Spherix Announces First Quarter Financial Results

News provided by

Spherix Incorporated

May 13, 2011, 04:25 ET

BETHESDA, Md., May 13, 2011 /PRNewswire/ -- Spherix Incorporated (NASDAQ: SPEXD) -- an innovator in biotechnology for therapy in diabetes, metabolic syndrome and atherosclerosis, and providers of technical and regulatory consulting services to food, supplement, biotechnology and pharmaceutical companies -- today reported financial results for the three months ended March 31, 2011.

Recent and Upcoming Highlights

  • Pharmaceutical Development
    • Began a multi-unit research contract to investigate the role of D-tagatose in lowering triglycerides
    • Began preclinical animal testing of SPX10624258 in combination with D-tagatose
    • Seeking a strategic relationship with a pharmaceutical company for the continued development of D-tagatose as a treatment for Type 2 diabetes
  • Health Sciences Consulting
    • Recent and upcoming trade and professional shows:
      • April 9, 2011: Dr. Claire Kruger, Spherix CEO, spoke at the American Dietetic Association's Nutrition News Forecast 2011 in Chicago
      • May 16, 2011: Spherix Consulting's Principal Advisor, Dr. A. Wallace Hayes, will be presenting at the American College of Toxicology's Toxicology for Industrial and Regulatory Scientists Program, to be held in Falls Church, Va.; his presentation, "Basic Principles of Toxicology," was co-authored by Dr. Kruger
  • Corporate
    • Raised $2.77 million in a registered direct offering of common stock and warrants
    • On May 6, 2011, effected a one for ten reverse stock split of the Company's common stock

Financial Results for the Three Months Ended March 31, 2011

The net loss for the first quarter of 2011 was $0.2 million or $0.10 per share, compared with a net loss for the first quarter of 2010 of $2.1 million or $1.25 per share.  The narrowing of the net loss was attributed mainly to lower research and development expenses, and gain on settlement of obligations of $0.8 million of which $0.6 million related to a settlement of future purchase obligations with the Company's manufacturer of D-tagatose and $0.2 million related to an agreement with the Company's founders, Gilvert V. Levin and M. Karen Levin.

Spherix reported research and development (R&D) expense for the first quarter of 2011 of $0.4 million, a decrease of $1.0 million from R&D expense of $1.3 million in the prior year's first quarter.  R&D expenses are entirely incurred by Biospherics, the Company's pharmaceutical development subsidiary.  The decrease in R&D was attributed to lower spending following completion of a Phase 3 clinical trial and a Phase 2 dose-ranging trial to develop D-tagatose for the treatment of Type 2 diabetes.  First quarter 2011 R&D expense is related to the Company's preclinical trials for the use of both D-tagatose and SPX10624258 in lowering triglyceride levels.  D-Tagatose, a naturally occurring sugar, is a low-calorie, full-bulk sweetener previously approved by the Food and Drug Administration (FDA) as a GRAS (Generally Recognized as Safe) food ingredient.

The Company had cash and cash equivalents of $6.5 million and working capital of $6.6 million as of March 31, 2011, compared with $5.6 million and $4.9 million, respectively, as of December 31, 2010.  The Company raised $2.77 million in a registered direct offering of common stock and warrants during the first quarter.

Commenting on the quarter and recent weeks, Dr. Kruger said, "We have been very pleased thus far with the progress and results of our preclinical studies with D-tagatose in the treatment of high triglycerides and other metabolic disorders.  We also tested our new pipeline compound for treating dyslipidemia, SPX10624258, which was licensed from the University of Kentucky last year, in conjunction with D-tagatose and were encouraged by the results.  Although it's very early to draw conclusions, it appears that the combination of the two compounds are worthy of further preclinical study.  Combination therapy is an important tool in many complex disease settings, such as the metabolic syndrome.  The Company also expects to conduct a human proof-of-concept trial that may begin in 2012 once a new IND is in place for the SPX10624258/D-tagatose combination.  We estimate that it will likely take three or more years to complete the studies necessary to attract a pharma partner to complete the development, and an additional two to four years to complete all necessary studies for an NDA filing for D-tagatose or SPX10624258."

Dr. Kruger continued, "With respect to the Type 2 diabetes indication, we continue to actively search for an appropriate partner to develop the drug further.  As we previously reported, because it would likely take several additional years of clinical trials and could cost as much as several hundred million dollars to secure FDA approval for D-tagatose as a diabetes drug, Spherix does not have the resources to continue development for this indication.  We are hopeful partners will be attracted to our Phase 3 trial in Type 2 diabetes and the stellar safety record for D-tagatose," Dr. Kruger added.

Until June 2010 Biospherics' activities were limited to developing D-tagatose as a novel, first-in-class treatment for Type 2 diabetes.  In June 2010 the Company announced that it will actively seek a pharma partner to continue the diabetes development and that it will also explore D-tagatose as a potential treatment for high triglycerides, a risk factor for atherosclerosis, myocardial infarction and stroke.  The clinical trials in the use of D-tagatose for the treatment of Type 2 diabetes have been the primary focus of the Biospherics segment.

