DOYLESTOWN, PA. - February 24, 2005 - The Quigley Corporation (Nasdaq: QGLY)
today reported net sales of $17.8 million, an increase of 8.3%, for the fourth
quarter ended December 31, 2004, compared to $16.4 million reported for the
same period in 2003. For the year ended December 31, 2004, net sales were $43.9
million, an increase of 5.9%, compared to $41.5 million in 2003.
Net sales of the Company's Cold Remedy segment increased 10.1% for the fourth
quarter of 2004 as compared to 2003. Net sales of the Health and Wellness
segment decreased 9.4% during the quarter, due to a decline in the number of
active domestic independent representatives, which was partially offset by an
increase of 14.1% in this segment's European sales as compared to 2003.
The increase in net sales for the year ended December 31, 2004 reflects an
11.5% increase in the Company's Cold Remedy segment and also reflects a 3.2%
decrease in net sales for the Health and Wellness segment, which were offset by
this segment's gains in international distribution of 135.4%. Even though the
incidence of colds during 2004 were fewer than the previous year, the Company's
Cold Remedy net sales increase for the year ended December 31, 2004 reflects
the success of expanded targeted advertising, marketing initiatives and new
product extensions of COLD-EEZE®, which have generated greater consumer
awareness and purchasing of our products.
Net income for the fourth quarter ended December 31, 2004 was $2.0 million, or
$0.13 per share, compared to net income of $2.5 million, or $0.17 per share,
for the same period last year. Net income for the year ended December 31, 2004
was $453,000, or $0.03 per share, compared to a net income of $675,000, or
$0.05 per share, for the same period last year. During the fourth quarter and
year ended December 31, 2004, the Company incurred research and development
costs of $837,000 and $3.2 million, respectively, as compared to $766,000 and
$3.4 million, for the comparable periods of 2003. Additionally, net income
margins by segments for the year 2004 are relatively consistent with net income
margins attained in 2003.
Gross profit margins for the quarter and year ended December 31, 2004 remained
relatively unchanged as compared with the same periods last year. Net income
for the fourth quarter and year ended December 31, 2004 were primarily driven
by profit gains from the increased sales, which were offset by an increase of
$1.0 million in advertising costs. The fiscal year results were also affected
by a $178,000 increase in other income, which was offset by a charge to gross
profit margins of $1.4 million, or $0.09 per share, related to the
discontinuation of the Company's COLD-EEZE® Cold Remedy Nasal Spray product.
This charge includes a $672,000 write-off of nasal spray inventory and a
$680,000 reduction to net sales resulting from anticipated customer returns of
the product.
No tax or tax benefits to reduce income or losses are provided for the quarters
and year ended December 31, 2004 and 2003, since the Company is in a net
operating loss carry-forward position, which is from the cumulative effect of
deductions attributed to options, warrants and unrestricted stock from previous
years' taxable income. On October 1, 2004, the Company acquired the assets of
JoEL, Inc., encompassing inventory, land, buildings, machinery and equipment of
two manufacturing facilities, located in Lebanon and Elizabethtown,
Pennsylvania for approximately $5.1 million. The facilities are FDA approved
and have been the exclusive manufacturing sites of the Company's COLD-EEZE®
lozenge since its launch in 1995. The purchase of the manufacturing facilities
allowed for the establishment of Quigley Manufacturing Inc., which protects the
proprietary manufacturing process of COLD-EEZE® and is anticipated to improve
cost efficiencies as volume production increases and allow for the manufacture
of other brands.
Guy J. Quigley, Chairman, President and Chief Executive Officer stated, "We are
pleased with our results for 2004 which reflect increased sales of our core
products and greater market penetration of our COLD-EEZE® Cold Remedy
products which enabled us to further fund pharmaceutical research and
development. In addition to increasing annual revenue, gross margins for the
year would have increased without the previously mentioned $1.4 million
one-time costs associated with a product discontinuation.
"We expect that our recently introduced new or improved products including
COLD-EEZE® Bubble Gum and COLD-EEZE® 'Green-Tea with honey' lozenges
will garner greater consumer acceptance and enhance product sales. We will
continue to develop products that appeal to adults as well as a younger
demographic, which could represent a significant opportunity for expansion in
market penetration and future growth.
"The main core of our Health and Wellness Company, our Supergreens™ line of
products developed by Dr. Robert O. and Shelley Redford Young, continues to
move forward with loyal distributors. The Company is also excited by the launch
of an exclusive skin care line under the BEVERLY SASSOON brand name to
diversify this segment's product offerings.
