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NeoPharm, Inc. Announces Fourth Quarter and Full Year 2008 Financial Results

LAKE BLUFF, Ill., Mar 04, 2009 (BUSINESS WIRE) -- NeoPharm, Inc. (Pink Sheets:NEOL), today announced its fourth quarter and full year 2008 financial results.

For the fourth quarter ended December 31, 2008, NeoPharm reported a net loss of $2.2 million, or ($0.08) per basic and diluted share, as compared to a net loss of $1.1 million, or ($0.04) per basic and diluted share, for the same period last year. The net loss for the fourth quarter of 2007 includes a credit to research and development expenses of $0.9 million, or $0.03 per basic and diluted share, related to an adjustment to reduce accrued clinical trial expenses for the Company's terminated PRECISE trial from the estimated costs provided as patients were enrolled in the trial to the actual final trial costs. Excluding this one-time credit, the loss for the fourth quarter of 2007 would have been $2.0 million, or ($0.07) per basic and diluted share. Absent this one-time credit of $0.9 million, the increase in the Company's 2008 fourth quarter net loss is primarily due to an increase in clinical trial and preclinical development activities and a decrease in net interest income, which was partially offset by the continued decrease in general and administrative expenses.

During the fourth quarter, the Company held its cash consumption to a level consistent with the prior quarter, allocating $2.3 million in cash to its operations, versus $2.2 million in the third quarter of 2008. NeoPharm anticipates future cash consumption levels to increase consistent with the advancement and progression of its clinical trials and other preclinical development activities, as well as for final payments related to previous drug product candidates' trial obligations.

On November 10, 2008, the Company accepted an offer by UBS to purchase, at a future date, auction rate securities owned by NeoPharm. As a result of accepting UBS' offer, the Company can require UBS to repurchase at par value all of the auction rate securities ("ARS") held by NeoPharm at any time during the period from June 30, 2010 through July 2, 2012. Additionally, the Company also entered into a loan agreement with UBS Bank USA and UBS Financial Services Inc. that provides NeoPharm with a credit line of up to 75% of the market value of the Company's auction rate securities, with such auction rate securities being pledged by NeoPharm as collateral. The Company is currently reviewing alternatives to raise additional capital, to not only bridge the capital gap between the last half of 2009 and the UBS ARS repurchase in 2010, but also to fund operations beyond that time.

For the year ended December 31, 2008, NeoPharm reported a net loss of $8.2 million, or ($0.29) per basic and diluted share, as compared to a net loss of $11.0 million, or ($0.39) per basic and diluted share, for the same period last year. The net loss for 2007 would have been $13.9 million or ($0.49) per basic and diluted share, absent a one-time credit to other income of $2.0 million related to the recognition of deferred revenue for a terminated license agreement, and the $0.9 million credit to reduce accrued clinical trial expenses described above. The decline in the Company's net loss is primarily attributed to the aggressive restructuring the Company undertook in 2007 and 2008 to reduce costs in all areas of the Company that are not directly related to its focus on optimizing NeoPharm's drug development activities. These cost reductions were partially offset by increased spending in 2008 on clinical trials and other research and development activities, as the Company continues to progress its current drug compounds to their next stages of development.

"Over the last two years, our team has focused on identifying the drug product candidates that have the greatest likelihood of reaching the market. We believe this dedication combined with the rightsizing of our organization will yield the highest return for our shareholders. With the restructuring of our business behind us, 2008 was concentrated on progressing our drug candidate portfolio. To that end, during the year we had a number of accomplishments including the initiation of multiple clinical trials, IND filings, and agreements to pursue new and innovative indications for existing drug candidates," commented Laurence P. Birch, President and Chief Executive Officer of NeoPharm. "In January 2009, we made the difficult decision to voluntarily delist our shares from the NASDAQ and deregister our common stock. The cost savings we will realize as a result of this choice will provide additional resources for our team to further develop the promising drug candidates within our portfolio; a task that we believe is in the best interest of our long-term shareholders. Although we are realistic about the challenging economic environment, we are encouraged by the preliminary data we are receiving from our trials and are hopeful to communicate the achievement of several new milestones to our stakeholders throughout the year."

