AVI BioPharma, Inc. (NASDAQ: AVII) today reported financial results
for the three and six months ending June 30, 2008. The Company also
reported that it has received approval from the Medicine and
Healthcare Product Regulatory Agency (MHRA) to conduct its systemic
trial of AVI-4658 in the treatment of Duchenne Muscular Dystrophy
in the United Kingdom and also updated the new additions to its
senior management team.
"As we continue AVI's transformation from an antisense pioneer
into an RNA-based drug discovery and development company, we are
excited to report on our recent progress and ongoing activities
toward achieving both our short-term and long-term goals," said Dr.
Leslie Hudson, Chief Executive Officer of AVI BioPharma. He
continued, "Over the past twelve months, we have significantly
enriched the pharmaceutical utility of our core phosphorodiamidate
morpholino (PMO) technology through the addition of several new
derivative chemistries that could improve the bioavailability,
potency and therapeutic index of the original chemical series.
Overall our antisense-based chemistries significantly expand the
field of RNA-based therapeutics by not only competitively
inhibiting mRNA translation, but by also directing the processing
of pre-mRNA to provide potential therapeutic benefit in an
important range of diseases. We believe these unique capabilities,
which are not encompassed by the technology portfolio and
intellectual property estate of our competitors, position AVI to
secure a leading role in the future successes of RNA-based drug
development."
Dr. Hudson concluded, "We have just begun to feel the impact of
our newly acquired intellectual property, the recent advances in
our core chemistry, the new product focus brought to our pipeline,
the additions to our leadership team and the fiscal measures
employed to extend our current financial runway. We believe that
there are partnership opportunities for a company that can go
beyond simple inhibition of mRNA -- we believe we are such a
company, but we now have to demonstrate this to capture the full
value from our technology and intellectual property. With the
ongoing and increasing interest in RNA-based therapeutics by both
the pharmaceutical and biotech sectors, we believe our renewed
activity and focus on business development, coupled with our
preclinical and clinical advances, are happening at an opportune
time."
Financial Results
Revenues
Revenues for the second quarter of 2008 were $5 million, up from
$2.4 million in the prior-year period, reflecting increases in
research contracts revenues of $2.6 million. Revenues for the first
half of 2008 were $10.6 million, up from $2.9 million in the first
half of 2007, reflecting increases in research contracts revenues
of $7.7 million.
Net Loss
The net loss for the second quarter of 2008 was $1.8 million, or
$0.02 per share, compared with a net loss for the second quarter of
2007 of $7.8 million, or $0.15 per share. For the six months ended
June 30, 2008, the Company reported a net loss of $16.8 million, or
$0.25 per share, compared with a net loss for the comparable period
in 2007 of $16.0 million, or $0.30 per share.
Cash, Cash Equivalents and Marketable Securities
The Company had cash, cash equivalents and short-term securities
of $18.8 million as of June 30, 2008, a decrease of $6.3 million
from December 31, 2007. This decrease was due primarily to $5.6
million used in operations and $603,000 used for purchases of
property and equipment and patent-related costs. This decrease
includes approximately $900,000 paid to Ercole for its use in
retiring certain of its debts prior to closing of the Ercole
acquisition.
Research and Development (R&D) Expenses
Research and Development (R&D) expenses for the second
quarter of 2008 decreased to $8.2 million from $9.2 million during
the second quarter of 2007. The decrease in R&D expenses was
due to decreases in government research contract expenses of $1.75
million, decreases in contract manufacturing costs of $330,000 and
decreases in amortization of leaseholds of $135,000. These amounts
were partially offset by increases in professional consultant costs
of $300,000, increases in purchases of government contract-related
equipment of $290,000, increases in net clinical expenses of
$230,000, severance payments to certain former Ercole employees of
$216,000 and increases in employee costs of $140,000.
R&D expenses for the first six months of 2008 increased to
$15.6 million from $15.5 million in the prior-year period. During
this period the Company completed an asset acquisition of Ercole
Biotechnology, Inc ("Ercole"), resulting in additional expenses of
$9.9 million relating to acquired in-process research and
development. The R&D expenses also reflect increases of
$770,000 in compensation costs, $617,000 in severance payments to
certain Ercole employees, $570,000 in net clinical expenses and
$65,000 in purchases of government-contract related equipment.
