TARRYTOWN, N.Y., March 14 /PRNewswire-FirstCall/ -- Emisphere
Technologies, Inc. (Nasdaq: EMIS) today announced financial results for the
fourth quarter and year ended December 31, 2005. The Company also reviewed
highlights of the year, including progress in advancing its product portfolio
and a successful result in a contract dispute lawsuit against Eli Lilly and
Company.
Fourth Quarter Results
Emisphere reported a net loss of $9.2 million, or $0.39 per share, for the
quarter ended December 31, 2005, compared to a net loss of $8.7 million, or
$0.47 per share for the quarter ended December 31, 2004.
Total operating expenses were $9.8 million for the 2005 fourth quarter, an
increase of $0.9 million, or 10%, compared to the same period last year. Total
operating expenses include research and development costs of $5.2 million, an
increase of $1.0 million or 25%, compared to last year's fourth quarter and
general and administrative expenses of $3.4 million, a decrease of $0.2
million or 6%, compared to the same period last year. The 25% increase in
research and development expenses is primarily due to an increase in clinical
trial expenses related to the heparin and insulin programs.
Cash, cash equivalents, restricted cash and investments held as of
December 31, 2005 were $9.2 million, a net decrease of $8.3 million from such
amounts held on December 31, 2004. Cash, cash equivalents and investments held
as of February 28, 2006 were $6.9 million. The Company anticipates that its
existing capital resources will not enable it to continue operations past mid-
May of 2006, or earlier if unforeseen events or circumstances arise that
negatively affect the Company's liquidity. As a result of these conditions,
the audit report prepared by Emisphere's independent registered public
accounting firm relating to its consolidated financial statements for the year
ended December 31, 2005 includes an explanatory paragraph expressing
substantial doubt about the Company's ability to continue as a going concern.
The audit report does not take into account any potential future cash inflows
from financing transactions or payments from new or existing partners.
Year End Results
Emisphere reported a net loss of $18.1 million, or $0.81 per share, for
the year ended December 31, 2005, compared to a net loss of $37.5 million, or
$2.04 per share, for the year ended December 31, 2004. Revenue for 2005 was
$3.5 million, compared to $2 million during 2004. The increase was primarily
due to reaching a milestone in the Company's collaboration with Roche.
Total operating expenses were $36 million for the year ended December 31,
2005, an increase of $1.8 million, or 5%, compared to the year ended December
31, 2004. Total operating expenses include research and development costs of
$18.9 million, an increase of $1.5 million or 8%, compared to last year, and
general and administrative expenses of $13.2 million, an increase of $1.4
million, or 12%, compared to last year. General and administrative expenses
include $6.8 million of legal and professional fees including, among other
things, $0.9 million related to the Lilly litigation and $1.3 million related
to consulting and accounting fees associated with implementing the
requirements of section 404 of the Sarbanes-Oxley Act. A significant portion
of these fees is not expected to be incurred in 2006.
Weighted average shares outstanding for the year ended December 31, 2005
and December 31, 2004, were 22.3 million and 18.4 million, respectively.
2005 Product Development and Licensing Highlights
Oral Heparin
During the third quarter of 2005, Emisphere completed a multi-arm, cross-
over, clinical trial with 16 normal subjects designed to compare heparin
delivered by different injection routes to heparin delivered orally. Emisphere
conducted this trial to support its contention that heparin, when given orally
using the Company's eligen(R) technology, is unaltered when compared to
heparin delivered by injection. The results from the trial should be available
shortly. Once available, Emisphere expects to discuss the data with the U.S.
Food and Drug Administration (FDA) to determine if the results can accelerate
the Company's product registration.
In November 2005, Emisphere announced that it received written guidance
from the FDA regarding the Company's planned Phase III trial with oral
heparin. The planned trial is designed to determine the safety and efficacy
of oral heparin measured against titrated Coumadin(R) (sodium warfarin) for
the prevention of venous thromboembolism (VTE) following elective total hip
replacement.
