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FOR IMMEDIATE
RELEASE
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CONTACT:
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George
J. Longo
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Carl
Hymans
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Vice
President, CFO
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G.S.
Schwartz & Co.
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(215)
345-0919
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(212)
725-4500
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carlh@schwartz.com
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The
Quigley Corporation Reports Fourth Quarter & 2007Annual Results
-
Increases Investment to $6.5 million in Pharmaceutical R&D in
2007-
DOYLESTOWN, PA. – March 3, 2008 – The
Quigley Corporation (Nasdaq: QGLY) today reported net sales of $13.6
million, for the fourth quarter ended December 31, 2007, compared to $14.2
million reported for the same period in 2006. For the year ended December 31,
2007, net sales were $39.5 million compared to $42.1 million reported for the
same period in 2006.
The
fourth quarter ended December 31, 2007 reflect a net sales decrease for the
Company's Cold Remedy segment of $600,000 and for the year ended December 31,
2007, a net sales increase for the Company's Cold Remedy segment of $900,000,
respectively, as compared to the same periods of 2006. These changes during 2007
include a price increase and inaugural sales of two new COLD-EEZE® branded line
extensions that commenced on July 2, 2007 totaling $4.3 million. The impact of
these initiatives were offset by changes in seasonal purchase patterns by our
customers that can occur when comparing quarters of different years, and
according to industry analysts, 2007 has resulted in the least incidence of
colds by consumers in the last eight years.
Despite
the aforementioned occurrences offsetting sales gains, the Company believes in
the viability
of the COLD-EEZE brand to garner acceptance among consumers who want
Natural Common Cold remedies that demonstrate proven clinical efficacy and
safety. As part of ongoing initiatives to generate future growth, the
introduction of two new COLD-EEZE brand extensions, Organix™ Cough and Sore
Throat Drops and COLD-EEZE Immune Support Complex-10 (ISC-10) will enable
consumers to choose two new options to support their health during the Cold and
Flu Season.
Organix
Cough and Sore Throat Drops is a proprietary product manufactured in the
Company’s certified organic manufacturing facility, the first facility of its
kind to obtain USDA organic certification. COLD-EEZE ISC-10 will compete in the
growing immune boosting dietary supplement marketplace and features a
proprietary blend of 10 important immune supporting nutrients, minerals and
herbs shown to support proper immune system functioning. Both of these new
products are currently being sold in many major market retailers.
The
Health and Wellness segment net sales declined by $4.1 million for the year
ended December 31, 2007, which reflects the continued reduction in the number of
active independent distributor representatives, and litigation with the sponsor
of the Company’s product line in this segment.
Net
income for the fourth quarter ended December 31, 2007 was $1.7 million, or $0.12
per share compared to net income of $1.2 million, or $0.09 per share, for the
same period last year. Net loss for the twelve-months ended December 31, 2007
was $2.5 million, or ($0.19) per share, compared to a net loss of $1.7 million,
or ($0.14) per share, for the same period last year.
The
increase in net income for the fourth quarter ended December 31, 2007 is
principally attributed to decreased operating expenses for both the Cold Remedy
and Health and Wellness segments, which were offset by increases in research and
development costs for the pharmaceutical segment.
The
increase in net loss for the twelve-months ended December 31, 2007 is
principally attributed to increased research and development costs for the
pharmaceutical segment to $6.5 million from $3.8 million and a reduction in
gross profits from the Health and Wellness operating segment. These increases to
net loss were lessened somewhat by improvement in other operating expenses and
Cold Remedy gross profits from related increases in net sales and other
efficiencies.
As
previously announced today by The Quigley Corporation, it completed the sale on
February 29, 2008 of its wholly owned subsidiary, Darius International Inc.
