Adamis Pharmaceuticals Corp (ADMP) 2005 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q2 2005 Cellegy Pharmaceuticals earnings conference call.

My names is Candace and I will be your coordinator for today.

At this time all participants are in listen-only mode.

We will be facilitating a question and answer session towards the end of today's conference. (OPERATOR INSTRUCTIONS) I'd now like to turn the presentation over to your host for today's conference, Vice President and Chief Financial Officer of Cellegy Pharmaceuticals, Mr. Robert Caso.

Please proceed, sir.

Thank you and good morning.

This is Robert Caso, Vice President and Chief Financial Officer of Cellegy.

With me is Dick Williams, Chairman and interim CEO.

We will be presenting an overview of the Company's second-quarter 2005 results and a status of key operating accomplished accomplishments for 2005.

Dick and I would be happy to answer any questions that you may have at the conclusion of our presentation.

During the course of our presentation we will be making certain forward-looking statements.

Investors are cautioned that these forward-looking statements are subject to numerous risks and uncertainties, known and unknown, which could cost actual results and developments to differ materially from those expressed or implied in such statements.

Readers are cautioned not to place undue reliance on forward-looking statements, and we undertake no obligation to update or revise statements made during this presentation.

Investors are encouraged to read both the risk factors section in the Company's annual report on Form 10-K and also its more recent SEC filings.

I will first cover the financial highlights for the second quarter and then I will review the year-to-date June 30 results.

Note that the current-year results include Biosyn, which was acquired in the fourth quarter of 2004.

The Company reported net income of 4,835,000 or $0.17 basics earnings per share in the second quarter of 2005, versus a loss of 2,708,000 or $0.13 a share in the same period of 2004.

Included in second-quarter 2005 net income are revenues of 7,749,000 versus 430,000 in the same period of 2004.

Current quarter revenues include approximately 6.5 million in licensing revenue that was recognized upon our settlement with PDI in April.

I would like to point out that this is a non-cash, non-recurring item.

This item represents the reversal of the remaining amount of a deferred credit that was recorded in 2002 in connection with the receipt of upfront licensing fees from PDI.

Also note that we expect licensing revenue to decrease significantly during the remainder of 2005.

Also included in revenues are 955,000 of Biosyn grant revenues and 275,000 of Rectogesic sales.

Note that approximately 90,000 of these sales relate to our initial sale of Rectogesic to our marketing partner ProStrakan in connection with its launch of the product in the UK.

Research and development expenses for the second quarter of 2005 were 2,284,000 versus 2,189,000 in the same quarter of 2004.

Current quarter amounts include Biosyn research expenses incurred in connection with its development of its HIV products.

The prior-year expense includes Cellegy research expenses in connection with its development of Cellegesic and other products.

Selling, general, and administrative expenses for the second quarter of 2005 were 456,000 versus 1,022,000 in the same quarter of 2004.

Note that the current quarter amount includes a lease termination fee of approximately 1.1 million received by Cellegy for the early vacation of its previous headquarters.

For the six months ended June 30, 2005, the Company reported a net loss of 251,000 or $0.01 a share, as compared to a loss of 5,766,000 or $0.29 a share in the same period of the prior year.

Included in current year-to-date results are revenues of 9,355,000 compared to 768,000 in the prior year.

Current-period revenues include the 6.5 million PDI reversal mentioned previously and approximately 2.2 million of Biosyn grant revenues.

Product sales were 428,000 in the current period versus 351,000 in 2004.

Research and development expenses for the current six-month period were approximately 5 million as compared to 4.3 million in the prior year.

The current year's expenses include approximately 2.7 million of Biosyn R&D, whereas the prior period includes Cellegy research of approximately 1.9 million.

SG&A expenses for the current six-month period were approximately 4.5 million versus 2.4 million in the prior year.

The increase over the prior year is due to the inclusion of Biosyn in 2005; approximately 1.4 million in PDI litigation expenses; the write-off of leasehold improvements due to the Company's move; and officers' severance.

These items were partially offset by the lease termination fee of approximately 1.1 million in 2005.

With respect to liquidity, the Company had cash and cash equivalents of approximately 4.1 million at June 30, 2005, compared to 8.7 million at December 31, 2004.

The primary use of cash in the first half of 2005 was due to the settlement of the PDI litigation, in which the Company made a $2 million payment to PDI; t legal fees associated with the settlement;

Biosyn research activities; and SG&A.

