Emisphere Technologies, Inc. (OTCBB:EMIS) ("Emisphere" or the
"Company") today announced its financial results for the fourth
quarter and year ended December 31, 2013. The Company will host a
conference call this morning at 8:30 AM ET to discuss these
results.
The live webcast of the conference call can be accessed through
the Company's web site at: www.emisphere.com. The live conference
call dial-in number is 1 (877) 303-9483 (United States and Canada)
or 1 (760) 666-3584 (International). In addition, an archive of the
webcast can be accessed through the same link and an audio replay
of the call will be available beginning at 1:00 PM ET today through
11:59 PM ET on April 11, 2014 by calling 1 (855) 859-2056 (United
States and Canada) or 1 (404) 537-3406 (International). The
conference replay PIN is 19712808.
FOURTH QUARTER 2013 FINANCIAL RESULTS
Emisphere reported a net loss of $2.8 million, or $0.05 per
basic and diluted share for the quarter ended December 31, 2013,
compared to net income of $0.6 million, or $0.01 per basic and
diluted share for the quarter ended December 31, 2012.
The Company reported an operating loss of $2.3 million for the
fourth quarter 2013, compared to an operating loss of $2.2 million
for the same period in 2012.
Total operating expenses were $2.3 million for the fourth
quarter 2013, an increase of $0.2 million or 8% compared to the
same period in 2012. Total operating expenses include research and
development costs of $0.2 million (a decrease of $0.5 million or
71% compared to the same period in 2012), and general and
administrative expenses of $2.1 million (an increase of $0.7
million or 52% compared to the same period in 2012). Other expense
for the fourth quarter of 2013 was $0.4 million compared to other
income of $1.3 million for the fourth quarter of 2012, an increase
of $1.8 million, due primarily to a decrease in fair value of
derivative instruments of $1.5 million, and a $0.3 million increase
in interest expense.
YEAR ENDING DECEMBER 31, 2013 FINANCIAL
RESULTS
Emisphere reported a net loss of $20.9 million or $0.35 per
basic and diluted share, for the year ended December 31, 2013,
compared to a net loss of $1.9 million, or $0.03 per basic and
diluted share for the year ended December 31, 2012.
Total operating expenses were $7.6 million for the year ended
December 31, 2013 compared to $6.8 million for the year ended
December 31, 2012, an increase of $0.8 million or 11%. Total
operating expenses include research and development costs of $0.8
million (a decrease of $1.0 million or 55% compared to 2012), and
general and administrative expenses of $6.7 million (an increase of
$1.8 million or 37% compared to 2012).
Other expense for the year ended December 31, 2013 was $13.3
million, compared to other income of $1.9 million for the year
ended December 31, 2012. The $15.2 million decrease was due
primarily to a $16.5 million increase in the fair value of
derivative instruments, partially offset by a $1.3 million decrease
in interest expense due to the restructuring of the Company's
debt.
A state income tax benefit for 2013 of approximately $1.7
million was received and recognized during the first quarter 2014
from the proceeds from the sale of approximately $20.8 million of
New Jersey net operating losses through the Technology Business
Certificate Transfer Program, sponsored by the New Jersey Economic
Development Authority.
Weighted average basic and diluted shares outstanding for the
years ended December 31, 2013 and December 31, 2012 were
60,687,478.
LIQUIDITY
As of December 31, 2013, we had approximately $4.1 million in
cash, a net increase of $2.6 million from December 31, 2012,
approximately $1.4 million working capital deficiency, a
stockholders' deficit of approximately $86.8 million and an
accumulated deficit of approximately $488.8 million.
On January 21, 2014, the Company received approximately $1.7
million from the sale of unused net operating losses by
participating in the Technology Business Tax Certificate Transfer
Program, sponsored by the New Jersey Economic Development
Authority. Based on this receipt and upon the receipt of a $10
million payment from Novo Nordisk during May 2013, the Company
estimates that it will have sufficient cash to continue to prepare
for the market development and domestic launch of, and to explore
global markets opportunities for its Eligen® Oral B12 Rx product,
and otherwise continue operations through approximately the second
quarter of 2014.
However, we do not have sufficient resources to support the
commercial launch of Eligen® Oral B12 Rx in the U.S. market or to
develop any new products or technologies at this time. The Company
requires additional capital to implement its business plan
including the commercial launch of Eligen® Oral B12 Rx. We cannot
assure that such financing will be available on favorable terms or
at all. Additionally, these conditions may increase the cost of
raising capital. If additional capital is raised through the sale
of equity or convertible debt securities, the issuance of such
securities would result in dilution to our existing
stockholders.
The Company estimates that if it fails to raise additional
capital or obtain substantial cash inflows from existing or new
partners prior to the third quarter of 2014, the Company would be
forced to cease operations. Even if we are successful in raising
additional capital to meet our obligations and otherwise continue
operations, our business will still require substantial additional
investment that we have not yet secured. These conditions raise
substantial doubt about our ability to continue as a going concern.
