Zila Takes Steps to Restructure Its Business
August 14 2007 - 10:30AM
PR Newswire (US)
- Company Poised For Growth - PHOENIX, Aug. 14
/PRNewswire-FirstCall/ -- Zila, Inc. (NASDAQ:ZILA), announced it
has taken significant steps to restructure its business through the
amendment of its $12 million convertible note, an evaluation of its
OraTest program and a major cost reduction program. Debt Covenant
Amendments Zila has successfully completed the restructuring of its
convertible debt instrument. The $12 million convertible note, held
by two of Zila's largest investors, Visium Asset Management and
Balyasny Asset Management, was amended, removing restrictive
covenants which free up additional working capital and further
preserve cash by providing the Company with an option to make
interest payments on the note with cash or stock. In a separate
transaction, the Company repurchased 932,832 shares of common stock
from Visium funds at the market price of $1.34 per share as well as
227,270 warrants priced at a Black-Scholes value of $0.66 per
warrant. OraTest Evaluation As discussed in its recent third
quarter fiscal year 2007 earnings call, management indicated that
it was in the process of conducting a thorough review of all
aspects of the OraTest program. This review was to include its
history, present status and future prospects, including OraTest's
regulatory path to approval with FDA and its post-approval
commercial potential. Having completed the review, the Company has
decided to continue enrollment in the Phase III clinical trial at
least through September, 2007. Based on the study design and
statistical powering of the trial, the endpoint may be met within
this timeframe. However, even if the endpoint is met, there would
be considerable activities required to submit a New Drug
Application (NDA). The actions required are Chemistry,
Manufacturing and Control (CMC) and clinical, which may include a
second clinical trial to support the NDA. The Company has begun the
process of seeking a partner that will be needed to continue the
OraTest program. Cost Reduction and Restructuring The Company has
taken certain actions to reduce costs and streamline its operations
as it begins its new fiscal year. The Company eliminated
approximately 20 full-time positions, and full-time equivalent
consultants, representing an estimated annual cost of approximately
$3 million. The cost to achieve these savings was approximately
$800,000. In addition, given the previously disclosed uncertainty
with respect to the regulatory objectives for OraTest, the Company
may incur an impairment charge with respect to OraTest assets which
include inventory, purchased technology rights, patents and pending
patents and fixed assets with an April 30, 2007 book value of
approximately $5.5 million. David R. Bethune, Zila Chairman,
commented, "With these actions, I believe we now have the
opportunity to build a solid growth-focused company." About Zila,
Inc. Zila, Inc., headquartered in Phoenix, is an oral cancer
screening company focused on the prevention and treatment of oral
disease. Zila is dedicated to establishing ViziLite(R) Plus as the
new standard of care for the early detection of oral abnormalities
that could lead to cancer, with an initial focus on the dental
market through Pro-Dentec(R), a leading designer, manufacturer and
marketer of Soft Tissue Management (STM(R)) products. Sold
exclusively and directly to dental professionals, Pro-Dentec's core
products include the Rota-dent(R) Professional Powered Brush, the
Pro- Select3(R) Piezo-Ultrasonic Scaler System and a suite of
pharmaceutical STM(R) products for both in-office and home-care
use. For more information about Zila, visit http://www.zila.com/.
Safe Harbor Statement This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are based largely on Zila's
expectations or forecasts of future events, can be affected by
inaccurate assumptions and are subject to various business risks
and known and unknown uncertainties, a number of which are beyond
the Company's control. Therefore, actual results could differ
materially from the forward-looking statements contained herein. A
wide variety of factors could cause or contribute to such
differences and could adversely impact revenues, profitability,
cash flows and capital needs. There can be no assurance that the
forward-looking statements contained in this press release will, in
fact, transpire or prove to be accurate, and we disclaim any
obligation to update or revise any such forward-looking statements.
For a more detailed description of these and other cautionary
factors that may affect Zila's future results, please refer to the
documents we file with the Securities and Exchange Commission,
including our Form 10-K for the fiscal year ended July 31, 2006,
our Current Report on Form 8-K filed on December 28, 2006, and our
Form 10-Q for the quarter ended April 30, 2007. DATASOURCE: Zila,
Inc. CONTACT: Robert Jaffe of PondelWilkinson, Inc.,
+1-310-279-5969 Web site: http://www.zila.com/
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