DOYLESTOWN, PA. - February 27, 2007 - The Quigley Corporation (Nasdaq: QGLY)
DOYLESTOWN, PA. . February 27, 2007 . The Quigley Corporation (Nasdaq: QGLY)
today reported net sales of $14.2 million, for the fourth quarter ended
December 31, 2006, compared to $17.7 million reported for the same period in
2005. For the year ended December 31, 2006, net sales were $42.1 million
compared to $53.7 million reported for the same period in 2005.
The fourth quarter of 2006 as compared to 2005 reflects net sales declines for
the Company's Cold Remedy segment of $1.4 million and $1.9 million for the
Health and Wellness segment. The year ended December 31, 2006 as compared to
2005, reflects net sales declines for the Company's Cold Remedy segment of $4.5
million, $5.2 million for the Health and Wellness segment and $1.9 million for
the Contract Manufacturing segment.
Cold-Remedy segment net sales declines for the fourth quarter and year ended
December 31, 2006 as compared to the same periods in 2005 were affected by:
inordinately warm weather; lower incidence of upper respiratory ailments; and
sales of new flavors introduced in 2005. These factors combined with a
continued shift in buying patterns by our customers, which was in part caused
by weaker consumer purchases during the first half of the year resulted in
higher than expected inventories of our customers. Also contributing to the net
change was the growth of Immune Booster products that may have resulted in
COLD-EEZE® consumers temporarily migrating to these brands in search of a
product to help them avoid catching a cold versus treating one.
Additionally, investment in advertising for the COLD-EEZE brand at comparable
levels as competitors is limited as the Company's resources are invested in
pharmaceutical research and development. Even with these aforementioned
setbacks, the Company believes in the viability of the COLD-EEZE brand among
the growing number of consumers who want Natural Common Cold remedies that
demonstrate proven clinical efficacy and safety unlike most other unproven
natural remedies.
Net Sales declines of The Health and Wellness segment reflects the continued
reduction in the number of active independent distributor representatives, and
litigation with the sponsor of the Company's product line in this segment,
which directly affects the segment's net sales. Corrective action has been the
ongoing focus for this segment to increase the number of active independent
distributor representatives. These corrective actions include the Company
investing and expanding its markets into Singapore and Taiwan including the
recent appointment of a new president for this segment knowledgeable in this
industry.
As the primary purpose of the Contract Manufacturing segment is to manufacture
COLD-EEZE, other contract manufacturing is performed for non-related third
party entities to compensate for the necessary fixed costs associated with this
segment. During 2005, excess capacity of this segment was used to manufacture a
product for an OTC company that utilized this segment's manufacturing
capabilities and subsequently discontinued its product in the marketplace in
2006, thereby reducing sales for this segment.
Net income for the fourth quarter ended December 31, 2006 was $1.2 million, or
$0.10 per share compared to net income of $2.2 million, or $0.16 per share, for
the same period last year. Net loss for the year ended December 31, 2006 was
$1.7 million, or ($0.14) per share, compared to net income of $3.2 million, or
$0.24 per share, for the same period last year.
The reduction in net profit for the fourth quarter ended December 31, 2006 is
due to lower gross profits from the aforementioned related net sales declines
in all operating segments of the Company and mitigated by improvement in sales,
marketing and administrative expenses.
The net loss increase for the year ended December 31, 2006 reflects a reduction
in gross profits from the related net sales decline in all operating segments
of the Company, particularly the Cold Remedy segment, which has a substantially
greater gross profit percentage and dollar margin and fewer fixed and directly
variable costs than the other operating segments. In addition, increases in
operating expenses for costs associated with insurance and legal fees relative
to the lawsuits for the Company's discontinued nasal spray products also added
to this net loss increase, which was mitigated by increases in interest income.
Gross profit percentages for the Cold Remedy remained relatively unchanged with
the Health Wellness segment slightly improving for 2006. Also, due to the lost
revenues from a major OTC company that utilized the manufacturing abilities of
the Contract Manufacturing segment, its gross profit percentage declined.
