Emisphere Technologies, Inc. (OTCBB:EMIS) today reported financial
results for the second quarter ended June 30, 2016, and provided an
overview of corporate accomplishments and plans.
“During the first half of 2016, we continued to
focus our efforts on business development initiatives, including
advancing discussions with potential partners for a strategic
transaction or alliance for our commercial oral Eligen B12™
product, the first and only prescription B12 replacement
therapeutic,” said Alan L. Rubino, President and Chief Executive
Officer of Emisphere. “In parallel, our Novo Nordisk A/S
(NYSE:NVO) partnership continues on track with Phase 3a trials well
underway evaluating oral semaglutide, a once daily type 2 diabetes
treatment utilizing SNAC, one of our Eligen® Technology carriers.
Efforts to secure new development partnerships centered around this
unique, absorption enhancing delivery technology continue and there
has been significant interest expressed by several pharmaceutical
companies with the shared goal of creating new oral formulations to
replace existing injectables.”
Mr. Rubino continued: “As a result of our
strategic decision to partner Eligen B12™, we also successfully
implemented several cost control measures which enabled us to
significantly reduce our operating expenses and preserve our
financial resources during the first half of the year.
Looking ahead to the remainder of 2016, we will continue to
aggressively explore, identify and advance discussions with
potential partners and we look forward to keeping you updated on
our progress.”
FIRST HALF 2016 HIGHLIGHTS
Exploring Strategic Partnership
Opportunities for Oral Eligen B12™ in the U.S. and
Internationally. Eligen B12™ is the first and only
once-daily oral prescription medical food tablet shown to normalize
B12 levels without the need for an injection. Eligen B12™ is
indicated for the dietary management of patients who have a
medically-diagnosed vitamin B12 deficiency, associated with a
disease or condition that cannot be managed by a modification of
the normal diet alone. Eligen B12™ utilizes Emisphere's SNAC
carrier to chaperone B12 through the gastric lining and directly
into the bloodstream even in the absence of intrinsic factor, a
protein made in the stomach that normally facilitates B12
absorption.
Novo Nordisk Commenced Global Phase 3a
Clinical Trials for Oral Semaglutide. During the
first half of 2016, Novo Nordisk commenced Phase 3a testing for
oral semaglutide, which utilizes Emisphere's absorption-enhancing
monosodium N-[8-(2-hydroxybenzoyl) amino] caprylate (SNAC) carrier.
Novo Nordisk plans to conduct ten clinical trials enrolling
approximately 9,300 patients with Type-2 diabetes in this Phase 3a
program. The advancement of oral semaglutide into Phase 3a
development represents a significant milestone for both Emisphere
and the Eligen® Technology platform and supports the Company's
belief that products developed using Eligen® carriers have the
potential to overcome bioavailability challenges commonly
associated with the oral administration of peptides and certain
other compounds.
Novo Nordisk Continues Feasibility
Studies under our Development and License Agreement to Develop Oral
Formulations Targeting Metabolic Indications. In
October 2015, Emisphere and Novo Nordisk entered into a new license
agreement to develop and commercialize oral formulations of four
classes of Novo Nordisk's investigational molecules targeting major
metabolic disorders, including diabetes and obesity, using
Emisphere's oral Eligen® Technology. Emisphere received a
$5.0 million upfront licensing fee, and is eligible to receive up
to $207 million in development and sales milestone payments in
addition to royalties on sales of each successfully commercialized
product under this agreement.
Global Eligen® Technology Business
Development Initiatives Continue. During the first
half 2016, Emisphere continued to pursue its comprehensive business
development initiative designed to identify and secure new Eligen®
Technology partnerships. Eligen® Technology is a proven
delivery system technology that is applicable to a broad range of
chemical entities and has been shown to increase the benefit of the
therapy by improving bioavailability or absorption or by decreasing
time to onset of action. The Company currently owns rights to
an extensive portfolio of carriers with strong patent protection.
The current focus of the business development initiative is
on next generation, smaller proteins and peptides, proven and/or
approved drug compounds, and the development of new oral
formulations to replace injectables.
