QUIGLEY
Carl Hymans Carl Fonash
G.S. Schwartz & Co. The Quigley Corporation
(212) 725-4500 (267) 880-1111
carlh@schwartz.com fonash@quigleyco.com
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QUIGLEY REPORTS SECOND QUARTER RESULTS
--NET SALES INCREASED 28%; COLD REMEDY SEGMENT NET SALES UP 36%--
DOYLESTOWN, PA. - JULY 28, 2005 - THE QUIGLEY CORPORATION (NASDAQ: QGLY) today
reported net sales of $8.8 million for the second quarter of 2005, a 28.2%
increase over the $6.9 million reported for the same period in 2004. For the six
months ended June 30, 2005, net sales were $20.6 million, a 24.8% increase over
the $16.5 million reported for the same period in 2004.
Net sales of the Company's Cold Remedy segment increased 36.4% for the second
quarter of 2005 compared to 2004. Overall net sales of the Health and Wellness
segment remained relatively unchanged for the second quarter of 2005 compared to
2004. The segment's European sales increased 39.7% and were offset by a decrease
in the domestic Health and Wellness operation, which was due to a decline in the
number of active domestic independent representatives. Net sales also reflects
$1.4 million generated from the Company's Contract Manufacturing segment which
has no comparable amount in 2004, as operations of this segment were part of the
fourth quarter 2004 acquisition of the facilities that manufactured
COLD-EEZE(R).
The increase in net sales for the six months reflects a 38.8% increase in the
Company's Cold Remedy segment and a 4.5% decrease in the Health and Wellness
segment.
The Company's Cold Remedy net sales continued to far outpace the growth in its
category as the further expansion of the Cold Remedy segment reflects the
success of strategic advertising and marketing initiatives; new product
extensions of COLD-EEZE(R); and a notable increase in consumer acceptance, as
reflected in a recent analysis demonstrating an expanded household penetration.
The Company's Health and Wellness European sales for the six months increased
28.7% reflecting the expansion of international distribution. The rise in
international distribution partially offset a decrease in domestic Health and
Wellness segment sales. Net sales for 2005 also reflect $2.4 million from the
Company's Contract Manufacturing segment, which has no comparable amount in
2004.
Guy J. Quigley, Chairman, President and Chief Executive Officer said, "We are
generally pleased with our overall results which include increases in sales for
the quarter and six-month periods, particularly as the second quarter is our
seasonally weakest period for COLD-EEZE(R) sales. The increase in sales reflects
the success of ongoing initiatives to generate greater market share for our
COLD-EEZE(R) Cold Remedy products and the expansion of the European Health and
Wellness segment. We remain well positioned to continue to generate increasing
sales of our core COLD-EEZE(R) products and expand its market penetration."
Net loss for the second quarter ended June 30, 2005 was $1.8 million, or ($0.15)
per share compared to a net loss of $912,000, or ($0.08) per share, for the same
period last year. Net loss for the six-months ended June 30, 2005 was $1.9
million, or ($0.17) per share, compared to a net loss of $1.7 million, or
($0.15) per share, for the same period last year. Net loss for the six-months
ended June 30, 2005 and 2004 is principally attributed to research and
development costs of $1.9 million and $1.8 million, respectively.
Gross profit percentage margins for the Cold Remedy segment for the quarter were
consistent with margins attained for the comparable period in 2004. The gross
profit percentage margins for the Health and Wellness declined due to inventory
obsolescence charges. Gross profit gains of the Cold Remedy segment for the
quarter and six months ended June 30, 2005 were offset by decreases in Health
and Wellness gross profit including substantially lower gross profit margins for
the Contract Manufacturing segment than other operating segments.
The net loss for the quarter and six months ended June 30, 2005 increased as
compared with the same periods last year, due to increased operating costs of
all business segments, including non-manufacturing operating costs of the
contract manufacturing segment that impacted current operations rather than
being carried as inventory. Net loss for the six months was in line with the
same period last year.
No tax benefits to reduce losses are provided for the quarter and six month
periods ended June 30, 2005 and 2004, as the Company is in a net operating loss
carry-forward position from the cumulative effect of deductions attributed to
options, warrants and unrestricted stock from previous year's taxable income.
