Exhibit 99.1
Quigley
FOR IMMEDIATE RELEASE
CONTACT:
George J. Longo Carl Hymans
Vice President, CFO G.S. Schwartz & Co.
(215) 345-0919 (212) 725-4500
carlh@schwartz.com
THE QUIGLEY CORPORATION REPORTS THIRD QUARTER RESULTS
- CONTINUES TO INVEST FOR THE FUTURE IN PHARMACEUTICAL R&D -
DOYLESTOWN, PA. - OCTOBER 26, 2006 - THE QUIGLEY CORPORATION (NASDAQ: QGLY)
today reported net sales of $11.5 million, for the third quarter ended September
30, 2006, compared to $15.3 million reported for the same period in 2005. For
the nine-months ended September 30, 2006, net sales were $27.9 million compared
to $35.9 million reported for the same period in 2005.
Net sales of the Company's Health and Wellness and Cold Remedy segments recorded
declines in the third quarter of 2006 as compared to 2005 that averaged
approximately $1.8 million each. For the nine-months ended September 30, 2006,
the Health and Wellness and Cold Remedy segments recorded declines that averaged
approximately $3.1 million each, and $1.7 million for the Contract Manufacturing
segment.
Net sales declines for the third quarter and nine months ended September 30,
2006 for the Cold-Remedy segment as compared to the same periods in 2005 reflect
sales of new flavors introduced during the third quarter of 2005 and include a
continued shift in buying patterns by our customers. Also, weaker consumer
purchases commencing January 1, 2006 through the start of the second quarter of
2006 resulted in higher than expected inventories of our customers, thereby
affecting the Company's sales for the quarter and nine months ended September
30, 2006.
Despite these factors, IRI scanner data consumer consumption statistics for
COLD-EEZE(R) in the Cough/Sore Throat Drop Category of Food, Drug and Mass for
the 4 and 12 week periods ending September 10, 2006 (without Wal-Mart data)
reflect trends that are up 2.5% and 3.6%, respectively, as compared to the same
periods last year. Additionally, consumer consumption statistics for COLD-EEZE
in the same category for the 24 week period ending September 10, 2006 (without
Wal-Mart data) is down 2%.
The Company believes in the viability of the COLD-EEZE brand among the growing
number of consumers who want Natural Common Cold remedies that demonstrate
proven clinical efficacy and safety unlike other unproven natural remedies.
Additionally, the Company will to continue to implement strategic plans to
expand household penetration thereby generating greater market share and to
increase sales of COLD-EEZE Cold Remedy products.
Net Sales declines of The Health and Wellness segment reflects the continued
reduction in the number of active independent distributor representatives, which
directly affects the segment's net sales. The focus for this segment includes
continued corrective operating actions necessary to increase the number of
active independent distributor representatives. These corrective actions include
the Company investing and expanding its markets into Singapore and Taiwan; the
recent appointment of a new president for this segment; and the anticipated
resolution of litigation with the sponsor of the Company's product line in this
segment.
The change in net sales of the Contract Manufacturing segment is attributed to
an OTC company that utilized this segment's manufacturing capabilities in 2005
and discontinued its product in the marketplace in 2006, thereby reducing sales
for this segment. While the primary purpose of the Contract Manufacturing
segment is to manufacture COLD-EEZE, other contract manufacturing is performed
for non-related third party entities to compensate for the necessary fixed costs
associated with this segment.
Net income for the third quarter ended September 30, 2006 was $1.1 million, or
$0.08 per share compared to net income of $3.0 million, or $0.23 per share, for
the same period last year. Net loss for the nine-months ended September 30, 2006
was $3.0 million, or ($0.25) per share, compared to net income of $1.1 million,
or $0.08 per share, for the same period last year.
The reduction in net profit for the third quarter ended September 30, 2006 is
due to lower gross profits from the aforementioned related net sales declines in
all operating segments of the Company.
The net loss increase for the nine-months ended September 30, 2006 reflects a
reduction in gross profits from the related net sales decline in all operating
segments of the Company, particularly the Cold Remedy segment, which has a
substantially greater gross profit percentage and dollar margin and fewer fixed
and directly variable costs than the other operating segments. In addition,
increases in operating expenses for advertising, promotions, costs associated
with insurance and legal fees relative to the lawsuits for the Company's
discontinued nasal spray products also added to this net loss increase.