Consequently, the audit reports prepared by our independent
registered public accounting firm relating to our financial
statements for the years ended December 31, 2013, 2012 and 2011
include an explanatory paragraph expressing the substantial doubt
about our ability to continue as a going concern.
The Company is pursuing several courses of action to address its
deficiency in capital resources including the global
commercialization of B12, seeking new partnerships, leveraging
existing partnerships, and capital markets financings.
PRODUCT DEVELOPMENTS
The Company continues to emphasize the commercialization of
Eligen® Oral B12 Rx, seek new high-value partnerships, evaluate new
prescription Medical Foods commercial opportunities, reprioritize
the product pipeline, and promote new uses for the Eligen®
Technology.
As a result of our recent steps to refocus and prioritize our
commercial opportunities, and promising trends in the industry that
should provide new growth opportunities, we believe that
Emisphere's new business strategy will present opportunities for
growth and value creation for the Company and its shareholders. We
recognize, however, that further development, exploration and
commercialization of our technology entails substantial risk and
requires significant operational expenses. We continue to refocus
our efforts on strategic development initiatives to reduce
non-strategic spending aggressively, and seek to obtain the funding
necessary to implement our new corporate strategy. There can be no
assurances, however, that the Company will be able to secure
adequate funding to meet its current obligations and successfully
pursue its strategic direction. Furthermore, despite our optimism
regarding the Eligen® Technology, even in the event that the
Company is adequately funded, there is no guarantee that any of our
products or product candidates will perform as hoped or that such
products can be successfully commercialized.
Emisphere's pipeline includes a broad range of product
candidates in different stages of development.
- Novo Nordisk is using Emisphere's Eligen® Technology to develop
and commercialize oral formulations of Novo Nordisk's insulin and
GLP-1 receptor agonists. During December 2013, Novo Nordisk
announced that it had initiated its first Phase II clinical trial
with a long-acting oral GLP-1 analog.
- The Company has developed an oral formulation of Eligen® B12
(1000 mcg) for use by B12 deficient individuals. On August 5, 2011
we received notice from the U. S. Patent Office that the U.S.
patent application directed to the oral Eligen® B12 formulation was
allowed. This new patent provides intellectual property protection
for Eligen® B12 in the U.S. through approximately 2029. Currently,
we are evaluating the results of our clinical trials and market
research and exploring alternative development and
commercialization options with the purpose of maximizing the
commercial and health benefits potential of our Eligen® B12
asset.
In addition to the foregoing, the Company is continuing to
pursue a number of pre-clinical programs in collaboration with
other companies, as well as projects on its own, using the
Company's proprietary Eligen® Technology to improve the oral
absorption of selected molecules.
About Emisphere Technologies, Inc.
Emisphere Technologies, Inc. is a specialty pharmaceutical
company that has been transformed during the last 15 months from a
delivery systems development company into a broader
commercial-stage entity. Assuming the Company is successful in
securing necessary funding, of which there can be no assurance, it
plans to launch its first commercial product, Oral Eligen® B12 Rx,
during 2014. Eligen® Oral B12 Rx meets significant
unmet patient and medical needs by combining B12 with our
proprietary delivery system technology. By building on the Eligen
Rx Oral B12 product, the Company intends to establish a sound
product portfolio platform on which to expand its B12 therapeutic
franchise as well as expand internal new product development with
new therapeutic agents. The Company will continue to develop its
existing drug delivery carrier partnerships and expand its carrier
business by seeking out and engaging in new global licensing
opportunities. The Company's strategy is to reemphasize the
commercialization of Eligen® Oral B12 Rx product, build new
high-value partnerships, evaluate new commercial opportunities, and
promote new uses for the Eligen® Technology. The Company's website
is: www.emisphere.com.
Safe Harbor Statement Regarding Forward-looking Statements
The statements in this release and oral statements made by
representatives of Emisphere relating to matters that are not
historical facts (including without limitation those regarding the
timing or potential outcomes of research collaborations or clinical
trials, any market that might develop for any of Emisphere's
product candidates, the sufficiency of Emisphere's cash and other
capital resources and its ability to obtain additional financing to
meet its capital needs) are forward-looking statements that involve
risks and uncertainties, including, but not limited to, the
likelihood that future research will prove successful, the
likelihood that any product in the research pipeline will receive
regulatory approval in the United States or abroad, the ability of
Emisphere and/or its partners to develop, manufacture and
commercialize products using Emisphere's drug delivery technology,
Emisphere's ability to fund such efforts with or without partners,
and other risks and uncertainties detailed in Emisphere's filings
with the Securities and Exchange Commission, including those
factors discussed under the caption "Risk Factors" in Emisphere's
identified in the documents Emisphere has filed, or will file, with
the Securities and Exchange Commission ("SEC"). Copies of
Emisphere's filings with the SEC may be obtained from the SEC
Internet site at http://www.sec.gov. Emisphere expressly disclaims
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in Emisphere's expectations with regard thereto
or any change in events, conditions, or circumstances on which any
such statements are based.
