EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit No. 99.1
 
Logo
FOR FURTHER INFORMATION: 
Karen Struck, Investor Relations
(602) 286-5250
kstruck@olgc.com


ORTHOLOGIC ANNOUNCES YEAR END 2006 FINANCIAL RESULTS

TEMPE, AZ - March 14, 2007 - OrthoLogic Corp. (NASDAQ: OLGC) today announced financial results for the year ending December 31, 2006. Net loss was $31.9 million, or $0.78 per share versus a net loss of $27.2 million or $0.72 per share for the year ended December 31, 2005. The $4.7 million increase in net loss for 2006 compared to the same period in 2005 results primarily from $2.8 million of stock compensation expense, recognition of a $2.1 million Chrysalin product platform patent impairment loss, $8.4 million of in-process research and development costs related to the acquisition of the AZX100 technology platform and recognition of income tax expense related to the recording of a valuation allowance of $1.1 million for a deferred tax asset related to an Alternative Minimum Tax credit carryover. These items were partially offset by the decrease in fracture repair clinical trial activity compared to the same period in 2005 and a general reduction of expenses due to cost containment efforts. Cash used in operations in 2006 was $18.9 million. Our cash position was favorably impacted by the receipt of $3.0 million from the exercise of stock options and the NovaQuest transactions, whereby we sold a total of 1,262,531 shares of our common stock for gross proceeds of $3.5 million.

OrthoLogic began 2006 with $83.6 million in cash and investments and ended the fourth quarter of 2006 with $70.2 million in cash and investments, a net change of $13.4 million versus original guidance of $35 million. For 2007, the Company forecasts a cash burn of $18.0 million - $19.0 million.

The Company will be investing approximately $4.0 million - $4.5 million in connection with the pending purchase of a new 34,440 square foot single-story office and laboratory facility in Phoenix, AZ. This estimate is not included in the forecasted cash burn. Management believes the facility purchase is a sound financial decision. Owning affords OrthoLogic strategic flexibility that entering a five-to-seven-year lease does not, and it will be substantially more cost-effective. The decision was necessitated by the expiration at the end of 2007 of the lease on OrthoLogic’s 100,000 square foot facility in Tempe, AZ.

Management will host a conference call and webcast today at 4:30 PM EDT (1:30 PM MT/PDT). The call may be accessed at 866-761-0749 (domestic) or 617-614-2707 (international), with access code 11208335, or by logging onto the Investors section of the Company’s website, www.orthologic.com.

A replay will be available beginning today at 6:30 PM EDT until April 13, 2007, and may be accessed at 888-286-8010 (domestic) or 617-801-6888 (international), with access code 68668590.

OrthoLogic Announces Year-End 2006 Financial Results
Page 2
 
About OrthoLogic
 
OrthoLogic is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served conditions. The Company is focused on the development and commercialization of two product platforms: Chrysalin® (TP508) and AZX100.
 
Chrysalin, the Company's novel synthetic 23-amino acid peptide, is being studied in two lead indications, both of which represent areas of significant unmet medical need -- fracture repair and diabetic foot ulcer healing. Based on the Company's pioneering scientific research of the natural healing cascade, OrthoLogic has become a leading company in bone and tissue repair. The Company owns exclusive worldwide rights to Chrysalin.
 
AZX100 is a novel synthetic pre-clinical 24-amino acid peptide, one of a new class of compounds in the field of smooth muscle relaxation called Intracellular Actin Relaxing Molecules, or ICARMsTM. AZX100 is currently being evaluated for medically and commercially significant applications, such as prevention of keloid scarring, treatment of vasospasm associated with subarachnoid hemorrhage, and treatment of asthma. OrthoLogic has an exclusive worldwide license to AZX100.
 
OrthoLogic's corporate office is in Tempe, Arizona. For more information, please visit the Company's website: www.orthologic.com.
 
