TEMPE, Ariz., March 14, 2007 (PRIME NEWSWIRE) -- OrthoLogic Corp. (Nasdaq:OLGC) today announced financial results for the year ending December 31, 2006. Net loss was $31.9 million, or $0.78 per share versus a net loss of $27.2 million or $0.72 per share for the year ended December 31, 2005. The $4.7 million increase in net loss for 2006 compared to the same period in 2005 results primarily from $2.8 million of stock compensation expense, recognition of a $2.1 million Chrysalin product platform patent impairment loss, $8.4 million of in-process research and development costs related to the acquisition of the AZX100 technology platform and recognition of income tax expense related to the recording of a valuation allowance of $1.1 million for a deferred tax asset related to an Alternative Minimum Tax credit carryover. These items were partially offset by the decrease in fracture repair clinical trial activity compared to the same period in 2005 and a general reduction of expenses due to cost containment efforts. Cash used in operations in 2006 was $18.9 million. Our cash position was favorably impacted by the receipt of $3.0 million from the exercise of stock options and the NovaQuest transactions, whereby we sold a total of 1,262,531 shares of our common stock for gross proceeds of $3.5 million.
OrthoLogic began 2006 with $83.6 million in cash and investments and ended the fourth quarter of 2006 with $70.2 million in cash and investments, a net change of $13.4 million versus original guidance of $35 million. For 2007, the Company forecasts a cash burn of $18.0 million - $19.0 million.
The Company will be investing approximately $4.0 million - $4.5 million in connection with the pending purchase of a new 34,440 square foot single-story office and laboratory facility in Phoenix, AZ. This estimate is not included in the forecasted cash burn. Management believes the facility purchase is a sound financial decision. Owning affords OrthoLogic strategic flexibility that entering a five-to-seven-year lease does not, and it will be substantially more cost-effective. The decision was necessitated by the expiration at the end of 2007 of the lease on OrthoLogic's 100,000 square foot facility in Tempe, AZ.
Management will host a conference call and webcast today at 4:30 PM EDT (1:30 PM MT/PDT). The call may be accessed at 866-761-0749 (domestic) or 617-614-2707 (international), with access code 11208335, or by logging onto the Investors section of the Company's website, www.orthologic.com.
A replay will be available beginning today at 6:30 PM EDT until April 13, 2007, and may be accessed at 888-286-8010 (domestic) or 617-801-6888 (international), with access code 68668590.
About OrthoLogic
OrthoLogic is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served conditions. The Company is focused on the development and commercialization of two product platforms: Chrysalin(r) (TP508) and AZX100.
Chrysalin, the Company's novel synthetic 23-amino acid peptide, is being studied in two lead indications, both of which represent areas of significant unmet medical need -- fracture repair and diabetic foot ulcer healing. Based on the Company's pioneering scientific research of the natural healing cascade, OrthoLogic has become a leading company in bone and tissue repair. The Company owns exclusive worldwide rights to Chrysalin.
AZX100 is a novel synthetic pre-clinical 24-amino acid peptide, one of a new class of compounds in the field of smooth muscle relaxation called Intracellular Actin Relaxing Molecules, or ICARMs(tm). AZX100 is currently being evaluated for medically and commercially significant applications, such as prevention of keloid scarring, treatment of vasospasm associated with subarachnoid hemorrhage, and treatment of asthma. OrthoLogic has an exclusive worldwide license to AZX100.
OrthoLogic's corporate office is in Tempe, Arizona. For more information, please visit the Company's website: www.orthologic.com.
Forward-Looking Statements
Statements in this document or otherwise attributable to OrthoLogic regarding its 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 may 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 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 the Company's products; the Company's inability to successfully and cost effectively develop or outsource manufacturing and marketing of any products it is able to bring to market; changes in FDA or other regulations that affect its ability to obtain regulatory approval of its products, increase its manufacturing costs or limit its ability to market its products; the possible need for additional capital in the future to fund the continued development of its product candidates; and other factors discussed in the Company's Form 10-K for the fiscal year ended December 31, 2006, and other documents on file with the Securities and Exchange Commission.
ORTHOLOGIC CORP.
