Emisphere Technologies, Inc.
Aug 9, 2011

Emisphere Technologies, Inc. Announces Financial Results for Second Quarter 2011

Conference Call/Webcast to be Held Tuesday, August 9, 2011 at 10:00 AM EDT

CEDAR KNOLLS, N.J., Aug. 9, 2011 (GLOBE NEWSWIRE) -- Emisphere Technologies, Inc. (OTCQB:EMIS) announced its financial results for the second quarter 2011. The Company will host a conference call this morning at 10:00 AM EDT to discuss these results.

The live webcast of the conference call can be accessed through the company's web site at: www.emisphere.com. The live conference call dial-in number is: 1-888-797-2998 (United States and Canada) or 1-913-312-0980 (International). In addition, an archive of the webcast can be accessed through the same link and an audio replay of the call will be available beginning at 1:00 PM EDT through midnight on August 23, 2011 by calling 1-888-203-1112 (United States and Canada) or 1-719-457-0820 (International). The conference replay PIN is 1405184.

SECOND QUARTER FINANCIAL RESULTS

For the three months ended June 30, 2011, Emisphere reported net income of $1.8 million, or $0.04 per basic and $0.03 per diluted share, compared to a net loss of $31.6 million (restated), or $0.73 per basic and diluted share for same period last year.

The operating loss for the three months ended June 30, 2011 was $2.2 million, compared to an operating loss of $3.1 million in same period last year.

Total operating expenses for the three months ended June 30, 2011 were $2.2 million, compared to $3.2 million for the same period last year. Total operating expenses include research and development costs of $0.6 million and general and administrative expenses of $1.6 million, compared to $0.7 million and $2.1 million respectively, for the same period last year.

Other income for the three months ended June 30, 2011 was $4.1 million, compared to other expense of $28.5 million (restated), for the same period last year, an increase of $32.6 million, due primarily to a $17.0 million one-time charge for loss on extinguishment of debt during 2010; a $14.0 million gain from the change in fair value of derivative instruments arising from the decrease in the price of the Company's stock; financing fees of $1.9 million in connection with the settlement of the Novartis note in June 2010 offset by a $0.3 million net increase in  interest expense and other income.

YEAR TO DATE FINANCIAL RESULTS

For the six months ended June 30, 2011, Emisphere reported net income of $12.8 million, or $0.25 per basic and $0.22 per diluted share, compared to a net loss of $48.8 million (restated), or $1.14 per basic and diluted share for the six months ended June 30, 2010.

Total operating expenses for the six months ended June 30, 2011 were $4.3 million, a decrease of approximately $1.9 million, or 31% compared to $6.2 million for the same period last year. Total operating expenses include research and development costs of $1.1 million and general and administrative expenses of $3.0 million, compared to $1.3 million and $4.5 million respectively, for the same period last year.

Other income for the six months ended June 30, 2011 was $17.1 million, compared to other expense of $42.7 million (restated) for the same period last year, an increase of $59.8 million, due primarily to the $17.0 million one-time charge for loss on extinguishment of debt; a $42.3 million gain from the change in fair value of derivative instruments arising from the decrease in the price of the Company's stock;  financing fees of $1.9 million in connection with the settlement of the Novartis note in June 2010;  offset by a $1.3 million net increase in interest expense and other income.

LIQUIDITY

Cash and cash equivalents held as of June 2011 were $1.3 million, compared to $5.3 million at December 31, 2010.

On July 6, 2011, the Company closed on a private placement transaction with various institutional investors and also on a private placement transaction with MHR Fund Management LLC. The Company raised approximately $7.25 million net of expenses in connection with these transactions.

The Company estimates its annual cash burn rate to support continuing operations without implementing additional cost reductions is approximately $8 million per year. Consequently, the Company anticipates that its existing capital resources, without implementing cost reductions, raising additional capital, or obtaining substantial cash inflows, will enable us to continue operations through approximately April 2012, or earlier, if unforeseen events arise that negatively affect our liquidity. Management continues to monitor financing alternatives potentially available to the Company, but there are no assurances that such financing can be obtained on favorable terms or at all. Please refer to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 for additional information.

PRODUCT DEVELOPMENTS

Emisphere's pipeline includes a broad range of product candidates in different stages of development.

The Company is continuing with a number of pre-clinical programs in collaboration with other companies, as well as projects on its own, using the Eligen® Technology to improve the oral absorption of selected molecules.

About Emisphere Technologies, Inc.

Emisphere is a biopharmaceutical company that focuses on a unique and improved delivery of pharmaceutical compounds, medical foods and dietary supplements using its Eligen® Technology. These molecules and compounds could be currently available or in development. Such molecules are usually delivered by injection; in many cases, their benefits are limited due to poor bioavailability, slow on-set of action or variable absorption. The Eligen® Technology can be applied to the oral route of administration as well other delivery pathways, such as buccal, rectal, inhalation, intra-vaginal or transdermal. The company's website is: www.emisphere.com.