The trial will be a randomized double blind, non-inferiority, multi-center
study with the primary endpoint to prevent VTE, which consists of deep vein
thrombosis (DVT), objectively confirmed by ultrasound, pulmonary embolism and
death. The two arm study will compare 30 days of dosing, three times per day,
of two Emisphere oral heparin capsules, to 30 days of dosing, once per day, of
oral titrated Coumadin(R). The expected enrollment for the trial is
approximately 2,100 patients (including an allowance for non-evaluable
patients), with 1,050 patients per arm. An independent Data and Safety
Monitoring Committee will be charged with periodically reviewing the trial for
safety. The Company plans to discuss modifications to the proposed protocol
with the FDA based on the results of the cross-over trial that Emisphere
completed during the third quarter of 2005 to determine if the results can
accelerate the Company's product registration.
Oral Insulin
In November 2005, Emisphere commenced a Phase II trial in India for the
Company's oral insulin product. The trial is a 90-day, multi-center, double-
blind, randomized clinical trial. The four arm study will evaluate the safety
and efficacy of low and high doses of oral insulin tablets measured against
placebo in 120 subjects with Type 2 Diabetes Mellitus who have inadequate
glycemic control with their existing oral antidiabetic monotherapy. The
primary efficacy endpoint of the study is related to the change in hemoglobin
A1c, the standard for evaluating glucose control in Type II diabetics. The
Company also will focus on the safety of oral insulin, specifically incidents
of hypoglycemia as well as the occurrence of insulin antibodies.
Oral Salmon Calcitonin
During the third quarter, Novartis Pharma AG (Novartis) and Nordic
Bioscience A/S (Nordic Bioscience) informed Emisphere that they had met with
the FDA to discuss their Phase III development plan for the oral formulation
of salmon calcitonin (CT) for the treatment of osteoporosis using Emisphere's
eligen(R) technology. Based on the advice provided by the FDA, Nordic
Bioscience and Novartis are planning to move forward with Phase III clinical
studies.
On December 12, Emisphere announced positive clinical data generated by
Drs. Daniel Manicourt and Jean-Pierre Devogelaer from the Department of
Rheumatology at the University Hospital St-Luc, Universite Catholique de
Louvain, Brussels, Belgium evaluating oral CT supplied by Novartis Pharma AG
using Emisphere's eligen(R) technology in treating osteoarthritis. Results of
this study strongly suggest that CT (enabled by Emisphere's proprietary
eligen(R) technology licensed to Novartis for the use with calcitonin)
exhibits not only clinical efficacy but also markedly reduces the levels of
several biochemical markers of joint metabolism, which all have been shown to
have a negative prognostic value of the osteoarthritis process in longitudinal
studies involving large groups of patients.
Oral Recombinant Human Growth Hormone (rhGH)
Novartis notified Emisphere that it initiated a multidose study in 2006 in
growth hormone deficient adults with Novartis' improved oral formulation of
rhGH. Emisphere will be entitled to a $5 million milestone payment upon
completion of the study if Novartis elects to continue development under the
Option and License Agreement with the Company. Results from the study are
expected in April. In addition, Novartis is responsible for all costs related
to the development of this product and Emisphere is entitled to receive
royalties based on product sales.
Roche Licensing Agreement
Roche continued a clinical study utilizing Emisphere's eligen(R)
technology in a number of different tablet dosage forms, under Roche's
agreement with the Company to develop new oral formulations of a Roche small
molecule compound for the treatment of bone-related diseases. Roche is using
the Company's oral drug delivery technology to evaluate a number of new
formulations that may be more convenient for patients than products currently
on the market. Roche has completed the dosing portion of the study and is
analyzing the relative performance of the various formulations tested in the
study.
On February 15, 2006, the Company announced that Roche had initiated a
clinical study utilizing Emisphere's eligen(R) delivery technology in a
formulation for a second product. As a result, Emisphere received an
additional milestone payment from Roche.
Eli Lilly and Company Litigation
On January 9, 2006, U.S. Federal District Court Judge David F. Hamilton of
the Southern District of Indiana, ruled that Eli Lilly & Co. had breached its
contractual obligations with Emisphere and that the Lilly license and
collaboration agreements with Emisphere for oral PTH were properly terminated
by Emisphere as of August 23, 2004. Judge Hamilton ruled in Emisphere's favor,
finding that "Lilly did not act in good faith and did not deal fairly with
Emisphere. The breach of trust went to the root of the parties' agreement, and
it is serious enough to support termination of the contracts."
