- Strategic Investments Position Carrington For Substantial Growth, Affect Near-Term Bottom Line
- Company Invests In Further Development Of Promising Drug-Delivery Technology (GelSite(TM))
- Investor Conference Call Scheduled Today
IRVING, Texas, May 13 /PRNewswire-FirstCall/ -- Carrington Laboratories, Inc. (Nasdaq: CARN) today reported that previously announced investments in core manufacturing operations and promising new products contributed to a first-quarter net loss of $1 million, or 11 cents per diluted share. That compares with net income of $226,000, or 2 cents per diluted share, a year earlier.
Revenues for the quarter ended March 31, 2002, were $3.7 million, compared with $4.7 million the prior year. The decrease was primarily attributed to lower sales of raw material to a significant customer. Expenses for the quarter included $304,000 in research and development costs for DelSite(TM) Biotechnologies Inc., Carrington's new wholly owned subsidiary established to commercialize the GelSite(TM) controlled drug delivery technology. This was partially offset by a reduction in basic R&D for Carrington's core product line to $379,000 from $574,000 as Carrington refocuses development efforts on products with strong market potential within six to 18 months. Production interruptions resulting from DelSite's development work at the company's Costa Rica manufacturing facility also contributed to increased costs.
Positioned For Substantial Growth
"We took significant steps during the first quarter to position Carrington for substantial growth. We invested in the further development of our new drug delivery technology, improved manufacturing efficiencies for our core products and expanded our contract manufacturing capabilities," said Dr. Carlton E. Turner, president and chief executive officer. "We knew these strategic investments would have an unfavorable impact on the bottom line but we believe that these investments are key to our future.
"Our work at DelSite with our drug delivery technology platform continues according to plan. Later this year we should be in position to negotiate strategic relationships with major pharmaceutical players to develop GelSite(TM) formulations tailored to delivery of specific drug products. Ultimately, we believe we will become a preeminent player in the $40 billion drug-delivery market, which is expected to grow to $70 billion by mid-decade."
Dr. Turner also noted that Carrington's Costa Rica facility is preparing for production of large quantities of CR1013, the material that is at the heart of the drug-delivery technology being developed by DelSite. The facility also is being prepared for commercial scale production of the SaliCept(TM) Oral Patch, for which the FDA recently allowed a claim to include management of alveolar osteitis, or "dry socket," in tooth extractions. This product is currently under registration in Japan by the company's licensee Sunstar, Inc. The potential market for the Oral Patch is estimated at $750 million annually.
At Carrington's Texas facility, production upgrades completed or under way include installing equipment that will triple production speed, plus new labeling and filling equipment, all designed to support the company's core products and contract manufacturing operations.
Improvements Seen In Third Quarter
"We were encouraged by the substantial increase in contract manufacturing revenues, a business we have targeted for strong growth in the coming quarters," Dr. Turner said. "We are bringing several new customers online that we expect to begin with moderate purchases and then ramp up in future periods.
"Additionally, we have indications that orders for our raw materials will be accelerating substantially in the third quarter."
Turner said second-quarter results probably will show moderate improvement, but that he expects some continued order softness and continued effects of the costs of manufacturing improvements to linger into the quarter.
Conference Call Information
Management will host a conference call to discuss first-quarter results beginning today (Monday, May 13, 2002) at 11 a.m. Eastern, 10 a.m. Central, 9 a.m. Mountain and 8 a.m. Pacific. U.S. callers may dial 888-881-4892 (toll free) and international callers may dial 416-640-4127. A playback of the call will be available through Thursday, May 23, 2002. The playback numbers are 877-289-8525 (toll free) and 416-640-1917 (international). Playback Pass Code: 190037# (required only for playback).
Carrington Laboratories, Inc., is an ISO 9001-certified, research-based biopharmaceutical company currently utilizing naturally occurring complex carbohydrates to manufacture and market products for mucositis, radiation dermatitis, wound and oral care; manufacture and market the nutraceutical raw materials Manapol(R) and Hydrapol(TM); and market consumer products under the AloeCeuticals(R) brand. Carrington's technology is protected by more than 120 patents in 26 countries. Select products are honored with the internationally coveted CE mark, recognized by more than 20 countries around the world.
Certain statements in this release concerning Carrington may be forward- looking. Actual events will be dependent upon a number of factors and risks including, but not limited to: subsequent changes in plans by the company's management; delays or problems in production; changes in the regulatory process; changes in market trends; and a number of other factors and risks described from time to time in the Company's filings with the Securities & Exchange Commission, including the Form 10K filed March 28, 2002.