PHARMOS FOR IMMEDIATE RELEASE
99 Wood Avenue South, Suite 311
Iselin, NJ 08830
www.pharmoscorp.com
Contact
Pharmos U.S. - Gale Smith Aline Schimmel (investors)
732-452-9556 Justin Jackson (media)
Pharmos Israel - Irit Kopelov Burns McClellan, Inc.
972-8-940-9679 212-213-0006
Pharmos Corporation Reports 2004 Second Quarter Results
Enrollment of CABG Patients Completed in Phase II Cognitive Impairment
Clinical Trial
Iselin, NJ, July 28, 2004 - Pharmos Corporation (Nasdaq: PARS) today reported
financial results for the second quarter and six month periods ended June 30,
2004. During the second quarter, net loss was $5,285,301, or $ .06 per share
compared to a net loss of $4,314,119, or $ .07 per share in the 2003 second
quarter. The increase in net loss was due primarily to a 35% rise in operating
costs to $4,359,918 in the 2004 second quarter, driven largely by higher
administrative expenses, including a non-cash charge of approximately $400,000.
Cash and cash equivalents totaled $54,608,206 at June 30, 2004, including
$13,521,538 in restricted cash.
General and administrative expenses rose to $1,712,634 in the 2004 second
quarter from $752,032 in the 2003 second quarter due to increased activities
with consultants and professional fees along with higher salaries and benefits
from additional headcount, and a non-cash charge of approximately $400,000 for a
modification to a former employee stock option agreement. The 2004 second
quarter also saw higher expenditures due to the scale up of dexanabinol
synthesis and to increased accounting and legal services fees, including
Sarbanes-Oxley compliance-related services.
Net research and development expenses increased 8% in the 2004 second quarter to
$2,497,008 from $2,317,564 in the 2003 second quarter, with increased earlier
stage research and development expenses and lower grant funding partially offset
by a decrease in clinical trial expenses. In its leading clinical operation, the
pivotal Phase III trial of dexanabinol for traumatic brain injury, enrollment of
861 total patients was completed in the first quarter 2004. In mid-July 2004,
Pharmos completed enrollment of 202 patients undergoing coronary artery bypass
grafting (CABG) surgery in a separate, Phase II trial of dexanabinol as a
preventive agent against post-surgical cognitive impairment.
"With enrollment completed in both of our clinical trials, research and
development operations are now focused on patient follow up, data management and
quality assurance before unblinding the results around yearend," said Haim Aviv,
Ph.D., Chairman and CEO. "We have also increased our efforts in building our
pipeline for other targeted neuroinflammatory indications by expanding
preclinical research of compounds from our CB2 receptor agonist family. These
new products represent large therapeutic markets which support a higher
valuation and product diversification" The Company's leading CB2-selective
compound, which has demonstrated efficacy in several animal models for pain and
multiple sclerosis, is currently undergoing advanced preclinical development in
preparation for human testing as a pain therapeutic.
For the six months ended June 30, 2004, Pharmos reported a net loss of
$11,226,102, or $ .13 per share compared to a net loss of $8,813,324, or $ .14
per share for the same period in 2003, primarily due to an
- more -
increase in other expenses, in particular interest expense in connection with
the convertible securities issued in September 2003. Research and development
expenses narrowed to $5,797,938 from $6,356,629 in the same period in 2003, due
to a decrease in clinical trial costs and increased grant funds in the 2004
first quarter. General and administrative expenses increased to $2,750,345 from
$1,604,931 in the 2003 same period due to higher professional fees, salaries and
insurance costs and the non-cash charge mentioned above. The higher professional
fees in 2004 are attributed to increased accounting fees, Sarbanes-Oxley
compliance-related expenses and earlier timing of the Company's annual
shareholder meeting. Other expenses increased in the six month period ended June
30, 2004 to $2,377,749 from $511,571 in the same period in 2003 primarily due to
increased interest expense from the issuance of the convertible debt in
September 2003. The increased interest expense was partially offset by lower
derivative expense and its respective market to market adjustment.
Pharmos management will host a conference call to discuss the 2004 second
quarter results at 11:00 a.m. eastern time on Thursday, July 29, 2004. A link to
the live webcast of the conference call will be available on the home page of
Pharmos' website at www.pharmoscorp.com and will be archived for a limited time
afterwards.