Grant of Waivers and Extensions Under
Debt Facility, Convertible Notes and Reimbursement
Notes. During November 2015, the creditor under our
Loan Agreement, Convertible Notes and Reimbursement notes agreed to
waive any event of default resulting from our failure to satisfy
the net sales milestone for the Eligen B12™ product for the 2015
fiscal year specified in our Loan and Royalty Agreements. The
creditor has also agreed to extend the date by which we are
required to use 50% of the $14 million received from Novo Nordisk
to pre-pay certain loans and notes (the "Loan Prepayment") until
August 16, 2016. We believe that our current cash balance
will provide sufficient capital to continue operations through
September 2016. However, if the pre-payment obligation is
further extended or waived, the Company will have sufficient cash
to operate through September 2017.
SECOND QUARTER 2016 FINANCIAL
RESULTS
Emisphere reported a net loss of $7.5 million,
or ($0.12) per basic and diluted share, for the quarter ended June
30, 2016, compared to net income of $7.1 million, or $0.12 per
basic share and ($0.04) per diluted share, for the quarter ended
June 30, 2015.
The Company reported an operating loss of $2.0
million for the second quarter 2016, compared to an operating loss
of $4.6 million for the same period in 2015.
Total operating expenses were $1.6 million for
the second quarter 2016, a decrease of $3.0 million or 66% compared
to the same period in 2015. Total operating expenses include
research and development costs of $0.10 million compared to $0.10
million in 2015, and selling, general and administrative expenses
of $1.5 million, a decrease of $3.1 million or 68% compared to the
same period in 2015. Other non-operating expense for the second
quarter of 2016 was $5.5 million compared to other non-operating
income of $11.7 million for the second quarter 2015.
Weighted average basic and diluted shares
outstanding for the three months ended June 30, 2016, was
60,687,478. Weighted average basic and diluted shares
outstanding for the three months ended June 30, 2015, was
60,687,478 and 123,445,160, respectively.
YEAR TO DATE FINANCIAL
RESULTS
For the six months ended June 30, 2016,
Emisphere reported a net loss of $9.3 million, or $(0.15) per basic
and diluted share, compared to net loss of $25.8 million, or
$(0.43) per basic and diluted share, for the same period last
year.
The Company reported an operating loss of $4.7
million for the six months ended June 30, 2016, compared to an
operating loss of $9.2 million for the same period in 2015.
Total operating expense for the six months ended
June 30, 2016 was $4.6 million, a decrease of $4.7 million or 50%.
Total operating expenses for the six months ended June 30, 2016
include research and development costs of $0.2 million compared to
$0.3 million in 2015, and selling, general and administrative
expenses of $4.4 million, a decrease of $4.6 million or 51%
compared to the same period in 2015. Other expense for the six
months ended June 30, 2016 was $4.7 million compared to $16.6
million for the same period in 2015.
Weighted average basic and diluted shares
outstanding for the six months ended June 30, 2016 and June 30,
2015 was 60,687,478.
LIQUIDITY
As of June 30, 2016, Emisphere had approximately
$8.7 million in cash, a net decrease of $4.2 million from December
31, 2015, a stockholders' deficit of approximately $161.1 million
and an accumulated deficit of approximately $563.9 million.
As of June 30, 2016, the Company's obligations
included approximately $49.7 million (face value) under its Second
Amended and Restated Convertible Notes (the "Convertible Notes"),
approximately $24.3 million (face value) under a loan agreement
dated August 20, 2014 (the "Loan Agreement"), approximately $0.8
million (face value) under its Second Amended and Restated
Reimbursement Notes (the "Reimbursement Notes"), and approximately
$2.3 million (face value) under its Second Amended and Restated
Bridge Notes (the "Bridge Notes"). The Convertible Notes and
the Loan Agreement are subject to various sales, operating and
manufacturing performance criteria.
