DOYLESTOWN, PA. - April 26, 2006 - The Quigley Corporation (Nasdaq: QGLY)
today reported net sales of $10.3 million, for the first quarter ended March
31, 2006, compared to $11.8 million reported for the same period in 2005.
Net sales of the Company's Cold Remedy, Health and Wellness and Contract
Manufacturing segments recorded declines in this first quarter of 2006 as
compared to 2005 that averaged approximately $500,000 for each segment.
During 2005, the Company's Cold Remedy net sales outpaced its category as the
further expansion of the Cold Remedy segment reflected the success of strategic
marketing initiatives and advertising with a notable increase in consumer
acceptance and expanded household penetration. Sales declines in the first
quarter of 2006 may be attributable to a widely disseminated controversial
report published in the January 2006 issue of the "Chest," the peer
reviewed journal of the American College of Chest Physicians (ACCP), that
implied that cough products had limited effectiveness while antihistamines were
more effective in reducing coughs. This report had an impact of increasing
allergy product sales and depressing cough cold category sales during the
traditional peak of the common cold season. Additionally, the brand and
category as a whole has faced increased competition from certain vitamin based
products that have launched successful public relations campaigns despite the
fact that they lack both safety and clinical efficacy data. Ongoing marketing
will feature COLD-EEZE® clinical effectiveness in two double-blind placebo
controlled studies as well as its efficacy studies in adolescents and safety
studies with Geriatric patients.
Guy J. Quigley, Chairman, President and Chief Executive Officer stated,
"We continue to remain confident in the COLD-EEZE brand and its appeal to
a broad range of consumers with a growing interest in Natural Common Cold
remedies that demonstrate proven clinical efficacy and safety unlike other
natural remedies. We are well positioned to capture market share, enhance our
household penetration to be able to increase sales of our COLD- EEZE Cold
Remedy products."
The Health and Wellness segment continues to be affected by the shift from the
number of active domestic independent distributor representatives, which has
outpaced the growth of active international independent distributor
representatives or an increase of 30.0% for this segment's international sales
as compared to 2005. Corrective actions concerning the shifting in active
independent distributor representatives continue to be the focus for this
segment.
The Contract Manufacturing segment's prime purpose is for the manufacture of
COLD-EEZE, however, other contract manufacturing is performed for third party
entities. In comparing 2006 with 2005, an OTC company that utilized
manufacturing capabilities of this segment discontinued their product in the
marketplace, thereby resulting in the reduced sales for the Contract
Manufacturing segment of the Company. Management is reviewing opportunities to
replace this lost business with other third party manufacturing contracts. Net
loss for the quarter ended March 31, 2006 was $1.5 million, or ($0.12) per
share, compared to net loss of $155,000 or ($0.01) per share, for the same
period last year.
The increase in net loss is principally attributed to the decrease in all of
the Company's segment sales, especially the Cold Remedy segment, which has a
greater gross profit percentage and dollar margin and fewer fixed and directly
variable costs than the other operating segments. Additionally, operating
expenses increased for advertising, promotions, insurance and legal costs
relative to the lawsuits for the Company's discontinued nasal spray product.
Gross profit percentages for the Cold Remedy segment for 2006 increased due to
the expiration in May 2005 of the founder's commission with the Health Wellness
segment remaining relatively unchanged. 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, which already has
a substantially lower gross profit margin then the other operating segments.
No tax or tax benefits to reduce income or losses are provided for the quarters
ended March 31, 2006 and 2005, except for any limitations imposed by the
alternative minimum, since the Company is in a net operating loss carry-forward
position.
"Quigley Pharma, our wholly-owned Ethical Pharmaceuticals subsidiary,
represents a significant potential source of growth for the Company. For
example, QR-333, our topical compound for the treatment of Diabetic Peripheral
Neuropathy, recently filed an IND and commenced plans to begin a Phase II B
study to develop the most efficacious dose range of this topical compound on
human patients. According to the American Diabetic Association, there are over
twenty million people in the United States who have diabetes. They represent a
huge market for the product we are developing," continued Mr. Quigley.
