ImaRx Therapeutics Reports Business Update and Financial Results for Fourth Quarter...

ImaRx Therapeutics Reports Business Update and Financial Results for Fourth
Quarter and Full Year 2007

TUCSON, Ariz., March 31 /PRNewswire/ -- ImaRx Therapeutics, Inc., a
biopharmaceutical company developing and commercializing therapies for
vascular disorders, today provided a corporate update along with fourth
quarter and full year 2007 financial results.
2007 Year in Review:

-- Initiated TUCSON Phase I/II clinical study
-- Received FDA approval to market urokinase under new trade name
Kinlytic(TM)
-- Signed strategic licensing agreement with Bracco International
-- Completed Initial Public Offering
-- Awarded Phase I STTR grant from the National Institutes of Health
-- Signed research collaboration with Royal Philips Electronics
-- Extended expiration dating of urokinase product inventory

Key Corporate Highlights:

PhaseI/II TUCSON Clinical Trial and SonoLysis Program Update
In January of 2007, the Company initiated its TUCSON trial, a Phase I/II
clinical study designed to assess the safety of the Company's proprietary MRX-
801 microbubbles in combination with ultrasound and tPA in ischemic stroke
patients. The TUCSON trial was designed with four 18-patient cohorts to
evaluate increasing doses of MRX-801. In the second dose cohort, the Company
observed a greater number of reported symptomatic intracranial hemorrhages in
subjects receiving treatment relative to controls and after consultation with
the Data and Safety Monitoring Board elected to stop enrollment of the study.
Bradford A. Zakes, President and CEO stated, "Although we would have
preferred to obtain more efficacy and safety data at higher doses of
microbubbles, we were encouraged by the data from the first cohort of
patients. One vial of MRX-801 in combination with ultrasound and tPA did not
result in any reported cases of intracranial hemorrhage in the treatment
group, suggesting a safe dose for further clinical studies. Furthermore, an
analysis of activity from the first cohort indicated a trend towards enhanced
recanalization of the occluded artery in treated subjects versus controls."
Following a comprehensive review of this program and taking into
consideration the challenging financial market conditions, ImaRx's Board of
Directors and management concluded that it is in the best interests of the
Company and its shareholders to actively seek strategic alternatives for the
funding and future development of its SonoLysis technology.
"Based on the encouraging results that were demonstrated in the first
cohort of our TUCSON study, we believe that our SonoLysis technology remains
an attractive development opportunity in ischemic stroke", stated Bradford A.
Zakes. "We are actively evaluating options that will secure funding for the
development of this technology while preserving the opportunity for our
shareholders to realize significant value from our SonoLysis program."
Urokinase Business Update
Urokinase, the Company's first FDA-approved commercially available product
is indicated for the treatment of acute massive pulmonary embolism. Formerly
marketed as Abbokinase(R), the FDA approved ImaRx's request to market the
product under a new trade name, Kinlytic. The Company acquired urokinase and
all related assets, including an approximate four-year supply of inventory,
from Abbott Laboratories (NYSE: ABT) in April 2006.
The Company commenced sales of urokinase in October 2006 and experienced
consistent hospital pull-through in 2007. In order to continue selling
product, the Company has maintained an ongoing stability testing program to
support extending the expiration dating of the urokinase inventory. In
October 2007, results from the stability testing program successfully met all
of the required specifications necessary to support the extension of
expiration dating for urokinase inventory to between July and September of
2009. The Company submitted for and the FDA approved the release of three
lots of urokinase during the first quarter of 2008 under the new Kinlytic
trade name. The Company believes this labeled inventory will be sufficient to
meet market demand through September 2009. ImaRx intends to continue its
stability program to evaluate the potential for further expiration extensions
beyond September 2009 for unlabeled vials of urokinase inventory.
Bradford A. Zakes stated, "The extension of the expiration dating and FDA
approval of our recent requests for lot release represent a significant
accomplishment for ImaRx, by allowing us to generate additional value from the
continued sale of our urokinase inventory well into 2009. We remain confident
that the stability profile of our urokinase inventory will enable us to
achieve future expiration date extensions as we market the balance of our
existing unlabeled vials of urokinase."
In January 2008 ImaRx signed a Letter of Intent with Microbix Biosystems
Inc. (TSE: MBX) to manufacture and continue selling urokinase beyond the
existing inventory. Closing of the transaction is dependent upon the
satisfactory completion of due diligence and Microbix securing adequate
financing to transfer the manufacturing process. A new supply of urokinase
would allow ImaRx to continue to serve its current customers. It also would
provide the opportunity to expand sales to additional vascular physicians and
acute care institutions and to explore clinical development of urokinase for
additional vascular indications.
In connection with the urokinase acquisition in April 2006, the Company
issued a $15.0 million non-recourse promissory note to Abbott that matures on
March 31, 2008. The outstanding balance of the note plus accrued interest,
net of funds in escrow, is $10.8 million. The Company has reached a tentative
agreement with Abbott regarding payment of the note on terms that will enable
it to continue commercializing urokinase. Upon execution, the Company will
hold full title to the asset including the remaining urokinase inventory and
will receive 100% of proceeds generated from future sales. The Company
expects to close this transaction in the second quarter of 2008.
Financial Results
Revenue for the fourth quarter ended December 31, 2007 rose to $2.7
million from $0.7 million for the fourth quarter ended December 31, 2006.
Full year 2007 revenue increased to $8.4 million from $1.3 million for the
full year 2006. Sales of urokinase, which ImaRx began commercializing in
October 2006, drove the revenue increase for the most recent quarter and full
year.
Net loss for the fourth quarter of 2007 was $2.2 million compared to net
income of $10.7 million in the year ago period. This change was primarily a
result of a $16.1 million gain on extinguishment of debt associated with the
relinquishment of the recombinant thrombolytic drug assets to Abbott in the
fourth quarter of 2006. Net loss per share attributable to common
shareholders of $0.24 for the fourth quarter of 2007 was based on weighted
average shares of approximately 9.1 million, compared to net income per share
attributable to common shareholders of $3.94 in the fourth quarter of 2006
based on weighted average shares of approximately 2.6 million.
Net loss for the full year 2007 was $8.8 million compared to $0.7 million
for the full year 2006. This change was primarily a result of a $16.1 million