No tax provision or benefits, to reduce losses, are provided for the quarter
and year ended December 31, 2006 and 2005, except for any requirements imposed
by the federal alternative minimum taxes or for compliance with state tax
regulations, since the Company is in a net operating loss carry-forward
position.
The Company is committed to continue its research and to develop potential
ethical pharmaceutical drugs as part of an ongoing effort to generate future
growth to bring current compounds to market, especially development that
includes furthering human studies on QR-333, an Investigational New Drug for
the treatment of Diabetic Peripheral Neuropathy, thereby capitalizing on the
growth potential of Quigley Pharma, a wholly-owned Ethical Pharmaceutical
subsidiary.
The following is a summary of ethical pharmaceutical announcements that
occurred during the fourth quarter of 2006:
Diabetic Neuropathy - QR-333: Patient enrollment commenced in a Phase
IIb double blind multi center clinical study to evaluate the safety and
efficacy of QR-333, as compared to placebo-treated patients. The active QR-333
Investigational New Drug and placebo were made available to clinical
investigators to begin treatment starting in December, 2006.
The Phase IIb trial is to evaluate the safety and efficacy of QR-333 applied
three times daily compared to placebo-treated patients over 12 weeks. Efficacy
will be determined by Symptom Assessment Scores, a Visual Analogy Scale (VAS),
Quality of Life and Sleep Questionnaires. Safety will be determined by medical
history, physical examination, vital signs, 12-lead ECG, laboratory tests and
nerve conduction studies. The study will involve 150-200 randomized male and
female patients with Type1 & 2 diabetes, as defined by the ADA (American
Diabetes Association) and distal symmetric diabetic polyneuropathy.
The Study Chairman is Dr. Philip Raskin, Professor of Medicine University of
Texas Southwestern Medical Center at Dallas Texas. The study protocol was
approved by the FDA as a part of Quigley Pharma's IND submission and has been
approved by the required Investigational Review Boards. The completion of the
study is dependent upon enrollment rates that may affect the overall length of
the study and the communication of its results.
Systemic Radiation - QR-336: Significant data was obtained identifying
50 microliters as the least toxic and most effective radiation protection dose
in mice when administered ip (intraperitoneal), po (by mouth) or sc (under the
skin) prior to radiation exposure. These experiments were essential for
providing the Company with data to optimize the formulation for efficacy and
route of administration, which is required for filing under the FDA
"Animal Efficacy Rule".
The tests were conducted by Dr. William H. McBride, Vice Chair of Research,
Department of Oncology at UCLA to help develop an appropriate animal model
radio protective research program for QR-336 to comply with New Food and Drug
Administration animal efficacy rules for radio-protective pharmacological
compounds. QR-336 is a naturally derived radio protective compound designed to
address the lethal effects of ionizing radiation.
Ocular and Genital Herpes - QR-435: A series of studies were conducted
on the advice of Campbell Laboratories, University of Pittsburgh, to assess the
anti-viral compound QR-435. While the in-vitro studies were very successful at
killing the herpes virus on direct contact, the HSV-1/NZW rabbit keratitis
model study showed that the compound, in its aqueous form, did not remain in
the eye long enough to penetrate the corneal epithelial cells where the virus
resides in an infection. The HSV-1/NZW rabbit keratitis model is a recognized
standard for evaluating potential therapeutic agents in this class and is only
utilized based on prior positive experimentation, as was the case.
Quigley Pharma will continue to pursue research and development objectives of
this compound in the treatment of respiratory viruses on the strength of prior
successful in-vitro and ferret model in-vivo studies. The Company's naturally
derived formula has shown significant antiviral properties against various
strains of H3N2 and H5N1 Influenza viruses in these studies. While Quigley
Pharma intends to continue to evaluate this compound against a range of Herpes
viruses, its primary research efforts will focus on respiratory viruses against
which this compound has proven to have its greatest therapeutic strength.