"We continue to make solid progress in developing our drug candidate portfolio. As we previously announced, based on the encouraging results for our Phase I trial for LE-DT, NeoPharm has submitted a Phase II protocol to the FDA for this drug candidate and expects to begin enrollment in the second quarter of 2009. Additionally, the initial data from our Phase II trial for LEP-ETU has led us to extend the targeted enrollment number to 70 patients to garner a deeper understanding of the clinical role of this drug candidate. Finally, we anticipate IND filings for both LE-rafAON for the treatment of pancreatic cancer and Cintredekin Besudotox for the treatment of Idiopathic Pulmonary Fibrosis in the second quarter of 2009," commented Dr. Rahman, Chief Scientific Officer Emeritus.

Drug Candidate Pipeline Update

Cintredekin Besudotox, IL13-PE38QQR, for Glioblastoma Multiforme

NeoPharm signed a contract with a contract research organization, SIRO ClinPharm, during the second quarter of 2008 to oversee a planned initial confirmatory Phase III trial for its drug product candidate Cintredekin Besudotox (IL13-PE38QQR) ("IL-13"), for the treatment of patients suffering from Recurrent Glioblastoma Multiforme (GBM). SIRO continues to pursue the required regulatory approval on behalf of the Company for this trial; however, at this time, the start of this Phase III trial has yet to be determined.

In the fourth quarter of 2008, the Company signed a Cooperative Research and Development Agreement ("CRADA") with the National Institute of Neurological Diseases and Stroke ("NINDS"), a part of the National Institutes of Health ("NIH"), for research on a therapeutic agent for untreatable brain diseases in humans. Under the terms of the CRADA, NINDS will deliver IL-13, in conjunction with a surrogate marker via NINDS' patented methodology of Convection Enhanced Delivery ("CED"), which was previously licensed to NeoPharm. The Company will provide both the drug and technical resources to study its effects in various brain cancers in humans.

LEP-ETU, Liposomal Encapsulated Paclitaxel

In March 2008, the Company initiated a Phase II open-label, multicenter outpatient study for LEP-ETU, Liposomal Paclitaxel, designed to evaluate the anti-tumor effect and safety/tolerability of LEP-ETU in metastatic breast cancer. The targeted enrollment of 35 patients for the first part of this Phase II trial has been completed and the preliminary data looks promising in terms of tumor response and protection of toxicities related to free Paclitaxel. The Company plans to extend the targeted enrollment to 70 patients with recurrent breast cancer to get a much better understanding of the significant clinical role of LEP, and to define more broadly the protection from peripheral neurotoxicity and bone marrow toxicities. All of the patients are receiving a dose of 275 mg/m2 every three weeks without any infusion related problems.

LE-DT, Liposomal Encapsulated Taxotere(R)

In the second quarter of 2008, NeoPharm began enrolling patients at TGen Clinical Research Services at Scottsdale Healthcare and at The Lombardi Comprehensive Cancer Center at Georgetown University in a multi-center Phase I clinical trial for LE-DT, a novel, proprietary liposomal delivery system of docetaxel, the active ingredient of Taxotere(R), for the treatment of patients with metastatic solid cancer. Patient enrollment continues in this Phase I trial to more accurately define the maximum tolerated dose, and completion is currently targeted for the first quarter of 2009.

Based upon the preliminary results from the LE-DT Phase I trial, the Company has submitted a Phase II protocol to the FDA for the study of LE-DT in hormone refractory metastatic prostate cancer patients. This open-label, Phase II study is designed to determine the antitumor effect on serum Prostate Specific Antigen (PSA) levels, disease response, progression free survival, and quality of life in patients with metastatic prostate cancer. The Company anticipates enrollment of the 40 patients in this Phase II trial to begin at three locations in the second quarter of 2009.

Cintredekin Besudotox, IL-13, for Idiopathic Pulmonary Fibrosis

NeoPharm has licensed IL-13 from NIH, FDA, and The University of Michigan as a potential therapeutic agent for the treatment of pulmonary fibrosis and asthma. NeoPharm's collaborators have completed extensive preclinical studies in animal models for the control and reversal of pulmonary fibrosis with this agent. Preclinical studies relating to asthma have also been performed.