gain on extinguishment of debt associated with the relinquishment of the
recombinant thrombolytic drug assets to Abbott in the fourth quarter of 2006,
partially offset by increased sales of urokinase in 2007 over 2006. Net loss
per share attributable to common shareholders of $3.16 for the full year 2007
was based on weighted average shares of approximately 5.9 million compared to
a net loss per share attributable to common shareholders of $0.72 for the full
year 2006 based on weighted average shares of approximately 2.6 million. The
net loss per share attributable to common stockholders in all periods includes
non-cash charges for accretion of preferred stock dividends and 2007 also
includes the reversal of accreted preferred stock dividends and a deemed
dividend on the conversion of preferred stock into common stock upon
completion of the Company's initial public offering. The weighted average
shares used in computing loss per share attributable to common shareholders
excludes anti-dilutive securities such as stock options and warrants and also
redeemable preferred stock in periods prior to their conversion to common
stock upon completion of the Company's initial public offering.
Cost of product sales totaled $1.0 million and $3.5 million in the fourth
quarter of 2007 and full year 2007, respectively. The cost of product sales
was $0.2 million for the fourth quarter of 2006 and the full year 2006, as the
Company acquired the urokinase product in April 2006 and commenced sales in
October 2006. The cost of product sales includes the price paid to acquire
the urokinase asset as well as labeling costs directly incurred in bringing
the product to market.
Research and development expenses for the fourth quarter of 2007 decreased
to $2.0 million from $2.6 million in the fourth quarter of 2006, primarily due
to less outside contract work performed on grants and pre-clinical studies.
Research and development expenses decreased to $7.4 million for the full year
2007 from $9.1 million for the full year 2006 as a result of staffing
reductions, third party service costs and other expenses related to the
Company's refined SonoLysis strategy. Full year 2006 results also included
expenses related to recombinant thrombolytic drug assets relinquished to
Abbott Laboratories in December 2006, which were partially offset by increased
clinical trial expenses recorded for the full year 2007.
General and administrative expenses in the fourth quarter of 2007
decreased to $1.8 million from $3.0 million in the year ago period resulting
mainly from cost controls and less outsourced services. General and
administrative expenses for the full year 2007 decreased to $6.1 million from
$7.7 million for the full year 2006. This decrease was principally a result of
legal and consulting expenses capitalized upon the completion of the IPO in
2007 compared to costs related to the unsuccessful IPO attempt in 2006 that
were expensed.
On December 31, 2007, ImaRx had $12.9 million in cash, cash equivalents
and investments, excluding $0.4 million in restricted cash, compared to $4.3
million in cash, cash equivalents and investments on December 31, 2006. The
increase in the cash balance was primarily related to the $9.0 million sale of
Abbokinase, net of discounts and fees, to two primary wholesale distributors
and the $12.4 million in net proceeds received from the common stock offering
in connection with the Company's July 2007 IPO. Assuming the tentative
agreement with Abbott regarding the remaining balance of the $15.0 million
note is executed and a strategic financing alternative for SonoLysis is
achieved, the Company believes it will have sufficient cash resources for at
least the next 12 months.
Additionally, in connection with the filing of its Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 2008,
Ernst & Young LLP, the Company's independent registered public accounting
firm, noted that the Company has recurring losses, which has resulted in a
significant accumulated deficit at December 31, 2007. In addition, the
Company has a significant note payable balance due on March 31, 2008. These
conditions, among others, raise substantial doubt about the Company's ability
to continue as a going concern.
Conference Call and Webcast Information
Management will host a conference call to review financial results for the
quarter and year ended December 31, 2007 and recent business developments. The
call is scheduled for today, March 31, 2008, at 5:00 p.m. Eastern Time (2:00
p.m. Pacific Time). To participate in the live conference call, U.S. residents
should dial 877-407-4018, and international callers should dial 201-689-8471.
Alternatively, log on to www.imarx.com to access a live webcast of the call.
Please connect to the Investor section of ImaRx's website several minutes
prior to the start of the live conference call to ensure adequate time for any
software download that may be necessary. To access the 48-hour telephone
replay, U.S. residents should dial 800-660-6853, and international callers
should dial 201-612-7415. The account number for the event is 3055, and the
conference ID number is 279436. A replay of the call will also be available
on www.imarx.com 14-days following the call.
About ImaRx Therapeutics
ImaRx Therapeutics is a biopharmaceutical company commercializing and
developing therapies for vascular disorders. The Company's commercialization
efforts are currently focused on its first FDA-approved thrombolytic agent,
urokinase, for the treatment of acute massive pulmonary embolism, or blood
clot in the lungs. The Company's research and development efforts are focused
on therapies for stroke and other vascular disorders using its proprietary
MRX-801 microbubble technology.
Cautionary Statement For The Purpose Of The "Safe Harbor" Provisions Of
The Private Securities Litigation Reform Act of 1995
Note: Statements made in this press release which are not historical in
nature constitute forward-looking statements for purposes of the safe harbor
provided by the Private Securities Litigation Reform Act of 1995. Such
statements include: those related to the search for strategic alternatives for
the funding and continued development of the SonoLysis technology; the
Company's efforts to extend the expiration dating on future lots of urokinase;
the Company's belief that its labeled inventory will be sufficient to meet
market demand through September 2009; Microbix's ability to transfer the
urokinase manufacturing process; the Company expect that it will close the
transaction with Abbott in the second quarter of 2008; and the Company's
belief that it will have sufficient cash resources for at least the next 12
months. These statements are based on management's current expectations and
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the forward-
looking statements. A more complete description of these risks and the event
that may cause such events not to occur can be found in the Company's filings
with the Securities and Exchange Commission. All information in this press
release is as of March 31, 2008, and the Company undertakes no duty to update
this information.
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ImaRx Therapeutics, Inc.
Consolidated Statements of Operations
(in thousands except share and per share data)

