EXHIBIT 99.1
Press Release
ZONAGEN REPORTS FOURTH QUARTER AND YEAR END 2002 RESULTS
THE WOODLANDS, Texas--March 31, 2003--Zonagen, Inc. (Nasdaq:ZONA)
(PCX:ZNG) today announced financial results for the three-month and
twelve-month periods ended December 31, 2002.
Total revenues for the three-month period ended December 31, 2002 were
$245,000 as compared to $826,000 for the same period in the prior year, and for
the twelve-month period ended December 31, 2002 were $5.3 million as compared
to $3.9 million for the same period in the prior year. Licensing fees for the
three-month period ended December 31, 2002 were zero as compared to $529,000
for the same period in the prior year, and were $4.2 million for the
twelve-month period ended December 31, 2002 as compared to $2.2 million for the
same period in the prior year. Included in licensing fees for the twelve-month
period ended December 31, 2002 was $4.2 million as compared to $2.2 million for
the same period in the prior year of revenues that were recognized from
licensing and milestone payments received in prior years from Schering-Plough
Corporation (NYSE:SGP) from their exclusive worldwide license to VASOMAX(R),
the Company's oral therapy product for erectile dysfunction. These licensing
fees, which had been received in previous periods, had been recorded as
deferred revenue on the balance sheet and had been amortized to revenue due to
the adoption of U.S. Securities and Exchange Commission Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). Due
to the mutual termination of the Schering-Plough Corporation agreements in July
2002, the Company recognized the remaining $3.2 million of deferred revenue in
accordance with SAB 101 relating to these agreements in the third quarter ended
September 30, 2002.
Product royalties from VASOMAX(R) were zero for both three-month
periods ended December 31, 2002 and 2001, and were zero for the twelve-month
period ended December 31, 2002 as compared to $58,000 for the same period in
the prior year. Due to the ongoing partial clinical hold on VASOMAX(R) in the
United States and the mutual termination of the Schering-Plough agreements
regarding VASOMAX(R), the Company is uncertain as to whether it will be able to
create a future revenue source regarding VASOMAX(R) or its other
phentolamine-based products. There was $102,000 of research and development
grant revenue for the three-month period ended December 31, 2002 as compared to
zero for the same period in the prior year, and there was $315,000 of research
and development grant revenue for the twelve-month period ended December 31,
2002 as compared to $115,000 for the same period in the prior year. The Company
was awarded three Small Business Innovation Research (SBIR) grants during the
year 2002 aggregating over $1 million and began performing that funded research
in the third quarter ended September 30, 2002. The Company was awarded two SBIR
grants during the last half of 2000 and performed some of that funded research
during the first half of 2001. Interest income for the three-month period ended
December 31, 2002 decreased to $143,000 from $297,000 for the same period in
the prior year, and decreased to $711,000 for the twelve-month period ended
December 31, 2002 as compared to $1.5 million for the same period in the prior
year. The decrease in interest income was due to declining interest rate yields
and lower cash balances.
Research and development (R&D) expenses for the three-month period
ended December 31, 2002 were $568,000 as compared to $891,000 for the same
period in the prior year, and were $6.4 million for the twelve-month period
ended December 31, 2002 as compared to $3.0 million for the same period in the
prior year. Due to the mutual termination of the Schering-Plough agreements in
July 2002, the future uncertainty surrounding the VASOMAX(R) product and the
fact that the Company is not presently committing resources toward the approval
of VASOMAX(R), the Company expensed both its bulk phentolamine inventory
previously valued at $4.4 million and its VASOMAX(R) patent estate previously
valued at approximately $1.0 million in the three-month period ended June 30,
2002 and in July 2002 a liability due to Schering-Plough of $1.3 million
relating to a prior joint clinical development program for VASOMAX(R) was
forgiven and taken as a reduction to R&D expenses. In addition, R&D expenses in
the three-month period ended June 30, 2002 were reduced by $188,000 due to a
reimbursement of prior clinical expenses for VASOMAX(R) that was received from
a clinical research organization after a reconciliation was completed comparing
actual expenses to payments made by the Company. R&D expenses excluding the
four adjustments listed above would have been $2.5 million for the twelve-month
period ended December 31, 2002.
