TEMPE, Ariz., July 26 /PRNewswire-FirstCall/ -- OrthoLogic Corp. today announced financial results for the second quarter ended June 30, 2005.
OrthoLogic reported a net loss of $6.6 million, or $(0.17) per share, for the second quarter of 2005, compared to a net loss of $4.2 million, or $(0.12) per share in the second quarter of 2004. Second quarter operating expenses totaled $7.3 million, compared to operating expenses of $4.5 million in the second quarter of 2004. The increase over prior year operating costs was primarily the result of the company’s expanded efforts in research, development and clinical activities for multiple indications of the Chrysalin(R) Product Platform. Pursuant to the Patent Assignment Agreement entered into in connection with the acquisition of substantially all the assets and intellectual property of Chrysalis BioTechnology, Inc., the company paid $400,000 to the University of Texas for certain patent rights related to the Chrysalin development program. Chrysalin, or TP508, is a 23-amino acid synthetic peptide representing a receptor-binding domain of the human thrombin molecule, a naturally occurring molecule in the body, that has the potential to accelerate the natural cascade of healing events in both soft tissue and bone repair.
At June 30, 2005, OrthoLogic had cash, cash equivalents, and investments of $91.1 million.
“During the second quarter and moving forward through 2005, we have directed our focus toward advancing our lead program in fracture repair at an accelerated pace,” stated James M. Pusey, M.D., president and chief executive officer. “We are also dedicated to optimizing the efficacy of the Chrysalin compound in several delivery mechanisms, including an injectable formulation, a gel formulation, and time released microspheres.”
Updates on Chrysalin Clinical Program
Fracture Repair: In the second quarter, OrthoLogic completed enrollment in its pivotal Phase 3 human clinical trial for fracture repair. The trial is a Phase 3 double-blind, randomized, placebo-controlled trial to compare the safety and efficacy of a single percutaneous injection of Chrysalin in saline at 10 micrograms/ml versus a saline placebo control. The trial includes 503 patients with unstable and/or displaced distal radius fractures enrolled in 27 U.S. centers, and is designed to measure how quickly wrist fractures in patients injected with Chrysalin heal as measured by the removal of immobilization. Accelerated removal of immobilization allows patients to initiate hand therapy and regain full function of their wrists and hands sooner. The clinical trial’s secondary efficacy endpoints include radiographic analysis of healing, as well as clinical, functional and patient outcome parameters. OrthoLogic expects to release initial efficacy results for the Phase 3 trial in the first half of 2006.
In addition to the Phase 3 clinical trial in fracture repair, a Phase 2b dosing trial is underway to establish the lower dose range of Chrysalin versus a placebo control.
Diabetic Ulcer Healing: OrthoLogic has completed a Phase 1/2 study of Chrysalin in diabetic ulcer healing, which showed significant effects in the foot ulcer sub-population of 35 patients. Final study results will be submitted to a peer-reviewed journal this year. The company is developing a gel formulation of Chrysalin for diabetic ulcer healing and plans to submit a formulation amendment to the existing and active Investigational New Drug (“IND”) application for this indication.
Cartilage Defect Repair: OrthoLogic is preparing for an IND application for a Chrysalin-based product candidate for cartilage defect repair, and is developing a sustained microsphere formulation for delivery of Chrysalin in this indication.
“We are excited by the potential that Chrysalin has shown in many of our preclinical studies toward the treatment of traumatic and chronic orthopedic indications in bone and soft tissue as well as cardiovascular repair and wound healing,” concluded Dr. Pusey. “With the additional potential indications, plus our ongoing late-stage trials in fracture repair, we are forging ahead as a biotechnology and drug development company focused on developing therapeutic peptides.”
Upcoming Milestones
OrthoLogic expects to complete data collection in the Phase 3 trial for wrist fractures as well as follow-up for the Phase 1/2 spine fusion safety trial by the end of 2005. In addition, the company seeks to submit Phase 1/2 data from the diabetic foot ulcer trial to a peer-reviewed journal and develop a Phase 2 protocol for the first Chrysalin gel formulation for use in a diabetic foot ulcer trial. By year-end, the company also expects to prepare an IND for an initial human clinical trial for cartilage defect repair.
Conference Call Information
As previously announced, management will host a conference call and webcast today at 4:30 p.m. EDT (1:30 p.m. PDT). To access the call, participants may dial 800-289-0544 (domestic) or 913-981-5533 (international) and provide the access code 6064597.
A replay of the call will be available beginning July 26, 2005, at 7:30 p.m. EDT until August 25, 2005, at 12:59 a.m. EDT. To access the replay, please dial 888-203-1112 (domestic) or 719-457-0820 (international) and provide the access code 6064597.
Additionally, the conference call will be webcast on the Investor Relations section of the company’s website, www.orthologic.com.
About Chrysalin(R)
Chrysalin (TP508) is a 23-amino acid peptide that represents the receptor-binding domain of the human thrombin molecule, the naturally occurring agent responsible for initiating many of the cellular events responsible for repair in both soft tissue and bone.
All cells contain high-affinity thrombin receptors, which led to the hypothesis that thrombin does more than form blood clots after wounding. It was discovered that thrombin acted as a signaling molecule to initiate the early stages of tissue repair. The basis for the development of Chrysalin started in 1985, when a class of synthetic peptides was developed representing a specific receptor-binding domain of thrombin that activates specific wound-healing signals.
