Operating Income Up $2.4 Million R & D Investment Up 17% REDWOOD CITY, Calif., March 4 /PRNewswire/ -- Advanced Polymer Systems, Inc. (Nasdaq: APOS) today reported fourth quarter and year-end 1998 financial results, reflecting continuing progress in all areas of its business. Total Revenues Excluding Milestone Payments Up 19% Total revenues excluding milestone payments increased by 19% to $19,991,000 compared to $16,833,000 in 1997. Royalties, License fees and Research and Development fees for 1998 increased by 45% to $6,355,000 compared with $4,390,000 in 1997. Product revenues for 1998 increased by 10% to $13,636,000 from $12,443,000 in 1997. Total revenues for the fourth quarter of 1998 increased by 11% to $5,169,000 compared to $4,649,000 in the fourth quarter of the prior year. Royalties, License fees and Research and Development fees for the fourth quarter of 1998 increased by 18% to $2,126,000 compared with $1,808,000 in the year-ago period. Product revenues for the fourth quarter of 1998 increased by 7% to $3,043,000 compared to $2,841,000 in the year-ago period. $2.6 Million Improvement to Net Income of $1.9 Million Advanced Polymer achieved four quarters of profitability in 1998, with net income for the year of $1,896,000, or $0.10 basic earnings per share, or $0.09 diluted earnings per share compared with a net loss of $683,000, or $0.04 basic and diluted loss per share, for 1997. Operating expenses decreased 6% for the year, to $10,390,000 compared with $11,098,000 for 1997. Investment in research and development increased 17% to $4,381,000, as the company advanced its oral site-specific and systemic bioerodible polymer technologies for internal drug delivery. Selling, general and administrative expenses decreased by $1,349,000 to $6,009,000 for 1998 from $7,358,000 for 1997. For the fourth quarter of 1998, net profit was $1,120,000, or $0.06 per share, compared with a net loss of $75,000, or $0.00 per share in the year-ago period. Operating expenses for the quarter decreased 7% to $2,444,000 from $2,622,000. Research and development expenses increased 20% to $1,186,000 for the fourth quarter of 1998, and selling, general and administrative expenses decreased 23% to $1,258,000. Growth of Core Skincare Business Allows for Greater Investment in R & D "We have made tremendous progress in our effort to build a first class drug delivery company," said John J. Meakem, Jr., chairman, president and chief executive officer of Advanced Polymer Systems. "Advanced Polymer now combines profitable operations with investment in high-potential future opportunities. Our skincare business continues to grow as our delivery systems technologies are used increasingly around the world, allowing investment in our internal delivery technologies." Emerging Technologies Show Significant Potential "We are particularly enthusiastic about the commercial potential of our innovative new drug delivery technologies," Meakem added. "In 1998, human proof-of-principle studies conducted in the United Kingdom demonstrated that our colon-specific system has the ability to bypass degradation in both the stomach and small intestine -- to deliver active ingredients throughout the length of the colon. In addition, preclinical studies have indicated that our bioerodible polymers can be implanted for systemic, site-specific or targeted drug delivery. We expect these new technologies to move Advanced Polymer into the broader internal drug delivery market." Value Added in Ethical Pharmaceuticals "U.S. sales of Retin-A(R) Micro(TM), marketed by Johnson & Johnson's Ortho Dermatological subsidiary, increased to 33% of total Retin-A sales during 1998," Meakem said. "To expand commercialization, Ortho is conducting Phase III studies of Retin-A Micro for international marketing clearances, and Phase III studies for product line extensions in the U.S. Dermik Laboratories, Inc., our partner for Microsponge(R)-entrapped 5-fluorouracil (5-FU) has completed its pivotal clinical studies and expects to submit a New Drug Application in 1999 seeking FDA marketing clearance for the treatment of actinic keratosis, a common precancerous skin condition. We are also collaborating with Pharmacia & Upjohn to develop a delivery system for another topical therapeutic agent." Skincare Applications Increase Worldwide "Our delivery systems technologies are playing an increasing role in cosmeceutical and personal care products marketed worldwide," Meakem added. "During 1998, Avon Products expanded its access to our technology and launched a second product internationally -- ANEW Retinol Hand