"We also remain focused on expanding our wholly-owned Ethical Pharmaceuticals
subsidiary, Quigley Pharma, which is developing natural-source prescription
medicinals for Diabetic Neuropathy, Systemic Radiation, Influenza A, and
Rheumatoid Arthritis. We continue moving forward with our development and
testing phases of ethical pharmaceutical drugs and are confident that this
segment of our business will be a source of future growth for the Company,"
concluded Mr. Quigley.
The following is a list of formulations currently in the Quigley Pharma pipeline
and an update on their progress:
Diabetic Neuropathy -- QR 333: Per the FDA's instructions at the last Pre-IND
Meeting for the continued development of this drug; the compound is undergoing
a series of toxicity studies to support the safety of this naturally derived
compound for the relief of symptoms of diabetic peripheral neuropathy, prior to
beginning a human Phase IIB dose ranging study. The company expects the
toxicity studies to be completed by June 2005. The company hopes to begin
pivotal studies on this compound in 2005.
Systemic Radiation -- QR336: There were encouraging results seen in a
preliminary non-GLP animal study of this naturally derived radio protective
compound against ionizing radiation. A pre-IND meeting was held at the FDA in
October of 2004 with the Division of Medical Imaging and Radiopharmaceutical
Drug Products. A GLP controlled animal study of the QR 336 formulation for the
Radioprotection/Treatment of Radiation Lethality Induced by Four MeV Photons in
the C3H Mouse will begin this year after a short series of experiments to
further define the compound's method of action.
Influenza A -- QR435: Retroscreen LTD. at The University of London has started
a final animal model influenza study in preparation for a proposed human Proof
Of Concept Study to start in mid-2005. The study "Prophylactic potential of
different QR-435 antiviral nasal spray formulations in the Influenza
A/Panama/2007/99 (H3N2) virus ferret transmission model" will determine if
there is any efficacy or safety issues with different dose forms of this
naturally derived broad-spectrum anti-viral compound.
Virucidal Compound -- QR437: Ongoing pre-clinical research activities include:
the completion of a second in vitro experiment to determine virucidal or
virustatic properties against the HIV virus by QR437. The results of the first
in vitro study determined that this naturally derived compound has significant
dose dependant virucidal properties with a probable rapid mode of action. This
type of compound might be used with condoms or intravaginal, oral and other
topical dose forms as a first line defense against infection. Ongoing plans for
this compound are pending; the company expects to announce next steps some time
in 2005.
Arthritis Compound QR-440: Quigley Pharma is also conducting research on its
previously announced patented compound for the treatment of rheumatoid
arthritis and similar diseases.
Avian Flu Compound QR-441: One positive pre-clinical in vitro study on Avian
Flu, demonstrating antiviral activity when tested in a virustatic test. Ongoing
plans for this compound are pending; the company expects to announce next steps
some time in 2005.
The Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will grant an Investigational New
Drug ("IND") or take any other action to allow its formulations to be studied
or marketed. Furthermore, no claim is made that potential medicine discussed
herein is safe, effective, or approved by the Food and Drug Administration.
Additionally, data that demonstrates activity or effectiveness in animals or in
vitro tests do not necessarily mean the formula test compound, referenced
herein will be effective in humans. Safety and effectiveness in humans will
have to be demonstrated by means of adequate and well controlled clinical
studies before the clinical significance of the formula test compound is known.
Readers should carefully review the risk factors described in filings the
Company files from time to time with the Securities and Exchange Commission.
The Quigley Corporation (Nasdaq: QGLY, http://www.Quigleyco.com) is a leading
developer and marketer of diversified health products including the COLD-EEZE®
family of patented zinc gluconate glycine (ZIGG™) lozenges and sugar free
tablets. COLD-EEZE is the only (ZIGG) lozenge proven in two double-blind
studies to reduce the duration of the common cold from 7.6 to 4.4 days or by
42%. In addition to Over-The-Counter (OTC) products, the Company has formed
Quigley Pharma Inc. (http://www.QuigleyPharma.com), a wholly owned ethical
pharmaceutical subsidiary, to introduce a line of naturally-derived patented
prescription drugs. The Quigley Corporation's customers include leading
national wholesalers and distributors, as well as independent and chain food,
drug and mass merchandise stores and pharmacies.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
involve known and unknown risk, uncertainties and other factors that may cause
the Company's actual performance or achievements to be materially different
from the results, performance or achievements expressed or implied by the
forward-looking statement. Factors that impact such forward-looking statements
include, among others, changes in worldwide general economic conditions,
changes in interest rates, government regulations, and worldwide competition.
