Pro-Pharmaceuticals Reports First Quarter 2006 Financial Results; Annual Shareholders Meeting Scheduled for May 25th
For the first quarter 2006, the Company reported a net loss of $7,309,000, or $0.27 per share, compared with a net loss of $1,417,000, or $0.05 per share, for the same period in 2005. The principal reason for the increase in net loss was $5,612,000 of non-cash charges related to fair value accounting and interest expense associated with the Company's convertible debenture financing.
“We continue to move our Company forward”
Net cash used in the first quarter 2006 operations increased by $260,000 to $1,851,000 from $1,591,000 for the same period in 2005. At March 31, 2006, the Company had cash and cash equivalents of $11,894,000.
On February 14, 2006, the Company issued $10,000,000 of 7% convertible debentures, which may be converted at any time, at the option of the holders, into shares of the Company's common stock at an initial price of $3.35 per share and are repayable, at the Company's option, in cash or common stock. Since March 31, 2006, investors converted principal of $1,500,000 and the related interest into 453,258 shares of common stock.
On January 1, 2006, the Company adopted SFAS 123R, "Accounting for Stock-Based Compensation", and as a result recorded a $108,000 non-cash charge in the first quarter to recognize stock-based compensation determined under the fair value method.
"We continue to move our Company forward," said David Platt, Ph.D., Chief Executive Officer, Pro-Pharmaceuticals. "In the first quarter, we made clinical progress and had operational success. We have taken the steps necessary to begin patient enrollment in our U.S.-based Phase II cholangiocarcinoma trial as well as our Europe-based Phase III colorectal cancer trial. We believe our expertise in carbohydrates offers opportunities to provide advanced treatment of cancer, liver, microbial, cardiovascular, and inflammatory diseases, as well as viral infections."
Research and development expense for the first quarter 2006 was $454,000, compared with $601,000 for the same period in 2005. The decrease in R&D expense is due principally to a contract credit associated with our Phase II DAVANAT(R)/5-FU colorectal cancer trial, offset by the addition of our Chief Scientist and, to a lesser degree, to the expensing of employee stock options using the fair value method as now required by SFAS 123R. Excluding the contract credit, our research and development expenses would have increased by approximately $82,000.
General and Administrative expense for the first quarter 2006 was $1,270,000 compared with $852,000 for the same period in 2005. The increase in G&A expense is due principally to legal expense to defend the counterclaims against our intellectual property and matters related to the protection of our intellectual property. Additionally, the increase resulted from our implementation of SFAS 123R under which we now expense the fair value of employee stock options.
Review of First Quarter and Recent Business Highlights
-- Anatole Klyosov, Ph.D., joined the management team as Chief Scientist.
-- The U.S. Patent and Trademark Office issued two new patents covering methods and compositions for reducing toxicity of a toxic agent, and co-administration of a carbohydrate with a chemotherapy agent to treat cancer.
-- An abstract covering our research program to better understand the mechanism of action for DAVANAT(R) and to confirm the pharmacokinetic results from the Phase I trial was accepted for publication in the American Society of Cancer Oncology's "Proceedings" at ASCO's annual meeting.
-- The FDA allowed a "compassionate use" Investigational New Drug Application for a patient with cancer of the bile duct.
-- Raised $10 million in a private placement transaction with institutional investors.
-- Company updates were presented at the Central European Society for Anti-Cancer Drug Research Conference, the Massachusetts Biotechnology Council Discovery Day Symposium, and at a Russ Trading investor meeting.
-- Reported an objective partial tumor response in our U.S.-based Phase II colorectal cancer trial.
Phase III Colorectal Cancer Trial
The Company initiated a Europe-based Phase III clinical trial for second line treatment of patients with metastatic colorectal cancer. The trial will be conducted at clinical sites in the European Union (EU) and countries outside of the EU following regulatory and ethics approval in each country. This study is a multi-center, randomized clinical trial to evaluate the safety and efficacy of DAVANAT(R) with 5-FU and leucovorin in combination with irinotecan or oxaliplatin. The Company expects to begin patient enrollment this quarter.
Phase II Cholangiocarcinoma Trial
The Company initiated a U.S.-based Phase II study of its lead carbohydrate compound DAVANAT(R) with 5-FU for first line treatment of patients with cholangiocarcinoma (cancer associated with the bile duct). The Company expects to begin patient enrollment this quarter. Cholangiocarcinoma may represent an opportunity for orphan drug status approval.
Annual Shareholders Meeting
The Company's Annual Meeting of Shareholders is scheduled to be held on May 25th at 10 a.m. EDT at the Sheraton-Needham Hotel, 100 Cabot Street, Needham, Mass.
DAVANAT(R), the Company's lead product candidate, is a proprietary nanotechnology polysaccharide polymer comprised of mannose and galactose carbohydrates in a CARBOSOME(TM) formation that enables the targeted delivery of chemotherapy drugs to protein receptors (lectins) on cancer cells.
Pro-Pharmaceuticals, Inc. - Advancing Drugs Through Glycoscience(R)
Pro-Pharmaceuticals is a development stage company engaged in the discovery, development and commercialization of nanotechnology carbohydrate-based therapeutic compounds for advanced treatment of cancer, liver, microbial, cardiovascular and inflammatory diseases, and viral infections. Initially, the product pipeline is principally focused on increasing the efficacy and decreasing the toxicity of approved chemotherapy drugs. The Company has been conducting clinical and pre-clinical studies with its lead nanotechnology product candidate, DAVANAT(R), in combination with 5-FU, leucovorin, irinotecan, doxorubicin, oxaliplatin, paclitaxel, cisplatin, and bevacizumab (AVASTIN(R)). Results show that DAVANAT(R) exhibits a broad spectrum of activity with tested drugs. Founded in 2000, the Company is headquartered in Newton, Mass. Additional information is available at www.pro-pharmaceuticals.com.
FORWARD LOOKING STATEMENTS: Any statements in this news release about future expectations, plans and prospects for the Company, including without limitation statements containing the words "believes," "anticipates," "plans," "expects," and similar expressions, constitute forward-looking statements as defined in the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in such statements. We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, the following: uncertainties as to the utility and market for our potential products; uncertainties associated with pre-clinical and clinical trials of our product candidates; our limited experience in product development and expected dependence on potential licensees and collaborators for commercial manufacturing, sales, distribution and marketing of our potential products; possible development by competitors of competing products and technologies; lack of assurance regarding patent and other protection of our proprietary technology; compliance with and change of government regulation of our activities, facilities and personnel; uncertainties as to the extent of reimbursement for our potential products by government and private health insurers; our dependence on key personnel; our history of operating losses and accumulated deficit; and economic conditions related to the biotechnology and biopharmaceutical industry. We cannot assure you that we have identified all the factors that create uncertainties. Readers should not place undue reliance on forward-looking statements.
More information about those risks and uncertainties is contained and discussed in the "Management Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's most recent quarterly or annual report and in the Company's other reports filed with the Securities and Exchange Commission. The forward-looking statements represent the Company's views as of the date of this news release and should not be relied upon to represent the Company's views as of a subsequent date. While the Company anticipates that subsequent events may cause the Company's views to change, the Company disclaims any obligation to update such forward-looking statements.
DAVANAT and Advancing Drugs Through Glycoscience are registered trademarks of Pro-Pharmaceuticals. CARBOSOME is a trademark of Pro-Pharmaceuticals. AVASTIN is a trademark of Genentech, Inc.