Mr. Quigley continued, "During the quarter we announced several important
developments in our pharmaceutical segment including the completion of a
double-blind placebo controlled study of our QR-340 Scar Formula in which
initial results demonstrated that the formula was safe, effective and
outperformed Mederma(R), the top selling scar appearance formula in the
commercial marketplace.
In addition, a series of In-Vivo (animal model) inflammation studies of our
potential broad-spectrum anti-inflammatory, all natural, botanical compound,
QR440 demonstrated a significant effect on both sterile and immune mediated
inflammation. QR440 has the potential to meet the significant need for safe and
effective therapies for patients with rheumatoid arthritis and other
inflammatory disorders," concluded Mr. Quigley.
The following is a list of other formulations currently in the Quigley Pharma
pipeline:
DIABETIC NEUROPATHY - QR333: A patented topical compound that extends through
March 2021 is being tested to treat people that suffer from diabetic peripheral
neuropathy, which can affect 60 to 70 percent of the 15.7 million diabetics in
the country.
SYSTEMIC RADIATION - QR336: A patented compound that extends through November
2021 is being investigated to potentially reduce the effects of radiation
exposure.
ARTHRITIS - QR440: A patented naturally-derived compound that extends through
April 2023 is being developed for the treatment of arthritis and related
inflammatory disorders as arthritis can afflict 40 million people in the US; 350
million worldwide.
INFLUENZA A - QR435: A test compound with potentially broad anti-viral
properties for applications such as Influenza A&B in an intranasal delivery.
The Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will grant an Investigational New
Drug ("IND") or take any other action to allow its formulations to be studied or
marketed. Furthermore, no claim is made that potential medicine discussed herein
is safe, effective, or approved by the Food and Drug Administration.
Additionally, data that demonstrates activity or effectiveness in animals or in
vitro tests do not necessarily mean the formula test compound, referenced herein
will be effective in humans. Safety and effectiveness in humans will have to be
demonstrated by means of adequate and well-controlled clinical studies before
the clinical significance of the formula test compound is known. Readers should
carefully review the risk factors described in filings the Company files from
time to time with the Securities and Exchange Commission.
The Quigley Corporation (Nasdaq: QGLY, http://www.Quigleyco.com) is a leading
developer and marketer of diversified health products including the COLD-EEZE(R)
family of patented zinc gluconate glycine (ZIGG(TM)) lozenges and sugar free
tablets. COLD-EEZE is the only (ZIGG) lozenge proven in two double-blind studies
to reduce the duration of the common cold from 7.6 to 4.4 days or by 42%. In
addition to Over-The-Counter (OTC) products, the Company has formed Quigley
Pharma Inc. (http://www.QuigleyPharma.com), a wholly owned ethical
pharmaceutical subsidiary, to introduce a line of naturally derived patented
prescription drugs. The Quigley Corporation's customers include leading national
wholesalers and distributors, as well as independent and chain food, drug and
mass merchandise stores and pharmacies.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risk, uncertainties and other factors that may cause the
Company's actual performance or achievements to be materially different from the
results, performance or achievements expressed or implied by the forward-looking
statement. Factors that impact such forward-looking statements include, among
others, changes in worldwide general economic conditions, changes in interest
rates, government regulations, and worldwide competition.
(Tables Follow)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
The following represents condensed financial data (in thousands) except per
share data:
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
($) ($) ($) ($)
------------- ------------- ------------- -------------
Net Sales 8,844 6,901 20,597 16,507
Gross profit 3,034 2,777 8,736 7,297
Sales & marketing expenses 1,067 835 2,902 2,458
Administrative expenses 2,987 2,055 5,981 4,805
Research & development 841 821 1,909 1,768
Income taxes (Benefit) -- -- -- --
Net loss (1,790) (912) (1,945) (1,694)
Diluted loss per share:
Net loss ($ 0.15) ($ 0.08) ($ 0.17) ($ 0.15)
Diluted weighted average common shares outstanding: 11,655,995 11,512,092 11,655,396 11,511,390
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
The following represents condensed financial data (in thousands) at June 30,
2005 and December 31, 2004:
2005 2004
($) ($)
-------- ---------
Cash & cash equivalents 13,979 14,366
Accounts receivable, net 1,623 6,376
Inventory 3,761 3,455
Total current assets 20,297 24,961
Total assets 26,398 31,530
Total current liabilities 5,095 7,109
Long-term debt 1,250 2,464
Total stockholders' equity 19,997 21,902