(A Development Stage Company)
BALANCE SHEET
December 31,
--------------------
2006 2005
(in thousands)
--------------------
Current assets
Cash and cash equivalents $ 18,047 $ 35,111
Short-term investments 35,977 46,437
Prepaids and other current assets 1,950 857
--------------------
Total current assets 55,974 82,405
Furniture and equipment, net 409 525
Long-term investments 16,206 2,084
Deferred income taxes -- 1,106
Patents, net -- 2,223
--------------------
Total assets $ 72,589 $ 88,343
====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,621 $ 1,036
Accrued compensation 584 711
Accrued clinical 133 544
Accrued severance and other restructuring
costs 366 602
Other accrued liabilities 737 1,089
--------------------
Total current liabilities 3,441 3,982
Deferred rent and other non-current
liabilities -- 183
--------------------
Total liabilities 3,441 4,165
Stockholders' Equity
Common Stock $.0005 par value;
100,000,000 shares authorized; 41,564,291
and 38,124,742 shares issued and outstanding
in 2006 and 2005, respectively 21 19
Additional paid-in capital 188,236 171,355
Accumulated deficit (119,109) (87,196)
--------------------
Total stockholders' equity 69,148 84,178
--------------------
Total liabilities and stockholders' equity $ 72,589 $ 88,343
====================
ORTHOLOGIC CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
As a
Development
Stage
Company
Aug. 5,
2004 -
Years Ended December 31, Dec. 31,
2006 2005 2004 2006
--------------------------------------
OPERATING EXPENSES (in thousands, except per
share data)
General and administrative $ 6,558 $ 4,910 $ 3,306 $ 13,346
Research and development 19,661 25,444 17,116 53,185
Other divestiture and related
gains -- (250) (347) (375)
Purchased in-process research
and development 8,471 -- 25,840 34,311
--------------------------------------
Total operating expenses 34,690 30,104 45,915 100,467
Interest and other income,
net (3,883) (2,640) (1,464) (7,274)
--------------------------------------
Loss from continuing
operations before taxes 30,807 27,464 44,451 93,193
Income tax expense (benefit) 1,106 (108) (642) 356
--------------------------------------
Loss from continuing
operations 31,913 27,356 43,809 93,549
Discontinued operations - net
gain on the sale of the
bone device business, net of
taxes of $0, $96, ($363),
($267), respectively -- (154) (2,048) (2,202)
--------------------------------------
NET LOSS $ 31,913 $ 27,202 $ 41,761 $ 91,347
--------------------------------------
Net loss per share of
continuing operations,
basic and diluted $ 0.78 $ 0.72 $ 1.22
============================
Net gain per share of
discontinued operations,
basic and diluted $ -- $ -- $ (0.06)
============================
Net loss per share, basic
and diluted $ 0.78 $ 0.72 $ 1.16
============================
Basic and diluted shares
outstanding 40,764 38,032 35,899
============================
ORTHOLOGIC CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOW
As a
Development
Stage
Company
Aug. 5,
2004 -
Years Ended December 31, Dec. 31,
2006 2005 2004 2006
--------------------------------------------
(in thousands)
OPERATING ACTIVITIES
Net loss $ (31,913) $ (27,202) $ (41,761) $ (91,347)
Non-cash items:
Deferred taxes 1,106 -- (336) 770
Depreciation and
amortization 2,833 392 187 3,265
Non-cash stock
compensation 2,781 162 6 2,943
Gain on sale of bone
stimulator business -- (250) (2,048) (2,298)
Purchased in-process
research and
development 8,471 -- 25,840 34,311
Change in other
operating items:
Prepaids and other
current assets (1,094) 424 827 (241)
Accounts payable 334 203 632 650
Accrued liabilities (1,422) (294) (2,284) (933)
--------------------------------------------
Cash flows used in
operating activities (18,904) (26,565) (18,937) (52,880)
--------------------------------------------
INVESTING ACTIVITIES
Expenditures for
furniture and
equipment, net (196) (268) (86) (515)
Proceeds from sale of
assets -- 7,000 -- 7,000
Cash paid for assets of
AzERx/CBI (390) -- (3,668) (4,058)
Cash paid for patent
assignment rights (250) (400) -- (650)
Purchases of
investments (56,509) (48,823) (91,092) (145,894)
Maturities of
investments 52,847 65,502 62,547 151,649
--------------------------------------------
Cash flows provided by
(used in) investing
activities (4,498) 23,011 (32,299) 7,532
--------------------------------------------
FINANCING ACTIVITIES
Net proceeds from stock
option exercises 2,962 288 5,256 4,612
Net proceeds from sale
of stock 3,376 -- -- 3,376
--------------------------------------------
Cash flows provided by
financing activities 6,338 288 5,256 7,988
--------------------------------------------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (17,064) (3,266) (45,980) (37,360)
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD 35,111 38,377 84,357 55,407
---------------------------------------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 18,047 $ 35,111 $ 38,377 $ 18,047
=============================================
Supplemental Disclosure
of Non-Cash Investing
Activities
Cash paid during the
year for interest $ -- $ -- $ 4
Cash paid during the
year for income taxes $ -- $ -- $ 2,679
AzERx and CBI
Acquisition:
Current assets
acquired $ -- $ -- $ 29 $ 29
Patents acquired -- -- 2,142 2,142
Liabilities acquired
and accrued
acquisition costs (317) -- (140) (457)
Original investment
reversal -- -- (750) (750)
In-process research
and development
acquired 8,471 -- 25,840 34,311
Common stock issued
for acquisition (7,764) -- (23,453) (31,217)
---------------------------------------------
Cash paid for
acquisition $ 390 $ -- $ 3,668 $ 4,058
=============================================