------------------------------------- $ 45,892 $ 59,460 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities $ 2,261 $ 4,991 Accounts payable and accrued liabilities to related party 45 1,058 Indebtedness to related party - 39,642 ------------------------------------------------------------------------- 2,306 45,691 ------------------------------------------------------------------------- Shareholders’ equity Common shares no par value, unlimited shares authorized: issued and outstanding - 18,309,613 and 14,227,500 shares at December 31, 2006 and 2005, respectively 82,672 42,629 Additional paid-in capital 482 - Accumulated other comprehensive loss (5,490) (5,281) Accumulated deficit (34,078) (23,579) ------------------------------------------------------------------------- Total shareholders’ equity 43,586 13,769 ------------------------------------------------------------------------- NUCRYST Pharmaceuticals Corp. Consolidated Cash Flow Statements (unaudited) ------------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31 December 31 ------------------------- ------------------------- (thousands of U.S. dollars) 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating activities Net loss $ (1,600) $ (2,835) $ (10,499) $ (2,641) Items not affecting cash Depreciation and amortization 396 376 1,656 1,282 Foreign exchange loss - - (356) - Stock-based compensation expense 147 - 496 - Write down of capital assets 1,049 - 1,049 - Cumulative effect of a change in accounting principle - - 7 - Accounts receivable 1,269 3,713 (606) (2,000) Inventories (534) (1,396) (777) (3,612) Other 71 (37) (212) 22 Accounts payable and accrued liabilities (1,079) 1,606 (2,376) 1,191 Accounts payable and accrued liabilities to related party (513) 1,058 (969) 1,058 Accrued interest on indebtedness to related party - (386) - 2,589 ------------------------------------------------------------------------- Cash (used in) provided from operating activities (794) 2,099 (12,587) (2,111) ------------------------------------------------------------------------- Investing activities Restricted cash (1) - (5) (2) Purchase of short-term investments - - (22,191) - Maturity of short-term investments - - 22,748 - Capital expenditures (632) (477) (4,978) (3,784) Intangible assets (32) (20) (153) (127) ------------------------------------------------------------------------- Cash used in investing activities (665) (497) (4,579) (3,913) ------------------------------------------------------------------------- Financing activities Issuance of common shares, net of share issuance costs 36 39,095 286 39,095 Net (repayments to) advances from related party - (5,478) - 1,662 ------------------------------------------------------------------------- Cash provided from financing activities 36 33,617 286 40,757 ------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (826) 253 (95) 220 ------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (2,249) 35,472 (16,975) 34,953 Cash and cash equivalents at beginning of period 21,175 429 35,901 948 ------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 18,926 $ 35,901 $ 18,926 $ 35,901 ------------------------------------------------------------------------- NUCRYST Pharmaceuticals Corp. Consolidated Statements of Shareholders’ Equity (unaudited) ------------------------------------------------------------------------- Common Shares ------------------------- Additional (thousands of U.S. dollars, Stated Paid-in except share data) Number Amount Capital ------------------------------------------------------------------------- December 31, 2004 9,727,500 $ 3,534 $ - Issuance of common shares 4,500,000 39,095 - Foreign currency translation adjustments - - - Net loss - - - ------------------------------------------------------------------------- December 31, 2005 14,227,500 42,629 - Issuance of common shares upon conversion of indebtedness to related party 3,964,200 39,642 - Issuance of common shares in connection with restricted shares and exercises of stock options and share appreciation rights 117,913 401 - Stock-based compensation - - 482 Foreign currency translation adjustments - - - Net loss - - - ------------------------------------------------------------------------- December 31, 2006 18,309,613 $ 82,672 $ 482 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Accumulated Other Total Compre- Compre- (thousands of U.S. dollars, hensive Accumulated hensive except share data) Loss Deficit Loss ------------------------------------------------------------------------- December 31, 2004 $ (4,180) $ (20,938) Issuance of common shares - - $ - Foreign currency translation adjustments (1,101) - (1,101) Net loss - (2,641) (2,641) ------------------------------------------------------------------------- December 31, 2005 (5,281) (23,579) (3,742) Issuance of common shares upon conversion of indebtedness to related party - - - Issuance of common shares in connection with restricted shares and exercises of stock options and share appreciation rights - - - Stock-based compensation - - - Foreign currency translation adjustments (209) - (209) Net loss - (10,499) (10,499) ------------------------------------------------------------------------- December 31, 2006 $ (5,490) $ (34,078) $ (10,708) ------------------------------------------------------------------------- -------------------------------------------------------------------------
NUCRYST Pharmaceuticals Corp.
CONTACT: David Wills, Investor Relations, NUCRYST Pharmaceuticals Corp.,(416) 504-8464, info@nucryst.com, www.nucryst.com
