EXHIBIT 99.1
Contact: Joseph S. Podolski
President & CEO
(281) 719-3447
ZONAGEN REPORTS SECOND QUARTER 2004 FINANCIAL RESULTS AND
PROVIDES INITIAL PROGENTA(TM)CLINICAL STUDY SAFETY DATA
ALSO ANNOUNCES ITS 2004 ANNUAL MEETING OF STOCKHOLDERS
The Woodlands, TX, August 12, 2004 - Zonagen, Inc. (Nasdaq: ZONA and
PCX: ZNG) today announced financial results for the three-month and six-month
periods ended June 30, 2004.
The Company has continued its 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 the completion of our U.S. human Phase
I/II clinical study of Androxal(TM), for the treatment of male hormonal
deficiency.
On June 29, 2004, the Company announced that it would initiate a 30
patient European Phase I/II study of its lead program Progenta(TM), which is an
orally administered drug being clinically developed for the treatment of
uterine fibroids. As of August 10, 2004, eight patients have entered this
clinical study. All eight patients have either entered or are about to enter
the second phase of the study, which is the efficacy testing phase. To date,
Progenta(TM) has been both well absorbed and well tolerated at all dose levels
administered. The Company believes it may have top-level reportable data from
this trial by year-end 2004.
On July 1, and July 15, 2004, the Company released results from a
randomized clinical trial comparing the Company's Androxal(TM) product to
placebo and to Androgel(R) in testosterone deficient men. Androgel(R) is the
current drug treatment of choice for this indication. Androxal(TM) is an orally
administered medication that induces increased production of testosterone. This
study consisted of 62 eligible subjects which were randomized and dosed into 6
different arms, three doses of Androxal(TM), placebo, and both high and low
doses of Androgel(R). All three doses of Androxal(TM) achieved statistically
significant results over the placebo group.
On June 16, 2004, the United States Court of Appeals for the Fifth
Circuit affirmed the June 13, 2003 judgment of the United States District Court
for the Southern District of Texas dismissing the one claim remaining from the
consolidated class action lawsuit described in the Company's SEC filings. In
addition, on July 15, 2004, the Court of Appeals denied the plaintiff's request
for a rehearing. The time for the plaintiff to file a writ of certiorari with
the United States Supreme Court has not yet expired.
On July 8, 2004 Zonagen's stock transferred from the Nasdaq National
Market to the Nasdaq SmallCap Market after Nasdaq had approved the Company's
application for this transfer. The Company applied for a Nasdaq SmallCap Market
listing after Nasdaq had informed the Company that it no longer met the
$10,000,000 minimum stockholders' equity listing requirement for the Nasdaq
National Market. This shortfall was a result of the previously
concluded, January 2004, self tender offer.
Financial Results
Total revenues for the three month period ended June 30, 2004
decreased to $75,000 as compared with $393,000 for the same period in the prior
year and were approximately $200,000 for the six-month period ended June 30,
2004 as compared to $625,000 for the same period in the prior year.
Research and development grants for the three-month period ended June
30, 2004 were $53,000 as compared to $217,000 for the same period in the prior
year and were $117,000 for the six-month period ended June 30, 2004 as compared
to $337,000 for the same period in the prior year. Grant revenue relates to
three Small Business Research ("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 existing $836,441 Phase II grant during the
three-month period ended June 30, 2004 as compared to the research that was
performed under three SBIR grants during the same period in the prior year. Two
of the awarded SBIR grants were depleted during 2003 and the last existing
grant for $836,441 has essentially been depleted during the second quarter
ended June 30, 2004.
Interest income decreased 70% to $22,000 for the three-month period
ended June 30, 2004, as compared to $74,000 for the same period in the prior
year and was $48,000 for the six-month period ended June 30, 2004 as compared
to $186,000 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 self tender offer for an approximate aggregate purchase price of
$13.7 million, which was exclusive of approximately $289,000 of costs
associated with the offer that was completed in January 2004.
In the three-month period ended June 30, 2003 the Company sold
substantially all of its fixed assets, in preparation for a strategic
alternative transaction, which management felt were not required to redeploy
the Company's overall assets, for approximate net proceeds of $225,000, which
was $102,000 over their book value.