About Spherix

Spherix Incorporated was launched in 1967 as a scientific research company under the name Biospherics Research.  The Company now leverages its scientific and technical expertise and experience through its two subsidiaries – Biospherics Incorporated and Spherix Consulting, Inc.  Biospherics is dedicated to development of D-tagatose and recently completed a Phase 3 clinical trial to study the use of D-tagatose as a treatment for Type 2 diabetes.  Biospherics is actively seeking a pharma partner to continue the diabetes development while exploring D-tagatose as a potential treatment for high triglycerides, a risk factor for atherosclerosis, myocardial infarction, and stroke.  Spherix's Consulting subsidiary provides scientific and strategic support for suppliers, manufacturers, distributors and retailers of conventional foods, biotechnology-derived foods, medical foods, infant formulas, food ingredients, dietary supplements, food contact substances, pharmaceuticals, medical devices, consumer products and industrial chemicals and pesticides.  For more information, please visit www.spherix.com.

Forward-Looking Statements

This release contains forward-looking statements which are made pursuant to provisions of Section 21E of the Securities Exchange Act of 1934.  Investors are cautioned that such statements in this release, including statements relating to planned clinical study design, regulatory and business strategies, plans and objectives of management and growth opportunities for existing or proposed products, constitute forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements.  The risks and uncertainties include, without limitation, risks that product candidates may fail in the clinic or may not be successfully marketed or manufactured, we may lack financial resources to complete development of D-tagatose, the FDA may interpret the results of studies differently than us, competing products may be more successful, demand for new pharmaceutical products may decrease, the biopharmaceutical industry may experience negative market trends, our continuing efforts to develop D-tagatose may be unsuccessful, our common stock could be delisted from the Nasdaq Capital Market, and other risks and challenges detailed in our filings with the U.S. Securities and Exchange Commission, including our current report on Form 8-K filed on October 10, 2007.  Readers are cautioned not to place undue reliance on any forward-looking statements which speak only as of the date of this release.  We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this release or to reflect the occurrence of unanticipated events.

- Tables Follow -

Consolidated Statements of Operations

(Unaudited)



Three Months Ended March 31,

2011

2010




Revenue

$                  306,303

$                  332,291

Operating expense


        Direct costs

(130,296)

(119,629)

        Research and development expense

(355,503)

(1,311,879)

        Selling, general and administrative expense

(932,204)

(1,050,647)

        Total operating expense

(1,418,003)

(2,482,155)




Loss from operations

(1,111,700)

(2,149,864)

        Interest income

1,219

1,988

        Other income

44,630

-

        Gain on settlement of obligations

845,000

-

Loss before taxes

(220,851)

(2,147,876)

        Income tax expense

(14,485)

-

Net loss

$                (235,336)

$             (2,147,876)




Net loss per share, basic

$                      (0.10)

$                      (1.25)

Net loss per share, diluted

$                      (0.10)

$                      (1.25)




Weighted average shares outstanding, basic

2,448,647

1,715,065

Weighted average shares outstanding, diluted

2,448,647

1,715,065

Consolidated Balance Sheets




ASSETS

March 31, 2011
(Unaudited)

December 31,
2010

Current assets



Cash and cash equivalents

$         6,544,793

$    5,575,310

Trade accounts receivable, net of allowance of $0 and $65,000

193,125

285,859

Grants receivable

-

270,128

Other receivables

105,685

74,110

Prepaid research expenses

404,032

464,322

Prepaid expenses and other assets

146,226

155,261

         Total current assets

7,393,861

6,824,990





Property and equipment, net of accumulated depreciation





of $215,008 and $197,971

139,498

154,161

Patents, net of accumulated amortization of $1,839 and $50,725

307

2,296

Deposit

35,625

35,625

         Total assets

$         7,569,291

$    7,017,072





LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities



Accounts payable and accrued expenses

$            395,111

$    1,211,561

Accrued salaries and benefits

253,712

563,706

Deferred revenue

96,515

170,641

         Total current liabilities

745,338

1,945,908





Deferred compensation

-

550,000

Deferred rent

73,478

80,945

         Total liabilities

818,816

2,576,853





Commitments and contingencies

-

-





Stockholders' equity



Preferred stock, $0.01 par value, 2,000,000 shares authorized;



         5,250 series B issued and 1 outstanding at March 31, 2011



         and December 31, 2010

-

-

Common stock, $0.01 par value, 5,000,000 shares authorized;





         2,570,531 and 2,143,631 issued, 2,562,487 and 2,135,587



         outstanding at March 31, 2011 and December 31, 2010,



         respectively

25,705

21,436

Paid-in capital in excess of par value

41,110,137

38,568,814

Treasury stock, 8,043 shares, at cost at March 31, 2011



         and December 31, 2010

(464,786)

(464,786)

Accumulated deficit

(33,920,581)

(33,685,245)

         Total stockholders' equity

6,750,475

4,440,219

         Total liabilities and stockholders' equity

$         7,569,291

$    7,017,072

SOURCE Spherix Incorporated

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