Cortex reports net loss of $0.01 per share for quarter ended December 31, 2010

Mar 18 2011

Cortex Pharmaceuticals, Inc. (OTCBB: CORX) reported a net loss applicable to common stock of $984,000, or $0.01 per share for the quarter ended December 31, 2010 compared with a net loss of $1,599,000, or $0.02 per share for the corresponding prior year period.

For the fiscal year ended December 31, 2010, Cortex reported net income applicable to common stock of $1,629,000, or $0.02 per share compared to a net loss of $10,788,000, or $0.19 per share for the corresponding prior year period.

Operating results for the quarter ended December 31, 2010 reflect an increase in grant revenues compared to the corresponding prior year period, along with a decrease in clinical development expenses and personnel-related expenses for the Company's research staff.

For the year ended December 31, 2010, operating results reflect revenues from the Company's earlier transaction with Biovail Laboratories International SRL ("Biovail"). As announced, in March 2010 Cortex sold its rights to CX717 and certain other AMPAKINE® compounds to Biovail as a potential treatment for respiratory depression and vaso-occlusive crises associated with sickle cell disease, an orphan drug indication. As a result of the transaction, Cortex received $10,000,000 from Biovail during 2010.

Results for the year ended December 31, 2010 also reflect increased grant revenues, including an award from The Michael J. Fox Foundation for Parkinson's Research. The grant will support testing of Cortex's AMPAKINE compounds for their ability to restore brain function in animal models of Parkinson's disease.

During late 2010 Cortex received an additional grant under a program created by Congress in the Patient Protection and Affordable Care Act of 2010. The grant reimbursed certain qualifying research expenses incurred by Cortex for its AMPAKINE CX1739.

Total operating expenses of approximately $8,292,000 for the year ended December 31, 2010 decreased only slightly from those for the prior year, due mostly to the timing of clinical development expenses for AMPAKINE CX1739, as partially offset by increased administrative expenses incurred in connection with the transaction with Biovail.

Interest expense for the year ended December 31, 2010 includes non-cash interest charges related to the June 2010 conversion of the promissory note issued to Samyang Optics Co., Ltd. ("Samyang") of Korea. As reported earlier, the convertible note was issued in connection with the Company's $1,500,000 private placement to Samyang in January 2010.

For the year ended December 31, 2009, the net loss applicable to common stock includes non-cash charges of approximately $2,347,000, or $0.04 per share, related to the beneficial conversion feature of preferred stock issued by the Company in April 2009 and July 2009.

Cortex is continuing its discussions related to strategic alternatives such as licensing, partnering and M&A opportunities. However, given that there can be no assurance that a transaction will be finalized from these discussions, the Company's Form 10-K for the year ended December 31, 2010 will include a going concern qualification from its independent auditors.

Recent Business Highlights

• Announced top-line results from an exploratory clinical study with AMPAKINE CX1739 in subjects with sleep apnea. The study demonstrated that selected oxygen saturation parameters were improved and some were statistically improved by a single dose of CX1739, but the interpretation of these results was complicated by a reduced sleep time during the night following drug treatment. Cortex believes the results warrant undertaking a larger study to test the response of sleep apnea patients to CX1739, particularly those patients with central or mixed sleep apnea.
• Announced notification by Servier, France's largest privately held pharmaceutical company, of their intent to move forward into Phase I clinical studies with the jointly-discovered High Impact AMPAKINE S47445 (CX1632). The High Impact AMPAKINE technology represents a potentially disease-modifying approach to treat Alzheimer's disease and other memory and cognitive impairments associated with a range of neurodegenerative diseases, due to the ability of the compounds to stimulate growth factors within the brain.
• Regained worldwide rights to develop and commercialize AMPAKINE compounds for the treatment of schizophrenia and depression.
• Obtained exclusive worldwide rights from the University of California for the combination of AMPAKINE and mGluR5 compounds for the treatment of various conditions. The broad method-of-use patent application covers the combined use of AMPAKINE compounds and metabotropic glutamate receptor type 5 (mGluR5) antagonists for the treatment of Fragile X syndrome, the most common genetically proven cause of autism, and for the treatment of Parkinson's disease, Huntington's disease and other neurodegenerative disorders.
• Received a grant from The Michael J. Fox Foundation for Parkinson's Research to test selected compounds from the AMPAKINE platform for their ability to restore brain function in animal models of Parkinson's disease.

As noted above, in March 2010 Cortex sold certain AMPAKINE compounds and their related intellectual property rights to Biovail for use in the field of respiratory depression and vaso-occlusive crises associated with sickle cell disease. Cortex received $10,000,000 from Biovail in connection with the agreement during 2010. In September 2010, Biovail's parent corporation merged with Valeant Pharmaceuticals International ("Valeant"). Following the merger, Valeant and Biovail conducted a strategic and financial review of the product pipeline and as a result, in November 2010 Biovail announced its intent to exit from the respiratory depression project acquired from Cortex.

As recently reported, in March 2011 Cortex entered into an agreement to reacquire the compounds, patents and rights sold to Biovail in March 2010. The new agreement includes an upfront payment by Cortex of $200,000 and potential future payments of up to $15,150,000 based upon the achievement of certain development and NDA submission and approval milestones. Under the agreement, Biovail is also eligible to receive up to $15,000,000 based upon Cortex's net sales of an intravenous dosage form of an AMPAKINE compound for respiratory depression. In addition, at any time following the completion of Phase I clinical studies and prior to the end of Phase IIa clinical studies, Biovail retains an option to co-develop and co-market intravenous dosage forms of an AMPAKINE compound as a treatment for respiratory depression and vaso-occlusive crises associated with sickle cell disease.