These items were partially offset by our May PIPE financing which netted approximately 5.7 million and the 1.1 million lease termination fee.

In connection with the PDI settlement, the Company issued two non-interest-bearing long-term notes with an aggregate fair market value of approximately 4.7 million as of June 30, 2005.

The Company feels that it currently has adequate funding into 2006.

I would now like to turn the presentation over to Dick.

Thanks, Rob.

Before reviewing accomplishments for the year, I'd like to remind all the listeners about things that have happened very early in the year.

We modified our main strategic direction by placing greater emphasis on women's health.

Our corporate snapshot is beginning to be realized, as I will get involved in later.

Revenue generation from overseas licensing, especially from the two approvals in Europe, a small well-qualified staff, expertise in topical formulations, and product out-licensing opportunities in nonstrategic products.

Our model is to complete the development of products for the global market.

When approved we will self-market or co-promote in the United States and license out as appropriate overseas.

We are enthused by the accomplishments that have occurred in 2005.

First item to relate is response from the FDA on the Cellegesic NDA.

We amended our NDA as requested by the FDA in April.

First indication by the FDA was that their review would be completed by June 15.

Subsequently they have informed us that their review is not complete and they that will notify us as soon as it is completed.

Discussions just in the last week indicate that the NDA's review is continuing and has not been completed as of yet.

We've changed our prioritization, as I indicated, on women's health and especially on the development of Savvy.

Savvy is a contraceptive that provides protection from HIV and other sexually transmitted diseases.

Savvy is a clear, odorless, colorless gel that comes in a prefilled applicator and is designed to offer protection to both women and her partner.

It is discreet and easy to use.

We are currently running two Phase III HIV prevention trials in Africa.

We currently have close to 2,000 women enrolled in Ghana and just over 1,000 enrolled in Nigeria.

We have seen no drug-related adverse events in either trial.

We are also running a Phase III contraception trial in 14 cites in the United States.

Enrollment is on track.

Our licensee ProStrakan launched Rectogesic, which is known as Cellegesic in the U.S., the last week of May in the United Kingdom and has experienced excellent market reception.

The second quarter reflects the first sales to ProStrakan of Rectogesic.

They have outperformed their projections in the first month of launch, and further orders have been received by the Company.

During the second quarter we completed a $6 million financing in early May.

Five current institutional shareholders participated in the financing.

This provides the Company with funds, as Rob mentioned, to meet its needs through the beginning of 2006.

We continue to upgrade our finished professional staffing.

Rob Caso joined us in March as CFO with backgrounds from Centocor and J&J.

Frank Malinoski is head of Women's Healthcare R&D in June; he is a clinician with large and midsize pharmaceutical experience.

In the last quarter last year Anne-Marie Corner, who is our Executive Vice President of Women's Preventive Health, joined us through the acquisition of Biosyn.

As Rob mentioned we in early April reacquired the rights to Fortigel from PDI and settled the lawsuit with them.

This allowed us to reacquire the product rights, reduce litigation expense, and future clinical development expenses.

We are in current discussions to out-license this product and this should be completed in the next few months.

You may recall that Fortigel is pending a Phase III trial which is under a special protocol agreement with the FDA.

We continue our efforts to license the European-approved products, Rectogesic and Tostrex, throughout the world and Fortigel in the U.S. as I just mentioned.

We have redefined our spending priorities and minimized our infrastructure.

Our burn rate will decrease to approximately 30% to 40% of previous levels in the latter part of this year.

The Company is continuing to evaluate the infrastructure savings when which can occur to it.

Still to come in the latter part of this year, the planned launch of Tostrex by ProStrakan in Sweden, which will occur this fall.

We continue the mutual recognition process by ProStrakan for the approval of Rectogesic and Tostrex throughout Europe.

We're making successful movement there and expect to have approvals in other European countries later this year and early 2006.

Finally, by the end of this quarter, the third quarter, the corporate offices will be located in Huntington Valley, Pennsylvania, and not in California.

We've stated, and I concur and support, that we have a pipeline that encompasses all mature phases of our development cycles, as an economic pipeline is very strong, and we thank you for your interest and support and look forward to the excitement to complete the accomplishments later this year.

If there are any questions we would be glad to take them now.

(OPERATOR INSTRUCTIONS) Gentlemen, you have no further questions at this time.

Thank you very much, for everyone.

Okay, thank you.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Have a great day.