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FOR IMMEDIATE RELEASE
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CONTACT:
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Gerard
M. Gleeson
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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 And 2008 Annual Results
-
Continues To Invest In Pharmaceutical R&D Future -
DOYLESTOWN, PA. – February 26, 2009 –
The Quigley Corporation, (Nasdaq: QGLY) www.quigleyco.com today reported net sales
of $6.8 million, for the fourth quarter ended December 31, 2008, compared to
$10.7 million reported for the same period in 2007. For the year ended December
31, 2008, net sales were $20.5 million compared to $28.2 million reported for
the year ended December 31, 2007.
The
decrease in net sales for the fourth quarter and twelve month periods of 2008
reflects a continued review by customers of inventory levels and product mix,
particularly in light of market conditions. Consumer purchases of market-wide
cold remedy products experienced a general decrease in 2008 compared to 2007 as
reported by Information Resources Inc., (“IRI”) data. The decrease reflects
general economic weakness and overall reductions in consumer spending as well as
the least incidence of colds by consumers in the last several
years.
Net sales
for the 2008 periods reflect the benefits of the Kids-EEZE® Chest
Relief product line, which was launched in August 2008, and a price increase
which commenced in the third quarter of 2007. As part of ongoing
initiatives to support consumer awareness, the Company continued to implement
its advertising and targeted couponing campaign to promote the COLD-EEZE® brand
and brand extensions during 2008.
The
Quigley Corporation reported a loss from continuing operations for the fourth
quarter ended December 31, 2008 of $2.0 million, or ($0.15) per share, compared
to income from continuing operations of $1.8 million, or $0.13 per share for the
fourth quarter of 2007. Loss from continuing operations for the
twelve months ended December 31, 2008 was $6.4 million, or ($0.50) per share
compared to a loss of $1.9 million, or ($0.14) per share for 2007.
The loss
from continuing operations for the fourth quarter and twelve months of 2008
reflect the aforementioned reduction in net sales and an increase in cost of
sales, thereby reducing gross margin for the periods. The 2008 cost of sales
also reflects costs of approximately $300,000 associated with the write-down in
the value of fixed assets and excess inventory at the Elizabethtown,
Pennsylvania manufacturing location. This facility is in the process
of being closed due to the consolidation of manufacturing operations in
2009. This location has been primarily involved in the manufacture of
hard candy and the closure of that facility will not impact the production and
distribution of the Cold-Eeze brand of products which is manufactured at the
Company’s Lebanon, Pennsylvania manufacturing facility. The shortfall
in gross margin was offset by a reduction in overall operating expenses of $1.1
million in the fourth quarter of 2008 and $3.0 million for the full year,
compared to the respective 2007 periods.
The
Company continued to invest in Quigley Pharma, a wholly owned Ethical
Pharmaceutical subsidiary developing natural-source potential prescription and
other products. Research and development costs associated with
Quigley Pharma for 2008 were $4.3 million, a reduction of approximately $2.2
million, from $6.5 million in 2007.
1
No tax
provision or benefits to reduce losses are provided for the quarter and twelve
month periods ended December 31, 2008 and 2007, since the Company is in a net
operating loss carry-forward position for which a valuation has been
established.
In March
2008, The Quigley Corporation completed the sale of its wholly owned subsidiary,
Darius International Inc. (“Darius”), which constituted the Health and Wellness
segment, to InnerLight Holdings, Inc. Net loss of the Company for the
twelve months ended December 31, 2008 reflects results from discontinued
operations associated with the sale of Darius that included a gain on disposal
of $737,000 and income from discontinued operations of $139,000, totaling
$876,000 as compared to a loss from discontinued operations of $602,000 for the
same period in 2007.
The
Company continued to invest in pharmaceutical research and development including
QR448(a), a veterinary anti-viral compound against Infectious Bronchitis Virus
(IBV) in poultry, and QR-333, an investigational new formulation for treating
conditions associated with diabetic peripheral neuropathy.
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 by developing natural-source potential prescription products
particularly for diabetic peripheral neuropathy, avian flu in animals,
rheumatoid arthritis and for protection against ionizing
radiation.
The
following is a summary of ethical pharmaceutical activities that occurred during
2008 and 2009 to date:
Ongoing
Quigley Pharma research and development initiatives include investing in its key
pharmaceutical formulations, QR-333. The last subject in the Phase
IIb study has completed treatment at the end November 2008 and the study is now
in the final stage of data collection, evaluation and study
conclusions. The Company, after collecting all the patient
information from 21 Study centers and conferring with its panel of experts on
the data, will draft and report study conclusions, as they are
available.
