CARLSBAD, Calif., Nov. 20 /PRNewswire-FirstCall/ --
The Immune Response Corporation (Nasdaq: IMNR) today announced financial
results for its third quarter ended September 30, 2002. The Company reported
a net loss for the quarter of $5.5 million, or $.56 per share, compared to a
net profit of $1.4 million, or $.16 per share, reported for the quarter ended
September 30, 2001. For the nine months ending September 30, 2002, the
Company had a net loss of $18.9 million, or $2.04 per share, compared to a net
loss of $8.7 million, or $1.05 per share, for the nine months ended September
30, 2001.
The consolidated financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has operating and
liquidity concerns due to continuing and significant net losses and negative
cash flows from operations. As of September 30, 2002, the Company had an
accumulated deficit of $245.9 million and current liabilities exceeded current
assets by approximately $4.8 million.
As of the date of filing of its quarterly report, the Company had limited
cash resources available to fund operations. If the Company is unable to
obtain funding in the next few days, the Company will consider ceasing its
ongoing business operations and seeking protection under the United States
Bankruptcy Code.
The Company currently is engaged in a private offering of common stock and
warrants, which could raise up to $8.0 million in gross proceeds
($10.4 million if the 30 percent overallotment option is exercised), subject
to market and other conditions, to meet some of our future capital
requirements. The offering could raise an additional $28.0 million upon the
exercise in full of the warrants. The securities being offered have not been
registered under the Securities Act of 1933 or any state securities laws and
unless so registered may not be offered or sold in the United States (or to a
U.S. person) except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933 and
applicable state securities laws.
However, the Company's placement agent has indicated that to the extent
the offering is not successfully completed on or prior to November 29, 2002,
it will need to re-evaluate its efforts in connection with the financing,
which could possibly result in the offering being terminated.
Revenues for the three and nine months ended September 30, 2002 were
$13,000 and $33,000, respectively, as compared to $7.8 million and
$9.9 million for the corresponding periods in 2001. The decrease in revenues
in 2002 was principally due to the termination by Pfizer in July 2001 of its
development and commercialization agreement for REMUNE(R).
Research and development expenditures for the three and nine months ended
September 30, 2002 were $3.2 million and $10.8 million, respectively, as
compared to $5.0 million and $15.3 million for the corresponding periods in
2001.
Spending for clinical trials and related regulatory activities in 2002,
due to completion or termination of clinical studies in our immune-based
therapy programs, decreased $400,000 for the three-month period and $1.2
million for the nine-month period of 2002. Decreasing activities on other
non-HIV development programs resulted in additional reduced spending of
$400,000 for the three-month period and $1.5 million for the nine-month period
of 2002.
General and administrative expenses for the three and nine months ended
September 30, 2002 were $1.3 million and $3.7 million, respectively, as
compared to $1.4 million and $4.2 million for the corresponding periods in
2001. This decrease in spending was primarily attributable to lower
professional fees, reduction in personnel through attrition and lower
insurance premiums. General and administrative expenses for the remainder of
2002 are expected to remain consistent with prior quarters with savings
attributed to the September 2002 restructuring being somewhat offset by higher
consulting fees.
Investment income decreased to $34,000 and $56,000, respectively, for the
three and nine months ended September 30, 2002 from $172,000 and $1.2 million
for the corresponding periods in 2001. The decrease in investment income in
2002 from 2001 was primarily due to overall lower cash balances in interest-
bearing investments and lower interest rates earned. Also contributing to the
decrease was the sale for approximately $416,000 of an equity security in
2001. Interest expense increased to $278,000 and $596,000 for the three and
nine months ended September 30, 2002, respectively, as compared to $72,000 and
$243,000 for the corresponding periods in 2001. This increase is attributable
to the issuance of $13.8 million of 8% convertible notes and short-term
promissory notes between November 2001 and September 2002.
