Conference Call Scheduled for Today at 10:00 a.m. ET
TARRYTOWN, N.Y., Aug. 8 /PRNewswire-FirstCall/ -- Emisphere
Technologies, Inc. (Nasdaq: EMIS) today announced financial results for the
second quarter ended June 30, 2006. The Company also reviewed highlights of
the quarter, including continued progress in advancing its heparin and
insulin development programs, a new multi-product research collaboration
with Roche, receipt of a milestone payment from Novartis, and a successful
financing.
Second Quarter Financial Results
Emisphere reported revenue of $5.2 million for the quarter, as compared
to $2.0 million for the same period last year, largely as a result of the
$5 million milestone payment received from Novartis Pharma AG (Novartis) in
connection with Novartis' election to commence development of an oral form
of recombinant human growth hormone (rhGH).
Emisphere reported an operating loss of $3.4 million for the quarter
ended June 30, 2006, compared to an operating loss of $6.5 million for the
second quarter of 2005. Emisphere reported a net loss of $3.8 million, or
$0.14 per basic and diluted share, for the quarter ended June 30, 2006,
compared to a net loss of $5.8 million, or $0.25 per basic and diluted
share, for the same quarter of 2005.
Total operating expenses were $8.6 million for the 2006 second quarter,
an increase of $0.2 million, or 3%, compared to the same period last year.
Total operating expenses include research and development costs of $4.9
million, an increase of $0.2 million or 5%, compared to last year's second
quarter, and general and administrative expenses of $2.8 million, a
decrease of $0.5 million or 14%, compared to the same period last year. The
14% decrease in general and administrative expenses is primarily due to a
decrease in the expenses associated with implementing the requirements of
section 404 of the Sarbanes-Oxley Act. Emisphere implemented SFAS 123(R) as
of January 1, 2006, resulting in non-cash stock-based compensation charges
of $0.4 million during the second quarter.
For the quarter ended June 30, 2006, the Company had interest expense
of $0.6 million, partially offset by interest income of $0.3 million,
resulting in $0.3 million of expense. Other income and expense for the same
period last year was $0.7 million of income, which was comprised of a $1.0
million gain on the sale of investments and interest income of $0.1
million, partially offset by an increase in the fair value of derivative
instruments of $0.3 million and interest expense of $0.1 million. The
current period increase in interest expense is related to the senior
secured convertible note held by MHR Institutional Partners IIA LP and
certain of its affiliated funds, due September 2012.
Cash, cash equivalents, and investments held as of June 30, 2006 were
$34.8 million. This represents a net increase of $25.5 million from such
amounts held on December 31, 2005. Events over the second quarter of 2006
that contributed to the Company's increased cash holdings were as follows:
On May 3, the Company received a $5 million milestone payment from
Novartis in conjunction with Novartis' election to commence development
of an oral form of rhGH using Emisphere's eligen(R) technology. Novartis
is in the process of evaluating the results of a completed study in eight
growth hormone deficient adults. Under the terms of the licensing
agreement, if fully developed and marketed, Emisphere may receive
additional milestone payments totaling up to a maximum of $28 million,
plus royalties on sales of the product, if any.
On May 16, Emisphere announced it had completed a common stock offering,
resulting in net proceeds to the Company of $31.1 million. Proceeds from
the offering will be used by Emisphere for general corporate purposes,
including further development of its lead clinical programs.
Weighted average shares outstanding on a diluted basis for the quarters
ended June 30, 2006 and 2005, were 26.0 million and 23.3 million,
respectively. The increase in shares outstanding is due primarily to the
common stock offering completed in May 2006.
Second Quarter and Recent Product Development/Corporate Highlights
Emisphere Announces New Multi-Product Research Collaboration Agreement
with Roche
On July 18, subsequent to the end of the second quarter, Emisphere
announced a multi-product research collaboration agreement with Roche to
explore the use of Emisphere's eligen(R) technology in feasibility studies
for new oral formulations of a number of Roche molecules. Roche will fund
the research, which will be conducted at both Roche and Emisphere.
Emisphere Reports Completion of Planned Preclinical Safety Studies of
Oral
Calcitonin
On May 25, Emisphere announced that Novartis notified the Company that
it had completed planned preclinical safety studies currently needed for
the oral calcitonin product using Emisphere's eligen(R) technology. From
these studies, Novartis concluded that oral administration by gavage of the
eligen(R) delivery agent to rats for 104 weeks was not considered
carcinogenic at doses up to 750 mg/kg per day. The carcinogenicity report
would be submitted to the U.S. Food and Drug Administration (FDA) in any
New Drug Application (NDA) submission on oral formulations of those
molecules for which Novartis has obtained rights to use the Emisphere
technology including calcitonin. No further toxicology studies are planned
for the NDA submission of oral calcitonin.
