Spherix 2011 net loss decreases to $3.5 million

Mar 29 2012

Spherix Incorporated (NASDAQ: SPEX) – an innovator in biotechnology for therapy in diabetes, metabolic syndrome and atherosclerosis, and provider of technical and regulatory consulting services to food, supplement, biotechnology and pharmaceutical companies – today reported financial results for the year ended December 31, 2011, and recent and upcoming business highlights.

Recent and Upcoming Highlights

• Pharmaceutical Development
  • The Company has just requested a Type B meeting to discuss its preclinical development of SPX-106T, a new drug-drug combination product, and finalize its IND application for submission to the FDA
  • Announced results showing that SPX-106T arrested development and reduced atherosclerotic plaque in the aortic arch, thoracic aorta and sinus of Valsalva in mice genetically predisposed to cardiovascular disease
  • Raised $1.15 million in a registered direct offering and $1.25 million through a private placement transaction
  • Announced the successful completion of a 28-day rat toxicology study of SPX-106, a component of SPX-106T, showing an ample margin of safety with the dosing planned for the first-in-human study later this year
  • Announced that SPX-106T was effective at reducing hyperlipidemia in three animal models
  • Recent and upcoming trade and professional shows:
    • September 30-October 5, 2012: Spherix's President, Dr. Robert Lodder will present two papers, "Nonparametric Feature Detection for Multifactorial Diseases with Ultrahigh Dimensional Data Spaces" and "Experimental Mechanisms for Suppression of Atherogenesis and Plaque Development" (title tentative), co-authored with Dr. Claire Kruger, Chief Executive Officer, Dr. A. Wallace Hayes, Spherix's Principal Advisor, and Dr. Dietrich Conze, Spherix's Science Consultant, at the SciX meeting in Kansas City, MO
    • March 29, 2012: Dr. Lodder will present a poster, co-authored with Brittney Metts, Sean Thatcher, and Dr. Lisa Cassis, on combination therapies for cardiovascular diseases and the metabolic syndrome at the CCTS Spring Conference in Lexington, KY
    • March 15, 2012: Dr. Lodder presented "Measurement of Lipoproteins in Treatment with SPX-106," co-authored with Drs. Kruger and Conze and Brittney Metts, at the Pittcon Conference in Orlando
    • March 12, 2012:  Dr. Lodder, presented "Molecular Factor Computing (MFC) of the Extent of Atherosclerosis in D Tagatose Treatment," co-authored with Drs. Kruger and Conze, and Molly Binkley, at the Pittcon Conference
    • February 16, 2012:  Dr. Kruger presented to investors as part of the LHA Life Sciences & Medical Technologies Virtual Conference
    • October 26, 2011:  Dr. Lodder presented a poster co-authored with Drs. Kruger, Hayes and Conze, at the AAPS National Meeting in Washington, D.C.
    • September 12, 2011:  Drs. Kruger and Lodder presented a corporate overview at the Rodman & Renshaw 13th Annual Healthcare Conference in New York

• Health Sciences Consulting
  • Recent publications:
    • Dr. Nancy Booth, Spherix's Science Consultant, Drs. Kruger and Hayes, and Dr. Roger Clemens, Spherix's Senior Consultant, authored "An innovative approach to the safety evaluation of natural products: Cranberry (Vaccinium macrocarpon Aiton) leaf aqueous extract as a case study," accepted for publication by Food and Chemical Toxicology
    • Drs. Kruger and Booth were quoted by NutraIngredients regarding the American Heart Association's recent claims regarding the GRAS (Generally Recognized As Safe) process: http://www.nutraingredients-usa.com/Regulation/AHA-GRAS-attack-reaction-Why-self-affirmed-GRAS-is-not-GRAS-lite
    • Dr. Kruger was quoted by NutraIngredients recently regarding the FDA's draft New Dietary Ingredient guidance:  http://www.nutraingredients-usa.com/Regulation/Harvard-professor-NDI-draft-guidance-doesn-t-go-far-enough
    • Drs. Kruger, Booth, and Hayes authored "Exceptions to the New Dietary Ingredient Notification Requirement: Utilizing GRAS as a Path Forward," in Food Technology, pages 16-18, January 2012
  • Recent and upcoming trade and professional shows:
    • January 23-May 7, 2012:  Drs. Kruger and Hayes taught "ENVR E-159 Environmental Toxicology and Risk Management," during the Spring Term at Harvard University's Extension School
    • December 12, 2011:  Dr. Kruger presented at the Food and Drug Law Institute's one-day workshop on New Dietary Ingredient Regulation and Compliance held in Washington, D.C.
    • November 18, 2011:  Drs. Kruger and Booth both presented at the American College of Nutrition Conference held at the Malcolm Forbes Conference Center of Morristown Memorial Hospital, New Jersey
    • October 6, 2011:  Dr. Kruger presented at Health Ingredients Japan in Tokyo
    • September 8, 2011:  Drs. Kruger, Booth and Hayes presented at the American Herbal Product Association's Congress on New Dietary Ingredients held in Chicago

Financial Results for the Year Ended December 31, 2011

The net loss for 2011 was $3.5 million, or $1.32 per share, compared with a net loss of $7.7 million, or $4.28 per share, for 2010.  Working capital was $4.6 million as of December 31, 2011, compared with $4.9 million as of December 31, 2010.  The Company's cash and cash equivalents as of December 31, 2011 were $4.9 million, and in February 2012 the Company raised an additional $1.15 million in a registered direct offering.

Since the fourth quarter of 2010, the Company's R&D segment has focused on the development of a new drug-drug combination of D-tagatose and SPX-106 referred to as SPX-106T (a licensed compound) to treat dyslipidemias.  Prior to that, the primary focus of the Company's R&D activities was on clinical trials investigating the use of D-tagatose for the treatment of Type 2 diabetes.  The shift from late-stage trials to a preclinical trial resulted in a decrease in R&D costs between years; the Company anticipates that R&D costs will begin to increase with the progression of its dyslipidemia studies.

The Company has just requested a Type B meeting to discuss its preclinical development of SPX-106T and finalize its IND application for submission to the FDA.  A human proof-of-concept trial of SPX-106T is expected to begin in mid-2012.  In general, combination therapies have proven to be very effective in treating complex diseases such as cancer, infectious diseases, cardiovascular disease, diabetes and metabolic syndrome because they improve treatment responses and/or minimize development of drug resistance.

We estimate that it will likely take three or more years to complete the studies and clinical trials necessary to attract a pharma partner to complete the development and an additional two to four years to complete all necessary studies for a New Drug Application filing for D-tagatose or SPX-106T.

"Spherix has made excellent progress with SPX-106T as a potential treatment for dyslipidemias, including high triglycerides; however, this is still an early stage compound.  In order to strengthen and diversify our pipeline, and provide for a series of drugs in various stages of development, we are actively seeking to acquire or in-license additional drugs," said Dr. Kruger.  "Clinical-stage compounds in Phase 1 or Phase 2 are of particular interest to us, as are orphan drugs, which can be eligible for accelerated approval processes and a longer time for market exclusivity.  The Spherix team of managers and scientists has already shown the ability to move a drug successfully through Phase 3 with D-tagatose for the treatment of mild diabetes, and we are confident we have the expertise to choose compounds with good opportunities for success," Dr. Kruger added.