Safe Harbor Statement Regarding Forward-looking Statements

The statements in this release and oral statements made by representatives of Emisphere relating to matters that are not historical facts (including without limitation those regarding the timing or potential outcomes of research collaborations or clinical trials, any market that might develop for any of Emisphere's product candidates, the sufficiency of Emisphere's cash and other capital resources and its ability to obtain additional financing to meet its capital needs) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the likelihood that future research will prove successful, the likelihood that any product in the research pipeline will receive regulatory approval in the United States or abroad, the ability of Emisphere and/or its partners to develop, manufacture and commercialize products using Emisphere's drug delivery technology, Emisphere's ability to fund such efforts with or without partners, and other risks and uncertainties detailed in Emisphere's filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in Emisphere's Annual

Report on Form 10-K for the fiscal year ended December 31, 2010 (file no. 000-17758) filed on March 31, 2011, Emisphere's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on May 10, 2011 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.

 
EMISPHERE TECHNOLOGIES, INC.
 
CONDENSED STATEMENT OF OPERATIONS
For the three and six months ended June 30, 2011 and 2010
(in thousands, except share and per share data)
(unaudited)
 
   For the three months ended
 June 30, 
 For the six months ended
 June 30, 
   2011   2010 Restated   2011   2010 Restated 
Net Sales  $ —  $ 39  $ —  $ 51
Costs and expenses:        
Research and development 563  732 1,092  1,294
General and administrative 1,593  2,129 3,043  4,463
Restructuring costs  —  50
Gain on disposal of fixed assets  —  (1)
Expense from settlement of lawsuit  220  220
Depreciation and amortization 70  75 140  150
Total costs and expenses 2,226  3,156 4,275  6,176
Operating loss (2,226)  (3,117) (4,275)  (6,125)
Other non-operating income (expense):        
Other income 45  2 68  5
Change in fair value of derivative instruments        
Related party 4,310  (6,208) 16,046  (15,328)
Other 1,079  (2,424) 3,660  (7,271)
Interest expense        
Related party (1,362)  (794) (2,642)  (859)
Other (4)  (160) (16)  (382)
Loss on extinguishment of debt (17,014) (17,014)
Financing fees (1,858) (1,858)
Total other non-operating income (expense) 4,068  (28,456) 17,116  (42,707)
Net income (loss) $ 1,842  $ (31,573) $ 12,841  $ (48,832)
Net income (loss) per share, basic $ 0.04  $ (0.73) $ 0.25  $ (1.14)
         
Net income (loss) per share, diluted $ 0.03 $ (0.73) $ 0.22  $(1.14)
Weighted average shares outstanding, basic 52,076,602 43,338,432 52,064,171 42,711,367
Weighted average shares outstanding, diluted 54,924,355  43,338,432 62,900,927 42,711,367
 
 
EMISPHERE TECHNOLOGIES, INC.
 
CONDENSED BALANCE SHEETS
June 30, 2011 and December 31, 2010
(in thousands, except share and per share data)
 
  June 30,
2011
December 31,
2010
  (unaudited)  
Assets: 
Current assets:
   
Cash and cash equivalents $ 1,343   $ 5,326
Accounts receivable, net 60  14
Inventories 260  260
Prepaid expenses and other current assets 535  496
Total current assets   2,198  6,096
Equipment and leasehold improvements, net 61  82
Purchased technology, net 718  838
Restricted cash 260  260
Total assets $ 3,237  $ 7,276
Liabilities and Stockholders' Deficit:    
Current liabilities    
Accounts payable and accrued expenses $ 2,172  $ 2,954
Notes payable related party, including accrued interest and net of related discount 547  —
Derivative instruments:    
Related party 5,517  17,293
Others 1,638  5,647
Contract termination liability, current 149  435
Restructuring accrual, current  300
Other current liabilities 1,189  35
Total current liabilities 11,212  26,664
Notes payable, including accrued interest and net of related discount, related party 22,480  20,385
Deferred revenue 31,577  31,535
Derivative instrument related party 6,895  11,166
Deferred lease liability and other liabilities 26  46
Total liabilities 72,190  89,796
Stockholders' deficit:    
Preferred stock, $.01 par value; authorized 1,000,000 shares; none issued and outstanding  —
Common stock, $.01 par value; authorized 100,000,000 shares; issued 52,366,334 shares (52,076,602 outstanding) as of June 30, 2011 and issued 52,178,834 shares (51,889,102 outstanding) as December 31, 2010 524  522
Additional paid-in-capital 402,577  401,853
Accumulated deficit (468,102)  (480,943)
Common stock held in treasury, at cost; 289,732 shares (3,952)  (3,952)
Total stockholders' deficit (68,953)  (82,520)
Total liabilities and stockholders' deficit $ 3,237  $ 7,276
CONTACT: Michael R. Garone, Interim CEO and CFO

         973.532.8005 or mgarone@emisphere.com



         Karen Kelsch, Assistant Manager Communications

         973.532.8101 or kkelsch@emisphere.com
Source: Emisphere Technologies, Inc.

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