On October 26, 2015, we received a total payment
of $14 million from Novo Nordisk pursuant to, and consisting of, $5
million as payment for entry into the Expansion License Agreement
and $9 million as prepayment of a product development milestone and
in exchange for a reduction in certain future royalty payments that
may have become due and payable under the terms of our GLP-1
Development License Agreement with Novo Nordisk. Under the
terms of our loan agreements, we are obligated to pre-pay certain
loans and notes using 50% of any extraordinary receipts, such as
the $14 million received from Novo Nordisk. The creditor under our
Loan Agreement and Reimbursement Notes has agreed to extend the
date by which we are required to use 50% of the $14 million
received from Novo Nordisk to pre-pay certain loans and notes until
August 16, 2016. Because the Loan Prepayment deadline has not
been extended beyond one year from June 30, 2016, we have
classified $7.0 million of the loans and notes as a current
liability as of June 30, 2016.
We believe that our current cash balance will
provide sufficient capital to continue operations through September
2016. However, if the pre-payment obligation is further extended or
waived, the Company will have sufficient cash to operate through
approximately September 2017. The Company’s future capital
requirements beyond September 2016 (or September 2017, in the event
the pre-payment obligation is further extended or waived) and our
financial success depend largely on our ability to raise additional
capital, including by leveraging existing and securing new
partnering opportunities for Eligen B12 and the Eligen®
Technology.
While our plan is to raise capital from
commercial operations and/or product partnering opportunities to
address our capital deficiencies and meet our operating cash
requirements, there is no assurance that our plans will be
successful. If we fail to generate sufficient capital from
commercial operations or partnerships, we will need to seek capital
from other sources and risk default under the terms of our existing
loans. We cannot assure you that financing will be available on
favorable terms or at all. If we fail to generate sufficient
additional capital from sales of oral Eligen B12 or to obtain
substantial cash inflows from existing or new partners or other
sources prior to September 2016 (or September 2017, in the event
the prepayment obligations is further extended or waived), we could
be forced to cease operations. Additionally, if additional capital
is raised through the sale of equity or convertible debt
securities, the issuance of such securities would result in
dilution to our existing stockholders. These conditions raise
substantial doubt about our ability to continue as a going concern.
Consequently, the audit reports prepared by our independent
registered public accounting firm relating to our financial
statements for the years ended December 31, 2015, 2014 and 2013
include an explanatory paragraph expressing substantial doubt about
our ability to continue as a going concern.
CONFERENCE CALL AND WEBCAST
INFORMATION
The live webcast of the conference call can be
accessed through the Company's web site at www.emisphere.com. The
call can also be accessed by dialing (877) 303-9483 (United States
and Canada) or (760) 666-3584 (international), and entering
Conference ID# 59804462. In addition, an archive of the
webcast can be accessed through the same link and an audio replay
of the call will be available beginning Monday, August 15, 2016 at
11:30 AM ET through 11:59 PM ET on August 22, 2016, by calling
(855) 859-2056 (United States and Canada) or (404) 537-3406
(International), and entering Conference ID# 59804462.
ABOUT ELIGEN B12™
Eligen B12 is indicated for the dietary
management of patients who have a medically-diagnosed vitamin B12
deficiency, associated with a disease or condition that cannot be
managed by a modification of the normal diet alone. Eligen
B12 is designed so that patients only need to take a single oral
tablet (cyanocobalamin 1000 mcg/salcaprozate sodium [SNAC] 100 mg)
of B12 daily.
Eligen B12 is the first and only prescription
medical food that has been shown to normalize vitamin B12 levels
comparable to an intramuscular (IM) injection of B12. In a study
that compared the impact of Eligen B12 and IM B12 on plasma B12
levels in 50 patients with demonstrated B12 deficiency (serum B12
<350 pg/mL), both products normalized B12 levels by Day 15
(first observation) and maintained normal levels over the duration
of the study (three months). In a study that compared
bioavailability in 20 healthy subjects of Eligen B12™ with that of
a standard oral B12 supplement, the bioavailability of Eligen B12
was 5.09 percent compared with 2.16 percent, which is more than
double the bioavailability of the conventional over-the-counter
oral B12 supplement formulation at the same dose.
Eligen B12 is classified by the U.S. Food and
Drug Administration as a medical food. A medical food is a
prescription product formulated to be consumed or administered
orally under medical supervision for the treatment of a disease or
condition that cannot be managed by a modification of the normal
diet alone.
For more information, visit
www.eligenb12.com.