Gross profit percentages for the Cold Remedy and Health Wellness segments for
2006 remained relatively unchanged. Also, due to the lost revenues from a major
OTC company that utilized the manufacturing abilities of the Contract
Manufacturing segment, its gross profit percentage declined. As this segment
already has a substantially lower gross profit margin then the other operating
segments, reducing profitable manufacturing operations amplifies the inability
to absorb the necessary fixed cost relative to manufacturing operations
particularly at a time which is not during the cold remedy season, thereby
reducing production.
No tax benefits to reduce losses are provided for the quarters and nine months
ended September 30, 2006 and 2005, except for any limitations imposed by the
federal alternative minimum taxes or for compliance with state tax regulations,
since the Company is in a net operating loss carry-forward position.
The Company is committed to continue its research and to develop potential
ethical pharmaceutical drugs as part of an ongoing effort to generate future
growth to bring current compounds to market, especially development that
includes furthering human studies on QR-333, an Investigational New Drug for the
treatment of Diabetic Peripheral Neuropathy, thereby capitalizing on the growth
potential of Quigley Pharma, a wholly-owned Ethical Pharmaceutical subsidiary.
A redesigned Quigley Pharma web site was recently launched to better inform
investors of ongoing research and development efforts, and engage potential
strategic pharmaceutical partners by offering information regarding Quigley
Pharma's naturally derived compounds.
The following is a summary of major ethical pharmaceutical events that occurred
during the third quarter of 2006:
DIABETIC NEUROPATHY - QR-333: A second patent was granted covering peripheral
neural and vascular complaints for Quigley Pharma's Compound QR-333, formulated
for Diabetic Neuropathy. This adds another degree of intellectual property
support to its lead investigational new drug QR-333.
The Company filed the patent application based upon observations that subjects
participating in the Proof of Concept Study conducted in France using the
compound had further improvements over and above the existing protocol. A
significant observation led the Company to conclude that the topical application
of the QR-333 compound may have led to improved peripheral circulation.
Subsequently an immediate data search evaluating the active ingredients
indicated that they indeed could have the potential to impact upon the human
circulation system as vasodilators. This important new information provided the
rationale for the Company to file a separate patent application to protect its
intellectual property and allow it to study this further therapeutic benefit.
In addition, the results from its human study, titled "Single Center, Dose
Escalating, Safety, Tolerability, And Pharmacokinetics Study Of QR-333 In
Subjects With Diabetic Peripheral Neuropathy", demonstrated that QR-333 can be
administered safely to patients suffering from diabetic peripheral neuropathy.
SYSTEMIC RADIATION - QR-336: Significant data was obtained identifying 50
microliters as the least toxic and most effective radiation protection dose in
mice when administered ip (intraperitoneal), po (by mouth) or sc (under the
skin) prior to radiation exposure. These experiments were essential for
providing the company with data to optimize the formulation for efficacy and
route of administration, which is required for filing under the FDA "Animal
Efficacy Rule".
The tests were conducted by Dr. William H. McBride, Vice Chair of Research,
Department of Oncology at UCLA to help develop an appropriate animal model radio
protective research program for QR-336 to comply with New Food and Drug
Administration animal efficacy rules for radio-protective pharmacological
compounds. QR-336 is a naturally derived radio protective compound designed to
address the lethal effects of ionizing radiation.
AVIAN FLU COMPOUND - QR-441(a): Quigley Pharma obtained positive results that
support its continued progress in developing the natural broad spectrum
anti-viral QR-441(a) for use in preventing the spread of avian flu in poultry
stocks. The results of the healthy chicken medical feed study confirm that food
or water dose forms provide an opportunity for potential commercialization if
the compound demonstrates efficacy within these dose forms.
The Company is investigating QR-441(a) as a potential first response agent in
safeguarding perimeter zones around a possible Avian Flu outbreak in the United
States. The Company plans to conduct challenge studies in chickens infected with
avian H5N1 virus. A compound such as QR-441 (a) may provide the poultry industry
and government agencies an additional method to safeguard our nation's food
supply.
