VioQuest Pharmaceuticals Announces Second Quarter 2008 Financial Results and Corporate Highlights

  
    
  
  
    
      VioQuest Pharmaceuticals, Inc. (OTCBB: VOQP) today reported its 
      financial results for the three- and six-month periods ended June 30, 
      2008, and provided an update on recent corporate activities.
    
    
      For the three-month period ended June 30, 2008, operating expenses 
      decreased to $1.0 million as compared to $2.1 million for the same 
      period of 2007. The Company’s net loss 
      applicable to common stockholders was $1.8 million for the three-month 
      period ended June 30, 2008, or $0.38 per basic and diluted share, versus 
      a net loss of $2.5 million, or $0.65 per basic and diluted share, for 
      the same period of 2007.
    
    
      For the six-month period ended June 30, 2008, operating expenses 
      decreased to $2.7 million as compared to $4.4 million for the same 
      period of 2007. The Company’s net loss 
      applicable to common stockholders was $4.9 million for the six-month 
      period ended June 30, 2008, or $1.00 per basic and diluted share, versus 
      a net loss applicable to common stockholders of $5.0 million, or $1.08 
      per basic and diluted share, for the same period of 2007. The 2008 net 
      loss figures above include the impact of a $708,000 non-cash charge 
      related to a beneficial conversion feature embedded in the 2008 
      preferred stock financing transactions.
    
    
      Recent corporate highlights
    
    
      
        Completion of a private placement across two transactions in March and 
        April 2008 raising an aggregate of approximately $3 million in gross 
        proceeds through the sale of units consisting of shares of the Company’s 
        Series A Convertible Preferred Stock and warrants to purchase shares 
        of its Common Stock, pursuant to a series of subscription agreements 
        with selected accredited investors.
      
      
        Presentation of updated data from a Phase 1 dose escalation study 
        evaluating Lenocta™ (sodium stibogluconate) 
        in combination with interferon-alpha-2b in patients with various 
        advanced solid tumors. Results were presented at the 44th 
        American Society of Clinical Oncology (ASCO) Annual Meeting.
      
      
        Submission on July 1, 2008 of a 510(k) application to the FDA seeking 
        marketing clearance for Xyfid™ (1% uracil 
        topical), a novel skin preparation intended to relieve and to manage 
        the burning and itching associated with various dermatoses including 
        atopic dermatitis, irritant contact dermatitis, radiation dermatitis 
        and other dry skin conditions, by maintaining a moist wound and skin 
        environment.
      
      
        Appointment of Christopher P. Schnittker, CPA as Vice President and 
        Chief Financial Officer on July 21, 2009. Mr. Schnittker brings to 
        VioQuest extensive experience in financial management for both public 
        and privately held biotechnology and pharmaceutical companies.
      
      
        Selection of VioQuest’s novel Akt inhibitor 
        VQD-002 (triciribine phosphate monohydrate, or TCN-P) as one of the 
        top 10 most promising development stage oncology projects for 
        strategic partnering. This designation was made by an independent 
        committee assembled by Windhover Information in July 2008.
      
    
    
      Michael D. Becker, VioQuest Pharmaceuticals’ 
      President and Chief Executive Officer, commented, “We 
      are especially pleased that we have made significant progress in many 
      critically important areas of our business while simultaneously 
      conserving capital and minimizing expenses. As a result of this 
      progress, VioQuest is positioned to continue a full range of business 
      development activities moving forward. We are also now an even more 
      attractive candidate for collaboration to advance our promising products 
      to commercialization.”
    
    
      Financial results for the three-month 
      period ended June 30, 2008
    
    
      Research and development expenses
    
    
      For the three-month period ended June 30, 2008, research and development 
      expenses decreased to $473,000 compared to $951,000 for the same period 
      in 2007. The decrease in R&D expenses was primarily attributable to 
      $300,000 in nonrecurring licensing fees incurred during the first 
      quarter of 2007 to acquire the worldwide license to Xyfid. In addition, 
      there was a reduction in clinical research costs, offset by increased 
      labor costs and regulatory and legal fees related to our oncology drug 
      candidates.
    
    
      General and administrative expenses
    
    
      For the three-month period ended June 30, 2008, general and 
      administrative expenses decreased to $555,000 compared to $1.2 million 
      for the same period in 2007. The decrease in G&A expenses was primarily 
      attributable to headcount reductions.
    
    
      Interest expense, net
    
    
      Interest expense (net of interest income) for the three-month period 
      ended June 30, 2008 was $103,000 compared to interest income (net of 
      interest expense) for the same period of 2007 of $6,000. Interest 
      expense for the three-month period ended June 30, 2008 included expenses 
      recorded for dividends payable on mandatorily redeemable convertible 
      preferred stock of $107,000, which was offset by interest income earned 
      on cash and cash equivalents of $4,000.
    