 
Forward-Looking Statements
 
Statements in this document or otherwise attributable to OrthoLogic regarding its business that are not historical facts are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may include the timing and acceptability of FDA filings and the efficacy and marketability of potential products, involve risks and uncertainties that could cause actual results to differ materially from predicted results. These risks include: delays in obtaining or inability to obtain FDA, institutional review board or other regulatory approvals of preclinical or clinical testing; unfavorable outcomes in preclinical and clinical testing; the development by others of competing technologies and therapeutics that may have greater efficacy or lower cost; delays in obtaining or inability to obtain FDA or other necessary regulatory approval of the Company’s products; the Company’s inability to successfully and cost effectively develop or outsource manufacturing and marketing of any products it is able to bring to market; changes in FDA or other regulations that affect its ability to obtain regulatory approval of its products, increase its manufacturing costs or limit its ability to market its products; the possible need for additional capital in the future to fund the continued development of its product candidates; and other factors discussed in the Company’s Form 10-K for the fiscal year ended December 31, 2006, and other documents on file with the Securities and Exchange Commission.
 
OrthoLogic Announces Year-End 2006 Financial Results
Page 3
 
ORTHOLOGIC CORP.
 
(A Development Stage Company)
BALANCE SHEET

   
December 31,
  
   
2006
  
2005
  
   
(in thousands)
  
Current assets
          
Cash and cash equivalents
  
$
18,047
  
$
35,111
  
Short-term investments
    
35,977
   
46,437
 
Prepaids and other current assets
    
1,950
   
857
 
               
Total current assets
    
55,974
   
82,405
 
               
Furniture and equipment, net
    
409
   
525
 
Long-term investments
    
16,206
   
2,084
 
Deferred income taxes
    
-
   
1,106
 
Patents, net
    
-
   
2,223
 
               
Total assets
  
$
72,589
  
$
88,343
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
Current liabilities
              
Accounts payable
  
$
1,621
  
$
1,036
  
Accrued compensation
    
584
   
711
 
Accrued clinical
    
133
   
544
 
Accrued severance and other restructuring costs
    
366
   
602
 
Other accrued liabilities
    
737
   
1,089
 
               
Total current liabilities
    
3,441
   
3,982
 
               
Deferred rent and other non-current liabilities
    
-
   
183
 
               
Total liabilities
    
3,441
   
4,165
 
               
Stockholders' Equity
              
               
Common Stock $.0005 par value; 100,000,000 shares authorized; 41,564,291 and 38,124,742 shares issued and outstanding in 2006 and 2005, respectively
    
21
   
19
 
Additional paid-in capital
    
188,236
   
171,355
 
Accumulated deficit
    
(119,109
)
  
(87,196
)
               
Total stockholders' equity
    
69,148
   
84,178
 
               
Total liabilities and stockholders' equity
  
$
72,589
  
$
88,343
  
 
OrthoLogic Announces Year-End 2006 Financial Results
Page  4
 
ORTHOLOGIC CORP.
(A Development Stage Company)
 
STATEMENTS OF OPERATIONS
 
               
As a
  
               
Development
 
               
Stage Company
  
   
Years Ended December 31,
  
August 5, 2004 -
  
   
2006
  
2005
  
2004
  
December 31, 2006
  
OPERATING EXPENSES
  
(in thousands, except per share data)
      
General and administrative
  
$
6,558
  
$
4,910
  
$
3,306
  
$
13,346
  
Research and development
    
19,661
   
25,444
   
17,116
   
53,185
 
Other divestiture and related gains
    
-
   
(250
)
  
(347
)
  
(375
)
Purchased in-process research and development
    
8,471
   
-
   
25,840
   
34,311
 
Total operating expenses
    
34,690
   
30,104
   
45,915
   
100,467
 
Interest and other income, net
    
(3,883
)
  
(2,640
)
  
(1,464
)
  
(7,274
)
Loss from continuing operations before taxes
    
30,807
   
27,464
   
44,451
   
93,193
 
Income tax expense (benefit)
    
1,106
   
(108
)
  
(642
)
  
356
 
Loss from continuing operations
    
31,913
   
27,356
   
43,809
   
93,549
 
Discontinued operations - net gain on the sale of the bone device business, net of taxes of $0, $96, ($363), ($267), respectively
    
-
   
(154
)
  
(2,048
)
  
(2,202
)
                           
NET LOSS
  
$
31,913
  
$
27,202
  
$
41,761
  
$
91,347
  
 
                          
