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FOR IMMEDIATE RELEASE
February 23, 1999
PHARMANETICS REPORTS FOURTH QUARTER AND 1998 YEAR-END RESULTS
RALEIGH, N.C. (February 23, 1999) - PharmaNetics, Inc. (NASDAQ NM: PHAR), holding company of Cardiovascular Diagnostics, Inc., today announced financial results for the three and 12 months ended December 31, 1998. Highlights of 1998 included:
- The signing of a global distribution agreement with Bayer/Chiron Diagnostics for certain PharmaNetics coagulation tests and the purchase by Chiron of $6 million of PharmaNetics common stock at $10 per share
- The continued development of the ecarin clotting time test and the receipt of a $2.1 million order related to this test from Knoll AG ("Knoll")
- The initiation of field trials with the theranostic test developed with Knoll for use in stroke therapy
- The initiation of a collaborative agreement with Astra AB ("Astra") to develop and supply a new test method for applications in the cardiovascular area
- The appointment of Dr. Andras Gruber as the Company’s Chief Scientific and Medical Officer.
Dr. Gruber received his M.D. in Budapest and after 7 years in clinical practice joined the Scripps Research Institute in La Jolla, California to pursue research in the field of blood coagulation and thrombosis
Revenues for the three months ended December 31, 1998 were $1,993,000, an increase of 5% compared with revenues for the comparable 1997 quarter. Fourth quarter 1998 operating expenses decreased 19% to $1,647,000, compared with the same period last year. The resulting operating loss for the 1998 fourth quarter of $1,310,000 was a 30% improvement compared with the fourth quarter 1997 operating loss. For the three months ended December 31, 1998, the Company reported a net loss of $1,174,000, or a loss of $0.16 per basic share, compared with a net loss of $1,805,000, or a loss of $0.27 per basic share, for the same period in 1997.
The Company reported revenues for 1998 of $8,790,000, an increase of 15% over revenues of $7,618,000 in 1997. Revenues for the year were positively impacted by a large order of analyzers and test cards from Knoll in association with Knoll’s PEG-Hirudin trials. The increased revenue, combined with a 12% decrease in operating expenses, resulted in an operating loss for 1998 of $4,144,000, a 32% improvement from the operating loss of $6,065,000 in 1997. The net loss for 1998 was $3,643,000, or a loss of $0.52 per basic share, compared with a net loss of $4,679,000, or a loss of $0.70 per basic share, in 1997.
"We are proud of the significant scientific and technical progress made by the Company during 1998," said John Funkhouser, President and Chief Executive Officer. "In addition, the Thrombolytic Assessment System technology and its ability to monitor the effects of certain drugs on coagulation parameters continued to attract pharmaceutical collaborations and distribution partnerships. Our strategy is to develop rapid specialty diagnostic tests that allow physicians in critical care settings to monitor effects of various drugs on patients and to adjust therapy. Unlike conventional diagnostic tests, which can only define a disease state, these "theranostic" tests (therapy + diagnostic) have the ability to affect therapy."
Presently, PharmaNetics has three collaborations to develop rapid theranostic tests. The Company anticipates field trials of these tests will be completed by the end of the 1999 first quarter.
Upon the successful completion, the tests will be ready for use in certain Phase III clinical studies. At this stage, we believe that our manufacturing capability and test formulations are proven and the data collected during Phase III studies should support the use of the test as part of the overall treatment of the disease states. While the PharmaNetics technology will be validated by successful completion of the field trials, the Company’s ultimate success is tied to the efficacy of the drug and the level of monitoring determined during the Phase III studies.
In addition to the initiation of field trials, the Company continues to add pharmaceutical collaborations and to seek out and develop new theranostic tests. As a result of this on-going research, PharmaNetics signed a letter of intent with Astra for monitoring an oral anti-coagulant which is about to enter Phase III trials. As part of this agreement, PharmaNetics has already sold 20,000 tests cards to be used in the upcoming trials.
