Cortex third quarter net loss decreases to $528,000

Cortex Pharmaceuticals, Inc. (OTCBB: CORX) reported a net loss applicable to common stock of approximately $528,000, or $0.01 per share, for the quarter ended September 30, 2010, compared with a net loss applicable to common stock of approximately $3,243,000 or $0.06 per share, for the prior year quarter.

For the nine months ended September 30, 2010, the Company reported net income applicable to common stock of approximately $2,613,000, or $0.04 per share, compared with a net loss applicable to common stock of $9,189,000, or $0.18 per share, for the corresponding prior year period.

Results for both periods reflect revenues from the Company's earlier transaction with Biovail Laboratories International SRL ("Biovail"). As announced, in March 2010 Cortex sold its rights to CX717 and certain other AMPAKINE® compounds to Biovail as a potential treatment for respiratory depression and vaso-occlusive crises associated with sickle cell disease.

Cortex received $9,000,000 from Biovail upon execution of the asset purchase agreement in March 2010 and an additional $1,000,000 upon completing the specified transfer plan in September 2010. Following the Biovail transaction, Cortex retains its rights to the majority of its AMPAKINE compounds for the treatment of neurodegenerative diseases and psychiatric disorders that have historically been a focus of its portfolio, along with the treatment of sleep apnea.

At the end of September 2010, Biovail merged with Valeant Pharmaceuticals International ("Valeant"). As a result of Valeant's merger and changes in strategic directions for the combined companies, Valeant announced its intent to exit several therapeutic development programs, including the respiratory depression project acquired from Cortex. Cortex is in discussions with Valeant regarding the future of the project and under the agreement between Cortex and Biovail, all contractual obligations remain in place.

As reported, Cortex's prior collaborator, Servier, has selected a licensed AMPAKINE compound to advance into clinical trials. The jointly discovered compound resulted from the Cortex research collaboration with Servier that ended in late 2006. Cortex is eligible to receive payments based upon key clinical development milestones of the compound and royalty payments on sales in licensed territories.

Along with amounts resulting from the Biovail agreement, revenues for the 2010 periods include the grant from The Michael J. Fox Foundation for Parkinson's Research. As announced, the award will allow Cortex to test AMPAKINE compounds for their ability to restore brain function in animal models of Parkinson's disease. If successful, the project could lead to a neuroprotective treatment with the potential to slow or stop the course of the disease — something no available therapy has been proven to do.

Shortly after the quarter ended, in October 2010 Cortex was awarded a grant of approximately $245,000 under a program created by Congress in the Patient Protection and Affordable Care Act of 2010. The grant reimburses certain qualifying research expenses incurred by Cortex for its AMPAKINE CX1739.

For the quarter ended September 30, 2010, the Company's total operating expenses of approximately $1,724,000 were consistent with those for the prior year quarter, reflecting a decrease in non-cash stock compensation charges within research and development and an increase in administrative consulting.

For the nine months ended September 30, 2010, the Company's total operating expenses of approximately $7,025,000 increased only slightly from those for the corresponding prior year period, due mostly to increased administrative expenses incurred in connection with the transaction with Biovail, as partially offset by savings from the Company's reduction in force in mid-March 2009 and the timing of clinical development expenses for AMPAKINE CX1739.

Interest expense for the nine months ended September 30, 2010 includes non-cash charges related to the June 2010 conversion of the promissory note issued to Samyang Optics Co., Ltd. ("Samyang") of Korea. As reported earlier, the convertible note was issued in connection with the Company's $1,500,000 private placement to Samyang in January 2010.

The net loss applicable to common stock for the quarter ended September 30, 2009 includes non-cash charges of approximately $1,515,000, or $0.03 per share, related to the beneficial conversion feature of preferred stock issued in July 2009. For the nine months ended September 30, 2009, the net loss applicable to common stock includes additional non-cash charges of approximately $832,000, or $0.02 per share, related to the beneficial conversion feature of preferred stock issued in April 2009.