InKine Reports First Quarter 2005 Financial Results: Realizing Profitability While Accelerating the Development of INKP-102
03 May 2005 - 10:01PM
Business Wire
InKine Pharmaceutical Company, Inc. (NASDAQ:INKP): -Highlights- --
Completed Phase III Clinical Study and Submitted a New Drug
Application to FDA for Approval of INKP-102 -- Grew Quarterly
Revenues by 30% to $6.0 Million for Q1 2005, Compared to $4.6
Million for Q1 2004 -- Generated Fourth Consecutive Quarter of
Profitability -- Earned Milestone for Development of Visicol(R) for
Sale in Japan -- Revised 2005 Annual Guidance Based on Year-to-Date
Prescription Growth Trends InKine Pharmaceutical Company, Inc.
(Nasdaq: INKP) today announced its first quarter 2005 financial
results, reporting first quarter revenue of $6.0 million, compared
to $4.6 million for the same period a year ago. The Company
generated EPS of $0.01 per share for the quarter, compared to an
EPS of $0.00 for the same period a year ago. Current quarter EPS
was achieved during the quarter where increased research and
development resources were invested to accelerate the development
of INKP-102, the Company's next generation purgative for which a
new drug application (NDA) was recently submitted to the FDA. "We
are pleased to announce our fourth consecutive quarter of
profitability," said Leonard S. Jacob, M.D., Ph.D., Chairman and
Chief Executive Officer of InKine. "Product revenue increased by
20% compared to the first quarter of 2004, despite the entrance of
two new products into the purgative marketplace. Our sales and
marketing team has been aggressively combating these new
competitors with success. Extensive competitor sampling and
physician trial has impacted our product revenue growth trends,
decreasing the prescription growth from a prior year average of
approximately 35% to current quarter growth of approximately 27%,"
added Dr. Jacob. "On the development front, we also announced today
that we submitted an NDA to the FDA for our new generation
purgative tablet, INKP-102. We are excited about our study results
and look forward to bringing to market what we believe will be the
best purgative on the market," Dr. Jacob further added. Product
Sales: -- Product revenues for the first quarter of 2005 were $5.2
million, a 20% increase over product revenues of $4.4 million for
the same period a year ago. Prescription levels have escalated as a
result of increased sales and marketing efforts, which continue to
grow market awareness and acceptance of Visicol(R). Approximately
133,000 prescriptions were filled for Visicol(R) during the first
quarter of 2005, which represents approximately a 27% increase over
prescriptions of 105,000 for the first quarter of 2004. -- In
addition to product revenue, the Company realized $818,000 in other
revenue for the first quarter of 2005, which was primarily
attributable to a milestone payment earned from Zeria
Pharmaceutical Company, the licensee for Visicol(R)'s use and sale
in Japan. "Our sales and marketing team is committed to growing
Visicol(R) and overcoming both new and previously existing
competitors," said Robert F. Apple, Chief Operating and Financial
Officer of InKine. "We intend to continue to carefully manage our
development and growth initiatives by making resource investment in
key areas that will return shareholder value. We believe that the
resources deployed for our sales and marketing initiatives,
INKP-102 development and NDA preparation will yield increased
shareholder value in the medium and long-term. We believe that the
growth in our sales force today will yield significant value as we
prepare for the launch of INKP-102 in 2006," added Mr. Apple. Costs
and Expenses: -- Research and development costs were $1.8 million
for the first quarter of 2005, compared to $0.9 million for the
same period a year ago. The increase was the result of development
costs associated with the clinical studies and NDA submission of
the Company's next generation MCC-free purgative tablet, INKP-102.