General and administrative (G&A) expenses for the three-month period
ended December 31, 2002 were $1.0 million as compared to $242,000 for the same
period in the prior year and increased to $2.7 million for the twelve-month
period ended December 31, 2002 as compared to $1.7 million for the same period
in the prior year. The increase in expenses for the three-month period ended
December 31, 2002 as compared to the same period in the prior year is primarily
due to the increase in costs associated with the costs of reviewing potential
strategic alternative opportunities. The increase in expenses for the
twelve-month period ended December 31, 2002 as compared to the same period in
the prior year is primarily due to the increase in costs associated with
potential strategic alternative opportunities, increase in insurance rates and
personnel expenses offset by a discontinuation of quarterly amortization
expenses relating to a non-cash compensation charge for stock options
previously issued in December 1996 that were fully amortized by December 31,
2001.
Net loss for the three-month period ended December 31, 2002, was
($1.4) million or ($0.12) per share as compared to a net loss of ($307,000) or
($0.03) per share for the same period in the prior year and was a net loss of
($3.9) million or ($0.34) per share for the twelve-month period ended December
31, 2002 as compared to ($839,000) or ($0.07) per share for the same period in
the prior year. The increased loss for both the three-month and twelve-month
periods ended December 31, 2002 as compared to last year is primarily due to
write-offs regarding the uncertainties relating to the VASOMAX(R) program, a
reduction in interest income and increased G&A expenses related to the costs of
reviewing potential strategic alternative opportunities.
On December 31, 2002, the Company reported cash, cash equivalents and
marketable securities totaling $25.1 million as compared to $30.1 million
reported as of December 31, 2001. The Company's reduction in cash for the year
2002 includes a November 2002, bridge loan to Lavipharm Corp. of $1.0 million
that is collateralized by certain assets. On October 30, 2002, the Company
entered into a definitive agreement to merge with Lavipharm Corp. that was
subsequently terminated on March 27, 2003. As of December 31, 2002 common
shares outstanding were approximately 11,503,000.
Zonagen, Inc. is engaged in the development of pharmaceutical products
that address diseases and conditions associated with the human reproductive
system.
A copy of this press release may be obtained via facsimile by dialing
1-888-329-0920 or via the internet by accessing www.zonagen.com.
Any statements that are not historical facts contained in this
release, are forward-looking statements that involve risks and uncertainties,
including such risks identified in Zonagen's Annual Report on Form 10-K for the
year ended December 31, 2001, as filed with the Securities and Exchange
Commission (SEC). These documents are available on request from Zonagen or at
www.sec.gov. Zonagen disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
ZONAGEN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
Twelve Months
Three Months Ended Ended
----------------------- ----------------
December 31, December 31,
2002 2001 2002 2001
----------- ----------- -------- -------
(Unaudited) (Unaudited)
Revenues
Licensing fees $- $529 $4,228 $2,162
Product royalties - - - 58
Research and
development grants 102 - 315 115
Interest income 143 297 711 1,526
----------- ----------- -------- -------
Total revenues 245 826 5,254 3,861
----------- ----------- -------- -------
Expenses
Research and development 568 891 6,420 3,028
General and administrative 1,038 242 2,716 1,672
----------- ----------- -------- -------
Total expenses 1,606 1,133 9,136 4,700
----------- ----------- -------- -------
Loss from continuing
operations (1,361) (307) (3,882) (839)
----------- ----------- -------- -------
Net loss before
cumulative effect of
change in accounting
principle (1,361) (307) (3,882) (839)
Cumulative effect of change in
accounting principle - - - -
----------- ----------- -------- -------
Net loss $(1,361) $(307) $(3,882) $(839)
=========== =========== ======== =======
Loss per share - basic
and diluted:
Loss from continuing
operations $(0.12) $(0.03) $(0.34) $(0.07)
Net loss before
cumulative effect of
change in accounting
principle (0.12) (0.03) (0.34) (0.07)
Cumulative effect of change in
accounting principle - - - -
----------- ----------- -------- -------
Net loss $(0.12) $(0.03) $(0.34) $(0.07)
=========== =========== ======== =======
Shares used in loss per share
calculation:
Basic 11,500 11,338 11,412 11,333
Diluted 11,500 11,338 11,412 11,333
CONSOLIDATED BALANCE SHEETS
December December
31, 31,
2002 2001
----------- --------
Current assets $26,670 $35,260
Fixed assets (net) 191 340
Other assets (net) 509 1,314
----------- --------
Total assets $27,370 $36,914
=========== ========
Accounts payable
and accrued expenses $519 $2,117
Deferred revenue - short term - 2,114
Deferred revenue - long term - 2,114
Stockholders' equity 26,851 30,569
----------- --------
Total liabilities
and stockholders'
equity $27,370 $36,914
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