PharmaNetics’ collaborative strength is also illustrated in the Chiron/Bayer agreement. Chiron/Bayer will begin distributing the PT, aPTT and HMT in the U.S. in 1999. During the second quarter of 1999, the Chiron/Bayer organization will introduce the products in Germany, the U.K. and Scandinavia. As evidence of its commitment to PharmaNetics, Chiron/Bayer Diagnostics took a $6 million equity stake in PharmaNetics at an approximate $5 per share premium over the market price. Additionally, Chiron accepted a seat on the PharmaNetics Board of Directors.
"Our agreements are with some of the largest pharmaceutical companies in the world, and we continue to engage in active dialogues with other potential collaborative partners for theranostic tests of compounds under late-stage development," stated Mr. Funkhouser. "The coming year promises to be an exciting time at PharmaNetics as our partners continue to determine the statistical significance and efficacy of their drugs. At the same time, we will continue to collect more evidence of the importance of rapid coagulation diagnostics through both our participation in these trials and our success in penetrating the market with our distribution partners."
The Company has scheduled an investor conference call regarding this announcement to be held today at 10:30 a.m. Eastern Time. To participate in the call, several minutes prior to the start time please dial (212) 748-2817. Those unable to participate are invited to listen to a recording, which will be available after the call through February 26th. The recording can be accessed by dialing (800) 633-8284, reservation number 11790228.
PharmaNetics, Inc. develops, manufactures and markets rapid turnaround diagnostics to assess blood clot formation and dissolution. The Company develops tests based on its proprietary, dry chemistry Thrombolytic Assessment System for its principal target market of powerful new drug compounds, some of which have narrow therapeutic ranges, as well as for monitoring routine anticoagulants. The Company’s therapeutic diagnostics are used in the treatment of angina, myocardial infarction (heart attack), stroke, deep venous thrombosis, and pulmonary and arterial emboli.
This press release contains forward-looking statements regarding future events and the future performance of PharmaNetics that involve risks and uncertainties, such as risks related to market acceptance, clinical trials and dependence on third-party distributors and collaborative partners that could cause actual results to differ materially from those projected in the forward-looking statements. Information concerning these and other factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s SEC filings, including Form 10-K, Form 10-Q and Form 8-K reports.
| PharmaNetics, Inc. |
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| Selected Financial Summary |
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| CONSOLIDATED INCOME (LOSS) STATEMENTS |
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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December 31, |
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December 31, |
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1998 |
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1997 |
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1998 |
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1997 |
| Net Revenue |
$1,992,782 |
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$1,898,318 |
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$8,790,222 |
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$7,618,473 |
| Cost of Goods Sold |
1,655,440 |
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1,735,355 |
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6,343,518 |
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6,169,112 |
| Gross Profit |
337,342 |
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162,963 |
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2,446,704 |
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1,449,361 |
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| Operating Expenses |
1,647,072 |
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2,028,343 |
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6,590,795 |
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7,514,116 |
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| Operating Loss |
(1,309,730) |
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(1,865,380) |
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(4,144,091) |
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(6,064,755) |
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| Other Income, net |
135,609 |
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99,441 |
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568,188 |
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1,467,627 |
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| Net Loss Before Taxes |
(1,174,121) |
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(1,765,939) |
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(3,575,903) |
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(4,597,128) |
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| Provision for Income Taxes |
0 |
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(39,264) |
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(67,250) |
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(82,083) |
| Net Loss |
($1,174,121) |
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($1,805,203) |
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($3,643,153) |
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($4,679,211) |
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| Basic and Diluted Loss Per Common Share |
($0.16) |
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($0.27) |
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($0.52) |
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($0.70) |
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| Weighted Average Common Shares Outstanding |
7,446,740 |
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6,741,872 |
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7,007,390 |
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6,722,491 |
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| CONSOLIDATED BALANCE SHEETS |
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December 31, |
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December 31, |
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1998 |
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1997 |
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| Cash and Investments |
$7,701,035 |
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$5,884,522 |
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| Other Current Assets |
4,765,205 |
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5,102,572 |
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| Total Assets |
18,693,211 |
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17,684,503 |
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| Current Liabilities |
1,322,824 |
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2,140,620 |
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| Total Liabilities |
2,949,107 |
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4,491,795 |
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| Total Shareholders' Equity |
15,744,104 |
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13,192,708 |
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| Total Liabilities and Shareholders' Equity |
$18,693,211 |
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$17,684,503 |
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