Pharmos Corporation Reports 2008 Third Quarter Results
Iselin NJ, November 6, 2008 – Pharmos Corporation (Nasdaq: PARS) today reported results for the third quarter ended September 30, 2008. The Company recorded a net loss of $2.8 million, or $0.1 1 per share, for the third quarter 2008 compared to a net loss of $3.5 million, or $0.14 per share, in the third quarter 2007. Cash and cash equivalents totaled $6.1 million at September 30, 2008.
The decrease in net loss for the third quarter 2008 is due primarily to a 26% decrease in operating expenses to $2.8 million from $3.7 million in the third quarter 2007. The decline in operating expenses resulted from a 16% decrease in gross research and development expenses to $2.3 million compared to $2.7 million in the third quarter 2007. Also general and administrative expenses decreased 64% to $0.4 million from $1.2 million in the third quarter 2007.
During the third quarter, the Company advanced a Phase IIb trial of its lead compound, dextofisopam, in female IBS patients. The Phase IIb trial is expected to enroll approximately 480 patients in about 70 sites in the United States. Costs of $1,734,000 were incurred during the quarter in connection with the trial, comprising CRO-related activities and patient recruitment costs. The company is currently using two CROYsto enhance enrollment in the Phase IIb trial, using a variety of advertising tactics. The Company is currently behind its originally planned enrollment and now expects top line data to be available in the second half of 2009. Dextofisopam was one of the compounds the Company obtained through the acquisition of Vela Phar~naceuticals Inc which closed in October 2006. The continued development of this compound through late-stage clinical testing will increase the research and development expenses going forward.
A Phase 2a clinical trial with the Company’s NanoEmulsion delivery technology for topical application of analgesic and anti-inflammatory agents commenced in June 2007 targeting 126 patients. Top line results are expected in the fourth quarter of 2008.
General and administrative expenses for the third quarter of 2008 decreased by 6496, from $1.2 million in 2007 to $0.4 million. The decline reflects decreases in virtually every general and administrative expense category. The primary reductions include a $468,000 reduction in payroll, a $93,000 reduction in consultant and professional fees and a $93,000 reduction in BOD fees. The decrease in payroll costs reflect the impact of the third and fourth quarter 2007 restructuring plans which have reduced the Company’s head count from 5 1 employees in March 2007 to 11 employees at the end of September 2008. The decrease in consulting and professional fees in 2008 result from a decline in legal costs and investor relation costs, and a one time IRS section 382 tax analysis cost incurred in 2007. The decrease in the BOD meeting costs result from board members receiving Company common stock in lieu of cash payments.
For the first nine months ended September 30, 2008, Pharmos recorded a net loss of $9.1 million, or $0.35 per share compared to a net loss of $12.9 million, or $0.51 per share for the nine months ended September 30, 2007. Total operating expenses decreased 35% to $9.0 million from $13.7 million. Gross research and development expenses decreased 22% to $7.2 million from $9.3 million for the nine months ended September 30, 2007 primarily related to the Company’s focus of cash resources on the Dextofisopam Phase 2b trial and the downsizing and curtailment of general research and development programs. Also a 66% decrease in general and administrative expenses to $1.7 million from $5.0 million due to the decrease in consulting and professional fees in 2008 result from non recurring 2007 costs related to contractual payment obligations associated with the retirement of the Company’s chief executive officer, higher legal and accounting fees in 2007, a one time IRS section 382 tax analysis cost incurred in 2007, a non recurring recruitment fee of $42,000 in 2007 and higher BOD meeting costs in 2007.
The company believes that the current cash and cash equivalents totaling $6.1 million as of September 30, 2008 will be sufficient to support the currently planned continuing operations through at least December 31, 2008. The company is actively pursuing efforts to raise additional capital but there can be no assurance that such efforts will be successful.
About Pharmos Corporation
Pharmos discovers and develops novel therapeutics to treat a range of indications including specific diseases of the nervous system such as disorders of the brain-gut axis (GUIBS), painlinflammation, and autoimmune disorders. The Company’s lead product in development, dextofisopam, is undergoing Phase 2b testing in IBS patients. Dextofisopam has completed a Phase 2a IBS study in which it demonstrated a statistically significant effect compared to placebo on the primary efficacy endpoint of adequate relief (n=141, p=0.033). The Company also has a proprietary technology platform focusing on discovery and development of synthetic cannabinoid compounds with a focus on CB2 receptor selective agonists. Various CB2-selective compounds from Pharmos’ pipeline have completed preclinical studies targeting pain, multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease and other disorders. Pharmos is also working to commercialize its proprietary NanoEmulsion drug delivery system, which is in clinical-stage development for topical application of analgesic and anti-inflammatory agents.
Safe Harbor Statement
Statements made in this press release related to the business outlook and future financial performance of Pharmos, to the prospective market penetration of its drug products, to the development and commercialization of its pipeline products and to its expectations in connection with any future event, condition, performance or other matter, are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Additional economic, competitive, governmental, technological, marketing and other factors identified in Pharmos’ filings with the Securities and Exchange Commission could affect such results.
PHARMOS CORPORATION
(Unaudited)
Condensed Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
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2008 2007 2008 2007
---------- ---------- ---------- ----------
Expenses
Research and
development,
gross $2,298,882 $2,711,774 $7,206,909 $9,285,543
Grants - (238,123) - (769,072)
---------- ---------- ---------- ----------
Research and
development,
net of grants 2,298,882 2,473,651 7,206,909 8,516,471
General and
administrative 436,758 1,200,594 1,687,747 4,998,725
Depreciation and
amortization 24,853 57,946 89,514 194,581
---------- ---------- ---------- ----------
Total operating
expenses 2,760,493 3,732,191 8,984,170 13,709,777
---------- ---------- ---------- ----------
Loss from
operations (2,760,493) (3,732,191) (8,984,170) (13,709,777)
---------- ---------- ---------- ----------
Other (expense) income
Interest income 43,061 198,703 238,152 782,146
Change in value
of warrants - - - 11,435
Interest expense (122,580) - (369,294) -
Other income (expense) (4,340) (5,067) 8,519 (12,857)
---------- ---------- ---------- ----------
Other (expense)
income, net (83,859) 193,636 (122,623) 780,724
---------- ---------- ---------- ----------
Net income (loss) ($2,844,352) ($3,538,555) ($9,106,793) ($12,929,053)
========== ========== ========== ==========
Net income (loss)
per share
- basic and diluted ($0.11) ($0.14) ($0.35) ($0.51)
========== ========== ========== ==========
Weighted average
shares outstanding
- basic and diluted 26,023,311 25,600,920 25,842,264 25,588,540
========== ========== ========== ==========
Select Consolidated Balance Sheet Data
September 30, 2008 December 31, 2007
------------------ -----------------
Cash and short-term investments $6,135,987 $11,168,309
Working capital $4,908,939 $9,504,348
Shareholder's equity $1,315,698 $9,984,665