"We are striving to capitalize on the growth potential of Quigley Pharma
by continuing to develop natural-source potential prescription products for
Diabetic Neuropathy, Systemic Radiation, Rheumatoid Arthritis, Avian Flu in
animals, and Ocular and Genital Herpes. We will continue to develop and test
ethical pharmaceutical drugs as part of our ongoing efforts to generate future
growth," concluded Mr. Quigley.
The following is a summary of major ethical pharmaceutical events that occurred
during the first quarter of 2006:
At the annual meeting of Quigley's Scientific Advisory Board, composed of 12
highly regarded medical professionals and three additional guest attendees,
2005 research and development results were reviewed. The Board was extremely
encouraged by the findings and strongly support Quigley Pharma's research and
development efforts and advocates their next stage of development.
Diabetic Neuropathy QR-333: Quigley Pharma filed an IND (Investigational New
Drug) application with the FDA for QR-333, a topical compound for the treatment
of Diabetic Peripheral Neuropathy and commenced its plans to begin a Phase II B
study to develop the most efficacious dose range of this topical compound on
human patients. QR-333 had been evaluated in animal model toxicity experiments
previous to the IND filing. QR-333 is designed and formulated to decrease
oxidative stress that contributes to peripheral diabetic neuropathy and thus
alleviate its symptoms. The original proof of concept study completed in
France, showed that the topical compound improved the quality of life as well
as improved key symptoms associated with this complication of diabetes. The
subjects using the compound had 67% of their symptoms improve, suggesting
efficacy. According to estimates from the American Diabetes Association, 7.0
percent of US adults or 20.8 million people have diabetes.
Systemic Radiation QR-336: This naturally derived radio protective compound
against ionizing radiation initially received encouraging results in a
preliminary non-GLP animal study. A pre-IND meeting was held at the FDA in
October of 2004 with the Division of Medical Imaging and Radiopharmaceutical
Drug Products. The aforementioned Scientific Advisory Board noted that
preliminary evidence demonstrates QR336's potential as a systemic radio
protective agent and recommended further studies. Plans are underway to advance
an animal model development plan that will comply with New Food and Drug
Administration animal efficacy rules for radio-protective pharmacological
compounds.
Rheumatoid Arthritis QR-440: Quigley Pharma received an additional
Investigational New Animal Drug (INAD) number from the Center for Veterinary
Medicine of the Food and Drug Administration to study its naturally-derived,
broad-spectrum anti-inflammatory compound QR-440 on dogs. In previous studies,
QR-440 has been shown to reduce inflammation and also suggests possible
disease-modifying potential. Canine arthritis afflicts an estimated 70 to 80
percent of dogs in certain breeds, particularly larger breeds.
Avian Flu Compound QR-441(a): Quigley Pharma initiated plans to test its all
natural broad spectrum antiviral compound against Avian Flu in poultry stocks.
The company has enlisted noted experts, Dr. Timothy S. Cummings, Clinical
Poultry Professor at the College of veterinary medicine at Mississippi State
University and Thomas G. Voss, Ph.D. Assistant Professor Tulane University
School of Medicine to assist Quigley Pharma in the development of the
Investigational New Animal Drug (INAD) bird challenge studies. According to
previously announced in vitro testing, QR-441A appears to have the potential to
inhibit infectivity of the avian H5N1 virus in poultry populations.
Ocular and Genital Herpes QR-435: In pre-clinical studies, the antiviral
formulation demonstrates potent antiviral activity against Ocular and Genital
Herpes, indicating a new research and development path for the versatile
compound. The studies were designed to determine the in vitro inhibitory
activity of QR-435 vs. two ocular isolates of Herpes Simplex Virus 1 (HSV-1)
and 2 non-ocular isolates of Herpes Simplex Virus 2 (HSV-2). The pre-clinical
studies of QR-435 demonstrated reproducible potent direct antiviral activity
against an ocular isolate of HSV-1. It also demonstrated similar potent direct
antiviral activity against a second similar ocular isolate of HSV-1 and
multiple clinical genital isolates of HSV-2.
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/and for any 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.