The decision allows Emisphere to license the technology for oral PTH to
Novartis. While the litigation with Lilly was pending, Emisphere had entered
into a contingent license option agreement with Novartis in the event that the
court permitted Emisphere to terminate the Lilly license, permitting Novartis
to use Emisphere's eligen(R) technology with PTH as a treatment for
osteoporosis In addition, Emisphere will work with counsel to pursue all
remedies against Lilly, including monetary damages, for Lilly's actions, which
the Company believes have caused direct and consequential damages to
Emisphere.
$15 Million Financing With Largest Shareholder
In September, Emisphere raised $15 million through a senior secured term
loan financing with funds managed by MHR Fund Management LLC ("MHR"). The Loan
Agreement required Emisphere to hold a special stockholder meeting for the
purpose of obtaining stockholder approval of (i) the exchange of the loan for
an 11% senior secured convertible note (the "Convertible Note") with
substantially the same terms as the Loan Agreement, and (ii) the amendment and
restatement of Emisphere's Restated Certificate of Incorporation. On December
8, 2005, Emisphere filed a definitive proxy statement with the Securities and
Exchange Commission relating to this special meeting of the Company's
stockholders. On January 17, 2006, the special meeting of stockholders was
held and both proposals were approved by the Company's stockholders. The $6.9
million cash balance as of February 28, 2006 includes the proceeds of the MHR
financing.
"We are excited to be entering 2006 with two products set to begin pivotal
Phase III trials -- our oral salmon calcitonin product that is partnered with
Novartis for two indications and our oral heparin product," said Michael M.
Goldberg, M.D., Chairman and Chief Executive Officer of Emisphere. "We expect
to receive the results from our heparin cross over study early in the second
quarter and later this year, we will announce results from our Phase II oral
insulin trial in India. We continue to advance our licensing agreement with
Roche to identify oral compounds for bone-related diseases. The strong
clinical activity reflects the broad applicability of our eligen(R) technology
platform.
"We are very pleased with the findings of Judge Hamilton, backing our
claim that Lilly breached its contract with Emisphere. We expect to ask the
Federal Court in the Southern District of Indiana to order Lilly to pay
substantial penalties related to this case. Finally we are eager to work with
our partner Novartis to advance development of oral PTH," Goldberg concluded.
Conference Call Information
Emisphere will hold a conference call to discuss its 2005 fourth quarter
and year end financial results today March 14, 2006 at 11:00 a.m. EST. A
replay of the teleconference will be accessible approximately two hours
following the end of the call and will be archived through March 21, 2006.
The live conference call dial-in number is: 1-888-695-7895 (U.S./Canada)
1-706-679-3799 (International)
The live conference call ID number is: 6454497
To access a replay of the call: 1-800-642-1687 (U.S./Canada)
1-706-645-9291 (International)
Conference ID / Pin: 6454497
Emisphere will simultaneously be webcasting this teleconference. To access
the live broadcast in listen-only mode or the subsequently archived recording
please go to the investor relations portion of the Company's website at
http://www.emisphere.com/ir.asp.
Please visit the site at least five minutes prior to start time for
instructions.
About the eligen(R) technology
Emisphere's broad-based oral drug delivery technology platform, known as
the eligen(R) technology, is based on the use of proprietary, synthetic
chemical compounds, known as Emisphere delivery agents, or "carriers." These
molecules facilitate or enable the transport of the therapeutic macromolecules
across biological membranes such as those of the gastrointestinal tract, and
exert their desired pharmacological effect. The Emisphere(R) delivery agents
have no known pharmacological activity themselves. Emisphere's eligen(R)
technology makes it possible to orally deliver a therapeutic molecule without
altering its chemical form or biological integrity. Emisphere is pursuing
shortened registration timelines for currently marketed drug products whose
absorption following oral administration is improved using the eligen(R)
technology through supplemental New Drug Applications or 505(b)(2) filings
with the US FDA. Successful achievement of these regulatory strategies may not
require large-scale studies to support product registration.
About Emisphere Technologies, Inc.