    
      Financial results for the six-month 
      period ended June 30, 2008
    
    
      Research and development expenses
    
    
      For the six-month period ended June 30, 2008, research and development 
      expenses decreased to $1.5 million compared to $2.3 million for the same 
      period in 2007. The decrease in R&D expenses was primarily attributable 
      to $300,000 in nonrecurring licensing fees incurred during the first 
      quarter of 2007 to acquire the worldwide license to Xyfid. In addition, 
      there was a reduction in clinical research costs, offset by increased 
      labor costs and regulatory and legal fees related to our oncology drug 
      candidates.
    
    
      General and administrative expenses
    
    
      For the six-month period ended June 30, 2008, general and administrative 
      expenses decreased to $1.2 million compared to $2.1 million for the same 
      period in 2007. The decrease in G&A expenses was primarily attributable 
      to headcount reductions.
    
    
      Interest expense, net
    
    
      Interest expense (net of interest income) for the six-month period ended 
      June 30, 2008 was $1.5 million compared to interest income (net of 
      interest expense) for the same period of 2007 of $32,000. Interest 
      expense for the six-month period ended June 30, 2008 was primarily 
      composed of interest expenses recorded upon the extinguishment of senior 
      convertible promissory notes of $1.4 million and dividends payable on 
      mandatorily redeemable convertible preferred stock of $122,000, which 
      was offset by interest income earned on cash and cash equivalents of 
      $7,000.
    
    
      Cash and cash equivalents
    
    
      As of June 30, 2008, VioQuest Pharmaceuticals’ 
      cash and cash equivalents were $814,000 compared to $695,000 as of 
      December 31, 2007.
    
    
      About VioQuest Pharmaceuticals
    
    
      VioQuest Pharmaceuticals is a New Jersey-based biotechnology company 
      dedicated to becoming a recognized leader in the successful development 
      of novel drug therapies targeting both the molecular basis of cancer and 
      side effects of treatment. VioQuest’s 
      oncology portfolio includes: Xyfid™ (1% 
      uracil topical) for the treatment of dry skin conditions and manage the 
      burning and itching associated with various dermatoses; VQD-002 
      (triciribine phosphate monohydrate), a targeted inhibitor of Akt 
      activation; and Lenocta™ (sodium 
      stibogluconate), an inhibitor of certain protein tyrosine phosphatases 
      such as SHP-1, SHP-2, and PTP1B.
    
    
      Further information about VioQuest can be found at www.vioquestpharm.com.
    
    
      This press release contains forward-looking statements that involve 
      risks and uncertainties that could cause VioQuest's actual results and 
      experiences to differ materially from the anticipated results and 
      expectations expressed in these forward-looking statements. These 
      forward-looking statements concern the timing, progress and results of 
      the clinical development, regulatory processes, potential clinical trial 
      initiations of VioQuest’s product candidates, 
      as well as our ability to complete strategic transactions. These 
      statements are often, but not always, made through the use of words or 
      phrases such as anticipates, expects, plans, believes, intends, and 
      similar words or phrases. These statements are based on current 
      expectations, forecasts and assumptions that are subject to risks and 
      uncertainties, which could cause actual outcomes and results to differ 
      materially from these statements. These statements are subject to 
      various risks and uncertainties and include VioQuest’s 
      immediate need for additional capital to cover its current obligations 
      and future operating expenses and fund its clinical development 
      programs, the possibility that the results of clinical trials will not 
      support VioQuest's claims, the possibility that VioQuest's development 
      efforts relating to its product candidates will not be successful, the 
      inability to obtain regulatory approval of VioQuest's product 
      candidates, VioQuest's reliance on third-party researchers to develop 
      its product candidates, its lack of experience in developing and 
      commercializing pharmaceutical products, and the possibility that its 
      licenses to develop and commercialize its product candidates may be 
      terminated. Additional risks are described in VioQuest's Annual Report 
      on Form 10-KSB for the year ended December 31, 2007. VioQuest assumes no 
      obligation and does not intend to update these forward-looking 
      statements, except as required by law.
    
    
      
        
          VIOQUEST PHARMACEUTICALS
        
      
      
        
          CONDENSED STATEMENTS OF OPERATIONS
        
      
      
        
          (in thousands - except per share data)
        
      
      
        
          (Unaudited)
        
      
      
        
           
        
      
      
        
        
        
           
        
        
          Three Months Ended
        
        
           
        
        
          Six Months Ended
        
      
      
        
        
        
        
        
          June 30,
        
        
        
        
          June 30,
        
      
      
        
        
        
        
        
          
            2008
          
        
        
           
        
        
          
            2007
          
        
        
        
        
          
            2008
          
        
        
           
        
        
          
            2007
          
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
          $
        
        
          473
        
        
        
        
          $
        
        
          951
        
        
        
        
          $
        
        
          1,452
        
        
        
        
          $
        
        
          2,320
        
      
      
        
          General and administrative
        
        
        
        
           
        
        
          555
        
        
        
        
           
        
        
          1,192
        
        
        
        
           
        
        