Earlier this month the Company completed a two week inhalation toxicology study performed by the Lovelace Respiratory Research Institute. This study was designed to provide a detailed preclinical evaluation of this product through nebulization to fully characterize the distribution in the lungs and other tissues and to identify any toxicity related to any organ with IL-13 along with the physio-chemical behavior of the nebulized product. Based upon the preliminary results from this study, NeoPharm anticipates filing an IND related to IL-13 for IPF during the second quarter of 2009.

LE-rafAON, for Pancreatic Cancer with Gemcitabine

The Company currently expects to complete the IND submission for LE-rafAON by the end of the second quarter of 2009 for pancreatic cancer. All preclinical studies related to the IND submission are completed, and preclinical data is positive. NeoPharm is in the process of developing clinical protocol of Phase I and II for pancreatic cancer with LE-rafAON and with the drug Gemcitabine.

About NeoPharm, Inc.

NeoPharm, Inc., based in Lake Bluff, Illinois, is a publicly traded biopharmaceutical company dedicated to the research, development and commercialization of new and innovative cancer and other drugs for therapeutic applications. Additional information can be obtained by visiting NeoPharm's web site at www.neopharm.com.

Forward Looking Statements - This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company has tried to identify such forward-looking statements by use of such words as "expects," "intends," "hopes," "anticipates," "believes," "could," "may," "evidences" and "estimates," and other similar expressions, but these words are not the exclusive means of identifying such statements. Such statements include, but are not limited to, any statements relating to the Company's strategic review of projects and operations, the Company's drug development programs, the initiation, progress and outcomes of clinical trials of the Company's drug product candidates,including,but not limited to,the possibility of initiating a Phase III confirmatory trial for Cintredekin Besudotox and advancing, the other drug product candidates, projections regarding cash used in operations, financial projections, and any other statements that are not historical facts. Such statements involve risks and uncertainties, including, but not limited to, those risks and uncertainties relating to difficulties or delays in financing, development, testing, regulatory approval, production, and marketing of the Company's drug compounds including, but not limited to, the Company's ability to fund and pursue additional testing of Cintredekin Besudotox and its NeoLipid drug product candidates, uncertainty regarding the outcomes of ongoing or potential clinical studies, the Company's financial guidance and projections, the Company's ability to evaluate the strategic alternatives available to the Company and to cut back on its funding of certain of its development projects in order to conserve its cash resources, the ability of the Company to procure additional future sources of financing, unexpected adverse side effects or inadequate therapeutic efficacy of the Company's drug compounds, including, but not limited to, Cintredekin Besudotox and its NeoLipid drug product candidates, that could slow or prevent products coming to market, uncertainty regarding the Company's ability to market its drug products, including, but not limited toCintredekin Besudotox and its NeoLipid drug product candidates, the uncertainty of patent protection for the Company's intellectual property or trade secrets, and other risks detailed from time to time in filings the Company makes with the Securities and Exchange Commission ("SEC"). Such statements are based on management's current expectations, but actual results may differ materially due to various factors, including those risks and uncertainties mentioned or referred to in this press release, and in the Company's most recent annual report on Form 10-K for the calendar year ended December 31, 2007, as the same have been subsequently updated by the Company in quarterly reports on Form 10-Q through the Form 10-Q for the third quarter of 2008.At the Company's request, the Company's obligation to file additional reports on Forms 10-K, 10-Q and 8-K with the SEC was suspended effective February 12, 2009 upon the Company's filing of Form 15, "Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934 or Suspension of Duty to File Reports under Sections 13 and 15(d) of the Securities Exchange Act of 1934. Accordingly, you should not rely on these forward-looking statements as a prediction of actual future results.

SOURCE: NeoPharm, Inc.

NeoPharm, Inc.
Laurence P. Birch
President & CEO
847-887-0800
lbirch@neopharm.com

Copyright Business Wire 2009

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