Pharmos Corporation Reports Fourth Quarter and Full Year 2010 Results
Iselin NJ, February 17, 2011 – Pharmos Corporation (OTCBB: PARS.PK) today reported financial results for the fourth quarter and twelve-month period ended December 31, 2010. These results are included in the Company’s Yearly Report on Form 10-K which has been filed with the SEC.
Fourth Quarter Ended December 31, 2010
The Company recorded a net loss of $152,000, or $0.00 per share, for the fourth quarter 2010 compared to a net income of $4,292,000, or $0.07 per share, in the fourth quarter 2009. In 2010 the loss from operations was $125,000 whereas in 2009 a $1.0 million fourth quarter reversal of an expense resulted in income from operations of $407,000. The Company believes that the current cash and cash equivalents, totaling $3.1 million as of December 31, 2010, will be sufficient to support its currently planned continuing operations through at least December 31, 2011. However, the Company’s ability to continue operations is largely dependent upon achieving a collaboration with a pharmaceutical partner and/or raising additional capital.
Gross research and development expenses were $117,771 compared to $156,263 in 2009. The Company received a $244,479 cash grant under the Federal Qualifying Therapeutic Discovery Project related to the Dextofisopam program and this was shown as a credit to gross R&D; in 2010, resulting in a net R&D; credit of $126,708. The Dextofisopam Phase 2b clinical trial was completed in late 2009 and there were minimal clinical expenses in 2010. The decline reflects decreases in virtually every research and development category.
In 2009 the fourth quarter reflected the reversal of an earlier expense of $1,000,000 in process research and development costs which were related to a Vela milestone. There was no milestone activity in 2010. On April 9, 2009 the last patients were enrolled in the Phase 2b trial thus triggering the following milestone: $1 million cash and 2 million shares of Pharmos common stock: Final patient enrolled in Phase 2b trial. The cash portion was expensed in Q1 2009 but was reversed in Q4 2009 since it is not probable that the amended terms of the Vela acquisition agreement will be met in the foreseeable future, which includes receipt of at least $10 million cash upfront payment.
General and administrative expenses decreased by $183,012 or 42%, from $434,605 in 2009 to $251,593 in 2010. The decrease in general and administrative expenses was due to reductions in salaries and benefits, rent expenses and a one-time consulting expense in 2009.
The Company had an income tax benefit of $3,914,481 in 2009 but nothing in 2010. The income tax benefit represents funds derived from the sale of Pharmos’ New Jersey State net operating losses in 2009. In 2010 the Company was not able to participate in sale of net operating losses to the State of New Jersey as the Company did not meet the requirement for the minimum number of employees.
Twelve Months Ended December 31, 2010
For the twelve months ended December 31, 2010, Pharmos recorded a net loss of $1,546,000, or $0.03 per share compared to a net loss of $3,054,000, or $0.06 per share for the twelve months ended December 31, 2009. Total operating expenses decreased 77% to $1,442,000 from $6,147,000.
Net Research & development (R&D;) expenses decreased by $4,169,144 or 94% from $4,422,600 in 2009 to $253,456 in 2010. The Dextofisopam Phase 2b clinical trial was completed in late 2009 and there were minimal clinical expenses in 2010. The decline reflects decreases in virtually every research and development category. The primary reductions included salaries and benefits, professional fees and consulting, clinical fees and various facility related expenses. An additional reduction occurred when the Company received a $244,479 cash grant based upon a Federal Qualifying Therapeutic Discovery Project for work completed on Dextofisopam.
In process research and development costs which were related to the Vela milestone decreased by $180,000 from $180,000 in 2009 to $0 in 2010. On April 9, 2009 the last patients were enrolled in the Phase 2b trial thus triggering the following milestone: $1 million cash and 2 million shares of Pharmos common stock: Final patient enrolled in Phase 2b trial. The expense of the milestone of $180,000 was reflected in the Q1 2009 results while the payment of the cash portion of the milestone was not triggered under the amendment to the acquisition agreement.
General and administrative expenses decreased by $349,135 or 23%, from $1,536,470 in 2009 to $1,187,335 in 2010. The decrease in general and administrative expenses was due to a reduction in expenses in every expense category. Reductions occurred in salaries and benefits, professional & consulting fees, investor relations expenses and rent expenses.
Other expense, net, decreased by $718,029 from an expense of $821,431 in 2009 to an expense of $103,402 in 2010. The majority of the reductions in 2010 were interest expense $114,591 and 2009 debt conversion expense of $596,104 associated with the 2009 conversion of the convertible debentures.
The Company had an income tax benefit of $3,914,481 in 2009 but nothing in 2010.The income tax benefit represents funds derived from the sale of Pharmos’ New Jersey State net operating losses. In 2010 the Company was not able to participate in sale of net operating losses to the State of New Jersey as the Company did not meet the requirement for the minimum number of employees.
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 (IBS), pain/inflammation, and autoimmune disorders. The Company’s lead product in development is Dextofisopam for the treatment of IBS which has been developed through Phase 2b clinical trials. The Company owns the rights to both R and S Tofisopam. Dextofisopam is the R enantiomer of racemic tofisopam and is being developed for IBS. Work has been conducted with various academic and research centers to explore a proof of concept trial using S-Tofisopam in gout patients. It is expected that the Company will initiate a trial in 2011. 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. These are available for licensing / partnering.
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.
Condensed Consolidated Statements of Operations
|Three months endedDecember 31,||Twelve months endedDecember 31,|
|Research and development, gross||$ 117,771||$ 156,263||$ 497,935||$ 4,422,600|
|Research and development, net||(126,708)||156,263||253,456||4,422,600|
|In-process acquired research and development||–||(1,000,000)||–||180,000|
|General and administrative||251,593||434,605||1,187,335||1,536,470|
|Depreciation and amortization||538||2,031||1,551||8,314|
|Total operating expenses||125,423||(407,101)||1,442,342||6,147,384|
|Income (Loss) from operations||(125,423)||407,101||(1,442,342)||(6,147,384)|
|Other (expense) income|
|Debt conversion expense||–||–||–||(596,104)|
|Other income (expense)||–||(1,122)||5,822||(8,404)|
|Other expense, net||(26,664)||(29,657)||(103,402)||(821,431)|
|Income (Loss) before income taxes||($152,087)||$377,444||($1,545,744)||($6,968,815)|
|Income tax benefit||–||(3,914,481)||–||(3,914,481)|
|Net income (loss)||($152,087)||$4,291,925||($ 1,545,744)||($ 3,054,334)|
|Net income (loss) per share|
|– basic and diluted||$0.00||$0.07||($0.03)||($0.06)|
|Weighted average shares outstanding|
|– basic and diluted||58,798,196||57,370,926||58,529,204||47,445,014|
|Select Consolidated Balance Sheet Data|
|December 31, 2010||December 31, 2009|
|Cash and short-term investments||$3,139,347||$4,629,486|