These amounts were offset by decreases of $950,000 in government
research contract expense, $300,000 in contract manufacturing
costs, $270,000 in amortization of leaseholds, $250,000 in chemical
costs and $125,000 in professional consultant costs.
General and Administrative (G&A) Expenses
G&A expenses for the second quarter of 2008 decreased to
$1.7 million from $2 million in the prior year's second quarter.
The decrease in G&A expenses was due primarily to decreases in
legal expenses of $215,000, employee costs of $52,000 and public
and investor relations costs of $51,000. G&A expenses in the
first six months of 2008 decreased to $3.7 million from $6.3
million in the prior-year period. The G&A expense decrease was
due primarily to a $2.2 million decrease in employee costs, of
which $1.6 million was related to the Separation and Release
Agreement with the Company's former Chief Executive Officer during
the first quarter of 2007, as well as a $600,000 decrease in SFAS
123R expenses. G&A expenses also included a $360,000 decrease
in legal expenses and a $76,000 decrease in public and investor
relations costs.
Second Quarter and Recent Corporate Highlights
In the second quarter 2008, the Company announced that J. David
Boyle II will become Senior Vice President and Chief Financial
Officer of AVI effective August 18, 2008. Mr. Boyle -- previously
Vice President of Finance and Chief Financial Officer of XOMA Ltd.
-- brings extensive operational and international financial and
business experience to AVI.
In August, Shirley J. Leow joined AVI as Vice President of
Clinical Operations and Project Management. Ms. Leow's
responsibilities will include the coordination of AVI's preclinical
and clinical collaborations on DMD. Her overall domain ownership of
the DMD program as it advances through the clinic, will greatly
improve the Company's capability to handle the current demands from
its third party collaborators as well as to capitalize on future
funding opportunities from both public and private sources. Ms.
Leow brings more than 35 years experience in the biotech and
pharmaceutical industries. Prior to joining AVI, she served in key
clinical and program management leadership positions in Xanthus
Pharmaceuticals, Wyeth, Navigant Biotechnologies and Pharmacia.
In June, the Company announced the addition of Ryszard Kole,
Ph.D., to head up its discovery research programs as Senior Vice
President of Discovery Research after a successful career as a
tenured professor and researcher at the University of North
Carolina and as the founder of Ercole Biotechnologies, Inc. In AVI,
Dr. Kole's discovery research goals encompass further improvements
to RNA-based chemistries as well as their application to the
Company's major programs in Duchenne Muscular Dystrophy (DMD) and
anti-viral therapies. These include further improvements in AVI's
proprietary PPMO (peptide conjugated PMOs) and PMO+ (positively
charged PMOs) chemistries, which build upon the strong fundamental
properties of PMOs, AVI's first generation oligomers.
This change allowed Patrick Iversen, Ph.D. to move to a newly
created role as Senior Vice President of Strategic Alliances and
thus enhance the Company's ability to form broad strategic
alliances and high-value partnerships. This is a key bridge between
AVI's internal R&D teams and its external partner network and
has significantly strengthened the Company's business development
capabilities and opportunities. Dr. Iversen will continue to head
up AVI's ongoing and successful collaboration with USAMRIID, as
well as other external collaborative efforts that will provide the
Company with potential commercial opportunities, including
development partnerships, licensing or program spin-offs.
During the second quarter, the Company announced that it reduced
staffing levels by approximately 15% to support a more focused
approach to product development and discovery research. The Company
believes that this reduction, combined with selective re-hiring,
will save an estimated $875,000 for the remainder of 2008 and an
estimated $1.6 million in 2009.
Product Pipeline and Discovery Research Updates
Duchenne Muscular Dystrophy (DMD)
The MHRA in the UK has given clearance for the Company to move
forward with a Company-sponsored systemic clinical trial of
AVI-4658 in the therapy of DMD in ambulatory patients.