Complex -- using our Microsponge(R)-entrapped retinol combination. Both of Avon's retinol products are now available not only door-to-door but also over the internet at www.avon.com. Scott's Liquid Gold launched Alpha Hydrox Retinol Night ResQ PM with our retinol formulation, supported by a multi-million dollar advertising campaign. That product is also available over the internet at www.alphahydrox.com as well as through traditional mass merchandising channels. "Other partners that launched products in 1998 included La Prairie, a subsidiary of Swiss cosmetics giant Beiersdorf AG, who launched Microsponge-based products in major markets worldwide," Meakem said. "Bath & Body Works launched our retinol product. Melanosponge melanin products are now marketed in South America and Southern Europe and, most recently, we began partnering with Guthy-Renker Corporation to commercialize multi-product skincare kits through infomercials featuring a celebrity spokesperson. "This is just a sample of the many uses of Advanced Polymer's technologies throughout the world," Meakem said. "Our substantial and growing client base enables us to develop and commercialize products very broadly -- through physicians, mass retailers, high-end department stores, the Avon lady, beauty salons and spas, TV infomercials, and the internet." Advanced Polymer Systems is a leader in polymer-based delivery systems and related technologies used primarily in ethical and over-the-counter (OTC) pharmaceuticals and personal care products. The company's Microsponge and Polytrap(R) systems, which deliver active ingredients to the skin, now play an integral role in almost 100 personal care products sold worldwide. New products and technologies under development include site-specific systems for delivering oral medications to the lower gastrointestinal tract, and bioerodible microspheres and polymers for oral or implantable drug delivery. NOTE: Except for historical information, this news release contains certain forward-looking statements that involve risk and uncertainties which may cause actual results to differ materially from the statements made, including the success and timing of product development, approvals and launches, the establishment of new corporate alliances, and other risks listed from time to time in Advanced Polymer's U.S. Securities and Exchange Commission (SEC) filings, including those described in the Company's most recently filed registration statement on Form S-3. These forward-looking statements represent Advanced Polymer's judgment, as of the date of this release, and the company disclaims any intent or obligation to update these forward-looking statements. ADVANCED POLYMER SYSTEMS, INC. HIGHLIGHTS - INCOME STATEMENT (in thousands, except per share data) Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 1998 1997 1998 1997 Product Revenues $3,043 $2,841 $13,636 $12,443 Royalties, License Fees & R&D Fees 2,126 1,808 6,355 4,390 Milestone Payment 0 0 0 1,500 TOTAL REVENUES 5,169 4,649 19,991 18,333 Cost of Sales 1,473 1,963 7,127 7,164 Operating Expenses: Research & Development 1,186 992 4,381 3,740 Selling, Advertising, General & Administrative 1,258 1,630 6,009 7,358 TOTAL OPERATING EXPENSES 2,444 2,622 10,390 11,098 OPERATING INCOME 1,252 64 2,474 71 Interest Expense, Net (131) (141) (559) (683) Other Expense, Net (1) 2 (19) (71) NET INCOME (LOSS) $1,120 ($75) $1,896 ($683) BASIC EARNINGS (LOSS) PER SHARE $0.06 ($0.00) $0.10 ($0.04) DILUTED EARNINGS (LOSS) PER SHARE $0.06 ($0.00) $0.09 ($0.04) HIGHLIGHTS - BALANCE SHEET (in thousands) December 31 December 31 1998 1997 ASSETS Cash and Cash Equivalents $4,088 $8,672 Accounts Receivable, Net 4,829 3,389 Inventory 2,959 2,639 Other Current Assets 936 541 TOTAL CURRENT ASSETS 12,812 15,241 Property, Plant & Equipment, Net 8,644 6,771 Other Non-Current Assets 1,625 2,168 TOTAL ASSETS $23,081 $24,180 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $7,510 $9,140 Long-Term Liabilities 1,036 4,799 Shareholders' Equity 14,535 10,241 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,081 $24,180 SOURCE Advanced Polymer Systems, Inc. -0- 03/04/99 /CONTACT: Michael O' Connell, Chief Financial Officer, 650-366-2626, ext. 326, or Gordon Sangster, Controller, 650-366-2626, ext. 327, both of Advanced Polymer Systems/ /Web site: http://www.advancedpolymer.com/ (APOS) CO: Advanced Polymer Systems, Inc. ST: California IN: MTC SU: ERN -0- Mar/04/1999 8:30 EOS (PRN) Mar/04/99 08:30 86 â -0- (PRN) Mar/04/1999 8:45
ADVANCED POLYMER SYSTEMS REPORTS 1998 RESULTS
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