InSite Vision Reports Third Quarter Financial Results
ALAMEDA, Calif., Nov. 19 /PRNewswire-FirstCall/ -- InSite Vision Incorporated
-- an ophthalmic therapeutics, diagnostics and drug- delivery company -- today
reported financial results for the three and nine months ended September 30,
2003.
InSite Vision reported a net loss for the third quarter of 2003 of $1.5 million,
or $0.06 per share, compared with a net loss for the third quarter of 2002 of
$3.1 million, or $0.12 per share. For the nine months ended September 30, 2003,
the net loss was $5.7 million, or $0.23 per share, compared with a net loss of
$8.7 million, or $0.35 per share, for the nine months ended September 30, 2002.
Research and development (R&D) expenses for the third quarter of 2003 decreased
to $793,000, compared with $1.9 million for the third quarter of 2002. R&D
expenses for the nine months ended September 30, 2003 declined to $3.5 million
from $5.7 million for the nine months ended September 30, 2002. The decrease in
R&D expenses reflects cost containment actions taken in the second quarter of
2003 and the reduction in support for external research, partially offset by
costs incurred during the first nine months of 2002 for the license of the
Optineurin gene and related patent filing costs.
Selling, general and administrative (SG&A) expenses decreased to $599,000 from
$1.2 million for the third quarters of 2003 and 2002, respectively, and
decreased to $2.0 million from $3.1 million for the nine months ended September
30, 2003 and 2002, respectively. The decreases in SG&A costs primarily reflect
the reduction in selling expenses related to the initial market introduction of
the OcuGene(R) glaucoma genetic test and other cost containment activities,
partially offset by legal costs related to fundraising efforts and by higher
insurance premiums.
In an effort to reduce expenses the Company implemented several measures during
2003. The actions taken included laying-off approximately 42% of the Company's
workforce, voluntary salary reductions by senior management, ceasing work on all
non-critical external activities, extending payment terms on trade payables and
other measures. Although it is not possible to anticipate all potential effects
the implementation of these expense control activities will have on InSite
Vision and its development, the Company expects that among other things, these
activities will delay the initiation of Phase 3 clinical trials on ISV-401 and
will impact its ability to promote the OcuGene test. The extent and
ramifications of these delays will be dependent upon the Company's ability to
obtain additional funding from private or public equity or debt financings,
collaborative or other partnering arrangements, asset sales or other sources,
the timing of the receipt of such funding and the amount raised through such
funding, if any. There can be no assurance that the Company will be able to
successfully implement these expense reduction plans or funding initiatives or
that it will be able to do so without significantly harming its business,
financial condition or results of operations.
InSite Vision reported $150,000 in cash and cash equivalents at September 30,
2003, compared with $1.2 million at December 31, 2002. The cash balance at
September 30, 2003 includes $500,000 in secured loans received by the Company in
July and August 2003, and $500,000 received from the acquisition of Ophthalmic
Solutions, Inc. and related assumption of convertible debentures. It does not
include $84,000 from a private placement completed in October 2003 or $500,000
in cash received by the Company in November 2003 from the repayment of a
promissory note originally issued to Ophthalmic Solutions in connection with the
convertible debentures InSite Vision assumed from Ophthalmic Solutions. Absent
further additional financing, the Company expects that its cash on hand, funding
commitments and anticipated cash flow from operations will be sufficient to fund
its operations through approximately the beginning of December 2003.
