NexMed surge in 2005 revenue may not guarantee continuation as going concern

By Angela McDaniels

Seattle, March 17 - NexMed Inc.'s revenue increased 567% to $2,399,161 for the year ended Dec. 31 from $359,369 for 2004, according to a company news release.

The company attributed the increase primarily to the revenue recognized in connection with its licensing agreement with Novartis International Pharmaceutical Ltd. for NexMed's nail fungus treatment.

Despite the boost in revenue, NexMed said its independent registered public account firm has substantial doubt as to the company's ability to continue as a going concern due to its losses to date, expected losses in the future, limited capital resources and accumulated deficit.

"Our continuation is dependent upon our ability to generate or obtain sufficient cash to meet our obligations on a timely basis and, ultimately, to attain profitable operations," the company said in its 10-K report filed with the Securities and Exchange Commission on Thursday.

"We anticipate that we will continue to incur significant losses at least until successful commercialization of one or more of our products, and we may never operate profitably in the future."

For 2005, net loss was $16,550,479, or $0.32 per share, compared with $17,023,648 or $0.39 per share, for 2004.

NexMed has an accumulated deficit of $117,657,621 as of Dec. 31 and currently has about $9 million in cash.

In December, the company laid off 26% of its work force and announced an objective to reduce its cash burn rate to $500,000 per month from more than $1 million per month.

NexMed, based in East Windsor, N.J., develops products based on its proprietary NexACT transdermal drug-delivery through early stage licensing and development partnerships with pharmaceuticals companies.

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