NRPH New River Pharmaceuticals (MM)

RADFORD, Va., Aug. 8 /PRNewswire-FirstCall/ -- New River Pharmaceuticals Inc. (NASDAQ:NRPH) today announced its financial results for the three months ended July 2, 2006. New River recognized a net loss of $4.3 million, or $(0.12) per share, basic and diluted for the three months ended July 2, 2006 compared to a net loss of $6.4 million, or $(0.18) per share, for the three months ended July 3, 2005. Cash and short-term investment balances were $91.7 million at July 2, 2006. For the three months ended July 2, 2006, New River recognized $5.5 million of revenue related to its collaboration agreement with Shire Pharmaceuticals Group plc (Shire) (LSE: SHP; Nasdaq: SHPGY; TSX: SHQ) with respect to NRP104, New River's lead product candidate under development. New River is recognizing milestone revenue from the collaboration that is not subject to refund over the estimated product development period for each of three indications for NRP104: pediatric, adult and adolescent, based on the estimated proportional effort associated with each indication. To date, New River has received $100 million under the terms of its collaboration with Shire, a portion of which is refundable under certain circumstances. General and administrative expenses were $5.3 million for the three months ended July 2, 2006 compared to $1.8 million for the three months ended July 3, 2005. The increase in these expenses is due primarily to increases in shared marketing expenses with Shire under the terms of the collaboration agreement and stock-based compensation due to the adoption of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment," (SFAS 123(R)) effective January 2, 2006. SFAS 123(R) requires companies to expense the grant-date fair value of employee equity awards over the vesting period. Research and development expenses were $5.6 million for the three months ended July 2, 2006 compared to $5.0 million for the three months ended July 3, 2005. This increase was primarily the result of increases in compensation- related costs, including stock-based compensation expense as a result of adopting the provisions of SFAS 123(R). "We continue to make solid progress on all fronts," said Krish Krishnan, New River's Chief Financial Officer and Chief Operating Officer. "We intend to use part of the proceeds from our recent financing transactions to raise a sales force to co-promote NRP104, which we believes positions us to achieve our strategic objective of becoming a fully integrated pharmaceutical company. We look forward to an End-of-Phase II meeting with the FDA regarding NRP290 which is scheduled to occur in the fourth quarter of 2006. Finally, we are pleased with the progress we have made with respect to NRP409, for which we filed an IND in the second quarter of 2006." New River Pharmaceuticals Inc. is a specialty pharmaceutical company focused on developing novel pharmaceuticals that are generational improvements of widely prescribed drugs in large and growing markets. For further information on New River, please visit the company's website at http://www.nrpharma.com/. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This press release contains certain forward-looking information that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward- looking statements are statements that are not historical facts. Words such as "expect(s)," "feel(s)," "believe(s)," "will," "may," "anticipate(s)" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of New River Pharmaceuticals, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include: those discussed and identified in the New River Pharmaceuticals Inc. annual report on Form 10-K, filed with the SEC on March 15, 2006; the timing, progress and likelihood of success of our product research and development programs; the timing and status of our preclinical and clinical development of potential drugs; the likelihood of success of our drug products in clinical trials and the regulatory approval process; our drug products' efficacy, abuse and tamper resistance, resistance to intravenous abuse, onset and duration of drug action, ability to provide protection from overdose, ability to improve patients' symptoms, incidence of adverse events, ability to reduce opioid tolerance, ability to reduce therapeutic variability, and ability to reduce the risks associated with certain therapies; the ability to develop, manufacture, launch