OrthoLogic Reports Second Quarter 2005 Results TEMPE, Ariz., July
26 /PRNewswire-FirstCall/ -- OrthoLogic Corp. (NASDAQ:OLGC) today
announced financial results for the second quarter ended June 30,
2005. OrthoLogic reported a net loss of $6.6 million, or $(0.17)
per share, for the second quarter of 2005, compared to a net loss
of $4.2 million, or $(0.12) per share in the second quarter of
2004. Second quarter operating expenses totaled $7.3 million,
compared to operating expenses of $4.5 million in the second
quarter of 2004. The increase over prior year operating costs was
primarily the result of the company's expanded efforts in research,
development and clinical activities for multiple indications of the
Chrysalin(R) Product Platform. Pursuant to the Patent Assignment
Agreement entered into in connection with the acquisition of
substantially all the assets and intellectual property of Chrysalis
BioTechnology, Inc., the company paid $400,000 to the University of
Texas for certain patent rights related to the Chrysalin
development program. Chrysalin, or TP508, is a 23-amino acid
synthetic peptide representing a receptor-binding domain of the
human thrombin molecule, a naturally occurring molecule in the
body, that has the potential to accelerate the natural cascade of
healing events in both soft tissue and bone repair. At June 30,
2005, OrthoLogic had cash, cash equivalents, and investments of
$91.1 million. "During the second quarter and moving forward
through 2005, we have directed our focus toward advancing our lead
program in fracture repair at an accelerated pace," stated James M.
Pusey, M.D., president and chief executive officer. "We are also
dedicated to optimizing the efficacy of the Chrysalin compound in
several delivery mechanisms, including an injectable formulation, a
gel formulation, and time released microspheres." Updates on
Chrysalin Clinical Program Fracture Repair: In the second quarter,
OrthoLogic completed enrollment in its pivotal Phase 3 human
clinical trial for fracture repair. The trial is a Phase 3
double-blind, randomized, placebo-controlled trial to compare the
safety and efficacy of a single percutaneous injection of Chrysalin
in saline at 10 micrograms/ml versus a saline placebo control. The
trial includes 503 patients with unstable and/or displaced distal
radius fractures enrolled in 27 U.S. centers, and is designed to
measure how quickly wrist fractures in patients injected with
Chrysalin heal as measured by the removal of immobilization.
Accelerated removal of immobilization allows patients to initiate
hand therapy and regain full function of their wrists and hands
sooner. The clinical trial's secondary efficacy endpoints include
radiographic analysis of healing, as well as clinical, functional
and patient outcome parameters. OrthoLogic expects to release
initial efficacy results for the Phase 3 trial in the first half of
2006. In addition to the Phase 3 clinical trial in fracture repair,
a Phase 2b dosing trial is underway to establish the lower dose
range of Chrysalin versus a placebo control. Diabetic Ulcer
Healing: OrthoLogic has completed a Phase 1/2 study of Chrysalin in
diabetic ulcer healing, which showed significant effects in the
foot ulcer sub-population of 35 patients. Final study results will
be submitted to a peer-reviewed journal this year. The company is
developing a gel formulation of Chrysalin for diabetic ulcer
healing and plans to submit a formulation amendment to the existing
and active Investigational New Drug ("IND") application for this
indication. Cartilage Defect Repair: OrthoLogic is preparing for an
IND application for a Chrysalin-based product candidate for
cartilage defect repair, and is developing a sustained microsphere
formulation for delivery of Chrysalin in this indication. "We are
excited by the potential that Chrysalin has shown in many of our
preclinical studies toward the treatment of traumatic and chronic
orthopedic indications in bone and soft tissue as well as
cardiovascular repair and wound healing," concluded Dr. Pusey.
"With the additional potential indications, plus our ongoing
late-stage trials in fracture repair, we are forging ahead as a
biotechnology and drug development company focused on developing
therapeutic peptides." Upcoming Milestones OrthoLogic expects to
complete data collection in the Phase 3 trial for wrist fractures
as well as follow-up for the Phase 1/2 spine fusion safety trial by
the end of 2005. In addition, the company seeks to submit Phase 1/2
data from the diabetic foot ulcer trial to a peer-reviewed journal
and develop a Phase 2 protocol for the first Chrysalin gel
formulation for use in a diabetic foot ulcer trial. By year-end,
the company also expects to prepare an IND for an initial human
clinical trial for cartilage defect repair. Conference Call
Information As previously announced, management will host a
conference call and webcast today at 4:30 p.m. EDT (1:30 p.m. PDT).
To access the call, participants may dial 800-289-0544 (domestic)
or 913-981-5533 (international) and provide the access code
6064597. A replay of the call will be available beginning July 26,
2005, at 7:30 p.m. EDT until August 25, 2005, at 12:59 a.m. EDT. To
access the replay, please dial 888-203-1112 (domestic) or
719-457-0820 (international) and provide the access code 6064597.