Pursuant to a merger agreement dated September 22, 2003 by and among InSite
Vision, Arrow Acquisition, Inc., a wholly owned subsidiary of InSite Vision and
Ophthalmic Solutions, Ophthalmic Solutions became a wholly owned subsidiary of
InSite Vision on September 22, 2003. Immediately prior to the merger,
Ophthalmic Solutions entered into a convertible debenture purchase agreement
with HEM Mutual Assurance LLC ("HEM"), pursuant to which it sold and issued
convertible debentures to HEM in an aggregate principal amount of up to
$1,000,000 in a private placement. In connection with InSite Vision's
acquisition of Ophthalmic Solutions through the merger, InSite Vision assumed
the rights and obligations of Ophthalmic Solutions in the private placement,
including the gross proceeds raised through the sale of the debentures and
Ophthalmic Solutions' obligations under the debentures and the related purchase
agreement. The acquisition of Ophthalmic Solutions has been, in substance,
reflected as a financing transaction in InSite Vision's accompanying financial
statements, including the receipt of cash, the issuance of debentures and the
issuance of a right to exercise the contingent debenture for an additional
$500,000 of convertible debentures at an exercise price of $500,000. The
Company will accrete the $500,000 discount recorded from the beneficial
conversion feature from the September 22, 2003 issuance date to the stated
redemption date of September 21, 2008. The accretion will be reported as
interest expense with a corresponding increase to convertible debentures. Further, as amounts are converted into common stock, all of the remaining
unamortized discount associated with those shares will be immediately recognized
as interest expense. As of September 30, 2003 approximately $2,000 of the
beneficial conversion feature had been expensed as interest. As of September
30, 2003 the $500,000 convertible debentures reported on the face of the balance
sheet are net of related unamortized debt discount of $498,000.
InSite Vision is engaged in discussions with several institutional investors,
potential collaborative partners and others to obtain sufficient interim
funding, through the issuance of debt or equity securities and/or through
licensing, collaborative, or asset sale arrangements or other sources, prior to
the beginning of December 2003 to enable the Company to continue operations for
an additional 90 to 120 days. If the Company is able to secure such funding, it
is hopeful that it will be able to secure longer-term financing or collaborative
arrangements prior to exhausting such interim funding. However, there can be no
assurance that the Company will be able to obtain such interim funding on
acceptable terms or at all, or if it obtains such interim funding that it will
be able to obtain longer term financing or collaborative arrangements to enable
it to continue its operations. If the Company is not able to obtain additional
interim funding, it will be forced to cease operations.
"Last week we secured the final tranche of our $1 million interim financing,
which has improved our ability to negotiate a longer term financing or
collaborative arrangement," said S. Kumar Chandrasekaran, Ph.D., InSite Vision's
chief executive officer. "We are actively engaged in discussions with several
institutional investors, potential collaborative partners and others to obtain
additional financing." Commenting on other recent developments, Dr. Chandrasekaran said, "We were
pleased last month to announce that the American Stock Exchange has accepted our
plan to regain compliance with our AMEX listing. Based on the acceptance of our
plan, InSite Vision will continue to be listed on the American Stock Exchange,
subject to certain listing standards and conditions, until December 19, 2004.
At that time, our status will be reviewed." Conference Call InSite Vision has scheduled an investor conference call beginning at 5:00 p.m. Eastern Time today to discuss third quarter financial results. To participate
in the live call via telephone, please call (888) 803-7364 for domestic callers
or (706) 634-1033 for international callers. A telephone replay will be
available for 48 hours following the conclusion of the call by dialing (800)
642-1687 (domestic) or (706) 645-9291 (international), and entering reservation
code 3970238.
The live conference call will be available via the Internet on the investor
relations section of the Company's Web site at http://www.insitevision.com/ ,
and a recording of the call will be available for 90 days following the
completion of the call.
InSite Vision is an ophthalmic products company focused on glaucoma, ocular
infections and retinal diseases. In the area of glaucoma, the Company conducts
genomic research using TIGR and other genes. A portion of this research has
been incorporated into the Company's OcuGene glaucoma genetic test for disease
management, as well as ISV-205, its novel glaucoma therapeutic. ISV-205 uses
InSite Vision's proprietary DuraSite drug-delivery technology, which also is
incorporated into the ocular infection products ISV- 401 and ISV-403, and InSite
Vision's retinal disease program. Additional information can be found at
http://www.insitevision.com/ .
