-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IuWN3v/xEkTsfZjxw3bmofcfasBxzuiT0sCLWazEdemQ2uAXx041kNMj511XdNyX jrzOLJAYS8ddaPAt2DQ9bg== 0000950005-04-000298.txt : 20040325 0000950005-04-000298.hdr.sgml : 20040325 20040325152917 ACCESSION NUMBER: 0000950005-04-000298 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040324 ITEM INFORMATION: ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CELLEGY PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000887247 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 820429727 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26372 FILM NUMBER: 04689696 BUSINESS ADDRESS: STREET 1: 349 OYSTER POINT BLVD. STREET 2: SUITE 200 CITY: SO. SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 6506262200 MAIL ADDRESS: STREET 1: 349 OYSTER POINT BLVD. STREET 2: SUITE 200 CITY: SO. SAN FRANCISCO STATE: CA ZIP: 94080 8-K 1 p18327_8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 24, 2004 CELLEGY PHARMACEUTICALS, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) California ------------------------------------------------------ (State or other jurisdiction of incorporation) 0-26372 82-0429727 - ---------------------------- -------------------------- (Commission (IRS Employer File Number) Identification No.) 349 Oyster Point Boulevard, Suite 200 South San Francisco, CA 94080 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (650) 616-2200 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5: OTHER EVENTS On March 24, 2004, Cellegy Pharmaceuticals, Inc. filed with the Securities and Exchange Commission an amended annual report on Form 10-K/A for the year ended December 31, 2002 and amended quarterly reports on Form 10-Q/A for the quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 (collectively, "Amended Reports"). The Amended Reports were filed to restate the financial statements in order to adjust the accounting treatment for certain employee and director stock options that had been cancelled during the fourth quarter of 2002. The Company initially accounted for the cancellation of certain unvested options as a modification to the stock options and applied variable accounting treatment to the uncancelled portion of the stock options. Subsequently, the Company determined that was not the appropriate application under generally accepted accounting principles, and reversed the non-cash expense of $695,000 previously recorded in the fourth quarter of 2002 related to the intrinsic value of the vested options. In turn, the restatement resulted in an additional non-cash expense of $248,000 for 2003. The net effect of the restatement through year end 2003 was a credit to expense of $447,000. A more detailed discussion regarding the restated financial statements is contained in the Amended Reports. ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS (a) Exhibits. 99.1 Press Release issued by the Registrant dated March 25, 2004. ITEM 12: RESULTS OF OPERATIONS AND FINANCIAL CONDITION On March 25, 2004, Cellegy Pharmaceuticals, Inc. issued a press release announcing its financial results for the fiscal year ended December 31, 2003. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: March 25, 2004 CELLEGY PHARMACEUTICALS, INC. By: /s/ A. Richard Juelis --------------------- A. Richard Juelis Vice President, Finance and Chief Financial Officer EX-99.1 3 p18327_ex99-1.txt PRESS RELEASE Exhibit 99.1 Cellegy Pharmaceuticals Reports 2003 Financial Results South San Francisco, California, March 25, 2004 - Cellegy Pharmaceuticals, Inc. (Nasdaq: CLGY) reported today its 2003 financial results. For the year ended December 31, 2003, revenues were $1,620,000, compared with $1,402,000 for the same period last year. Revenues in 2003 consisted primarily of $385,000 in Australian RectogesicTM ointment sales, $67,000 in initial Rectogesic sales in South Korea, $316,000 in skin care product sales to Gryphon Development, the product development arm of a major specialty retailer and $833,000 in licensing revenue for Fortigel(TM) (testosterone gel). Revenues in 2002 consisted primarily of $275,000 in Australian Rectogesic sales and $1,081,000 in skin care product sales, primarily to Gryphon. The net loss for the year ended December 31, 2003 was $13,532,000 or $0.68 per share based on 19,964,000 weighted average shares outstanding, compared with a 2002 net loss of $15,241,000 or $0.86 per share based on 17,643,000 weighted average shares outstanding. Cash, restricted cash and investments at December 31, 2003 were $11.6 million, compared with $23.9 million at December 31, 2002 and $14.5 million at September 30, 2003. Cellegy's cash, restricted cash and investments declined by $2.9 million in the fourth quarter of 2003. This was in line with management's expectations and reflects ongoing efforts to preserve cash and control spending, while continuing to focus on the clinical development and commercialization of key products. Cellegy's cash use for the first half of 2004 is expected to remain