AVI BioPharma, Inc. (NASDAQ: AVII), a developer of RNA-based drugs,
today reported financial results for the three and twelve months
ending December 31, 2009.
"We've achieved significant progress over the past year. Our DMD
program delivered the first clinical evidence of efficacy in two
trials and our biodefense business, based on past successes and new
data, garnered up to $22.5 million in new government drug
development contracts. We also significantly improved our R&D
and business capabilities as part of our headquarters move to the
greater Seattle area," stated Leslie Hudson, Ph.D., President and
CEO of AVI BioPharma. "In 2010 we plan to advance and expand our
DMD program guided by the outcome of the ongoing systemic trial of
AVI-4658. We intend to leverage our biodefense successes and
believe we may have the opportunity to develop an influenza
therapeutic program."
Revenues for the fourth quarter of 2009 were $5.1 million,
compared to $5.5 million in the fourth quarter of 2008. Revenues
for the full year ended December 31, 2009 were $17.6 million,
compared to $21.3 million in the full year ended December 31, 2008,
reflecting decreases in research contract revenues of $3.7
million.
The operating loss for the fourth quarter of 2009 was $4.0
million compared to an operating loss of $2.9 million from the same
period in the prior year. The operating loss for the fourth quarter
of 2009 was more than the loss from the fourth quarter of 2008 as
the result of higher research and development costs associated with
our Duchenne Muscular Dystrophy project.
The operating loss for the full year ended December 31, 2009
decreased to $15.5 million from $27.5 million for the prior year
period. In 2008, operating loss included a charge of $9.9 million
for acquired in-process research and development associated with
the acquisition of Ercole Biotech, Inc. The operating loss in 2009
also decreased compared to 2008 as a result of lower research and
development and general and administrative expenses.
The net income for the fourth quarter of 2009 was $3.5 million,
or $0.03 per share, compared with a net loss for the fourth quarter
of 2008 of $1.1 million, or $(0.01) per share. The net income for
the fourth quarter of 2009 includes a non-cash income for warrant
liability of $7.8 million compared to a gain from the same source
of $1.7 million during the fourth quarter of 2008. For the full
year ended December 31, 2009, the Company reported a net loss of
$25.2 million, or $(0.27) per share, compared with a net loss for
the comparable period in 2008 of $24.0 million, or $(0.34) per
share. The net loss for the full year ended December 31, 2009
includes a non-cash expense for warrant liability of $9.2 million
compared to a gain of $3.2 million during the same period of 2008.
These are non-cash liabilities; the Company does not expect to
expend any cash to settle these liabilities. The increase on
warrant valuation is a non-cash expense and is the result of the
increase in the Company's stock price subsequent to the issuance of
warrants as a part of the equity financings that closed in January
and August of 2009. The increase or decrease on the warrant
valuation will fluctuate as the market price of the Company's
stock.
Research and development (R&D) expenses for the fourth
quarter of 2009 increased to $6.6 million from $5.1 million during
the fourth quarter of 2008. R&D expenses for the full year
ended December 31, 2009 decreased to $24.4 million from $27.3
million in the prior year period. The increase in R&D expenses
for the fourth quarter 2009 was due primarily to increases in the
spending for the Duchene Muscular Dystrophy program. The decrease
in R&D expenses for the full year ended December 31, 2009 was
due primarily to decreases in government research contracting costs
associated with the decline in government research contract
revenue.
General and administrative (G&A) expenses for the fourth
quarter of 2009 decreased to $2.5 million, from $3.3 million in the
prior year's fourth quarter. G&A expenses in the year ended
December 31, 2009 decreased to $8.7 million from $11.5 million in
the prior-year period. The G&A expense decrease for the current
year vs. the prior year time frame was due primarily to stock
compensation expenses incurred in the prior-year quarter related to
the Ercole acquisition, the resignation of former executive
officers and relocation costs of new executive officers.