Net loss per share of continuing operations, basic and diluted
  
$
0.78
  
$
0.72
  
$
1.22
        
Net gain per share of discontinued operations, basic and diluted
  
$
-
  
$
-
  
$
(0.06
)
      
Net loss per share, basic and diluted
  
$
0.78
  
$
0.72
  
$
1.16
        
Basic and diluted shares outstanding
    
40,764
    
38,032
    
35,899
        
 
OrthoLogic Announces Year-End 2006 Financial Results
Page  5
 
ORTHOLOGIC CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOW
 
               
As a
  
               
Development
  
               
Stage Company
  
   
Years Ended December 31,
  
August 5th 2004 -
  
   
2006
  
2005
  
2004
  
December 31, 2006
  
   
(in thousands)
      
OPERATING ACTIVITIES
                  
Net loss
  
$
(31,913
)
$
(27,202
)
$
(41,761
)
$
(91,347
)
Non-cash items:
                          
Deferred taxes
    
1,106
   
-
   
(336
)
  
770
 
Depreciation and amortization
    
2,833
   
392
   
187
   
3,265
 
Non-cash stock compensation
    
2,781
   
162
   
6
   
2,943
 
Gain on sale of bone stimulator business
    
-
   
(250
)
  
(2,048
)
  
(2,298
)
Purchased in-process research and development
    
8,471
   
-
   
25,840
   
34,311
 
                           
Change in other operating items:
                          
Prepaids and other current assets
    
(1,094
)
  
424
   
827
   
(241
)
Accounts payable
    
334
   
203
   
632
   
650
 
Accrued liabilities
    
(1,422
)
  
(294
)
  
(2,284
)
  
(933
)
Cash flows used in operating activities
    
(18,904
)
  
(26,565
)
  
(18,937
)
  
(52,880
)
INVESTING ACTIVITIES
                          
Expenditures for furniture and equipment, net
    
(196
)
  
(268
)
  
(86
)
  
(515
)
Proceeds from sale of assets
    
-
   
7,000
   
-
   
7,000
 
Cash paid for assets of AzERx/CBI
    
(390
)
  
-
   
(3,668
)
  
(4,058
)
Cash paid for patent assignment rights
    
(250
)
  
(400
)
  
-
   
(650
)
Purchases of investments
    
(56,509
)
  
(48,823
)
  
(91,092
)
  
(145,894
)
Maturities of investments
    
52,847
   
65,502
   
62,547
   
151,649
 
Cash flows provided by (used in) investing activities
    
(4,498
)
  
23,011
   
(32,299
)
  
7,532
 
FINANCING ACTIVITIES
                          
Net proceeds from stock option exercises
    
2,962
   
288
   
5,256
   
4,612
 
Net proceeds from sale of stock
    
3,376
   
-
   
-
   
3,376
 
Cash flows provided by financing activities
    
6,338
   
288
   
5,256
   
7,988
 
                           
NET DECREASE IN CASH AND CASH EQUIVALENTS
    
(17,064
)
  
(3,266
)
  
(45,980
)
  
(37,360
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
35,111
   
38,377
   
84,357
   
55,407
 
CASH AND CASH EQUIVALENTS, END OF PERIOD
  
$
18,047
  
$
35,111
  
$
38,377
  
$
18,047
  
                           
Supplemental Disclosure of Non-Cash Investing Activities
                          
Cash paid during the year for interest
  
$
-
  
$
-
  
$
4
        
Cash paid during the year for income taxes
  
$
-
  
$
-
  
$
2,679
        
                           
AzERx and CBI Acquisition:
                          
Current assets acquired
  
$
-
  
$
-
  
$
29
  
$
29
  
Patents acquired
    
-
   
-
   
2,142
   
2,142
 
Liabilities acquired and accrued acquisition costs
    
(317
)
  
-
   
(140
)
  
(457
)
Original investment reversal
    
-
   
-
   
(750
)
  
(750
)
In-process research and development acquired
    
8,471
   
-
   
25,840
   
34,311
 
Common stock issued for acquisition
    
(7,764
)
  
-
   
(23,453
)
  
(31,217
)
Cash paid for acquisition
  
$
390
  
$
-
  
$
3,668
  
$
4,058