BLUE BELL, PA February 6, 2003 - InKine Pharmaceutical Company, Inc. (Nasdaq: INKP) today announced fourth quarter and year end financial results reporting an operating loss of $0.9 million and $5.7 million for the quarter and year ended December 31, 2002, compared to an operating loss of $4.3 million and $15.0 million for the same periods a year ago. The decreased operating losses were the result of strong demand for Visicol™, the Company's tablet purgative, which was reformulated earlier this year, along with sharp cost reductions. InKine's management estimates that the Company will have income from operations and positive cash flow for 2003.
"This past year was quite a turnaround year for InKine," said Leonard S. Jacob, M.D., Ph.D., Chairman and Chief Executive Officer of InKine. "All indications to date suggest that the gastroenterology community is accepting the new and improved Visicol formulation. Our forty person sales organization is in place, properly trained and incentivized to continue to gain share in the purgative market. Additionally, our balance sheet is much improved as a result of the completion of the two rounds of financing this past December," said Dr. Jacob.
For the quarter and year ended December 31, 2002:
Product Sales and Gross Profit:
- Product revenues were $2.3 and $7.5 million for the quarter and year ended December 31, 2002, compared to $0.5 million and $4.3 million for the same periods a year ago. Prescription levels continue to increase on a monthly basis, resulting in increased orders from wholesalers and large retail chains. Increased prescription levels have been fueled by increased market awareness and acceptance of the new Visicol formulation launched in the second quarter of 2002.
- Gross profit as a percentage of product sales increased to 79% and 77% for the quarter and year ended December 31, 2002, compared to 55% and 57% for the same periods a year ago. The increases were the result of savings realized from internalizing product distribution and sourcing a more cost effective packaging partner for Visicol along with increased sales price per unit. Such margins are expected to continue to increase as a result of reduced manufacturing and distribution costs as a percentage of product revenue. "We continue to grow prescriptions and preliminary data suggests that January 2003 will be our highest month ever in terms of prescriptions filled," said Robert F. Apple, InKine's Chief Operating Officer. "Our internal sales and marketing organization is in place and energized to bring the Visicol message to gastroenterologists, pharmacists and patients. On the expense side, we have lowered our cost of goods by 29% per unit from 2001," Mr. Apple added.
Costs and Expenses:
- Research and development costs were $0.3 and $3.3 million for the quarter and year ended December 31, 2002, compared to $1.8 million and $5.4 million for the same periods a year ago. The significant reductions were the result of less development costs associated with the new Visicol formulation and the internalization of the management of the ongoing Colirest™ clinical trial.
- Sales and marketing costs were $1.9 million and $6.0 million for the quarter and year ended December 31, 2002 compared to $2.0 million and $8.9 million for the same periods a year ago. For 2002, sales and marketing costs include expenses related to an internal sales force to detail Visicol and IBStat to gastroenterologists along with additional costs and prescription based incentives paid to Procter and Gamble Pharmaceuticals. The internal sales force numbered 30 representatives during the fourth quarter of 2002 and currently stands at 36 representatives and 2 district managers.
- General and administrative costs were $0.5 million and $2.2 million for the quarter and year ended December 31, 2002, compared to $0.8 million and $3.7 million for the same periods a year ago. The decreases were the result of ongoing cost control measures and decreased expenses related to stock based compensation.
- In October 2002, the Company amended its then outstanding June 2003 convertible notes. These notes were subsequently redeemed in December 2002 with the proceeds from a private placement of June 2005 convertible notes. As a result of the amendment, subsequent redemption and issuance of the June 2005 notes, the Company incurred $3.8 million in non-cash charges. These charges were for the acceleration of the amortization of deferred financing costs, acceleration of the amortization of warrant costs, the recording of redemption premiums and amortization of the beneficial conversion feature. The Company will incur additional non-cash charges over the term of the June 2005 convertible notes. On a quarterly basis, these non-cash charges for accretion of the redemption premium and amortization of the warrants and beneficial conversion costs could be as large as $0.5 million.