Pharmos discovers, develops, and commercializes novel therapeutics to treat a
range of indications, in particular neurological and inflammation-based
disorders. The Company's first neuroprotective product is dexanabinol, a
tricyclic dextrocannabinoid, currently undergoing clinical testing as a
treatment for TBI and as a preventive agent against post-surgical cognitive
impairment. Other dextrocannabinoid compounds and CB2-selective receptor agonist
compounds from Pharmos' proprietary synthetic cannabinoid library are being
studied in pre-clinical programs targeting stroke, pain, multiple sclerosis and
other disorders.
Statements made in this press release related to the business outlook and future
financial performance of the Company, to the prospective market penetration of
its drug products, to the development and commercialization of the Company's
pipeline products and to the Company's 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 which 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.
(Tables attached)
Pharmos Corporation Financial Highlights
Condensed Statements of Operations
For the three months ended For the six months ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Expenses
Research &development, net of grants $ 2,497,008 $ 2,317,564 $ 5,797,938 $ 6,356,629
Selling, general & administrative 1,712,634 752,032 2,750,345 1,604,931
Depreciation & amortization 150,276 168,577 300,070 340,193
------------ ------------ ------------ ------------
Total operating expenses 4,359,918 3,238,173 8,848,353 8,301,753
------------ ------------ ------------ ------------
Loss from operations (4,359,918) (3,238,173) (8,848,353) (8,301,753)
Other expense
Interest income 138,902 48,905 302,849 895,416
Other income (expense), net 13,975 (6,205) 8,684 (24,721)
Derivative loss (34,624) (1,115,911) (201,707) (1,072,546)
Interest expense (1,043,636) (2,735) (2,487,575) (309,720)
------------ ------------ ------------ ------------
Other expense, net (925,383) (1,075,946) (2,377,749) (511,571)
------------ ------------ ------------ ------------
Net loss ($ 5,285,301) ($ 4,314,119) ($11,226,102) ($ 8,813,324)
============ ============ ============ ============
Net loss per share
- basic and diluted ($ 0.06) ($ 0.07) ($ 0.13) ($ 0.14)
============ ============ ============ ============
Weighted average shares outstanding
- basic and diluted 88,017,455 64,842,460 87,770,205 61,590,867
============ ============ ============ ============
Condensed Balance Sheets at
June 30, 2004 Dec. 31, 2003
(Unaudited) (Unaudited)
------------- -------------
Assets
Cash and cash equivalents $ 41,086,668 $ 49,369,250
Restricted cash 13,521,538 11,192,312
Research & development grants receivable 1,397,932 681,245
Debt issuance costs 331,527 967,402
Prepaid expenses and other current assets 488,152 585,020
------------- -------------
Total current assets 56,825,817 62,795,229
Fixed assets, net 1,108,715 1,255,096
Restricted cash -- 4,907,686
Other assets 18,946 20,589
Debt issuance costs -- 29,471
------------- -------------
Total assets $ 57,953,478 $ 69,008,071
============= =============
Liabilities and Shareholders' Equity
Accounts payable $ 2,547,557 $ 3,005,461
Accrued expenses 1,121,923 1,751,200
Warrant liability 1,024,736 823,029
Accrued wages and other compensation 1,157,730 1,486,529
Convertible debentures, net 12,656,502 13,702,412
------------- -------------
Total current liabilities 18,508,448 20,768,631
Other liability 10,000 10,000
Convertible debentures, net -- 4,773,339
------------- -------------
Total liabilities 18,518,448 25,551,970
------------- -------------
Commitments and contingencies
Preferred stock, $.03 par value, 1,250,000 shares
authorized, none issued and outstanding -- --
Common stock, $.03 par value; 150,000,000 shares
authorized, 88,235,531 and 85,554,016 issued 2,647,492 2,567,047
Deferred compensation (104,676) (66,660)
Paid in capital 169,122,661 161,960,059
Accumulated deficit (132,230,021) (121,003,919)
Treasury stock, $.03 par value; 14,189 shares (426) (426)
------------- -------------
Total shareholders' equity 39,435,030 43,456,101
------------- -------------
Total liabilities and shareholders' equity $ 57,953,478 $ 69,008,071
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