Drugs based on the Chrysalin peptide can be used to mimic part of the thrombin response without stimulating the events associated with blood clotting and therefore have the potential to accelerate the natural cascade of healing events.
About OrthoLogic Corp.
OrthoLogic is a drug-development company focused on commercializing several potential therapeutics comprising the Chrysalin(R) Product Platform, a series of product candidates aimed at treating traumatic and chronic orthopedic indications in bone and soft tissue as well as cardiovascular repair and wound healing. All of these potential products are based on the Chrysalin synthetic peptide, also known as TP508.
OrthoLogic is actively pursuing multiple indications for potential Chrysalin-based products. These include product candidates for fracture repair and chronic diabetic ulcers which are in human clinical trials, and cartilage defect repair, which is in late-stage preclinical trials. OrthoLogic’s product development pipeline includes several other indications for which the company has positive preclinical results or clinical results, including spinal fusion, dental bone formation and myocardial revascularization.
For more information, please visit the company’s website: www.orthologic.com.
Forward-Looking Statements
Statements in this press release or otherwise attributable to OrthoLogic regarding our business that are not historical facts are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include the timing and acceptability of FDA filings and the efficacy and marketability of potential products, involve risks and uncertainties that could cause actual results to differ materially from predicted results. These risks include: delays in obtaining or inability to obtain FDA, institutional review board or other regulatory approvals of preclinical or clinical testing; unfavorable outcomes in our preclinical and clinical testing; the development by others of competing technologies and therapeutics that may have greater efficacy or lower cost; delays in obtaining or inability to obtain FDA or other necessary regulatory approval of our products; our inability to successfully and cost effectively develop or outsource manufacturing and marketing of any products we are able to bring to market; changes in FDA or other regulations that affect our ability to obtain regulatory approval of our products, increase our manufacturing costs or limit our ability to market our products; our inability to raise additional capital in the future needed to fund the continued development of our Chrysalin Product Platform; and other factors discussed in our Form 10-K for the fiscal year ended December 31, 2004, our Form 10-Q for the quarter ended March 31, 2005, and other documents we file with the Securities and Exchange Commission.
OrthoLogic Corp. (A Development Stage Company) Statements of Operations (in thousands, except per share data) (Unaudited) As a Development Three months Six months Stage ending June 30, ending June 30, Company 8/5/2004 - 2005 2004 2005 2004 6/30/2005 OPERATING EXPENSES General and administrative $1,273 $616 $2,183 $1,171 $4,061 Research and development 5,991 3,987 11,394 7,358 19,474 CPM divestiture and related gains (81) (250) (192) (375) CBI in process research and development 0 0 0 25,840 Total operating expenses 7,264 4,522 13,327 8,337 49,000 Other income, net 654 301 1,206 607 1,957 Loss from continuing operations (6,610) (4,221) (12,121) (7,730) (47,043) Income tax benefit 0 (12) (294) (654) Net loss from continuing operations (6,610) (4,221) (12,109) (7,436) (46,389) Discontinued operations Net gain on the sale of the bone device business, net of taxes of $0, $0, $0, $0, ($363) respectively 0 0 0 0 2,048 Net income from discontinued operations 0 0 0 0 2,048 NET LOSS ($6,610) ($4,221)($12,109) ($7,436) ($44,341) Per Share Information: Net loss from continuing operations Basic ($0.17) ($0.12) ($0.32) ($0.22) Diluted ($0.17) ($0.12) ($0.32) ($0.22) Net loss Basic ($0.17) ($0.12) ($0.32) ($0.22) Diluted ($0.17) ($0.12) ($0.32) ($0.22) Basic and diluted shares outstanding 38,220 34,528 38,134 34,419 ORTHOLOGIC CORP. (A Development Stage Company) BALANCE SHEETS (in thousands except share and per share data) ASSETS June 30, December 31, 2005 2004 (Unaudited) Current assets Cash and cash equivalents $34,733 $38,377 Short-term investments 49,847 53,642 Accounts receivable, net 8 34 Prepaids and other current assets 1,470 1,019 Total current assets 86,058 93,072 Furniture and equipment, net 458 478 Escrow receivable, net 6,895 6,828 Long-term investments 6,500 11,558 Deferred income taxes - non-current 1,106 1,106 Trademarks and patents 2,351 2,142 Total assets $103,368 $115,184 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $1,243 $833 Accrued compensation 566 648 Accrued taxes 114 114 Excess space reserve 160 559 Accrued clinical 1,111 1,236 Other accrued liabilities 1,034 727 Total current liabilities 4,228 4,117 Deferred rent and capital lease obligation 101 137 Non-current portion of excess space reserve 174 0 Total liabilities 4,503 4,254 Stockholders’ Equity Common Stock $.0005 par value; 19 19 100,000,000 and 50,000,000 shares authorized; 38,224,742 and 38,011,642 shares issued and outstanding Additional paid-in capital 170,949 170,905 Accumulated deficit (72,103) (59,994) Total stockholders’ equity 98,865 110,930 Total liabilities and stockholders’ equity $103,368 $115,184
OrthoLogic Corp.
CONTACT: Sherry A. Sturman, Chief Financial Officer of OrthoLogic,+1-602-286-5436, or Melanie Friedman of Stern Investor Relations, Inc.,+1-212-362-1200
Web site: http://www.orthologic.com//