A significant portion of these costs have and will occur in the
first two quarters of 2005 as the INKP-102 development program is
currently winding down. -- Sales and marketing costs were $2.3
million for the first quarter of 2005, compared to $1.9 million for
the same period a year ago. The increase was the result of
continued growth in the size of the Company's sales force, along
with increased marketing campaigns related to Visicol(R). As of
March 31, 2005, the Company's sales force covered 48 territories
with five district managers, compared to 45 territories and four
district managers as of March 31, 2004. -- General and
administrative costs were $0.9 million for the first quarter of
2005, compared to $0.8 million for the same period a year ago. The
increase was the result of higher personnel, patent and insurance
costs resulting from increased overhead costs associated with
supporting a growing sales volume, and head count, along with
increased legal and accounting fees associated with maintaining
compliance with the Sarbanes-Oxley Act of 2002. Balance Sheet: --
The Company had $10.6 million in cash and investments at March 31,
2005. Revised Guidance: -- The Company had previously guided the
investor community that it expected that 2005 product revenues
would be in the range of $28 million to $32 million. Based upon
information currently available, the Company has revised its
revenue guidance to a range of $23 million to $27 million. The
reduction in 2005 product revenue guidance is principally due to
the recently experienced slowing in the growth trend for Visicol(R)
prescriptions, which Company management believes has been caused by
the emergence of the new product competitors to the purgative
marketplace. -- Based upon information currently available, the
Company may postpone or slow certain development programs in the
second half of 2005 in order to maintain profitability and positive
cash flow for the 2005-year. The postponement and slowing of these
programs could result in a reduction of research and development
expense for 2005 of up to $2.0 million. The Company had previously
guided the investor community that it expects to incur
approximately $6.5 million to $7.0 million in research and
development expenses. -- The Company had previously guided the
investor community that it expects to incur approximately $0.7
million to $0.9 million in equity compensation costs related to
option and restricted stock grants under its equity compensation
plans. As a result of the recent postponement of the required SFAS
123R adoption date from July 1, 2005 to January 1, 2006, the
Company expects to incur equity compensation costs in the range of
approximately $0.2 million to $0.3 million for 2005. -- The Company
had previously guided the investor community that it expected that
2005 EPS would be in the range $0.08 to $0.11 per share. Based upon
information currently available, 2005 earnings per share is
expected be in the range of $0.06 to $0.09 per share. The Company
will be hosting a conference call today at 11:00 AM EDT to further
discuss the first quarter 2005 financial results. To participate
please dial (877) 407-8029 about five to ten minutes prior to the
initiation of the teleconference. The conference call will also be
available on replay starting at 1:00 PM EDT on May 3, 2005, and
ending at 5:00 PM EDT on May 10, 2005. For the replay, please dial
(877) 660-6853 (replay account # 2658, replay conference # 148664).
The access number for the replay for international callers is (201)
612-7415 (replay account # 2658, replay conference # 148664). About
InKine Pharmaceutical InKine Pharmaceutical Company, Inc. is a
publicly traded specialty pharmaceutical company focused on
developing and commercializing pharmaceutical products for the
diagnosis and treatment of gastrointestinal disorders. The
Company's development strategy is to acquire late-stage drug
candidates with short time lines to commercialization. The
Company's franchise product, Visicol(R) is the only tablet
purgative preparation indicated for bowel cleansing prior to
colonoscopy. InKine's second product, IB-Stat(R), is an oral
hyoscyamine spray for the treatment of a variety of indications.
Additionally, the Company is developing INKP-102, an advanced
generation purgative, which we recently submitted a new drug
application to FDA for bowel cleansing prior to colonoscopy and
studying Visicol(R) for use as a laxative in treating patients with
chronic constipation. For further information, please visit InKine
on its web site http://www.inkine.com. This press release contains
forward-looking statements, including statements regarding our
expectations regarding INKP-102, our development programs, our
financial performance and our ability to increase shareholder
value. Such forward-looking statements are based on InKine's
current expectations or forecasts of future events. InKine's
performance and financial results could differ materially from
those reflected in these forward-looking statements due to general
financial, economic, regulatory and political conditions affecting
the biotechnology and pharmaceutical industries, market acceptance
of product introductions by InKine's competitors, InKine's success
in implementing sales and marketing changes and the effects of the
other risks and uncertainties set forth in InKine's reports on Form
10-Q and 10-K filed with the U.S. Securities and Exchange
Commission. Given these risks and uncertainties, any or all of
these forward-looking statements may prove to be incorrect.
Therefore, you should not rely on any such factors or
forward-looking statements. Furthermore, InKine may elect to update
forward-looking statements, but the Company disclaims any
obligation to do so. -0- *T InKine Pharmaceutical Company, Inc.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (amounts in thousands,
except per share) (unaudited) Quarter Ended March 31,
------------------------- 2005 2004 ------------ ------------
Product revenue $ 5,218 $ 4,350 Other revenue 818 283 ------------
------------ Total revenue 6,036 4,633 Cost of goods sold (848)
(491) ------------ ------------ Gross profit 5,188 4,142 Research
and development 1,769 922 Sales and marketing 2,288 1,949 General
and administrative 877 785 Withdrawn public offering and litigation
- 567 ------------ ------------ Operating expenses 4,934 4,223
------------ ------------ Operating income (loss) 254 (81) Interest
income and expense 60 3 ------------ ------------ Net income (loss)
$ 314 $ (78) ============ ============ Earnings per share - Basic
and diluted $ 0.01 $ - ============ ============ Weighted average
shares outstanding: Basic 49,095 48,547 Diluted 53,459 48,547 March
31, December 31, 2005 2004 ------------ ------------ (unaudited)
ASSETS ------ Cash and investments $ 10,562 $ 13,053 Accounts
receivable 4,196 2,264 Inventory 1,905 1,445 Other assets 911 622
------------ ------------ Total assets $ 17,574 $ 17,384
============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ Accounts payable and accrued
expenses $ 2,776 $ 3,016 Shareholders' equity 14,798 14,368
------------ ------------ Total liabilities and shareholders'
equity $ 17,574 $ 17,384 ============ ============ *T
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