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POZEN Inc. Reports Third-Quarter and Nine-Month Results

CHAPEL HILL, N.C., Nov. 8 /PRNewswire/ -- POZEN Inc. (Nasdaq: POZN), a pharmaceutical development company whose lead product candidate for the treatment of migraine is in late Phase III clinical trials, today announced results for the first time as a public company. The financial performance met management's expectations for the third quarter and nine months ended September 30, 2000. After the quarter closed, POZEN completed its initial public offering, selling 5.75 million shares including the overallotment option.

Third-Quarter Results

POZEN is a development-stage company that has not recorded revenues. For the third quarter, the company had operating expenses excluding non-cash amortization of deferred compensation of $7.9 million compared with $3.0 million for the 1999 third quarter. Non-cash deferred compensation in connection with employee stock option grants was $869,000 and $198,000 for the 2000 and 1999 periods, respectively.

POZEN's net loss attributable to common stockholders was $7.7 million, excluding non-cash deferred compensation, a charge related to preferred stock sold in August 2000, and dividends on preferred stock, versus $3.4 million for the comparable 1999 period. The charge related to the sale of preferred stock was a non-cash charge of $10.7 million that recognized the difference between the deemed fair market value of the preferred stock and the fair market value of the common stock. The preferred stock dividends totaled $439,000. Excluding these items, POZEN's net loss per share would have been $0.28 when the $7.7 million is divided by the 27.4 million shares outstanding after giving effect to the IPO and the exercise of the overallotment option. POZEN's basic and diluted net loss per common share and pro forma net loss per common share are set forth in the following schedule.

Nine-Month Results

Operating expenses, excluding non-cash deferred compensation, were $16.0 million compared with $6.7 million for the 1999 period. Non-cash deferred compensation in connection with employee stock option grants was $2.2 million and $431,000 for the 2000 and 1999 periods, respectively.

POZEN's net loss attributable to common stockholders was $15.4 million, excluding non-cash deferred compensation, a charge related to preferred stock sold in August 2000 and March 2000, and dividends on preferred stock, versus $7.1 million for the comparable 1999 period. The charge related to the preferred stock sales was a non-cash charge of $27.6 million that recognized the difference between the deemed fair market value of the preferred stock and the fair market value of the common stock. The dividends on preferred stock totaled $830,000. Excluding these items, POZEN's net loss per share would have been $0.56 when the $15.4 million is divided by the 27.4 million shares outstanding after giving effect to the IPO and the exercise of the overallotment option.

John R. Plachetka, Pharm.D., POZEN's president and chief executive officer, noted that the company's performance was in line with management's expectations. "The increase in operating expenses was largely due to higher levels of development activity. For the full year ending December 31, 2000, we anticipate that our operating expenses, excluding non-cash deferred compensation, will be between $21 million and $23 million."

Strong, Liquid Balance Sheet

According to the company, if the sale of 5.75 million shares in the IPO had been completed by September 30, 2000, POZEN would have had $97.7 million in cash on hand. The company has no debt. "We believe we have sufficient cash to fund the development of our current product portfolio," Plachetka commented.

Late-Stage Product Pipeline

POZEN's initial focus is on developing products for migraine therapy, a market estimated to exceed $2.0 billion by 2001. The company currently has four products in development. Its lead product candidate, MT 100, which is in late Phase III clinical trials, is an oral, first-line treatment. Data from clinical trials to date indicate that MT 100 provides rapid and sustained migraine relief with minimal side effects. MT 300, which is being developed for relief of severe migraines, is in Phase III testing. MT 400, which is designed to provide faster relief and a reduced relapse rate for migraine sufferers, and MT 500, a product candidate for the prophylactic treatment of migraine, are in initial clinical trials.

"We are proceeding according to schedule with the Phase III trials for MT 100," Plachetka said. "We expect these trials to be completed in the clinic by the end of this year. Our next step will be to file a New Drug Application (NDA) with the Food and Drug Administration (FDA) by the end of 2001. Recently, the FDA approved our Investigational New Drug (IND) for a Phase II clinical trial of MT 400, which we will commence shortly." Additionally, he noted that the company has targeted filing an NDA for MT 300 early in 2002.