Additionally, there is an open ethics extension, which has allowed
identification and screening of subjects for this trial prior to
receiving Gene Therapy Advisory Committee (GTAC) approval. The
Company anticipates receiving GTAC response to the proposed study
such that the study could commence during the fourth quarter of
this year. In addition, the MHRA has agreed that the on-going IM
study of AVI-4658 in non-ambulatory patients may proceed directly
to the top dose with an increased cohort size.
AVI has continued to demonstrate its scientific leadership in
the application of exon skipping to DMD through the publication of
preclinical results of a study demonstrating the ability of AVI's
new class of drug candidates -- termed PPMO-B -- to induce
sustained expression of dystrophin in the mdx mouse model of DMD.
Treatment with this new class of AVI compound resulted in the
sustained production of functional dystrophin in numerous tissues,
including the heart, diaphragm and skeletal muscles. These are key
organs for the treatment of the disease. The paper, published the
peer-reviewed journal, Molecular Therapy, is titled "Sustained
Dystrophin Expression Induced by Peptide-Conjugated Morpholino
Oligomers in the Muscles of mdx Mice," by Natee Jearawiriyapaisarn,
Hong Moulton, Brian Buckley, Jennifer Roberts, Peter Sazani, Suthat
Fucharoen, Patrick Iversen and Ryszard Kole. See:
http://www.nature.com/mt/journal/vaop/ncurrent/abs/mt2008120a.html.
In addition, a number of Company and collaborator oral
presentations, as well as posters, utilizing AVI technology were
presented at the 11th Annual Meeting of the American Society of
Gene Therapy in Boston. As a presentation to peers of the published
data on DMD and TNF receptor referenced above, in July Dr. Kole was
invited to present both sets of data at the Gordon Conference held
at Colby College in Maine.
Cardiovascular Restenosis
The Company announced that its partner, Global Therapeutics --
the cardiology unit of Cook Medical -- had received CE Mark
approval for a new cobalt chromium bare metal stent. The device,
the Global Therapeutics GTX Coronary Stent System, is also the
platform for a new drug-eluting stent (DES) utilizing AVI-5126,
developed by AVI and licensed by Cook Medical. AVI-5126 is a more
potent compound from the new PPMO drug class and has replaced the
original PMO-based c-myc inhibitor AVI-4126. The new GTX DES system
encompasses several technical advances in stent design as well as a
potential breakthrough approach to reducing restenosis through the
targeting of its cause (up regulation of c-myc) as opposed to its
effect (inflammation). Cook Medical has indicated that the clinical
trial to test the efficacy of AVI-5126 in inhibiting restenosis is
expected to begin in Europe during the fourth quarter of 2008.
Biodefense Program: Ebola Zaire and Marburg Musoke Viruses
The Company's antiviral focus has been principally on efforts
with the Department of Defense and in cooperation with the U.S.
Army Medical Research Institute of Infectious Diseases (USAMRIID).
Dr. Iversen made the opening presentation of the Pre-Conference
Symposium to the 6th Annual Biodefense Vaccines & Therapeutics
Meeting (June 9-11, 2008 in Washington, D.C.) at which he
highlighted the Company's progress in the development of its
therapeutic drugs against agents on the bioterrorism list, in
particular Ebola Zaire and Marburg Musoke viruses.
The Company had announced earlier in the second quarter that
treatment of non-human primates with either the antisense drug
AVI-6002, or with AVI-6003, resulted in a reproducible and high
rate of survival in the face of an otherwise lethal infection with
Ebola or Marburg virus, respectively. Treatment of mice with AVI
compounds designed for the treatment of Dengue virus infection have
also resulted in reproducible and high rates of survival in the
face of otherwise lethal infections. The Company's Dengue virus
program is currently being supported through a separate government
agreement and the program is in the designated class of diseases
which are potentially eligible for the FDA's new Priority Review
Voucher Program, which is scheduled to go into effect in September
of 2008. The Company has filed pre-INDs with the FDA on its drugs
to treat Ebola Zaire and Marburg Musoke and is completing its
response to FDA feedback on the proposed toxicology program before
proceeding to formal IND submissions.
