Nexmed lays off 40% of staff, plans to renegotiate notes due in 2006

By Elaine Rigoli

Tampa, Fla., May 10 - Nexmed, Inc. has consolidated operations in its East Windsor, N.J. facility, which is expected to result in savings of approximately $600,000 per year. The company also reduced its staff by 40%, which should result in annual savings of approximately $2.8 million. In December 2005, the company laid off 26% of its work force.

Nexmed also said it intends to renegotiate upcoming convertible note maturities.

As of March 31, Nexmed had cash and equivalents of $8.5 million as compared to $3.5 million at Dec. 31, 2005. The increase in cash is the result of the net proceeds of $7.7 million received from a January private placement, offset by expenditures of $2.7 million, which consisted of $1.2 million of severance payments related to the company's restructuring program implemented in December 2005, as well as its fixed monthly overhead costs of $500,000 per month.

Nexmed said it projects that its cash reserves are sufficient to sustain operations for approximately 15 months at the current expenditure level.

This projection is based on estimated reduced monthly burn rate for 2006, the company's ability to renegotiate $6 million in convertible notes to be able to repay amounts due in 2006 and 2007 in equity rather than cash.

Nexmed said there is no assurance it will be able to amend the terms of the convertible notes; additional financing may be required.

As a result of losses to date and accumulated deficit, the company said there is doubt about its ability to continue as a going concern.

Accordingly, the company's independent registered public accounting firm has modified its report on the Dec. 31, 2005 consolidated financial statements included in its annual report on Form 10-K in the form of an explanatory paragraph describing the events that have given rise to this uncertainty.

As of March 31, Nexmed had accumulated a deficit of $120,59 million with operations principally financed through private placements of equity securities and debt financing.

Nexmed is a pharmaceutical product-development company based in East Windsor, N.J.

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