Javelin Pharmaceuticals - Javelin Pharmaceuticals Reports Second Quarter 2006 Results

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Javelin Pharmaceuticals Reports Second Quarter 2006 Results

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 14, 2006--Javelin Pharmaceuticals, Inc. (Amex: JAV - News) today reported its unaudited financial results for the second quarter ended June 30, 2006.

Daniel B. Carr, M.D., Javelin's Chief Executive Officer and Chief Medical Officer commented, "We are aggressively pursuing clinical development programs for our three late stage products, exploring partnering opportunities and executing on our commercialization strategy. This quarter our product candidates Rylomine^™ and Dyloject^™ advanced into pivotal phase III clinical trials and we obtained a $750,000 NCI/NIH grant for our intranasal ketamine product, PMI 100/150. In addition, we added two pharmaceutical industry veterans to the Company's Board of Directors, hired a seasoned VP of commercial affairs, and recently began trading our common stock on the American Stock Exchange."

Financial and corporate highlights for the three and six month periods ending June 30, 2006

Ended the second quarter with $28.8 million in cash, cash equivalents and short term investments.
Used approximately $4.4 million to fund operations for the six months ended June 30, 2006.
Net loss increased to approximately $4.5 million or $0.11 per share in the second quarter of 2006, from $2.8 million or $0.11 per share in the second quarter of 2005.
Net loss increased to approximately $6.6 million or $0.16 per share for the six months ended June 30, 2006, from $4.6 million or $0.18 per share for the same period in 2005.
Reported non-cash stock based compensation expense for the three and six month periods ended June 30, 2006 of approximately $0.9 million and $1.3 million, or $0.02 and $0.03 per share impact on operations, respectively, in accordance with Statement of Financial Accounting Standard 123R.

Clinical Update

During the quarter, the Company announced enrollment in two pivotal phase III clinical studies of Rylomine^™, the Company's proprietary intranasal formulation of morphine, and Dyloject^™, the Company's proprietary injectable (diclofenac sodium) NSAID.

Financial Performance

For the second quarter of 2006, Javelin recorded approximately $0.5 million in grant revenue from the U.S. Department of Defense and incurred approximately $5.3 million in operating expenses, partially offset by approximately $0.3 million of interest income in the quarter.

Research and development expenses for the second quarter of 2006 were $3.0 million, compared to $2.2 million in the second quarter of 2005. Research and development expenses for the first six months of 2006 were $4.3 million, compared to $3.4 million in 2005. Total research and development expense increased in the three and six month periods of 2006 compared to 2005 due primarily to increases in the number of full-time employees, consulting, clinical manufacturing expenses, milestone expenses and expensing employee stock option awards. General and administrative expenses were $2.3 million in the second quarter of 2006 compared to $1.3 million for the second quarter of 2005, and $4.0 million and $2.3 million for the first six months of 2006 and 2005, respectively. The increases were mainly due to expensing employee stock option awards, the addition of executive and managerial personnel, and higher consultant expenses.

Stephen Tulipano, Javelin's Chief Financial Officer, indicated, "We are progressing nicely in each area of our business and were very pleased to have been awarded funding from the NCI/NIH through the Phase II SBIR grant. We are ramping up our development efforts in anticipation of commercialization and we are investing in an infrastructure that will support a product launch initially in Europe and then in the United States. We anticipate that these activities will increase our cash outflows over the next twelve to eighteen months."

                     JAVELIN PHARMACEUTICALS, INC.