This press release and the telephone conference referenced herein may contain
among other things certain statements of a forward-looking nature relating to
future events or the future business performance of InSite Vision. Such
statements entail a number of risks and uncertainties, including but not limited
to: Insite Vision's ability to obtain interim funding from private or public
equity or debt financings, collaborative or other partnering arrangements, asset
sales or other sources on or before the beginning of December 2003; its
immediate need for significant additional funding to continue its operations;
the effects of its expense control activities on its operations and product
development, its ability to obtain regulatory approval and market acceptance of
its products, including ISV-403, OcuGene, ISV-401 and ISV-205; its ability to
maintain and develop additional collaborations and commercial agreements with
corporate partners, including those with respect to ISV-403, ISV-401 and
ISV-205; its reliance on third parties for the development, marketing and sale
of its products; and the initiation and results of preclinical and clinical
studies, its ability to adequately protect its intellectual property and;
determinations by the U.S. Food and Drug Administration, including those with
respect to ISV-403, OcuGene, ISV-401 and ISV-205. Reference is made to the
discussion of risk factors detailed in InSite Vision's filings with the
Securities and Exchange Commission, including its annual report on Form 10-K for
the 2002 fiscal year and quarterly reports on Form 10-Q. Any projections in
this release or in the telephone conference are based on limited information
currently available to InSite Vision, which is subject to change. Although any
such projections and the factors influencing them will likely change, InSite
Vision undertakes no obligation to update the information. Such information
speaks only as of the date of this release or the date of the telephone
conference. Actual events or results could differ materially and no reader of
this release should assume later that the information provided today or in the
live telephone conference is still valid.
Note to Editors: OcuGene is written with a "small cap" G; if doing so is not
possible, please use an upper case G. InSite Vision Incorporated, InSite
Vision, DuraSite and OcuGene are trademarks of InSite Vision Incorporated. Other
trademarks that may be mentioned in this release are the intellectual property
of their respective owners.
For further information, please contact: S. Kumar Chandrasekaran, CEO, or
Sandra Heine, Director of Finance, both of InSite Vision Incorporated,
+1-510-865-8800; or investors, Bruce Voss, , or Jody Cain, , both of
Lippert/Heilshorn & Associates, Inc., +1-310-691-7100, for InSite Vision
Incorporated; or media, Chenoa Taitt, , or Michael Hopkins, , both of
Lippert/Heilshorn & Associates, Inc., +1-212-838-3777, for InSite Vision
Incorporated.
InSite Vision Incorporated Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2003 and 2002
(in thousands, except per share amounts; unaudited) Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002 Revenues, net $4 $9 $8 $26
Cost of goods 5 25 17 57
Operating expenses:
Research and development 793 1,892 3,461 5,686
Cost reimbursement -- -- -- 66
Research and development,
net 793 1,892 3,461 5,620
Selling, general and
administrative 599 1,192 2,025 3,080
Total 1,392 3,084 5,486 8,700
Loss from operations (1,393) (3,100) (5,495) (8,731)
Interest and other
income, net (9) 10 (7) 53
Net loss (1,402) (3,090) (5,502) (8,678)
Non-cash preferred
dividends 60 18 161 18
Net loss applicable to
common stockholders $(1,462) $(3,108) $(5,663) $(8,696) Net loss per share
applicable to common
stockholders, basic
and diluted $(0.06) (0.12) (0.23) (0.35) Shares used to calculate
net loss per share,
basic and diluted 25,137 25,007 25,136 24,959
Condensed Consolidated Balance Sheets
At September 30, 2003 and December 31, 2002
(in thousands; unaudited) September 30, December 31,
2003 2002 Assets:
Cash and cash equivalents $150 $1,179
Prepaid expenses and other assets 107 143
Property and equipment, net 349 544
Deferred debt issuance cost 86 --
Total assets $692 $1,866 Liabilities and stockholders' equity:
Current liabilities $2,720 $969
Long-term liabilities 3 10
Convertible notes payable 2 --
Preferred stock 2,059 --
Stockholders' equity (4,092) 887
Total liabilities and stockholders' equity $692 $1,866
DATASOURCE: InSite Vision Incorporated CONTACT: S. Kumar Chandrasekaran, CEO, or Sandra Heine, Director of Finance, both of InSite Vision Incorporated, +1-510-865-8800; or investors, Bruce Voss, , or Jody Cain, , both of Lippert/Heilshorn & Associates, Inc., +1-310-691-7100, for InSite Vision Incorporated; or media, Chenoa Taitt, , or Michael Hopkins, , both of Lippert/Heilshorn & Associates, Inc., +1-212-838-3777, for InSite Vision Incorporated Web site: http://www.lhai.com/ Web site: http://www.insitevision.com/
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