Pharmos Corporation Reports 2008 First Quarter Results
Iselin NJ, May 8, 2008 – Pharmos Corporation (Nasdaq: PARS) today reported results for the first quarter ended March 31, 2008. The Company recorded a net loss of $3.6 million, or $0.14 per share, for the first quarter 2008 compared to a net loss of $4.8 million, or $0.19 per share, in the first quarter 2007. Cash and short-term investments totaled $11.3 million at March 31, 2008.
The decrease in net loss for the first quarter 2008 is due primarily to a 29% decrease in operating expenses, which was driven by a 68% decrease in general and administrative expenses to $0.8 million compared to $2.5 million in the first quarter 2007.
Research & development net, increased by $208,136 or 8%, from $2,570,098 in 2007 to $2,778,234 in 2008. Increased expenditures for the dextofisopam clinical trial are offset in part by the cost savings resulting from the downsizing and curtailment of general R&D; programs. CB2 research and discovery and R&D; overhead at our Rehovot facility were the areas of reduced spending.
During the first quarter, the Company advanced a Phase IIb trial of its lead compound, dextofisopam, in female IBS patients, which is expected to enroll approximately 480 patients in about 70 sites over an 18 month period. Costs of $2.0 million were incurred during the quarter in connection with the trial, comprising CRO-related activities and patient recruitment costs. Dextofisopam was one of the compounds the Company obtained through the acquisition of Vela Pharmaceuticals Inc which closed in October 2006. The continued development of this compound through late-stage clinical testing will significantly increase the research and development expenses going forward.
A Phase 2a clinical trial with the Company’s NanoEmulsion delivery technology, formulated with 3% diclofenac cream, to treat osteoarthritis of the knee commenced in June 2007 targeting 126 patients. Completion of patient recruitment is expected in mid 2008.
General and administrative expenses for the first quarter of 2008 decreased by $1,663,772, or 68%, from $2,460,696 in 2007 to $796,924 in 2008. The decline reflects decreases in virtually every general and administrative expense category. The primary reductions include a $792,730 reduction in payroll and a $674,286 reduction in consultant and professional 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 51 employees in March 2007 to 14 employees in March 2008. 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 and a non recurring recruitment fee of $42,000 in 2007.
Net Operating Loss Shareholder Notice
Under Internal Revenue Code Section 382 rules, a change in ownership can occur whenever there is a shift in ownership by more than 50 percentage points by one or more five-percent shareholders within a three-year period. When a change of ownership is triggered, the Company’s net operating losses (NOL) asset may be impaired. The Company believes that substantially all of its Federal NOL generated since 1995 are not impaired, and requests that all investors contact the Company prior to allowing their ownership interest to reach a five-percent level.
About Pharmos Corporation
Pharmos Corporation is a biopharmaceutical company that discovers and develops novel therapeutics to treat a range of diseases of the nervous system, including disorders of the brain-gut axis, with a focus on pain/inflammation and autoimmune disorders. The Company’s lead product, dextofisopam, is being studied in a Phase 2b clinical trial in patients with IBS. 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) and was very well tolerated. A second program in Phase 2a involves a clinical trial of our NanoEmulsion cream drug delivery system to deliver the NSAID diclofenac topically in patients suffering from osteoarthritic knee pain. The Company’s core proprietary technology platform focuses on discovery and development of synthetic cannabinoid compounds, especially CB2 receptor-selective (CB2-selective) agonists. PRS-639,058, the leading CB2-selective agonist, has demonstrated promising preclinical data in neuropathic pain. Various other CB2-selective compounds from Pharmos’ pipeline are in preclinical studies targeting pain, multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease and other disorders.
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.
(Tables attached) PHARMOS CORPORATION (Unaudited) Consolidated Statements of Operations Three months ended March 31, 2008 2007 Expenses Research and development, gross $2,778,234 $2,906,739 Grants - (336,641) Research and development, net of grants 2,778,234 2,570,098 General and administrative 796,924 2,460,696 Depreciation and amortization 34,552 69,568 Total operating expenses 3,609,710 5,100,362 Loss from operations (3,609,710) (5,100,362) Other (expense) income Interest income 130,700 330,158 Interest expense (122,862) - Other income 6,989 17,109 Other income, net 14,827 347,267 Net loss ($3,594,883) ($4,753,095) Net loss per share - basic and diluted ($0.14) ($0.19) Weighted average shares outstanding - basic and diluted 25,739,855 25,563,367 Select Consolidated Balance Sheet Data March 31, 2008 December 31, 2007 Cash and short-term investments $11,327,248 $11,168,309 Working capital $10,031,767 $9,504,348 Shareholder's equity $6,549,530 $9,984,665