The Phase
IIb study was designed to evaluate the safety and efficacy of QR-333, a unique
topical formulation designed to offer physicians and patients an effective, easy
to administer, safe treatment for diabetic peripheral neuropathy with little to
no side effects. To date there is no fully effective treatment for
diabetic neuropathy. Current treatment options are limited to
products such as NSAIDs, analgesics, anticonvulsants, antidepressants, etc.,
which are often not well tolerated by patients.
Quigley
Pharma generated positive results of its study to determine the duration of the
anti-viral effect of QR448(a), a veterinary anti-viral compound against
Infectious Bronchitis Virus (IBV) in commercial broiler chickens, a consumer
meat type bird. QR448(a) also prevented the transmission of IBV from
infected to non-infected 2 week old commercial broiler chickens, a consumer meat
type bird.
Veterinary
poultry products industry experts and those familiar with prevention and control
of IBV recognize that abating transmission is perhaps one of the most important
ways to economically prevent, control and manage potential losses due to IBV
outbreaks.
During
the first quarter of 2009, the Company signed a license with assignment of
ownership agreement with Levlad, LLC/Natures Gate, a manufacturer and marketer
of personal care products based on botanicals, for its patented formulation
QR-340, a clinically tested compound developed by Quigley Pharma, shown to
improve the appearance of scars. The general terms of the agreement
allow the assignee to further refine, develop and commercialize the product with
exclusivity and eventual full ownership of the patent within five years,
beginning January 2009, with required royalty payments totaling $1.1 million to
The Quigley Corporation over the time period. If minimum payments and terms are
not met within the five year period, Quigley retains full rights and ownership
of the property, however, Levlad can continue to pay per unit royalties beyond
five years for a non-exclusive license.
2
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)
3
Consolidated Statements of
Operations (Unaudited)
The
following represents condensed financial data (in thousands) except per share
data:
|
Three-Months
Ended
December
31, 2008
|
Three-Months
Ended
December
31, 2007
|
Year
Ended
December
31, 2008
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Year
Ended
December
31, 2007
|
|||||||||||||
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($)
|
($)
|
($)
|
($)
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|||||||||||||
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Net
Sales
|
6,779 | 10,743 | 20,507 | 28,242 | ||||||||||||
|
Gross
profit
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2,863 | 7,643 | 11,413 | 18,556 | ||||||||||||
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Sales
& marketing expenses
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2,508 | 1,084 | 5,958 | 4,995 | ||||||||||||
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Administrative
expenses
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1,743 | 3,177 | 7,943 | 9,627 | ||||||||||||
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Research
& development
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612 | 1,690 | 4,242 | 6,482 | ||||||||||||
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Income
taxes (benefit)
|
- | - | - | - | ||||||||||||
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Income
(Loss) from:
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||||||||||||||||
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Continuing
operations
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(1,965 | ) | 1,818 | (6,410 | ) | (1,856 | ) | |||||||||
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Discontinued
operations
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- | (157 | ) | 876 | (602 | ) | ||||||||||
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Net
Income (Loss)
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(1,965 | ) | 1,661 | (5,534 | ) | (2,458 | ) | |||||||||
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Diluted
income (loss) per share:
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||||||||||||||||
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Continuing
operations
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($0.15 | ) | $0.13 | ($0.50 | ) | ($0.14 | ) | |||||||||
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Discontinued
operations
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- | ($0.01 | ) | $0.07 | ($0.05 | ) | ||||||||||
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Net
income (loss)
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($0.15 | ) | $0.12 | ($0.43 | ) | ($0.19 | ) | |||||||||
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Diluted weighted average common shares
outstanding
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12,905,883 | 13,396,497 | 12,877,983 | 12,728,706 | ||||||||||||
Consolidated Balance Sheets
(Unaudited)
The
following represents condensed financial data (in thousands) at December 31,
2008 and 2007:
|
2008
($)
|
2007
($)
|
|||||||
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Cash
& cash equivalents
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11,957 | 15,134 | ||||||
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Accounts
receivable, net
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4,524 | 6,649 | ||||||
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Inventory
|
3,001 | 4,136 | ||||||
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Total
current assets
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20,666 | 28,835 | ||||||
|
Total
assets
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24,369 | 33,502 | ||||||
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Total
current liabilities
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6,595 | 10,258 | ||||||
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Total
stockholders’ equity
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17,744 | 23,244 | ||||||
4