Avian Flu Compound - QR-441(a): Positive results were achieved from a
study evaluating the anti-viral compound QR-441(a) in embryonating egg and VERO
E6 cell test models. The preliminary study demonstrated QR-441(a) as a
potential antiviral agent in reducing Infectious Bronchitis and New Castle
Disease, two viral poultry diseases that have a significant economic impact to
the poultry industry on an annual basis. Previous in vitro studies have
demonstrated that QR-441(a) to be a potent antiviral agent against H5N1 (Avian
Flu). The study was conducted after receiving industry and veterinary thought
leader feedback indicating a need for a well tolerated broad spectrum antiviral
agent against both Infectious Bronchitis Virus (IBV) and Newcastle Disease
Virus (NDV), two pathogens which constantly threaten commercial poultry stocks.
Preliminary data indicate that further study is warranted and that QR441(a) may
have potential in treating and or preventing Infectious Bronchitis and New
Castle Disease. The company will be preparing experiments to validate the
significance of this data in a challenge study in chickens. Studies will be
designed around previously established positive medical feed tolerability data.
In addition, the company will also look to conduct experiments to establish
feed conversion related data.
The value of a broad spectrum antiviral addressing multiple viral pathogens in
poultry stocks increases the potential utility of the compound for routine
commercial application as well its use in the event of more serious H5N1 (Avian
Flu) outbreaks.
Presentation at the New York Society of Security Analysts (NYSSA):
Senior management of the Quigley Corporation made a presentation at the 10th
Annual Biotech/Specialty Pharma Industry investor conference in New York City.
The presentation is archived for web cast at www.QuigleyPharma.com.
The Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will allow this Investigational
New Drug to be 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.
About The Quigley Corporation
The Quigley
Corporation (Nasdaq: QGLY, http://www.Quigleyco.com) is a diversified natural
health medical science company. Its Cold Remedy segment is a leading marketer
and manufacturer of the COLD-EEZE® family of lozenges, gums and sugar free
tablets clinically proven to cut the common cold nearly in half. COLD-EEZE
customers include leading national wholesalers and distributors, as well as
independent and chain food, drug and mass merchandise stores and pharmacies.
The Quigley Corporation has several wholly owned subsidiaries. Darius
International markets health and wellness products through its wholly owned
subsidiary, InnerLight Inc. Quigley Manufacturing Inc. consists of two FDA
approved facilities to manufacture COLD-EEZE® lozenges as well as fulfill
other contract manufacturing opportunities. Quigley Pharma Inc.
(http://www.QuigleyPharma.com) conducts research in order to develop and
commercialize a pipeline of patented botanical and naturally derived
prescription drugs.
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.
Consolidated Statements of Operations (Unaudited)
The following represents condensed financial data (in thousands) except per share data:
Three-Months Three-Months Year Year
Ended Ended Ended Ended
Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05
($) ($) ($) ($)
Net Sales 14,196 17,741 42,125 53,658
Gross profit 8,997 10,803 22,878 27,834
Sales & marketing expenses 3,530 4,060 8,326 8,414
Administrative expenses 3,122 3,777 13,124 12,656
Research & development 1,286 845 3,820 3,784
Income taxes (benefit) - 65 89 65
Net income (loss) 1,246 2,163 (1,748) 3,217
Diluted income (loss) per share:
Net income (loss) $0.10 $0.16 ($0.14) $0.24
Diluted weighted average
common shares outstanding: 13,162,534 13,340,358 12,245,073 13,299,162
Consolidated Balance Sheets (Unaudited)
The following represents condensed financial data
(in thousands) at December 31, 2006 and 2005:
2006 2005
($) ($)
Cash & cash equivalents 17,757 16,885
Accounts receivable, net 6,557 7,880
Inventory 4,262 3,900
Total current assets 29,793 30,248
Total assets 34,845 35,976
Total current liabilities 9,252 9,566
Long-term debt - 1,036
Total stockholders' equity 25,529 25,320