Plachetka also discussed POZEN's plans to secure marketing partners to commercialize its products. "Now that we have completed our IPO, we have turned our attention to partnership discussions. Our goal is to have a marketing partner for our lead product candidate, MT 100, by the end of 2001."

POZEN's longer-term goal is to use its license-back model to acquire and develop additional therapeutic products with commercial potential. Plachetka pointed out that members of management have significant experience developing drugs for diseases of the gastrointestinal and respiratory tracts, oncology and infectious diseases.

Third-Quarter Conference Call

POZEN will hold a conference call to discuss third-quarter results and management's outlook for the fourth quarter and next year at 11:00 a.m. EST on Wednesday, November 8, 2000. The call can be accessed live and will be available for replay over the Internet via www.vcall.com and www.streetevents.com. A replay will be available on the company's website, www.pozen.com.

North Carolina-based POZEN Inc. is a pharmaceutical development company committed to building a portfolio of products with significant commercial potential in select therapeutic areas. The company's initial focus is migraine, where it has built a robust portfolio of four product candidates through a combination of innovation and in-licensing. The company's common stock is traded on The Nasdaq Stock Market under the symbol "POZN."

Statements included in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. You should be aware that our actual results could differ materially from those contained in the forward-looking statements, which are based on management's current expectations and are subject to a number of risks and uncertainties, including, but not limited to, our failure to successfully commercialize MT 100 and our other products; unanticipated costs and delays in the development of MT 100 and our other products; our inability to enter into or maintain, and the risks resulting from our dependence upon, collaboration or contractual arrangements necessary for the development, manufacture, commercialization, marketing, sales and distribution of our products; competitive factors; our inability to protect our patents or proprietary rights and obtain necessary rights to third party patents and intellectual property to operate our business; our inability to operate our business without infringing the patents and proprietary rights of others; general economic conditions; the failure of our products to gain market acceptance; our inability to obtain any additional required financing; technological changes; government regulation; changes in industry practice; and one-time events, including those discussed herein and in our Registration Statement filed on Form S-1 (File No. 333-35930) under "Business" or " Risk Factors." We do not intend to update any of these factors or to publicly announce the results of any revisions to these forward- looking statements.

POZEN is on the Internet at www.pozen.com

                                  POZEN Inc.
                           Statements of Operations
                                 (Unaudited)

                            Three Months Ended         Nine Months Ended
                               September 30,             September 30,
                            2000         1999         2000          1999
    Operating expenses:
      General and
       administrative    $1,238,735     $681,284    $3,288,752   $1,442,933
      Research and
       development        7,550,640    2,527,138    14,847,661    5,674,693
    Total operating
      expenses            8,789,375    3,208,422    18,136,413    7,117,626
    Interest income
      (expense), net        235,237     (401,281)      540,049     (443,289)
    Net loss             (8,554,138)  (3,609,703)  (17,596,364)  (7,560,915)

    Deemed dividend to
      preferred
       stockholders      10,741,990           --    27,617,105           --
    Preferred stock
      dividends             439,307           --       829,882           --
    Net loss
      attributable to
       common
        stockholders  $(19,735,435) $(3,609,703)  $(46,043,351) $(7,560,915)

    Basic and diluted
      net loss per
      common share          $(3.35)       $(0.62)       $(7.87)      $(1.29)

    Shares used in
      computing basic
       and diluted net
       loss per
        common share      5,887,246    5,844,167     5,850,520    5,844,167

    Pro forma net loss
      per common
       shares-basic
        and diluted         $(1.00)       $(0.31)       $(2.59)     $(0.68)

    Pro forma weighted
      average
       common shares
        outstanding-basic
         and diluted     19,737,305   11,552,118    17,790,301   11,171,796

CONTACT:
Matt Czajkowski
Chief Financial Officer, of POZEN
+1-919-913-1040
or
General Inquiries
Kathy Brunson of FRB Weber Shandwick
+1-312-640-6696


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