and market our drug products; our projections for future revenues, profitability and ability to achieve certain sales targets; our estimates regarding our capital requirements and our needs for additional financing; the likelihood of obtaining favorable scheduling and labeling of our drug products; the likelihood of regulatory approval under the Federal Food, Drug, and Cosmetic Act without having to conduct long and costly trials to generate all of the data which are often required in connection with a traditional new chemical entity; our ability to develop safer and improved versions of widely prescribed drugs using our Carrierwave (TM) technology; our success in developing our own sales and marketing capabilities for our lead product candidate, NRP104; and our ability to obtain favorable patent claims. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. New River Pharmaceuticals does not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in New River Pharmaceuticals' annual report on Form 10-K, filed with the SEC on March 15, 2006, as well as other public filings with the SEC. Contacts: The Ruth Group John Quirk (investors) 646-536-7029 Zack Kubow (media) 646-536-7020 NEW RIVER PHARMACEUTICALS INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Unaudited) Assets July 2, 2006 January 1, 2006 Current assets: Cash and cash equivalents $19,221,558 $3,515,572 Short-term investments 72,475,000 49,250,000 Other receivables 198,795 135,755 Due from affiliates 5,188 - Prepaid expenses 491,930 798,090 Total current assets 92,392,471 53,699,417 Property and equipment: Leasehold improvements 94,609 94,609 Machinery and equipment 854,325 819,472 948,934 914,081 Less accumulated depreciation and amortization 734,129 653,427 Property and equipment, net 214,805 260,654 Total assets $92,607,276 $53,960,071 Liabilities and Shareholders' Equity (Deficit) Current liabilities: Capital lease obligation - current $23,582 $22,298 Accounts payable 5,605,846 1,548,473 Unpaid and accrued research and development expenses 4,211,331 3,201,732 Accrued compensation 1,358,828 2,203,898 Due to affiliates 70,162 34,138 Deferred revenue - current 13,274,708 - Accrued stock based compensation - current 226,758 - Total current liabilities 24,771,215 7,010,539 Capital lease obligation - noncurrent 15,027 27,148 Accrued stock-based compensation 7,919,291 3,404,435 Deferred revenue 59,900,215 50,000,000 Total liabilities 92,605,748 60,442,122 Shareholders' Equity (Deficit): Preferred stock, par value $0.001 per share. Authorized 25,000,000 shares; none issued and outstanding - - Common stock, par value $0.001 per share. Authorized 150,000,000 shares; issued and outstanding 36,707,064 shares at July 2, 2006 and 36,367,064 shares at January 1, 2006 36,707 36,367 Additional paid-in capital 66,349,374 63,326,824 Accumulated deficit (66,384,553) (69,845,242) Total shareholders' equity (deficit) 1,528 (6,482,051) Commitments and contingencies Total liabilities and shareholders' equity (deficit) $92,607,276 $53,960,071 NEW RIVER PHARMACEUTICALS INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Six months ended July 2, July 3, July 2, July 3, 2006 2005 2006 2005 (Unaudited) (Unaudited) Collaboration revenues $5,497,701 $- $26,825,077 $- Operating costs and expenses: Selling, general, and administrative 5,278,256 1,770,242 13,495,760 4,945,523 Research and development 5,581,996 5,040,996 11,097,909 8,825,211 Depreciation and amortization of property and equipment 39,702 39,636 80,702 74,816 Total operating expenses 10,899,954 6,850,874 24,674,371 13,845,550 Operating income (loss) (5,402,253) (6,850,874) 2,150,706 (13,845,550) Other income (expense): Interest expense (1,189) (1,854) (2,531) (1,854) Interest income 1,150,095 498,294 2,023,411 820,738 Total other income, net 1,148,906 496,440 2,020,880 818,884 Income (loss) before cumulative effect of change in accounting principle (4,253,347) (6,354,434) 4,171,586 (13,026,666) Cumulative effect of a change in accounting principle - - (710,897) - Net income (loss) $(4,253,347) $(6,354,434) $3,460,689 $(13,026,666) Net income (loss) per share: Basic $(0.12) $(0.18) $0.09 $(0.37) Diluted $(0.12) $(0.18) $0.09 $(0.37) DATASOURCE: New River Pharmaceuticals Inc. CONTACT: Investors - John Quirk, +1-646-536-7029, , Zack Kubow, +1-646-536-7020, , both of The Ruth Group Web site: http://www.nrpharma.com/

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