For the third quarter, additional activities included:
-- The Company implemented a restructuring program and management
changes aimed at reducing costs and refocusing efforts on REMUNE(R),
including reduced staff and spending cuts while ramping up
manufacturing capacity at its production facility in King of Prussia,
Pennsylvania;
-- The Company privately placed with The Kimberlin Family 1998
Irrevocable Trust ("KFIT"), approximately $567,000 and $637,000 of
convertible notes and warrants in July 2002, and subsequently issued
short-term secured promissory notes to KFIT for approximately
$3,590,000. Additional short-term secured promissory notes to Oshkim
Limited Partnership and Cheshire Associates LLC were issued in
October 2002 for approximately $977,000. The short-term secured
promissory notes were repaid in November with interest thereon of
approximately $61,000;
-- In November, the Company privately placed convertible notes and
warrants of approximately $5.0 million to Cheshire Associates LLC;
-- The Company's Board of Directors formally declared a one-for-four
reverse stock split of issued and outstanding shares of common stock,
which was effective as of the open of trading on October 9, 2002.
The Company's stockholders authorized a reverse split at their
annual meeting held in June 2002; and
-- Stockholders ratified the selection of BDO Seidman, LLP, as the
Company's independent auditors.
Co-founded by medical pioneer, Dr. Jonas Salk and based in Carlsbad,
California, The Immune Response Corporation is a biopharmaceutical company
developing immune-based therapies designed to treat HIV, autoimmune diseases
and cancer. The Company also develops and holds patents on several
technologies that can be applied to genes in order to increase gene expression
or effectiveness, making it useful in a wide range of therapeutic applications
for a variety of disorders. Company information is also available at
http://www.imnr.com .
This news release contains forward-looking statements. Actual results
could vary materially from those expected due to a variety of risk factors,
including whether the Company will continue as a going concern or need to seek
protection from its creditors under the U.S. Bankruptcy Code, whether the
Company will successfully raise proceeds from financing activities sufficient
to fund operations, the uncertainty of successful completion of clinical
trials, whether REMUNE(R) is effective as either a preventive or therapeutic
vaccine, whether future trials will be conducted, whether the results of
REMUNE(R) in clinical trials will coincide with the results of REMUNE(R) in
preclinical trials, and those risks set forth from time to time in The Immune
Response Corporation's SEC filings, including but not limited to its report on
Form 10-K for the year ended December 31, 2001 and subsequent Forms 10-Q. The
Company undertakes no obligation, subject to applicable law, to publicly
release the result of any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
REMUNE(R) is a registered trademark of The Immune Response Corporation.
THE IMMUNE RESPONSE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
September 30, December 31,
(Amounts in thousands) 2002 2001
Assets (restated)
Cash, cash equivalents and
short-term investments $1,127 $2,701
Other current assets 969 861
2,096 3,562
Property and equipment, net 8,295 9,026
Licensed technology 3,002 3,532
Other assets 1,416 1,378
Total assets $14,809 $17,498
Liabilities and stockholders'
equity
Current liabilities $6,896 $3,061
Long-term liabilities 997 1,230
Convertible notes payable,
related party (net of discount
of $8,112 and
$1,904, respectively) 2,507 119
Stockholders' equity 4,409 13,088
Total liabilities and
stockholders' equity $14,809 $17,498
THE IMMUNE RESPONSE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
(Amounts in thousands,
except share data) 2002 2001 2002 2001
Research revenue $13 $7,787 $33 $9,855
Expenses:
Research and development 3,221 5,006 10,782 15,271
General and administrative 1,343 1,398 3,723 4,173
Collaborative contract cost -- -- 2,360 --
4,564 6,404 16,865 19,444
Other revenue and expense:
Equity in loss of investee -- (64) -- (123)
Investment income 34 172 56 1,199
Interest expense (278) (72) (596) (243)
Interest expense - noncash
accretion (713) -- (1,541) --
Net income (loss) (5,508) 1,419 (18,913) (8,756)
Preferred stock items -- -- -- (334)
Net income (loss) applicable
to common stockholders $(5,508) $1,419 $(18,913) $(9,090)
Income (loss) per common
share - basic and diluted:
Net income (loss) $(0.56) $0.16 $(2.04) $(1.05)
Net income (loss)
applicable to common
stockholders $(0.56) $0.16 $(2.04) $(1.09)
Weighted average common
and common equivalent
shares outstanding 9,903,474 8,933,697 9,252,963 8,317,823
SOURCE The Immune Response Corporation
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Related links:
http://www.imnr.com
CONTACT:
media, James Lee of The Lee Strategy Group,
+1-310-229-5771, or fax, +1-310-229-5772, jlee@leestrategy.com ,
for The Immune Response Corporation; or investors, Kathy Lane of
The Immune Response Corporation, +1-760-771-2236, or fax,
+1-760-771-2140, info@imnr.com
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