Enrollment Completed for Phase II Oral Insulin Trial
On April 11, Emisphere completed enrollment for the first 120 patients
in its Phase II oral insulin trial, and received permission from regulatory
authorities in India to expand the trial enrollment to 140 patients in
order to compare all three active arms of the trial against each other for
statistical significance. On May 3, 2006, the Company was informed that
enrollment had been completed in the clinical trial. Emisphere has been
notified by its CRO that "last patient last visit" will be in September
2006.
Eli Lilly to Assign Intellectual Property to Emisphere
In April, the U.S. Federal District Court in Indianapolis granted an
application by Emisphere, and ordered Eli Lilly & Co. (Lilly) to assign to
Emisphere the patent application filed by Lilly in February 2002 for a
patent on the use of Emisphere's proprietary technology with GLP molecules.
On May 3, Lilly notified Emisphere that it had assigned the patent to
Emisphere. The GLP family of peptides has attracted significant interest
from the medical and pharmaceutical communities for use in the treatment of
diabetes and obesity.
On January 6, U.S. Federal District Court determined that Lilly
breached its contractual obligations owed to Emisphere and that Emisphere
properly terminated the Lilly license and collaboration agreements for oral
parathyroid hormone (PTH) as of August 23, 2004. The decision allowed
Emisphere to license the technology to Novartis. On March 8, the Company
announced that Novartis has executed its license option for the development
and commercialization of an oral form of PTH using Emisphere's eligen(R)
technology. Under the terms of the licensing agreement, Emisphere may
receive milestone payments totaling up to a maximum of $30 million, plus
royalties on future sales of the product, if any.
Emisphere Granted Additional Patent Regarding Pulmonary Delivery of
Proteins
On April 12, Emisphere announced that the U.S. Patent and Trademark
Office granted an additional patent to Emisphere regarding the pulmonary
delivery of proteins, using Emisphere's eligen(R) technology. Emisphere
received U.S. Patent number 6,991,798 with claims directed to the pulmonary
delivery of peptides. In addition, foreign Patent Number 2001273153,
granted in March, provides Emisphere with additional patent protection for
pulmonary delivery of peptides. Thus far in 2006, three patents have been
granted to Emisphere containing language and/or claims affording patent
protection for the pulmonary delivery of proteins, bringing the total of
U.S. patents owned by Emisphere to nine, with additional applications
concerning pulmonary routes of administration currently being prepared.
New Vice President of Regulatory Affairs
We are pleased to announce the appointment of Emisphere's newly hired
Vice President of Regulatory Affairs, Dr. Paul R. Nemeth. Dr. Nemeth
recently served as Executive Director of Worldwide Regulatory Affairs for
Centocor, Inc. Prior to his employment at Centocor, he served as Vice
President of Global Regulatory Affairs for AstraZeneca, Neuroscience. Dr.
Nemeth has also held various regulatory affairs positions within
Astra-Merck, Cephalon, Rhone-Poulenc Rorer, and G.D. Searle & Co. Dr.
Nemeth holds a Ph.D. from University of Texas - Houston in Physiology, and
an M.S. from Southern Illinois University in Medical Physiology and
Pharmacology.
Emisphere Joins the Russell 3000 and the Russell 2000
On June 30, Emisphere was added to the Russell 3000 Index. Membership
in the Russell 3000, which remains in place for one year, means automatic
inclusion in small-cap Russell 2000(R) Index as well as the appropriate
growth and style indexes. Russell determines membership for its equity
indexes primarily by objective, market capitalization rankings and style
attributes.
Michael M. Goldberg, M.D., Chairman and Chief Executive Officer of
Emisphere, commented: "The first half of 2006 has been outstanding for
Emisphere, as we advanced our clinical development pipeline and boosted our
cash holdings. We have had significant success with our partnered programs.
Novartis completed safety studies for the oral calcitonin program and
significantly expanded our relationship with them by initiating programs
for oral PTH and oral rhGH. We also advanced our partnership with Roche
with the initiation of a new multi-product research collaboration to
explore the use of our eligen(R) technology in a number of Roche molecules.