ELIGEN B12™ IMPORTANT SAFETY
INFORMATION
Those with an allergy to B12, cobalt or any
ingredients of Eligen B12 should not take this product. Eligen B12
should not be taken by people who have Leber’s disease, which
physicians may refer to as hereditary optic nerve atrophy.
Cyanocobalamin (B12) can lead to optic nerve damage (and possibly
blindness) in people with Leber’s disease. Note that Eligen B12 has
not been studied in patients below 18 years of age.
ABOUT EMISPHERE
Emisphere Technologies, Inc. ("Emisphere" or the
"Company") is a pharmaceutical and drug delivery company. The
Company launched its first prescription product, oral Eligen B12™,
in the U.S. in March 2015 and we are currently engaged in strategic
discussions to optimize its economic value in the U.S. and global
markets. Beyond Eligen B12™, the Company utilizes its proprietary
Eligen® Technology to create new oral formulations of therapeutic
agents. Emisphere is currently partnered with global pharmaceutical
companies for the development of new orally delivered therapeutics.
For more information, please visit www.emisphere.com.
SAFE HARBOR STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
The statements in this release or oral
statements made by representatives of Emisphere relating to matters
that are not historical facts are forward-looking statements that
involve risks and uncertainties, including, but not limited to, the
sufficiency of the Company's cash position, the Company's ability
to enter into strategic partnerships, the Company's ability to
capture market share for oral Eligen B12™ or any potential
products, the success of the Company's commercialization
initiatives, the ability of the Company and/or that of its partners
to develop, manufacture and commercialize products using
Emisphere's drug delivery technology, and other risks and
uncertainties detailed in Emisphere's filings with the Securities
and Exchange Commission, including those factors discussed under
the caption "Risk Factors" identified in the documents Emisphere
has filed, or will file, with the Securities and Exchange
Commission ("SEC"). Copies of Emisphere's filings with the SEC may
be obtained from the SEC Internet site at http://www.sec.gov.
Emisphere expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in Emisphere's
expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statements are
based.
EMISPHERE
TECHNOLOGIES INC.CONDENSED BALANCE
SHEETSJUNE 30, 2016 AND DECEMBER 31,
2015(in thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016 (unaudited) |
|
|
|
December 31, 2015 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
|
8,740 |
|
|
|
$ |
12,898 |
|
Accounts
Receivable, net |
|
|
|
246 |
|
|
|
|
455 |
|
Inventories |
|
|
|
656 |
|
|
|
|
1,340 |
|
Prepaid
expenses and other current assets |
|
|
|
448 |
|
|
|
|
1,081 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets |
|
|
|
10,090 |
|
|
|
|
15,774 |
|
Equipment and leasehold
improvements, net |
|
|
|
4 |
|
|
|
|
12 |
|
Security deposits |
|
|
|
24 |
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
|
10,118 |
|
|
|
$ |
15,810 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
|
878 |
|
|
|
$ |
2,121 |
|
Notes
payable, related party |
|
|
|
7,000 |
|
|
|
|
7,000 |
|
Deferred
Revenue, current portion |
|
|
|
677 |
|
|
|
|
631 |
|
Royalty
payable, related party |
|
|
|
208 |
|
|
|
|
208 |
|
Derivative
instruments |
|
|
|
|
|
|
|
|
|
|
Related
party |
|
|
|
12,274 |
|
|
|
|
12,690 |
|
Others |
|
|
|
— |
|
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
|
21,037 |
|
|
|
|
22,855 |
|
Notes payable, related
party, net of related discount |
|
|
