Pharmos Corporation Reports 2008 Second Quarter Results
Iselin NJ, August 7, 2008 – Pharmos Corporation (Nasdaq: PARS) today reported results for the second quarter ended June 30,2008. The Company recorded a net loss of $2.7 million, or $0.10 per share, for the second quarter 2008 compared to a net loss of $4.6 million, or $0.18 per share, in the second quarter 2007. Cash and cash equivalents totaled $9.0 million at June 30,2008.
The decrease in net loss for the second quarter 2008 is due primarily to a 46% decrease in operating expenses to $2.6 million from $4.9 million in the second quarter 2007. The decline in operating expenses resulted from a 41% decrease in gross research and development expenses to $2.1 million compared to $3.7 million in the second quarter 2007. Also general and administrative expenses decreased 66% to $0.5 million from $1.3 million in the second quarter 2007.
During the second 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 $1,470,000 were incurred during the quarter in connection with the trial, comprising CRO-related activities and patient recruitment costs. During the second quarter, the Company engaged a second CRO to identify and manage additional sites. As the Company is currently behind its planned enrollment schedule, additional expenses were incurred in conducting a centralized advertising campaign to enhance patient enrollment. 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 for topical application of analgesic and anti-inflammatory agents commenced in June 2007 targeting 126 patients. The Company believes that it has sufficient patient data to measure efficacy and, given the typically slow recruitment encountered in the summer, the Company has decided to cease enrollment, complete those patients currently in screening, and evaluate and analyze the results of the 100+ patients who have completed the trial.
General and administrative expenses for the second quarter of 2008 decreased by 66%, from $1.3 million in 2007 to $0.5 million. The decline reflects decreases in virtually every general and administrative expense category. The primary reductions include a $450,000 reduction in payroll and a $160,000 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 11 employees at the end of June 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.
For the first half ended June 30, 2008, Pharmos recorded a net loss of $6.3 million, or $0.24 per share compared to a net loss of $9.4 million, or $0.37 per share in the first half 2007. Total operating expenses decreased 38% to $6.2 million from $10.0 million. Gross research and development expenses decreased 25% to $4.9 million from $6.6 million in the first half 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 67% decrease in general and administrative expenses to $1.3 million from $3.8 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 and a non recurring recruitment fee of $42,000 in 2007. The company believes that the current cash and cash equivalents totaling $9.0 million as of June 30,2008 will be sufficient to support the currently planned continuing operations through at least December 3 1, 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 (GIIIBS), 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 teclmology 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 are in preclinical studies targeting pain, multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease and other disorders. Pharmos is also working to coimnercialize 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 Six months ended June 30, June 30, 2008 2007 2008 2007 Expenses Research and development, gross $2,147,992 $3,667,030 $4,926,226 $6,573,769 Grants (18,199) (194,308) (18,199) (530,949) Research and development, net of grants 2,129,793 3,472,722 4,908,027 6,042,820 General and administrative 454,065 1,337,435 1,250,989 3,798,131 Depreciation and amortization 30,109 67,067 64,661 136,635 Total operating expenses 2,613,967 4,877,224 6,223,677 9,977,586 Loss from operations (2,613,967) (4,877,224) (6,223,677) (9,977,586) Other (expense) income Interest income 64,392 264,720 195,092 594,878 Interest expense (123,852) - (246,714) - Other income (expense) 5,869 (24,899) 12,858 (7,790) Other (expense) income, net (53,591) 239,821 (38,764) 587,088 Net income (loss) ($2,667,558) ($4,637,403) ($6,262,441) ($9,390,498) Net income (loss) per share - basic and diluted ($0.10) ($0.18) ($0.24) ($0.37) Weighted average shares outstanding - basic and diluted 25,761,637 25,600,920 25,750,746 25,582,247 Select Consolidated Balance Sheet Data June 30, 2008 December 31, 2007 Cash and short-term investments $9,036,652 $11,168,309 Working capital $7,483,021 $9,504,348 Shareholder's equity $3,928,834 $9,984,665