          1,245
        
        
        
        
           
        
        
          2,106
        
      
      
        
          Total operating expenses
        
        
        
        
           
        
        
          1,028
        
        
        
        
           
        
        
          2,143
        
        
        
        
           
        
        
          2,697
        
        
        
        
           
        
        
          4,426
        
      
      
        
          Loss from operations
        
        
        
        
        
        
          (1,028)
        
        
        
        
        
        
          (2,143)
        
        
        
        
        
        
          (2,697)
        
        
        
        
        
        
          (4,426)
        
      
      
        
          Interest income (expense), net
        
        
        
        
        
        
          (103)
        
        
        
        
          6
        
        
        
        
        
        
          (1,515)
        
        
        
        
        
        
          32
        
      
      
        
          Loss from discontinued operations
        
        
        
        
          -
        
        
        
        
           
        
        
          (335)
        
        
        
        
          -
        
        
        
        
           
        
        
          (596)
        
      
      
        
          Net loss
        
        
        
        
        
        
          (1,131)
        
        
        
        
        
        
          (2,472)
        
        
        
        
        
        
          (4,212)
        
        
        
        
        
        
          (4,990)
        
      
      
        
          Beneficial conversion feature
        
        
        
        
           
        
        
          (708)
        
        
        
        
          -
        
        
        
        
           
        
        
          (708)
        
        
        
        
          -
        
      
      
        
          Net loss applicable to
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          common stockholders
        
        
        
        
          $
        
        
          (1,839)
        
        
        
        
          $
        
        
          (2,472)
        
        
        
        
          $
        
        
          (4,920)
        
        
        
        
          $
        
        
          (4,990)
        
      
      
        
          Basic and diluted net loss per share
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          applicable to common stockholders:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Continuing operations
        
        
        
        
          $
        
        
          (0.38)
        
        
        
        
          $
        
        
          (0.56)
        
        
        
        
          $
        
        
          (1.00)
        
        
        
        
          $
        
        
          (0.95)
        
      
      
        
          Discontinued operations
        
        
        
        
          -
        
        
        
        
           
        
        
          (0.09)
        
        
        
        
          -
        
        
        
        
           
        
        
          (0.13)
        
      
      
        
          Basic and diluted net loss per share
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          applicable to common stockholders
        
        
        
        
          $
        
        
          (0.38)
        
        
        
        
          $
        
        
          (0.65)
        
        
        
        
          $
        
        
          (1.00)
        
        
        
        
          $
        
        
          (1.08)
        
      
      
        
          Basic and diluted weighted average
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Common shares outstanding
        
        
        
        
           
        
        
          4,905
        
        
        
        
           
        
        
          3,817
        
        
        
        
           
        
        
          4,905
        
        
        
        
           
        
        
          4,606
        
      
    
    
      
        
          VIOQUEST PHARMACEUTICALS
        
      
      
        
          CONDENSED BALANCE SHEETS
        
      
      
        
          (in thousands)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          June 30,
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
          
            2008
          
        
        
        
        
          
            2007
          
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          814
        
        
        
        
          $
        
        
          695
        
      
      
        
          Prepaid expenses
        
        
        
        
        
        
          269
        
        
        
        
        
        
          189
        
      
      
        
          Deferred financing costs
        
        
        
        
          -
        
        
        
        
        
        
          358
        
      
      
        
          Other assets
        
        
        
        
           
        
        
          94
        
        
        
        
           
        
        
          116
        
      
      
        
          Total assets
        
        
        
        
          $
        
        
          1,177
        
        
        
        
          $
        
        
          1,358
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES, MANDATORILY REDEEMABLE
        
        
        
        
        
        
        
        
        
      
      
        
          CONVERTIBLE PREFERRED STOCK
        
        
        
        
        
        
        
        
        
      
      
        
          AND STOCKHOLDERS' DEFICIENCY
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts payable
        
        
        
        
          $
        
        
          2,171
        
        
        
        
          $
        
        
          1,873
        
      
      
        
          Accrued liabilities
        
        
        
        
        
        
          522
        
        
        
        
        
        
          1,039
        
      
      
        
          Convertible notes
        
        
        
        
          -
        
        
        
        
           
        
        
          2,930
        
      
      
        
          Total liabilities
        
        
        
        
        
        
          2,693
        
        
        
        
        
        
          5,842
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Mandatorily redeemable convertible
        
        
        
        
        
        
        
        
        
      
      
        
          preferred stock
        
        
        
        
        
        
          4,155
        
        
        
        
          -
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders' deficiency
        
        
        
        
           
        
        
          (5,671)
        
        
        
        
           
        
        
          (4,484)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities, mandatorily redeemable
        
        
        
        
        
        
        
        
        
      
      
        
          convertible preferred stock and
        
        
        
        
        
        
        
        
        
      
      
        
          stockholders' deficiency
        
        
        
        
          $
        
        
          1,177
        
        
        
        
          $
        
        
          1,358