Three Months Ended Year Ended
December 31 December 31
2006 2007 2006 2007
(unaudited)
Revenues:
Product sales, net $226 $2,472 $480 $7,841
Research and development 481 178 848 519
Total operating revenue 707 2,650 1,328 8,360
Costs and expenses:
Cost of product sales 204 989 204 3,518
Research and development 2,589 2,033 9,067 7,424
General and administrative 2,951 1,813 7,749 6,087
Total cost and expenses 5,744 4,835 17,020 17,029
Operating loss (5,037) (2,185) (15,692) (8,669)
Interest and other
income, net 63 159 381 548
Interest expense (450) (187) (1,515) (862)
Gain on extinguishment
of debt 16,127 - 16,127 219
Net income (loss) 10,703 (2,213) (699) (8,764)

Deemed dividend from
beneficial conversion
feature for Series F
redeemable convertible
preferred stock - - - (13,842)
Accretion of dividends
on preferred stock (441) - (1,167) (867)
Reversal of accretion
of dividends on
preferred stock not paid - - - 4,919
Net loss attributed to
common stockholders $10,262 $(2,213) $(1,866) $(18,554)
Net loss per share:
- Basic and diluted $3.94 $(0.24) $(0.72) $(3.16)
Shares used in computing
net loss per share:
- Basic and diluted 2,606,739 9,070,994 2,599,425 5,868,131

ImaRx Therapeutics, Inc.

Selected Balance Sheet Data (in thousands)

December 31 December 31
2006 2007
ASSETS
Current assets:
Cash and cash equivalents $4,256 $12,861
Restricted cash - 388
Accounts receivable, net 576 349
Inventory 16,060 11,138
Inventory subject to return 445 2,560
Prepaid expenses and other 539 589
Total current assets 21,876 27,885
Long-term assets:
Property and equipment, net 917 1,170
Intangible assets, net 2,500 1,633
Other assets - 19
Total assets $25,293 $30,707

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $1,413 $1,277
Accrued expenses 851 837
Accrued chargebacks and administrative fees 385 1,317
Deferred revenue 955 5,373
Notes payable 15,615 11,698
Total current liabilities 19,219 20,502
Other long-term liability 219 -
Total liabilities 19,438 20,502
Total redeemable convertible preferred stock 35,863 -
Total stockholders' equity (deficit) (30,008) 10,205
Total liabilities and stockholders' equity (deficit) $25,293 $30,707

Contacts:
The Ruth Group (Investors/Media)
Sara Ephraim/Jason Rando
sephraim@theruthgroup.com
jrando@theruthgroup.com

SOURCE ImaRx Therapeutics, Inc.

Investors, Sara Ephraim, +1-646-536-7002, sephraim@theruthgroup.com, or Media,
Jason Rando, jrando@theruthgroup.com, both of The Ruth Group for ImaRx
Therapeutics, Inc.