OLGC Orthologic (MM)

TEMPE, Ariz., Aug. 9 /PRNewswire-FirstCall/ -- OrthoLogic Corp. (NASDAQ:OLGC) today announced financial results for the second quarter of 2006. OrthoLogic reported a net loss of $6.5 million, or $0.16 per share, for the second quarter of 2006, compared to a net loss of $6.6 million or $0.17 per share, for the second quarter of 2005. For the six months ended June 30, 2006 the net loss was $23.0 million, or $0.58 per share, versus a net loss of $12.1 million, or $0.32 per share, for the six months ended June 30, 2005. The increase in net loss for the six month period resulted from $8.4 million of in-process research and development costs related to the AzERx acquisition, the inclusion in 2006 of $1.7 million in non-cash stock compensation expense related to the January 1, 2006 adoption of SFAS 123(R) and $1.1 million in non-cash deferred tax expense. The Company had $75.6 million in cash and investments as of June 30, 2006. OrthoLogic originally issued guidance for 2006 for $35.0 million in cash burn. With careful adjustments to resource allocation and the interruption of the fracture repair clinical development program, the Company now forecasts a cash burn for 2006 of $15.0 - $17.5 million. "The OrthoLogic management team is operating with an intense focus on value creation," stated Jock Holliman, Executive Chairman of OrthoLogic. "We have significantly decreased the cash burn through the interruption in the fracture repair clinical trial, a reduction in headcount and stringent cost control. We are continuing to analyze Chrysalin from a scientific, clinical and regulatory standpoint in both fracture repair and diabetic foot ulcer healing to optimize its value to shareholders. We are also continuing the pre-clinical work that will support the initiation of clinical trials for AZX100 in one of several possible indications." Conference Call Information Management will host a conference call and webcast on August 9, 2006, at 4:30 PM EDT (1:30 PM PT). To access the call, participants may dial 866-825-3209 (domestic) or 617-213-8061 (international), with access code 30471562. A replay of the call will be available beginning August 9, 2006, at 6:30 PM EDT until August 22, 2006, and may be accessed at 888-286-8010 (domestic) or 617-801-6888 (international), with access code 18532110. Additionally, the conference call will be webcast on the Investor Relations section of the Company's website: http://www.orthologic.com/. About OrthoLogic OrthoLogic is a biotechnology company committed to developing a pipeline of novel therapeutic peptides and other molecules aimed at helping patients with under-served medical conditions. The Company is focused on the development and commercialization of two product platforms: Chrysalin(R) (TP508) and AZX100. Chrysalin, the Company's novel synthetic 23-amino acid peptide, is being studied in two lead indications, both of which represent areas of significant unmet medical need -- fracture repair and diabetic foot ulcer healing. Based on the Company's pioneering scientific research of the natural healing cascade, OrthoLogic has become a leading company focused on bone and tissue repair. The Company owns exclusive worldwide rights to Chrysalin. AZX100 is a novel synthetic pre-clinical 24-amino acid peptide, one of a new class of compounds in the field of smooth muscle relaxation called Intracellular Actin Relaxing Molecules, or ICARMs(TM). AZX100 is currently being evaluated for commercially significant medical applications, such as the treatment of vasospasm associated with subarachnoid hemorrhage, the prevention of keloid scarring and the treatment of asthma. OrthoLogic has an exclusive worldwide license to AZX100. OrthoLogic's corporate headquarters are in Tempe, Arizona. For more information, please visit the Company's website: http://www.orthologic.com/. Statements in this press release or otherwise attributable to OrthoLogic regarding our business that are not historical facts are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include the timing and acceptability of FDA filings and the efficacy and marketability of potential products, involve risks and uncertainties that could cause actual results to differ materially from predicted results. These risks include: delays in obtaining or inability to obtain FDA, institutional review board or other regulatory approvals of pre-clinical or clinical testing; unfavorable outcomes in our pre-clinical and clinical testing; the development by others of competing technologies and therapeutics that may have greater efficacy or lower cost; delays in obtaining or inability to obtain FDA or other necessary regulatory approval of our products; our inability to successfully and cost effectively develop or outsource manufacturing and marketing of any products we are able to bring to market; changes in FDA or other regulations that affect our ability to obtain regulatory approval of our products, increase our manufacturing costs or limit our ability to market our products; our possible need for additional capital in the future to fund the continued development of our product candidates; and other factors discussed in our Form 10-K for the fiscal year ended December 31, 2005, and other documents we file with the Securities and Exchange Commission. ORTHOLOGIC CORP. (A Development Stage Company) CONDENSED BALANCE SHEETS (in thousands, except per share data) (Unaudited) June 30, December 31, 2006 2005 ASSETS Current assets Cash and cash equivalents $36,992 $35,111 Short-term investments 28,425 46,437 Prepaids and other current assets 546 857 Total current assets 65,963 82,405 Furniture and equipment, net 512 525 Long-term investments 10,182 2,084 Deferred income taxes -- 1,106 Patents, net 2,170 2,223 Total assets $78,827 $88,343 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $785 $1,036 Accrued compensation 448 711 Accrued clinical 557 544 Accrued severance and restructuring costs 349 602 Other accrued liabilities 829 1,089 Total current liabilities 2,968 3,982 Deferred rent and other non-current liabilities 412 183 Total liabilities 3,380 4,165 Stockholders' Equity Common Stock $.0005 par value; 20 19 100,000,000 shares authorized; 40,661,039 and 38,124,742 shares issued and outstanding at 2006 and 2005, respectively Additional paid-in capital 185,646 171,355 Accumulated deficit (110,219) (87,196) Total stockholders' equity 75,447 84,178 Total liabilities and stockholders' equity $78,827 $88,343 ORTHOLOGIC CORP. (A Development Stage Company) CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) As a Three months Six months Development ended ended Stage June 30, June 30, Company 2006 2005 2006 2005 8/5/2004 - 6/30/2006 OPERATING EXPENSES General and administrative $2,061 $1,273 $4,153 $2,183 $10,941 Research and development 4,208 5,991 10,924 11,394 44,448 Other divestiture and related gains -- -- -- (250) (375) Purchased in-process research and development 34 -- 8,469 -- 34,309 Total operating expenses 6,303 7,264 23,546 13,327 89,323 Interest income, net (867) (654) (1,629) (1,206) (5,020) Loss from continuing operations before taxes 5,436 6,610 21,917 12,121 84,303 Income tax expense (benefit) 1,106 -- 1,106 (12) 356 Loss from continuing operations 6,542 6,610 23,023 12,109 84,659 Discontinued operations - net gain on the sale of the bone device business, net of taxes ($267) -- -- -- -- (2,202) NET LOSS $6,542 $6,610 $23,023 $12,109 $82,457 Per Share Information: Net loss, basic and diluted $0.16 $0.17 $0.58 $0.32 Basic and diluted shares outstanding 40,622 38,220 39,962 38,134 DATASOURCE: OrthoLogic Corp. CONTACT: Investors, Melanie Friedman of Stern Investor Relations, Inc., +1-212-362-1200, , for OrthoLogic Corp. Web site: http://www.orthologic.com/

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