NEWPORT's NAME CHANGE TO "SYSTEMED" REFLECTS NEW MAIL-ORDER FOCUS
NEWPORT's NAME CHANGE TO "SYSTEMED" REFLECTS NEW MAIL-ORDER FOCUS for the former Newport Pharmaceuticals, which has discontinued development of its only pharmaceutical product in the U.S. to focus instead on mail-order pharmacy. Newport became SysteMed as of Oct. 1, the company announced in an Oct. 25 preliminary prospectus for an offering of 2.5 mil. shares of common stock. SysteMed's wholly-owned subsidiary, America's Pharmacy, accounted for 90% of the firm's consolidated revenues in the first nine months of 1991 with sales of $ 57 mil. The decision to discontinue drug development has resulted in net income of $ 948,000 for the first three quarters, compared to losses in the five preceding years. SysteMed abandoned efforts to obtain U.S. approval for its sole pharmaceutical product, the immunomodulating agent Isoprinosine (inosine dimepranol acedoben), in 1990 after FDA decided that additional clinical trials were necessary prior to consideration of approval, the prospectus says. Newport had been studying the drug for treatment of pre-AIDS conditions and had compassionate use approval for treating the orphan indication subacute sclerosing panencephalitis. FDA rejected SysteMed's NDA for Isoprinosine as a treatment for AIDS in 1985, but the company said it subsequently "expended significant funds" to determine efficacy in the treatment of "asymptomatic HIV infection, herpes and other viral infections." Foreign sales of Isoprinosine have been less than $ 8 mil. over the past five years, and patent rights have expired in all the principal markets, the company reported. America's Pharmacy filled 802,000 prescriptions through nine months of 1991, a 32.3% increase over the year-earlier period. The average price per script was $ 70.65, compared to $ 61.03 in 1990, an increase of 15.8%. America's Pharmacy services 650 clients (primarily small to mid-size companies) from a single facility in Des Moines, Iowa. SysteMed's strategy for building its mail-service pharmacy business includes adding non-maintenance prescriptions to the maintenance drug services it now offers. Nonmaintenance drug scripts represent around 30% of medications prescribed, the firm estimates. The company noted that approximately $ 2 mil. of the estimated gross proceeds of $ 12.2 mil. from the 2.5 mil. share offering will go toward completion of the development of a new management information and database management software for America's Pharmacy. Another $ 750,000 would be utilized if the company either expands its Des Moines facility or moves to another location; another portion of the proceeds will be used to pay down America's Pharmacy's current $ 8 mil. revolving line of credit, the prospectus states. Sutro & Co. is underwriting the offering.
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