CACHEXIA TREATMENT COMPOUND - QR-443: Positive results were obtained for the
QR-443 compound for the treatment of Cachexia, a debilitating and life
threatening muscle wasting condition. The results of an animal study found a 75%
efficacy rate in the treatment of mice with this condition.
OCULAR AND GENITAL HERPES - QR-444: Studies have been ongoing, evaluating the
antiviral efficacy and toxicity of the naturally-derived compound on various
viruses causing ocular diseases. The studies are being conducted at The Campbell
Ophthalmic Microbiology Laboratory at the University of Pittsburgh. In recently
pre-clinical studies, the antiviral formulation demonstrated potent antiviral
activity against Ocular and Genital Herpes, indicating a new research and
development path for the versatile compound.
The studies were designed to determine the in vitro inhibitory activity of the
compound vs. two ocular isolates of Herpes Simplex Virus - 1 (HSV-1) and 2
non-ocular isolates of Herpes Simplex Virus -2 (HSV-2). The pre-clinical studies
of this compound demonstrated reproducible antiviral activity against an ocular
isolate of HSV-1. It also demonstrated similar activity against a second ocular
isolate of HSV-1 and multiple genital isolates of HSV-2.
The Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will allow this Investigational
New Drug to be marketed. Furthermore, no claim is made that potential medicine
discussed herein is safe, effective, or approved by the Food and Drug
Administration. Additionally, data that demonstrates activity or effectiveness
in animals or in vitro tests do not necessarily mean the formula test compound;
referenced herein will be effective in humans. Safety and effectiveness in
humans will have to be demonstrated by means of adequate and well-controlled
clinical studies before the clinical significance of the formula test compound
is known. Readers should carefully review the risk factors described in filings
the Company files from time to time with the Securities and Exchange Commission.
ABOUT THE QUIGLEY CORPORATION
The Quigley Corporation (Nasdaq: QGLY, HTTP://WWW.QUIGLEYCO.COM) is a
diversified natural health medical science company. Its Cold Remedy segment is a
leading marketer and manufacturer of the COLD-EEZE(R) family of lozenges, gums
and sugar free tablets clinically proven to cut the common cold nearly in half.
COLD-EEZE customers include leading national wholesalers and distributors, as
well as independent and chain food, drug and mass merchandise stores and
pharmacies. The Quigley Corporation has several wholly owned subsidiaries.
Darius International markets health and wellness products through its wholly
owned subsidiary, InnerLight Inc. Quigley Manufacturing Inc. consists of two FDA
approved facilities to manufacture COLD- EEZE(R) lozenges as well as fulfill
other contract manufacturing opportunities. Quigley Pharma Inc.
(HTTP://WWW.QUIGLEYPHARMA.COM) conducts research in order to develop and
commercialize a pipeline of patented botanical and naturally derived
prescription drugs.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risk, uncertainties and other factors that may cause the
Company's actual performance or achievements to be materially different from the
results, performance or achievements expressed or implied by the forward-looking
statement. Factors that impact such forward-looking statements include, among
others, changes in worldwide general economic conditions, changes in interest
rates, government regulations, and worldwide competition.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
The following represents condensed financial data (in thousands) except per
share data:
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
($) ($) ($) ($)
------------------------------------------------------------------------
Net Sales 11,481 15,320 27,929 35,917
Gross profit 6,260 8,294 13,882 17,031
Sales & marketing expenses 1,283 1,452 4,796 4,354
Administrative expenses 3,195 2,898 10,001 8,879
Research & development 892 1,030 2,534 2,939
Income taxes (benefit) -- -- 89 --
Net income (loss) 1,079 2,999 (2,994) 1,054
Diluted income (loss) per share:
Net income (loss) $ 0.08 $ 0.23 ($ 0.25) $ 0.08
Diluted weighted average common shares outstanding: 13,242,127 13,316,660 12,163,858 13,285,422
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
The following represents condensed financial data (in thousands) at September
30, 2006 and December 31, 2005:
2006 2005
($) ($)
-------- --------
Cash & cash equivalents 13,597 16,885
Accounts receivable, net 6,701 7,880
Inventory 5,042 3,900
Total current assets 26,208 30,248
Total assets 31,341 35,976
Total current liabilities 7,372 9,566
Long-term debt -- 1,036
Total stockholders' equity 23,909 25,320