EMISPHERE TECHNOLOGIES,
INC. |
CONDENSED STATEMENTS OF
OPERATIONS |
For the three months
and twelve months ended December 31, 2013 and 2012 |
(in thousands, except share and
per share data) |
|
|
|
|
|
|
For the three months
ended December 31 |
For the twelve
months ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Revenue |
$ -- |
$ -- |
$ -- |
$ -- |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Research and development |
222 |
771 |
836 |
1,867 |
General and administrative
expenses |
2,118 |
1,393 |
6,749 |
4,935 |
Depreciation and
amortization |
3 |
7 |
9 |
29 |
Gain (loss) on sale of fixed
assets |
-- |
(10) |
10 |
(10) |
Total costs and expenses |
2,343 |
2,161 |
7,604 |
6,821 |
Operating loss |
(2,343) |
(2,161) |
(7,604) |
(6,821) |
|
|
|
|
|
Other non-operating income (expense): |
|
|
|
|
Other income (expense): |
11 |
-- |
81 |
45 |
Change in fair value of
derivative instruments |
|
|
|
|
Related party |
327 |
2,416 |
(8,491) |
7,880 |
Other |
583 |
-- |
58 |
230 |
Interest expense, net |
-- |
-- |
-- |
-- |
Related party |
(1,363) |
(1,080) |
(4,955) |
(6,236) |
Other |
-- |
-- |
-- |
-- |
Total other non-operating
income (expense) |
(442) |
1,336 |
(13,307) |
1,919 |
Net loss before income tax benefit |
(2,785) |
(825) |
(20,911) |
(4,902) |
Income tax benefit (expense) |
(28) |
1,452 |
(28) |
2,974 |
Net Income (loss) |
$ (2,813) |
$ 627 |
$ (20,939) |
$ (1,928) |
Net income (loss) per share, basic |
$ (0.05) |
$ 0.01 |
$ (0.35) |
$ (0.03) |
Net income (loss) per share, fully
diluted |
$ (0.05) |
$ 0.01 |
$ (0.35) |
$ (0.03) |
Weighted average shares outstanding,
basic |
60,687,478 |
60,687,478 |
60,687,478 |
60,687,478 |
Weighted average shares outstanding, fully
diluted |
60,687,478 |
60,765,805 |
60,687,478 |
60,687,478 |
|
EMISPHERE TECHNOLOGIES,
INC. |
BALANCE
SHEETS |
|
|
|
|
December
31, |
|
2013 |
2012 |
|
(in thousands except
share data) |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 4,053 |
$ 1,484 |
Accounts receivable |
-- |
1 |
Inventory |
230 |
249 |
Prepaid expenses and other
current assets |
622 |
149 |
Total Current Assets |
4,905 |
1,883 |
Equipment and leasehold improvements,
net |
40 |
12 |
Restricted cash |
-- |
247 |
Security deposits |
34 |
34 |
Total assets |
$ 4,979 |
$ 2,176 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT |
|
|
Current liabilities: |
|
|
Notes payable, including
accrued interest and net of related discount |
$ 556 |
$ 33,607 |
Accounts payable and accrued
expenses |
1,539 |
923 |
Derivative instruments |
|
|
Related party |
3,638 |
1,491 |
Others |
540 |
598 |
Other current liabilities |
30 |
9 |
Total current liabilities |
6,303 |
36,628 |
Notes payable, related party, net of related
discount in 2013 |
32,523 |
-- |
Derivative instruments – Related party |
11,331 |
-- |
Deferred revenue, non-current |
41,616 |
31,614 |
Deferred lease liability, non-current and
other liabilities |
7 |
-- |
Total liabilities |
91,780 |
68,242 |
|
|
|
Stockholders' deficit: |
|
|
|
|
Preferred stock, $.01 par value;
authorized 2,000,000 shares; none issued and outstanding |
|
Common stock, $.01 par value; authorized
2,000,000 shares; issued 60,977,210 shares (60,687,478 outstanding)
as of December 31, 2013 and December 31, 2012 |
610 |
610 |
Additional paid-in-capital |
405,300 |
405,096 |
Accumulated deficit |
(488,759) |
(467,820) |
Common stock held in treasury, at cost;
289,732 shares |
(3,952) |
(3,952) |
Total stockholders'
deficit |
(86,801) |
(66,066) |
Total liabilities and
stockholders' deficit |
$ 4,979 |
$ 2,176 |
CONTACT: For further information contact:
Alan L. Rubino, CEO
973.532.8000 or arubino@emisphere.com
Michael R. Garone, CFO
973.532.8005 or mgarone@emisphere.com