Other revenue included in the six-month period ended June 30, 2004 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.
R&D expenses decreased 12% to $508,000 for the three-month period ended June
30, 2004 as compared to $579,000 for the same period in the prior year and
decreased 14% to $985,000 for the six-month period ended June 30, 2004 as
compared to $1.1 million for the same period in the prior year. Reimbursed R&D
expenses relating to the Company's SBIR grants were $166,000 less for the
three-month period ended June 30, 2004 as compared to the same period in the
prior year and were $209,000 less for the six-month period ended June 30, 2004
as compared to the same period in the prior year. In addition, during the
six-month period ended June 30, 2003, the Company reduced its research staff
and incurred a $122,000 severance charge. During the three and six-month
periods ended June 30, 2004 the Company prepared for the start of its
Progenta(TM) European Phase I/II clinical study and also continued working
toward the completion of its U.S. Phase I/II human
clinical study with Androxal(TM). The Company also continued its early
development work with Progenta(TM) as an oral treatment for endometriosis,
which was funded under a Phase II $836,441 SBIR grant that was essentially
depleted by June 30, 2004.
General and administrative ("G&A") expenses decreased 40% to $294,000
for the three-month period ended June 30, 2004, as compared to $490,000 for the
same period in the prior year and decreased 34% to $728,000 for the six-month
period ended June 30, 2004 as compared to $1.1 million for the same period in
the prior year. The decrease in expenses for the three-month and six-month
periods ended June 30, 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.
Net loss for the three-month period ended June 30, 2004, was
($727,000) or ($0.15) per share as compared to a net loss of ($676,000) or
($0.06) per share for the same period in the prior year. Net loss for the
six-month period ended June 30, 2004, was ($1.5) million or ($0.29) per share
as compared to a net loss of ($1.6) million or ($0.14) per share for the same
period in the prior year. Although the loss for the three-month and six-month
periods ended June 30, 2004 was $51,000 greater and $107,000 less,
respectively, than the same period in the prior year, the loss per share was
significantly greater due to the Company's smaller share base which was the
result of the completion of the Company's self tender offer completed in
January 2004. The increased loss for the three-month period ended June 30, 2004
was primarily due to a reduction in SBIR grant revenue in 2004 and a one time
gain on disposal of fixed assets in 2003 offset by a reduction in total
expenses. The decreased loss for the six-month period ended June 30, 2004 as
compared to the same period in the prior year was primarily due to reduced
total expenses offset by a reduction in revenues from interest income, research
and development grants and a one time gain on disposal of fixed assets in 2003.
2004 Annual Meeting of Stockholders
The 2004 Annual Meeting of Stockholders of Zonagen, Inc. will be held
on Wednesday, September 29, 2004, at 1:00 p.m., Eastern Standard Time, at the
Marriott, New York East Side Hotel, 525 Lexington Avenue, New York, New York. A
Notice of the Annual Meeting, Proxy Statement and form of Proxy will be
provided to shareholders of record as of August 20, 2004.
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, 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. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
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JUNE 30, JUNE 30,
2004 2003 2004 2003
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(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
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Revenues
Research and development grants $ 53 $ 217 $ 117 $ 337
Interest income 22 74 48 186
Gain on disposal of fixed assets - 102 - 102
Other Income - - 35 -
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Total revenues 75 393 200 625
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EXPENSES
Research and development 508 579 985 1,143
General and administrative 294 490 728 1,102
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Total expenses 802 1,069 1,713 2,245
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NET LOSS $ (727) $ (676) $ (1,513) $ (1,620)
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NET LOSS PER SHARE $ (0.15) $ (0.06) $ (0.29) $ (0.14)
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Shares used in loss per share calculation:
Basic 4,993 11,484 5,242 11,494
Diluted 4,993 11,484 5,242 11,494
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
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(UNAUDITED)
Cash and cash equivalents $ 1,215 $ 20,946
Marketable securities 6,350 2,000
Other currents assets 224 235
Fixed assets (net) 12 -
Other assets (net) 637 847
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Total assets $ 8,438 $ 24,028
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Accounts payable and accrued expenses $ 418 $ 541
Stockholders' equity 8,020 23,487
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Total liabilities and stockholders' equity $ 8,438 $ 24,028
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