|
57,113 |
|
|
|
|
54,172 |
|
Derivative instruments,
related party |
|
|
|
37,289 |
|
|
|
|
35,071 |
|
Deferred revenue |
|
|
|
55,616 |
|
|
|
|
55,616 |
|
Royalty payable – related
party |
|
|
|
141 |
|
|
|
|
— |
|
Deferred lease liability
and other liabilities |
|
|
|
9 |
|
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
|
171,205 |
|
|
|
|
167,728 |
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit: |
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par
value; 4,000,000 shares authorized; none issued and
outstanding |
|
|
|
— |
|
|
|
|
— |
|
Common stock, $.01 par
value; 400,000,000 shares authorized; issued 60,977,210 shares
(60,687,478 outstanding) as of June 30, 2016 and December 31,
2015 |
|
|
|
610 |
|
|
|
|
610 |
|
Additional
paid-in-capital |
|
|
|
406,117 |
|
|
|
|
405,944 |
|
Accumulated deficit |
|
|
|
(563,862 |
) |
|
|
|
(554,520 |
) |
Common stock held in
treasury, at cost; 289,732 shares |
|
|
|
(3,952 |
) |
|
|
|
(3,952 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit |
|
|
|
(161,087 |
) |
|
|
|
(151,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit |
|
$ |
|
10,118 |
|
|
|
$ |
15,810 |
|
|
|
|
|
|
|
|
|
|
|
|
EMISPHERE TECHNOLOGIES,
INC.CONDENSED STATEMENT OF
OPERATIONSFor the three and six months ended June
30, 2016 and 2015(in thousands, except share and per share
data)(unaudited) |
|
|
For the three months ended |
|
For the six months ended |
|
June 30, |
|
June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
286 |
|
|
$ |
88 |
|
|
$ |
659 |
|
|
$ |
94 |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
46 |
|
|
|
55 |
|
|
|
98 |
|
|
|
80 |
|
Write-off of slow
moving inventory |
|
654 |
|
|
|
— |
|
|
|
654 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Gross profit
(loss) |
|
(414 |
) |
|
|
33 |
|
|
|
(93 |
) |
|
|
14 |
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
Research and development |
|
89 |
|
|
|
59 |
|
|
|
180 |
|
|
|
287 |
|
General and administrative
expenses |
|
1,322 |
|
|
|
1,528 |
|
|
|
2,662 |
|
|
|
2,820 |
|
Selling expenses |
|
137 |
|
|
|
3,007 |
|
|
|
1,731 |
|
|
|
6,132 |
|
Depreciation and amortization |
|
3 |
|
|
|
3 |
|
|
|
8 |
|
|
|
7 |
|
Total costs and expenses |
|
1,551 |
|
|
|
4,597 |
|
|
|
4,581 |
|
|
|
9,246 |
|
Operating loss |
|
(1,965 |
) |
|
|
(4,564 |
) |
|
|
(4,674 |
) |
|
|
(9,232 |
) |
|
|
|
|
|
|
|
|
Other non-operating
income (expense): |
|
|
|
|
|
|
|
Other income |
|
4 |
|
|
|
3 |
|
|
|
9 |
|
|
|
7 |
|
Change in fair value of derivative
instruments |
|
|
|
|
|
|
|
Related
party |
|
(2,993 |
) |
|
|
13,493 |
|
|
|
456 |
|
|
|
(12,117 |
) |
Other |
|
83 |
|
|
|
433 |
|
|
|
205 |
|
|
|
(420 |
) |
Interest expense related party |
|
(2,642 |
) |
|
|
(2,229 |
) |
|
|
(5,338 |
) |
|
|
(4,070 |
) |
Total other
non-operating income (expense) |
|
(5,548 |
) |
|
|
11,700 |
|
|
|
(4,668 |
) |
|
|
(16,600 |
) |
Net income (loss) |
$ |
(7,513 |
) |
|
$ |
7,136 |
|
|
$ |
(9,342 |
) |
|
$ |
(25,832 |
) |
Net income (loss) per
share, basic |
$ |
(0.12 |
) |
|
$ |
0.12 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.43 |
) |
Net income (loss) per
share, fully diluted |
$ |
(0.12 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.43 |
) |
Weighted average shares
outstanding, basic |
|
60,687,478 |
|
|
|
60,687,478 |
|
|
|
60,687,478 |
|
|
|
60,687,478 |
|
Weighted average shares
outstanding, diluted |
|
60,687,478 |
|
|
|
123,445,160 |
|
|
|
60,687,478 |
|
|
|
60,687,478 |
|
COMPANY CONTACTS:
Alan L. Rubino, CEO
973.532.8000
arubino@emisphere.com
Alan Gallantar, Acting CFO
973.532.8005
agallantar@emisphere.com
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