(“Darius”), which constitutes the Health and Wellness segment, to InnerLight
Holdings, Inc. The terms of the agreement include a purchase price of $1 million
in cash without guarantees, warranties or indemnifications for the stock of
Darius and its subsidiaries. The unaudited net book value of Darius
at December 31, 2007 and 2006 approximate $124,000 and $2.4 million,
respectively. Darius’ net sales for 2007 and 2006 approximate $11.2 million and
$15.3 million, respectively with a net loss for 2007 and 2006 approximating
$600,000 and $1.2 million, respectively.
Over the
last few years, net sales of the Health and Wellness segment have declined
significantly resulting in continued losses, which is due to the continued
reduction in the number of active independent distributor representatives, and
the effects of ongoing litigation with the sponsor of its product
line.
As the
Company continues to review its current structure, ownership of Darius is no
longer a benefit since losses by this segment have been a drain for the ongoing
research and development costs associated with the ethical pharmaceutical
segment. Also, separating this segment will help streamline the structure of the
Company, which will focus on continuing operations in OTC product marketing and
pharmaceutical research.
Pharmaceutical
research and development costs associated with clinical studies for QR-333,
including the Phase II(b), an investigational new drug for treating conditions
associated with diabetic peripheral neuropathy, increased significantly during
2007 to $4.7 million from $1.9 million invested in 2006.
According
to The World Health Organization estimates, more than 171 million people have
diabetes worldwide. It is also estimated that 20 million people,
representing approximately 7% of the United States population have diabetes of
which some 60% will suffer from mild to severe nerve damage due to diabetic
peripheral neuropathy. Conditions associated with diabetic peripheral neuropathy
include numbness, skin ulcers, constant pain or extreme sensitivity to
stimulus.
The
research by the Company is part of its strategic initiatives to generate future
growth. These initiatives include capitalizing on the growth potential of
Quigley Pharma, a wholly owned Ethical Pharmaceutical subsidiary, by developing
natural-source potential prescription products particularly for Diabetic
Peripheral Neuropathy, Avian Flu in animals, Rheumatoid Arthritis and for
protection against ionizing Radiation and other items.
The
following is a summary of ethical pharmaceutical activities that occurred during
2007:
Diabetic Peripheral Neuropathy –
QR-333: The number of enrolled subjects continue to increase in our Phase
II(b) study designed to evaluate the safety and efficacy of the topical
formulation on subjects with diabetic peripheral neuropathy. Subject
screening and enrollment will continue to ensure at least a 140 evaluable
patient study population. Once enrolled, subject treatment time is 12
weeks. To date the in-progress safety profile for this study has been
consistent with favorable safety results of the previous human proof of concept
study conducted in France.
Avian Flu Compound –
QR-441(a): Positive results were achieved in a preliminary study which
demonstrated the compound to be a potential antiviral agent for Infectious
Bronchitis and New Castle Disease, two viral poultry diseases that have a
significant annual economic impact on the poultry industry. Previous in vitro
studies have demonstrated QR-441(a) to be a potent antiviral agent against H5N1
(Avian Flu).
In
addition, an agreement was signed with the State of Israel Ministry of
Agriculture & Rural Development (MOAG) and the Kimron Veterinary Institute
to conduct a clinical trial testing the anti-viral capacity of the Quigley
compound QR-441(a) administered as a medical feed and water to chickens exposed
to HPAI (Highly Pathogenic Avian Influenza) H5N1.
Patent For Prophylactic And
Anti-Transmissivity Uses Of An Anti-Microbial Composition – This patent
provides additional protection to an existing composition patent and further
supports on-going investigations and potential commercialization opportunities
for compounds against avian flu (QR-441(a) and human influenza
(QR-435).
Cachexia Treatment Compound – QR-443:
Further positive results were obtained for the QR-443 compound for the
treatment of Cachexia, a debilitating and life threatening muscle wasting
condition associated with cancer, AIDS, renal failure, COPD and rheumatoid
arthritis, where inflammation has a significant impact and patients experience
loss of weight, muscle atrophy, fatigue, weakness and decreased
appetite. A preliminary follow up Cachexia study, evaluating weight
loss in mice concluded that QR-443 was as effective in delaying the progression
of Cachexia when given orally as it had been shown to be when administered
intra-peritoneally in a previous study. The data compliments the previous study
results demonstrating a correlation between effectiveness and the frequency of
administration of the QR-443 compound.