Cash and cash equivalents:
- The Company's cash balance at December 31, 2002 was $12.2 million, which included approximately $3.8 million from the December 31, 2002 private placement of the Company's common stock. The Company's borrowings on its line of credit increased from $2.4 million to $4.4 million.
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The Company will be hosting a conference call today at 11:00 AM EST to further discuss the fourth quarter 2002 financial results. To participate please dial (800) 576-7247 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 EST on February 6, 2003, and ending at 1:00 pm EST on February 7, 2003. For the replay, please dial (800) 633-8284 (confirmation #21120425). The access number for the replay for international callers is (402) 977-9140 (confirmation #21120425).
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InKine Pharmaceutical Company, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
| |
Quarter Ended
December 31
|
Year Ended
December 31
|
| |
2002
|
2001
|
2002
|
2001
|
| Product revenue |
$2,345
|
$518
|
$7,488
|
$4,338
|
| Other revenue |
$1
|
$23
|
$64
|
$523
|
| Total Revenue |
$2,346
|
$541
|
$7,552
|
$4,861
|
| Cost of goods sold |
(490)
|
(231)
|
(1,724)
|
(1,881)
|
|
Gross profit
|
$1,856
|
$310
|
$5,828
|
$2,980
|
| Research and development |
$328
|
$1,846
|
$3,259
|
$5361
|
| Sales and marketing |
$1,924
|
$1,985
|
$6,003
|
$8,944
|
| General and administrative |
$538
|
$818
|
$2,249
|
$3,689
|
|
Operating expenses
|
$2,790
|
$4,649
|
$11,511
|
$17,994
|
Operating Loss
|
$(934)
|
$(4,339)
|
$(5,683)
|
$(15,014)
|
| Other income and expenses |
$(230)
|
$(182)
|
$(911)
|
$(170)
|
| Non-cash accretion and modification of debt |
$(3,385)
|
$(34)
|
$(3,766)
|
$(74)
|
Net loss
|
$(4,549)
|
$(4,555)
|
$(10,360)
|
$(15,258)
|
Net loss per share - basic and diluted
|
$ (0.13)
|
$ (0.13)
|
$ (0.30)
|
$ (0.45)
|
Weighted average shares outstanding - basic and diluted
|
35,175
|
34,601
|
34,965
|
34,285
|
CONDENSED BALANCE SHEETS
(amounts in thousands)
| |
December 31,
2002
|
December 31,
2001
|
|
ASSETS
|
|
|
| Cash and investments |
$12,151
|
$ 12,166
|
| Accounts receivable |
856
|
400
|
| Inventory |
677
|
204
|
| Other assets |
395
|
1,095
|
Total assets
|
$ 14,079
|
$ 13,865
|
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LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
| Current liabilities |
$ 8,633
|
$ 5,951
|
| Convertible notes and shareholders' deficit |
$ 5,446
|
$ 7,914
|
Total liabilities and shareholders' deficit
|
$ 14,079
|
$ 13,865
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About InKine Pharmaceutical
InKine Pharmaceutical Company, Inc. is a publicly traded biopharmaceutical company focused on the diagnosis and treatment of cancer and autoimmune diseases. The Company's development strategy is to acquire late-stage drug candidates with short time lines to commercialization. The Company's first product, Visicol® is the first and only tablet purgative preparation indicated for bowel cleansing prior to colonoscopy. InKine's second product, IBStat®, is a novel oral hysocyamine spray for the treatment of Irritable Bowel Syndrome (IBS) and spasm of the colon. Additionally, the Company has other development programs such as Colirest™, which is in clinical trials for the treatment of Crohn's disease and completed Phase II trials for the treatment of ulcerative colitis. For further information, please visit InKine on their web site http://www.inkine.com.
In addition to historical facts or statement of current condition, this press release may contain forward-looking statements. Forward-looking statements provide InKine's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, development of potential pharmaceutical products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, sales and earnings projections, and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. 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 as well as more specific risks and uncertainties such as those set forth in its 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 does not intend (and it is not obligated) to update publicly any forward-looking statements. This discussion is permitted by the Private Securities Litigation Reform Act of 1995.
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