Additionally, the conference call will be webcast on the Investor
Relations section of the company's website,
http://www.orthologic.com/. About Chrysalin(R) Chrysalin (TP508) is
a 23-amino acid peptide that represents the receptor-binding domain
of the human thrombin molecule, the naturally occurring agent
responsible for initiating many of the cellular events responsible
for repair in both soft tissue and bone. All cells contain
high-affinity thrombin receptors, which led to the hypothesis that
thrombin does more than form blood clots after wounding. It was
discovered that thrombin acted as a signaling molecule to initiate
the early stages of tissue repair. The basis for the development of
Chrysalin started in 1985, when a class of synthetic peptides was
developed representing a specific receptor-binding domain of
thrombin that activates specific wound-healing signals. Drugs based
on the Chrysalin peptide can be used to mimic part of the thrombin
response without stimulating the events associated with blood
clotting and therefore have the potential to accelerate the natural
cascade of healing events. About OrthoLogic Corp. OrthoLogic is a
drug-development company focused on commercializing several
potential therapeutics comprising the Chrysalin(R) Product
Platform, a series of product candidates aimed at treating
traumatic and chronic orthopedic indications in bone and soft
tissue as well as cardiovascular repair and wound healing. All of
these potential products are based on the Chrysalin synthetic
peptide, also known as TP508. OrthoLogic is actively pursuing
multiple indications for potential Chrysalin-based products. These
include product candidates for fracture repair and chronic diabetic
ulcers which are in human clinical trials, and cartilage defect
repair, which is in late-stage preclinical trials. OrthoLogic's
product development pipeline includes several other indications for
which the company has positive preclinical results or clinical
results, including spinal fusion, dental bone formation and
myocardial revascularization. For more information, please visit
the company's website: http://www.orthologic.com/. Forward-Looking
Statements Statements in this press release or otherwise
attributable to OrthoLogic regarding our business that are not
historical facts are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements, which include the timing and
acceptability of FDA filings and the efficacy and marketability of
potential products, involve risks and uncertainties that could
cause actual results to differ materially from predicted results.
These risks include: delays in obtaining or inability to obtain
FDA, institutional review board or other regulatory approvals of
preclinical or clinical testing; unfavorable outcomes in our
preclinical and clinical testing; the development by others of
competing technologies and therapeutics that may have greater
efficacy or lower cost; delays in obtaining or inability to obtain
FDA or other necessary regulatory approval of our products; our
inability to successfully and cost effectively develop or outsource
manufacturing and marketing of any products we are able to bring to
market; changes in FDA or other regulations that affect our ability
to obtain regulatory approval of our products, increase our
manufacturing costs or limit our ability to market our products;
our inability to raise additional capital in the future needed to
fund the continued development of our Chrysalin Product Platform;
and other factors discussed in our Form 10-K for the fiscal year
ended December 31, 2004, our Form 10-Q for the quarter ended March
31, 2005, and other documents we file with the Securities and
Exchange Commission. OrthoLogic Corp. (A Development Stage Company)
Statements of Operations (in thousands, except per share data)
(Unaudited) As a Development Three months Six months Stage ending
June 30, ending June 30, Company 8/5/2004 - 2005 2004 2005 2004
6/30/2005 OPERATING EXPENSES General and administrative $1,273 $616
$2,183 $1,171 $4,061 Research and development 5,991 3,987 11,394
7,358 19,474 CPM divestiture and related gains (81) (250) (192)
(375) CBI in process research and development 0 0 0 25,840 Total
operating expenses 7,264 4,522 13,327 8,337 49,000 Other income,
net 654 301 1,206 607 1,957 Loss from continuing operations (6,610)
(4,221) (12,121) (7,730) (47,043) Income tax benefit 0 (12) (294)
(654) Net loss from continuing operations (6,610) (4,221) (12,109)
(7,436) (46,389) Discontinued operations Net gain on the sale of
the bone device business, net of taxes of $0, $0, $0, $0, ($363)
respectively 0 0 0 0 2,048 Net income from discontinued operations
0 0 0 0 2,048 NET LOSS ($6,610) ($4,221)($12,109) ($7,436)
($44,341) Per Share Information: Net loss from continuing
operations Basic ($0.17) ($0.12) ($0.32) ($0.22) Diluted ($0.17)
($0.12) ($0.32) ($0.22) Net loss Basic ($0.17) ($0.12) ($0.32)
($0.22) Diluted ($0.17) ($0.12) ($0.32) ($0.22) Basic and diluted
shares outstanding 38,220 34,528 38,134 34,419 ORTHOLOGIC CORP. (A
Development Stage Company) BALANCE SHEETS (in thousands except
share and per share data) ASSETS June 30, December 31, 2005 2004
(Unaudited) Current assets Cash and cash equivalents $34,733
$38,377 Short-term investments 49,847 53,642 Accounts receivable,
net 8 34 Prepaids and other current assets 1,470 1,019 Total
current assets 86,058 93,072 Furniture and equipment, net 458 478
Escrow receivable, net 6,895 6,828 Long-term investments 6,500
11,558 Deferred income taxes - non-current 1,106 1,106 Trademarks
and patents 2,351 2,142 Total assets $103,368 $115,184 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable
$1,243 $833 Accrued compensation 566 648 Accrued taxes 114 114
Excess space reserve 160 559 Accrued clinical 1,111 1,236 Other
accrued liabilities 1,034 727 Total current liabilities 4,228 4,117
Deferred rent and capital lease obligation 101 137 Non-current
portion of excess space reserve 174 0 Total liabilities 4,503 4,254
Stockholders' Equity Common Stock $.0005 par value; 19 19
100,000,000 and 50,000,000 shares authorized; 38,224,742 and
38,011,642 shares issued and outstanding Additional paid-in capital
170,949 170,905 Accumulated deficit (72,103) (59,994) Total
stockholders' equity 98,865 110,930 Total liabilities and
stockholders' equity $103,368 $115,184 DATASOURCE: OrthoLogic Corp.
CONTACT: Sherry A. Sturman, Chief Financial Officer of OrthoLogic,
+1-602-286-5436, or Melanie Friedman of Stern Investor Relations,
Inc., +1-212-362-1200 Web site: http://www.orthologic.com/
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