at about the fourth quarter 2003 rate. In January 2004, Cellegy entered into a Structured Secondary Offering (SSO) agreement with Kingsbridge Capital Limited which allows Cellegy to sell up to 3.74 million shares of newly issued common stock at times and in amounts selected by the Company over a period of up to two years, subject to certain restrictions including the registration of the shares with the SEC. Additional Financial Information Rectogesic revenues in Australia increased 40% in 2003, compared with 2002. The Company believes Rectogesic has the potential to continue to gain market share and increase revenue in the Australian market. Cellegy launched Rectogesic in South Korea through our distributor during the fourth quarter of 2003. We are not yet able to assess the market acceptance and revenue potential of Rectogesic in South Korea. Skin care moisturizer sales to Gryphon decreased by $765,000 or about 71% in 2003, compared with 2002. Product sales to Gryphon will likely continue to fluctuate from period to period depending on their seasonal ordering patterns. We do not now expect any Gryphon sales orders through, at least, the first quarter of 2004. In December 2002, Cellegy entered into an exclusive license agreement with PDI, Inc. for commercial rights to Fortigel in North American markets. In 2003, Cellegy recorded total - more - licensing revenue of $833,000 from PDI, with about $208,000 realized in each of the four quarters of 2003 reflecting the amortization, over the expected commercial life of Fortigel, of the initial $15 million received from PDI on the agreement date. The Company expects the balance to be recorded as licensing revenue at the same quarterly rate in subsequent periods. Operating expenses for the year ending December 31, 2003 were $2,134,000 lower than during the comparable 2002 period. During the first half of 2002, Cellegy incurred pre-launch marketing costs relating to its CellegesicTM (nitroglycerin ointment) product candidate, as well as, Fortigel Phase 3 clinical trial costs and FDA user fees associated with filing the Fortigel New Drug Application. Subsequent reductions in marketing and research expenses and overall reductions in staff were made in the second half of 2002. Reduced expense levels were maintained in 2003, but were offset somewhat by clinical expenses associated with the recently completed Phase 3 Cellegesic clinical trial. Operating expenses for 2003 and 2002 were also impacted by various non-cash charges and credits. Total non-cash compensation charges for 2003 were $579,000, associated with the modification of certain stock options and bonuses paid in stock. For 2002, total non-cash credits were $504,000 with compensation charges of $322,000 more than offset by a non-cash credit of $826,000 resulting from the termination of the Ventiv Health marketing and sales agreement for Cellegesic(TM) (nitroglycerin ointment) in the third quarter of 2002. In the course of preparing its financial statements for the year ended December 31, 2003, the Company determined that it was necessary to adjust the accounting treatment for certain employee and director stock options that had been cancelled during the fourth quarter of 2002. The Company initially accounted for the cancellation of certain unvested options as a modification to the stock options and applied variable accounting treatment to the uncancelled portion of the stock options. Subsequently, the Company determined that was not the appropriate application under generally accepted accounting principles, and reversed the non-cash expense of $695,000 previously recorded in the fourth quarter of 2002 related to the intrinsic value of the vested options. In turn, the restatement resulted in an additional non-cash expense of $248,000 for 2003. Cellegy has filed an amended annual report on Form 10-K/A for 2002 and amended quarterly reports on Form 10-Q/A for each of the first three quarters of 2003. The Company has completed its review of the 2003 financial statements, as reported herein, and plans to file its 2003 Annual Report on Form 10-K next week. About Cellegy Pharmaceuticals Cellegy Pharmaceuticals is a specialty biopharmaceutical company engaged in the development and marketing of prescription drugs for the treatment of gastrointestinal disorders, sexual dysfunction, and the use of nitric oxide donors for the treatment of certain cancers. The Company is developing Cellegesic for the treatment of pain associated with chronic anal fissures and recently announced positive results of a Phase 3 clinical trial. Cellegy now intends to file a New Drug Application in the second quarter of 2004. The Company is also developing Cellegesic for the treatment of hemorrhoids and a painful condition called dyspareunia, which prevents or inhibits sexual intercourse in more than 5 million women in the United States. There are - more - currently no effective, non-invasive drug treatments for either of these conditions. Cellegy researchers are