Emisphere Technologies, Inc. is a biopharmaceutical company pioneering the
oral delivery of otherwise injectable drugs. Emisphere's business strategy is
to develop oral forms of injectable drugs, either alone or with corporate
partners, by applying its proprietary eligen(R) technology to those drugs or
licensing its eligen(R) technology to partners who typically apply it directly
to their marketed drugs. Emisphere's eligen(R) technology has enabled the oral
delivery of proteins, peptides, macromolecules and charged organics. Emisphere
and its partners have advanced oral formulations or prototypes of salmon
calcitonin, heparin, insulin, parathyroid hormone, human growth hormone and
cromolyn sodium into clinical trials. Emisphere has strategic alliances with
world-leading pharmaceutical companies. For further information, please visit
http://www.emisphere.com.
Safe Harbor Statement Regarding Forward-looking Statements
The statements in this release and oral statements made by representatives
of Emisphere relating to matters that are not historical facts (including
without limitation those regarding the timing or potential outcomes of
research collaborations or clinical trials, any market that might develop for
any of Emisphere's product candidates and the sufficiency of Emisphere's cash
and other capital resources) are forward-looking statements that involve risks
and uncertainties, including, but not limited to, the likelihood that future
research will prove successful, the likelihood that any product in the
research pipeline will receive regulatory approval in the United States or
abroad, the ability of Emisphere and/or its partners to develop, manufacture
and commercialize products using Emisphere's drug delivery technology,
Emisphere's ability to fund such efforts with or without partners, and other
risks and uncertainties detailed in Emisphere's filings with the Securities
and Exchange Commission (the "SEC"), including those factors discussed under
the caption "Risk Factors" in Emisphere's Annual Report on Form 10-K (file no.
1-10615) filed on March 11, 2005, as amended by Form 10-K/A filed on March 29,
2005.
EMISPHERE TECHNOLOGIES, INC.
Selected Financial Information
For the three and twelve months ended December 31, 2005 and 2004
(in thousands, except share and per share data)
Condensed Statements of Operations
For the three months For the twelve months
ended ended
December 31, December 31,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited)
Revenue $155 $1,773 $3,540 $1,953
Costs and expenses:
Research and development 5,225 4,181 18,915 17,462
General and administrative
expenses 3,426 3,635 13,165 11,766
Loss/(gain) on sale and
impairment of fixed
assets 139 - (397) -
Depreciation and
amortization 1,051 1,148 4,312 4,941
Total costs and
expenses 9,841 8,964 35,995 34,169
Operating loss (9,686) (7,191) (32,455) (32,216)
Other income and (expense):
Gain on extinguishment
of note payable - - 14,663 -
Investment and other
income 203 178 526 846
Interest expense (567) (1,557) (1,141) (6,016)
Change in fair value of
derivative instruments 894 (136) (624) (136)
Gain on sale of investments - - 980 -
Total other income and
(expense) 530 (1,515) 14,404 (5,306)
Net loss $(9,156) $(8,706) $(18,051) $(37,522)
Net loss per share,
basic and diluted $(0.39) $(0.47) $(0.81) $(2.04)
Weighted average shares
outstanding, basic and
diluted 23,363,391 18,536,950 22,300,646 18,411,240
Condensed Balance Sheets
December 31, December 31,
2005 2004
(unaudited)
Assets:
Cash, cash equivalents, restricted cash and
investments $9,218 $17,550
Accounts receivable 71 120
Prepaid expenses and other current assets 951 2,516
Total current assets 10,240 20,186
Equipment and leasehold improvements, net 5,899 10,007
Land, building and equipment held for sale, net - 3,589
Purchased technology, net 2,034 2,273
Other assets 815 237
Total assets $18,988 $36,292
Liabilities and stockholders' deficit:
Current liabilities $10,762 $7,328
Notes payable 22,857 39,332
Other long-term liabilities 264 906
Stockholders' deficit (14,895) (11,274)
Total liabilities and stockholders' deficit $18,988 $36,292
SOURCE Emisphere Technologies, Inc.
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Related links:
http://www.emisphere.com
CONTACT:
Emisphere Technologies, Inc., Elliot M. Maza,
CPA, J.D., Chief Financial Officer, +1-914-785-4703; Media: BMC
Communications, Dan Budwick, Account Supervisor, +1-212-477-9007
ext. 14
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