Finally, Dr. Iversen presented at the TIDES Oligonucleotide and
Peptide Technology and Product Development meeting in Las Vegas on
May 20, 2008. The title of his presentation was "Manipulating the
Immune Response with Cell Penetrating Peptide Conjugated
Phosphorodiamidate Morpholino Oligomers" and featured the targeting
of genes, such as interleukin-10 (IL-10), involved in the host
immune reponse, with AVI's proprietary Phosphorodiamidate
Morpholino Oligomers and aginine-rich peptides. IL-10 is considered
a key regulator of immune response to infection from viruses,
bacteria and other organisms.
Conference Call
AVI BioPharma has scheduled an investor conference call
regarding this announcement, and the company's current and planned
business activities, to be held on August 11, 2008 beginning at
9:30 a.m. Eastern time (6:30 a.m. Pacific time).
Individuals interested in listening to the live conference call
may do so by dialing 877.704.5378 toll free within the United
States and Canada, or 913.312.1268 for international callers.
Following the conference call, a recording of the call will be
available for download (MP3) on the company's website:
www.avibio.com.
About AVI BioPharma
AVI BioPharma is focused on the discovery and development of
RNA-based drugs using the company's expanded portfolio of
proprietary antisense compounds (PMOs). The company's technology
applications leverage distinct mechanisms of action in a range of
genetic diseases, genetic disorders and the genetic code of
disease-causing organisms. The emerging field of directed
alternative RNA splicing represents AVI's newest and most exciting
application based on the company's core antisense technology.
Functional attributes of this approach could include correcting
genetic defects (RNA mutations; which AVI believes could produce
promising treatments for Duchenne muscular dystrophy), coding for
novel soluble receptors (an exciting and novel approach which could
have application in the treatment of inflammatory diseases such as
rheumatoid arthritis), and the reduction in activity of immune
modulators in disease states (currently being applied to IL-10).
AVI's RNA-based drug programs also include blocking mRNA
translation. In AVI's biodefense program, this application has been
successful against the single-stranded RNA viruses Ebola Zaire and
Marburg Musoke in non-human primates and could have value against
other viral targets such as HCV, Dengue, Junin, influenza and RSV
viruses. This application also will be evaluated in the clinic for
the treatment of cardiovascular restenosis by our partner, Cook
Medical. More information about AVI is available at
www.avibio.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: The statements that are not historical facts
contained in this release are forward-looking statements that
involve risks and uncertainties, including, but not limited to, the
results of research and development efforts, the results of
preclinical and clinical testing, the effect of regulation by the
FDA and other agencies, the impact of competitive products, product
development, commercialization and technological difficulties, and
other risks detailed in the company's Securities and Exchange
Commission filings.
AVI BIOPHARMA, INC.
(A Development-Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenues, from
license fees,
grants and
research contracts $ 4,982,963 $ 2,351,424 $ 10,607,580 $ 2,887,466
Operating expenses:
Research and
development 8,164,698 9,160,816 15,637,509 15,478,457
General and
administrative 1,696,796 2,030,796 3,679,475 6,334,681
Acquired in-process
Research and
development - - 9,916,271 -
------------ ------------ ------------ ------------
9,861,494 11,191,612 29,233,255 21,813,138
Other income:
Interest
income, net 80,450 303,568 247,802 666,077
Gain (loss) on
warrant
liability 3,047,459 755,317 1,612,775 2,254,008
------------ ------------ ------------ ------------
Net loss $ (1,750,622) $ (7,781,303) $(16,765,098) $(16,005,587)
============ ============ ============ ============
Net loss per share--
basic and diluted $ (0.02) $ (0.15) $ (0.25) $ (0.30)
============ ============ ============ ============
Shares used in per
share calculations 70,985,520 53,560,360 68,153,753 53,381,256
============ ============ ============ ============
BALANCE SHEET HIGHLIGHTS
(unaudited)
June 30, December 31,
2008 2007
------------ ------------
Cash, cash equivalents and short-term securities $ 18,786,092 $ 25,074,413
Total current assets 22,546,479 28,711,451
Total assets 32,578,172 38,637,930
Total current liabilities 8,826,906 9,752,329
Total shareholders? equity $ 21,243,010 $ 26,381,748
AVI Press and Investor Contact: Michael Hubbard Email Contact
Director of Corporate Communications (503) 227-0554
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