                    UNAUDITED FINANCIAL INFORMATION

                 Consolidated Statements of Operations

                        Three Months Ended        Six Months Ended
                             June 30,                 June 30,
                     -------------------------------------------------
                         2005         2006        2005        2006
                     -------------------------------------------------
Revenues:
   Government grants
    and contracts       $642,724     $491,304  $1,010,723    $573,712
                     -------------------------------------------------
Operating expenses:
   Research and
    development        2,226,027    3,013,432   3,353,001   4,337,533
   General and
    administrative     1,278,869    2,309,586   2,299,552   3,998,037
   Depreciation and
    amortization          11,901       13,399      22,073      24,258
                     -------------------------------------------------
   Total operating
    expenses           3,516,797    5,336,417   5,674,626   8,359,828
                     -------------------------------------------------
Operating loss        (2,874,073)  (4,845,113) (4,663,903) (7,786,116)
                     -------------------------------------------------
Other income
 (expense):
   Interest expense            -            -           -         (47)
   Interest income        46,226      314,852      46,226     630,650
   Other income                -            -           -     600,000
                     -------------------------------------------------
   Total other
    income (expense)      46,226      314,852      46,226   1,230,603
                     -------------------------------------------------
                     
Net loss
 attributable to     -------------------------------------------------
 common Stockholders ($2,827,847) ($4,530,261) (4,617,677) (6,555,513)
                     -------------------------------------------------
Net loss per share
 attributable to
 common stockholders
   Basic and diluted      $(0.11)      $(0.11)     $(0.18)     $(0.16)
                     -------------------------------------------------
Weighted average
 shares               25,562,914   40,177,937  25,481,605  40,177,937
                     -------------------------------------------------



                     JAVELIN PHARMACEUTICALS, INC.

                    UNAUDITED FINANCIAL INFORMATION

                 Condensed Consolidated Balance Sheets

                                             December 31,   June 30,
                                                2005         2006
                                             -------------------------
Assets:
   Cash, cash equivalents and short term
    investments                              $33,307,449  $28,809,215
   Other current assets                          917,459      772,010
   Fixed assets, at cost, net of accumulated
    depreciation                                 161,866      217,206
   Other assets                                   52,188      128,865
                                             -------------------------
Total assets                                 $34,438,962  $29,927,296
                                             -------------------------

Liabilities:
   Total current liabilities                  $1,237,019   $1,932,700
                                             -------------------------
Stockholders' equity:
   Common stock                                   40,404       40,404
   Additional paid-in capital                 95,355,368   96,142,761
   Unearned compensation                        (553,756)
   Other comprehensive income                          -        7,017
   Deficit accumulated during the
    development stage                        (61,640,073) (68,195,586)
                                             -------------------------
   Total stockholders' equity                 33,201,943   27,994,596

                                             -------------------------
Total liabilities and stockholders' equity   $34,438,962  $29,927,296
                                             -------------------------

About Javelin

With corporate headquarters in Cambridge, MA, Javelin applies innovative proprietary technologies to develop new drugs and improved formulations of existing drugs to target unmet and underserved medical needs in the pain management market. The Company has two drug candidates in Phase III clinical development and one in late Phase II. One of these Phase III drug candidates, Dyloject^™, is currently under review for Marketing Authorization Application (MAA) approval in Europe. Previous clinical trials have demonstrated its safety and rapid onset of action. For additional information about Javelin, please visit the company's website at http://www.javelinpharmaceuticals.com or contact us directly.

Forward Looking Statement

This news release contains forward-looking statements. Such statements are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. Drug discovery and development involve a high degree of risk. Factors that might cause such a material difference include, among others, uncertainties related to the ability to attract and retain partners for our technologies, the identification of lead compounds, the successful preclinical development thereof, the completion of clinical trials, the FDA review process and other governmental regulation, our ability to obtain working capital, our ability to successfully develop and commercialize drug candidates, and competition from other pharmaceutical companies.

Contact:
Financial Contact:
Javelin Pharmaceuticals, Inc.
Stephen J. Tulipano, CPA, 617-349-4500
Chief Financial Officer
stulipano@javelinpharmaceuticals.com
or
Investor Relations & Media Contact:
Javelin Pharmaceuticals, Inc.
Frederick E. Pierce, 617-349-4500
VP Investor Relations
rpierce@javelinpharmaceuticals.com

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