"We expect an active second half of 2006 across our internal and
external clinical programs. We are preparing to meet with the FDA to
discuss how we will proceed in our oral heparin program, based on our
successful demonstration that orally delivered heparin is unchanged as
compared to intravenously or subcutaneously administered heparin. We expect
to complete dosing in our Phase 2 clinical trial in our oral insulin
program in the first weeks of September and will announce results as soon
as the study is unblinded. We are initiating human testing of the eligen(R)
technology with oral GLP-1 and oral PYY. We expect developments in our
other clinical programs as well, and will make announcements as these
events occur.
"Finally, we raised $31.1 million in a common stock offering during the
second quarter. This financing gives us the ability to further develop
several of our promising clinical programs, while enabling the continued
development of our intellectual property and product pipeline. With a
significantly strengthened balance sheet, and many important milestones
with our key programs expected in the near term, we look forward to
building on our success during the second half of 2006," Dr. Goldberg
concluded.
Conference Call Information
Emisphere will hold a teleconference today to discuss its second
quarter 2006 financial results beginning at 10:00 a.m. Eastern Time. A
replay of the call will be accessible approximately three hours following
the end of the call and will be archived through August 15, 2006.
The live conference call dial-in number is: 1-877-704-5391 (U.S./Canada)
1-913-312-1301 (International)
The live conference call ID number is: 9124489
To access a replay of the call: 1-888-203-1112 (U.S./Canada)
1-719-457-0820 (International)
Conference replay PIN number is: 9124489
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 drugs that are not currently available
or have poor bioavailability in oral form, 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 our web site, 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, 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 16, 2006, and updates to such Risk Factors included in
Emisphere's Quarterly Report for the fiscal quarter ended March 31, 2006,
filed on May 9, 2006.
EMISPHERE TECHNOLOGIES, INC.
Condensed Statements of Operations (Unaudited)
For the three and six months ended June 30, 2006 and 2005
(in thousands, except share and per share data)
For the three months ended For the six months ended
June 30, June 30,
2006 2005 2006 2005
Revenue $5,220 $1,961 $6,916 $2,954
Costs and expenses:
Research and development 4,858 4,618 9,375 9,030
General and administrative
expenses 2,816 3,282 5,618 6,947
Loss/(gain) on sale of
fixed assets (4) (567) (4) (567)
Depreciation and
amortization 972 1,091 1,962 2,202
Total costs and expenses 8,642 8,424 16,951 17,612
Operating loss (3,422) (6,463) (10,035) (14,658)
Other (expense) and income:
Gain on extinguishment
of note payable - - - 14,663
Investment and other income 299 110 422 208
(Loss)/gain on sale
of investments (5) 989 (5) 989
Change in fair value of
derivative instruments (56) (296) (7,620) (208)
Interest expense (573) (124) (13,355) (249)
Total other (expense)
and income (335) 679 (20,558) 15,403
Net (loss) income $(3,757) $(5,784) $(30,593) $745
Net (loss) income
per share, basic $(0.14) $(0.25) $(1.23) $ 0.04
Net (loss) income
per share, diluted $(0.14) $(0.25) $(1.23) $ 0.03
Weighted average shares
outstanding, basic 25,952,342 23,267,713 24,815,680 21,253,091
Weighted average shares
outstanding, diluted 25,952,342 23,267,713 24,815,680 21,436,982
EMISPHERE TECHNOLOGIES, INC.
Condensed Balance Sheets (Unaudited)
As of June 30, 2006 and December 31, 2005
(in thousands)
June 30, December 31,
2006 2005
Assets:
Cash, cash equivalents, restricted cash
and investments $34,759 $9,218
Accounts receivable 32 71
Prepaid expenses and other current assets 1,056 951
Total current assets 35,847 10,240
Equipment and leasehold improvements, net 4,203 5,899
Purchased technology, net 1,914 2,034
Other assets 798 815
Total Assets $42,762 $18,988
Liabilities and stockholders' equity (deficit):
Current liabilities $17,197 $10,762
Notes payable 23,565 22,857
Other long-term liabilities 66 264
Stockholders' equity (deficit) 1,934 (14,895)
Total liabilities and stockholders'
equity (deficit) $42,762 $18,988
SOURCE Emisphere Technologies, Inc.
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Related links:
http://www.emisphere.com
CONTACT:
Stewart Siskind, Investor Relations,
+1-914-785-4742, of Emisphere Technologies, Inc.; or Dan Budwick,
+1-212-477-9007 ext. 14, of BMC Communications, for Emisphere
Technologies, Inc.
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