Net interest income and other expenses declined primarily due to
declines in market rates of interest on the Company's
interest-earning investments and the write off of valuations for
patents, property and equipment.
We had cash, cash equivalents and short-term securities of $48.4
million as of December 31, 2009, an increase of $36.9 million from
December 31, 2008. This increase was primarily due to two equity
financings that raised aggregate net proceeds of $47.8 million,
partially offset by cash used in operations of $8.8 million,
property and equipment and patent-related costs of approximately
$2.0 million, and debt repayments of $0.1 million.
2010 Guidance
For 2010, AVI provides guidance for expenditures for operations,
net of government funding and other collaborative efforts, to be
approximately $23 million to $27 million. The Company believes it
will continue to receive funding from government and other sources
to pursue the development of product candidates, and has assumed
certain revenues from these awards in providing this guidance. If
the Company does not continue to receive the funding from its
current contracts, our guidance may change.
2009 and Recent Corporate Developments
Duchenne Muscular Dystrophy (DMD)
-- AVI showed impressive levels of new dystrophin expression in DMD
patients in a Phase 1 trial evaluating intramuscular injection of
AVI-4658, AVI's lead drug candidate with potential to treat DMD
by skipping exon 51.
-- Announced positive data from the initial cohorts in Study 28, the
Phase 1b/2 clinical trial evaluating systemic delivery of AVI-4658
for the treatment of patients with DMD. RNA exon skipping was seen
in 3 of 3 patients with DMD following treatment with 2 or 4 mg/kg,
including one patient with robust dystrophin protein expression.
-- Completed dosing of all 19 DMD patients enrolled in the ongoing Study
28, with the final two cohorts, five and six, completing 12 weeks of
dosing in 4 patients each at 10 mg/kg and 20 mg/kg, respectively with
AVI-4658.
-- Entered into or expanded DMD program agreements for up to $7.2 million
in non-dilutive funding to support and build upon proof-of-concept
established in two clinical trials in 2009:
-- Amended the Charley's Fund, Inc. sponsored research agreement
providing up to an additional $3 million in sponsored research
funding to support the development of AVI-5038, AVI's lead drug
candidate to treat DMD by skipping exon 50.
-- Established a $2.5 million contract with Children's National
Medical Center of Washington, D.C., with funding from the US
Department of Defense, to conduct preclinical studies supporting
the development of AVI-4658 as a DMD treatment.
-- Entered into an agreement with Action Duchenne providing
Approximately $1.2 million in funding to support AVI's
DMD-related research, development and regulatory efforts.
-- Received grants totaling $500,000 from CureDuchenne and the
Foundation to Eradicated Duchenne to support continuing
development of drug candidates to treat DMD.
-- Received US and European Orphan Drug Designation for AVI-5038.
Biodefense Program
-- Based on successful research culminating in open INDs for our candidate
drugs targeting Ebola and Marburg viruses, we submitted two proposals
to the US Department of Defense (DOD) to develop FDA approvable medical
countermeasures for Ebola and Marburg viruses in response to an RFP
published in November 2009 by the DOD Transformational Medical
Technologies Initiative to develop medical countermeasures
(therapeutics) for the treatment of hemorrhagic fever viruses.
-- Expanded existing contract with the Defense Threat Reduction Agency
(DTRA) to include up to $5.9 million in additional research and
development of RNA-based drugs targeting Ebola and Marburg viruses.
-- Expanded the DTRA contract to include $11.5 million of new funding for
additional research and development of AVI's RNA-based Junín drug
candidate.
Influenza Therapeutic
-- Entered into a contract worth up to $5.1 million with the DTRA for the
development of RNA-based drugs targeting the H1N1 swine flu virus. In
partnership with the US government, we successfully conducted an
exercise demonstrating the ability to rapidly respond to a real-world
emerging viral threat.
