EXHIBIT 99.1
ZONAGEN REPORTS FIRST QUARTER 2004 FINANCIAL RESULTS
THE WOODLANDS, Texas--(BUSINESS WIRE)--May 10, 2004--Zonagen,
Inc.(NASDAQ-NMS:ZONA) (Nasdaq:ZONA) today announced financial results for the
three-month period ended March 31, 2004.
During the first quarter ended March 31, 2004, the Company continued to focus on
its near term business strategy of concentrating its resources on the clinical
development of Progenta(TM), for the treatment of uterine fibroids, and to
complete a U.S. human Phase I/II clinical study of Androxal(TM), for the
treatment of male hormonal deficiency. The Company is in the process of
obtaining the necessary regulatory approvals to conduct (outside the U.S.) a
Phase I/II human safety and efficacy challenge study with Progenta(TM), against
the current pharmaceutical gold standard of drug therapy for the treatment of
uterine fibroids which is anticipated to begin in mid-year 2004. The Company
anticipates the completion of its Androxal(TM) Phase I/II study by year end
2004.
Total revenues for the three-month period ended March 31, 2004 were $125,000 as
compared to $233,000 for the same period in the prior year. Research and
development grants for the three-month period ended March 31, 2004 were $64,000
as compared to $121,000 for the same period in the prior year. Grant revenue
relates to three SBIR grants that were awarded to the Company in the third
quarter ended September 30, 2002. The Company performed a portion of that paid
research under its one remaining $836,441 Phase II grant during the three-month
period ended March 31, 2004 as compared to the research that was performed under
three SBIR grants during the same period in the prior year. Two of these awarded
SBIR grants were depleted during 2003 and the last remaining grant for $836,441
is expected to be depleted during the second quarter ended June 30, 2004.
Interest income decreased 77% to $26,000 for the three-month period ended March
31, 2004, as compared to $112,000 for the same period in the prior year. This
decrease is primarily due to the reduction in investment cash on hand as a
result of the Company completing its January 2004 self tender offer stock
repurchase (see below) and the reduction in interest rate yields on the
Company's cash investments. Other revenue of $35,000 was from the sale of some
of the Company's preclinical phentolamine data that is to be used for a purpose
that does not compete with the Company's existing sexual dysfunction
technologies.
Research and development ("R&D") expenses include contracted research,
regulatory affairs activities and general research and development expenses.
During the quarter ended March 31, 2004 the Company spent 71% of total R&D
spending on outsourced product development with the majority of that spending
being utilized for the preparation of the Progenta(TM) Phase I/II human clinical
trial, for the treatment of uterine fibroids, that is anticipated to begin
outside of the U.S. in mid-year 2004. During the quarter ended March 31, 2003
the Company reduced its research staff and incurred a $122,000 severance charge.
R&D expenses were $477,000 for the three-month period ended March 31, 2004 as
compared to $564,000 for the same period in the prior year. Excluding the
severance charge in the quarter ended March 31, 2003 R&D expenses would have
been $442,000. The Company also continued early development work with
Progenta(TM) as an oral treatment for endometriosis, which was funded under its
currenT Phase II
1
$836,441 SBIR grant. In addition, the Company continued working toward the
completion of its U.S. Phase I/II human clinical study with Androxal(TM), as an
oral treatment for andropause.
General and administrative ("G&A") expenses decreased 29% to $434,000 for the
three-month period ended March 31, 2004, as compared to $613,000 for the same
period in the prior year. The decrease in expenses for the three-month period
ended March 31, 2004 is primarily due to a decrease in costs associated with the
search for a potential strategic alternative, a reduction in D&O insurance costs
and a reduction in facility related costs due to facility downsizing in 2003,
offset by an increase in legal expenses to prepare the Company for current and
future reporting requirements.
Net loss for the three-month period ended March 31, 2004, was ($786,000) or
($0.14) per share as compared to a net loss of ($944,000) or ($0.08) per share
for the same period in the prior year. Although the loss for the three-month
period ended March 31, 2004 was $158,000 less than the same period in the prior
year, the loss per share was $0.06 higher due to the Company's smaller share
base. The reduced number of shares is a result of the company's self tender
offer which was completed in January 2004 (see below). This decreased loss was
primarily due to reduced G&A and R&D expenses offset by a reduction in revenues
from interest income and research and development grants.
In January 2004, Zonagen completed the purchase of 6,547,635 shares (57% of our
outstanding common stock) at a purchase price of $2.10 per share in accordance
with the terms of its self tender offer, which expired on January 7, 2004. This
purchase included 60,888 shares issuable upon exercise of options for a total
aggregate purchase price of approximately $13.7 million, exclusive of
approximately $289,000 of costs associated with the offer. As of March 31, 2004,
the Company had 4,992,901 shares of common stock outstanding as compared to
11,479,648 shares of common stock outstanding as of December 31, 2003.
Any statements that are not historical facts contained in this release are
forward-looking statements that involve risks and uncertainties including
Zonagen's ability to have success in the clinical development of its
technologies, Zonagen's ability to raise additional capital on acceptable terms
or at all, uncertainty relating to Zonagen's patent portfolio, Zonagen's ability
to have success in meeting governmental regulations and the costs and time
required to meet such regulatory requirements, manufacturing uncertainties
related to Progenta(TM), the Company's ability to remain listed on Nasdaq, and
such other risks identified in Zonagen's Annual Report on Form 10-K for the year
ended December 31, 2003, 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.(NASDAQ-NMS:ZONA)
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31,
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2004 2003
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(Unaudited) (Unaudited)
Revenues
Research and development grants $ 64 $ 121
Interest income 26 112
Other 35 --
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Total revenues 125 233
Expenses
Research and development 477 564
General and administrative 434 613
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Total expenses 911 1,177
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Net loss $ (786) $ (944)
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Net loss per share $(0.14) $ (0.08)
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Shares used in loss per share calculation:
Basic 5,492 11,504
Diluted 5,492 11,504
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2004 2003
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(Unaudited)
Cash, cash equivalents & marketable securities $8,247 $22,946
Other current assets 277 235
Fixed assets (net) 3 --
Other assets (net) 614 847
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Total assets $9,141 $24,028
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Accounts payable and accrued expenses $ 396 $ 541
Stockholders' equity 8,745 23,487
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Total liabilities and stockholders' equity $9,141 $24,028
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CONTACT: Zonagen, Inc.(NASDAQ-NMS:ZONA), The Woodlands
Joseph S. Podolski, 281-719-3447
SOURCE: Zonagen, Inc.(NASDAQ-NMS:ZONA)