investigating several nitric oxide donor product candidates in earlier development stages. Cellegy is also developing two transdermal testosterone gel products. The Company has previously completed two Phase 1 / 2 clinical trials using Tostrelle(TM) (testosterone gel) for the treatment of female sexual dysfunction (FSD). In June 2003, Cellegy announced results of an interim analysis of an additional Phase 2 study using Tostrelle for treating FSD, which showed a favorable response rate of 71% versus a placebo response of 13%. Fortigel, a replacement therapy for male hypogonadism, was the subject of a Not Approvable letter by the FDA in July 2003. Forward-Looking Statements This press release contains forward-looking statements. Investors are cautioned that these forward-looking statements are subject to numerous risks and uncertainties, known and unknown, which could cause actual results and developments to differ materially from those expressed or implied in such statements. Such risks and uncertainties relate to, among other factors, completion and timing of the NDA filing of Cellegesic Phase 3 clinical trial data and the completion of trials for hemorrhoids and dyspareunia. There can be no assurance that the FDA will find the Cellegesic trial data, the statistical analysis methodology used by the Company, or other sections of the NDA acceptable. The FDA may not agree that the trial data satisfy the standards specified in the Special Protocol Assessment and may not ultimately grant marketing approval for Cellegesic. In addition, there is no certainty as to the outcome and timing of discussions with the FDA, particularly with regard to additional requirements for marketing approval of Fortigel or the Company's ability to complete corporate partnerships relating to Cellegesic or Fortigel. In October 2003, Cellegy announced that it had received a communication from PDI, Inc. invoking mediation procedures under the exclusive license agreement between PDI and Cellegy relating to Fortigel. After mediation was completed in December 2003, both PDI and Cellegy initiated litigation proceedings against each other. The Company believes PDI's claims are without merit. However, there can be no assurances regarding the outcome of litigation proceedings by Cellegy and PDI. The Company could be required to devote significant time and resources to the proceedings and an adverse outcome could have a material adverse financial impact on Cellegy. Readers are cautioned not to place undue reliance on forward-looking statements, and we undertake no obligation to update or revise statements made herein. For more information regarding risk factors, refer to the Company's Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2002 and other documents, including the forthcoming Annual Report on Form 10-K for the year ending 2003, that the Company has filed and will file with the Securities and Exchange Commission. - more - For more information: Web site: www.cellegy.com Phone: (650) 616-2200 Richard Juelis K. Michael Forrest Vice President, Finance & CFO President & CEO - more - CELLEGY PHARMACEUTICALS, INC. SUMMARY FINANCIAL RESULTS December 31, 2003 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) - -------------------------------------------------------------------------------- Year ended December 31, ----------------------- 2003 2002 -------- -------- (unaudited) Revenues $ 1,620 $ 1,402 Cost and expenses: Cost of product sales 186 370 Selling, general and administrative 4,448 6,390 Research and development 10,211 10,403 -------- -------- Total costs and expenses 14,845 17,163 -------- -------- Operating loss (13,225) (15,761) Interest and other income (expense), net(1) (307) 520 -------- -------- Net loss $(13,532) $(15,241) ======== ======== Basic and diluted net loss per common share $ (0.68) $ (0.86) ======== ======== Weighted average common shares used in computing basic and diluted net loss per share 19,964 17,643 1. During 2003, $666,900 was recorded as other expense associated primarily with the write off of capitalized tenant improvements at the Company's South San Francisco facility which were subleased and modified by the tenant. During 2002, $86,500 in gains on sale of certain laboratory equipment were recorded as other income. - more - CELLEGY PHARMACEUTICALS, INC. SUMMARY FINANCIAL RESULTS December 31, 2003 CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) - -------------------------------------------------------------------------------- December 31, -------------------- 2003 2002 -------- ------- (unaudited) Cash, restricted cash and investments $ 11,564 $23,858 Other assets 3,767 4,521 -------- ------- Total assets $ 15,331 $28,379 ======== ======= Current liabilities $ 2,852 $ 2,960 Deferred revenue 13,335 14,168 Other long-term liabilities 724 717 Shareholders' equity (deficit) (1,580) 10,534 -------- ------- Total liabilities and shareholders' equity $ 15,331 $28,379 ======== ======= - ### - -----END PRIVACY-ENHANCED MESSAGE-----