Human clinical safety trial designed
to evaluate the effects of QR-449: Based on positive preclinical animal
data and Institutional Review Board (IRB) approval human clinical safety trials
designed to evaluate the effects of QR-449 on subjects with Metabolic Syndrome
were initiated. People suffering from Metabolic Syndrome are vulnerable to the
most dangerous heart attack risk factors; diabetes, abdominal obesity, high
cholesterol and high blood pressure.
Presentation at the New York Society
of Security Analysts (NYSSA): Senior management of the Quigley
Corporation made a presentation at the 11th Annual Biotech/Specialty Pharma
Industry investor conference in New York City. The
presentation is archived for web cast at www.QuigleyPharma.com.
The
Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will allow this Investigational
New Drug to be 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.
About The Quigley
Corporation
The
Quigley Corporation (NASDAQ: QGLY, http://www.Quigleyco.com)
is a diversified natural health medical science company. Its
Cold Remedy segment is a leading marketer and manufacturer of the COLD-EEZE®
family of lozenges, gums and sugar free tablets clinically proven to cut the
common cold nearly in half. COLD-EEZE customers include leading
national wholesalers and distributors, as well as independent and chain food,
drug and mass merchandise stores and pharmacies. The Quigley
Corporation has several wholly owned subsidiaries; Quigley Manufacturing Inc.
consists of two FDA approved facilities to manufacture COLD- EEZE® lozenges as
well as fulfill other contract manufacturing opportunities. Quigley Pharma Inc.
(http://www.QuigleyPharma.com)
conducts research in order to develop and commercialize a pipeline of patented
botanical and naturally derived potential prescription drugs.
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:
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Three-Months
Ended
December
31, 2007
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Three-Months
Ended
December
31, 2006
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Year
Ended
December
31, 2007)
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Year
Ended
December
31, 2006
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($)
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($)
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($)
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($)
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Net
Sales
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13,568 | 14,196 | 39,475 | 42,125 | ||||||||||||
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Gross
profit
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8,597 | 8,997 | 22,648 | 22,878 | ||||||||||||
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Sales
& marketing expenses
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1,341 | 3,530 | 5,977 | 8,326 | ||||||||||||
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Administrative
expenses
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4,050 | 3,122 | 13,417 | 13,124 | ||||||||||||
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Research
& development
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1,694 | 1,286 | 6,490 | 3,820 | ||||||||||||
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Income
taxes (benefit)
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- | - | - | 89 | ||||||||||||
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Net
income (loss)
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1,661 | 1,246 | (2,458 | ) | (1,748 | ) | ||||||||||
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Diluted
income (loss) per share:
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||||||||||||||||
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Net
income (loss)
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$ | 0.12 | $ | 0.09 | $ | (0.19 | ) | $ | (0.14 | ) | ||||||
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Diluted
weighted average common shares outstanding:
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13,396,497 | 13,162,534 | 12,728,706 | 12,245,073 | ||||||||||||
Consolidated Balance Sheets
(Unaudited)
The
following represents condensed financial data (in thousands) at December 31,
2007 and 2006:
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2007
($)
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2006
($)
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|||||||
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Cash
& cash equivalents
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16,085 | 17,757 | ||||||
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Accounts
receivable, net
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6,673 | 6,557 | ||||||
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Inventory
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4,812 | 4,262 | ||||||
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Total
current assets
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28,835 | 29,793 | ||||||
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Total
assets
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33,314 | 34,845 | ||||||
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Total
current liabilities
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10,016 | 9,252 | ||||||
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Long-term
debt
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- | - | ||||||
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Total
stockholders’ equity
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23,244 | 25,529 | ||||||