Corporate
-- Moved the AVI corporate headquarters to the greater Seattle area to
build the management, clinical development and drug discovery
capabilities by drawing upon the region's greater biotechnology sector
relevant expertise:
-- Established a new biology and chemistry research group in
Bothell, WA.
-- Appointed Paul Medeiros as Chief Business Officer.
-- Appointed Dr. Steve Shrewsbury as Chief Medical Officer.
-- Announced our understanding that our partner Cook Therapeutics decided
to discontinue development of its cobalt-chromium stent coated with
AVI-5126 because of an unexpectedly high rate of restenosis.
-- Appointed Drs. Christopher Henney and Kathleen Behrens to AVI's board
of directors.
-- Completed two offerings of common stock and warrants providing the
company with approximately $50 million in aggregate gross proceeds.
Conference Call
A conference call to review the financial results and provide a
corporate update will be held today, March 16, 2010, at 8:30 a.m.
Eastern time (5:30 a.m. Pacific time). Dr. Leslie Hudson, AVI's
President and Chief Executive Officer, and J. David Boyle II, AVI's
Senior Vice President and Chief Financial Officer, will host the
call.
The conference call may be accessed by dialing 866.578.5771 for
domestic callers and 617.213.8055 for international callers. The
passcode for the call is 39302987. Please specify to the operator
that you would like to join the "AVI BioPharma fourth quarter and
year end 2009 earnings call." The conference call will be webcast
live under the events section of AVI's website at www.avibio.com,
and will be archived there following the call. Please connect to
AVI's website several minutes prior to the start of the broadcast
to ensure adequate time for any software download that may be
necessary.
About AVI BioPharma
AVI BioPharma is focused on the discovery and development of
RNA-based drugs utilizing proprietary derivatives of its antisense
chemistry (morpholino-modified phosphorodiamidate oligomers or
PMOs) that can be applied to a wide range of diseases and genetic
disorders through several distinct mechanisms of action. Unlike
other RNA therapeutic approaches, AVI's antisense technology has
been used to directly target both messenger RNA (mRNA) and its
precursor (pre-mRNA), allowing for both up and down-regulation of
targeted genes and proteins. AVI's RNA-based drug programs are
being evaluated for the treatment of Duchenne muscular dystrophy,
including an ongoing systemic Phase 1b/2 clinical trial of exon
skipping with AVI-4658. AVI's antiviral programs have demonstrated
promising outcomes in Ebola Zaire and Marburg Musoke virus
infections and may prove applicable to other viral targets such as
Junín, influenza, HCV or Dengue viruses. For more information,
visit 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)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues from license fees,
grants and research
contracts $ 5,141 $ 5,479 $ 17,585 $ 21,258
Operating expenses:
Research and development 6,624 5,070 24,396 27,331
General and administrative 2,470 3,303 8,696 11,469
Acquired in-process
research and development - - - 9,916
---------- ---------- ---------- ----------
Operating loss (3,953) (2,894) (15,507) (27,458)
Other income (loss):
Interest (expense)
income and other, net (312) 36 (454) 344
(Increase) decrease
on warrant valuation 7,791 1,718 (9,198) 3,161
---------- ---------- ---------- ----------
Net income (loss) $ 3,526 $ (1,140) $ (25,159) $ (23,953)
========== ========== ========== ==========
Net income (loss) per
share--basic $ 0.03 $ (0.01) $ (0.27) $ (0.34)
========== ========== ========== ==========
Net income (loss) per
share--diluted $ 0.03 $ (0.01) $ (0.27) $ (0.34)
========== ========== ========== ==========
Shares used in per share
calculations - basic 110,266 71,074 93,090 69,491
========== ========== ========== ==========
Shares used in per share
calculations - diluted 125,647 71,074 93,090 69,491
========== ========== ========== ==========
BALANCE SHEET HIGHLIGHTS
(in thousands)
December 31, December 31,
2009 2008
----------- -----------
Cash, cash equivalents and
short-term securities $ 48,446 $ 11,474
Total current assets 51,310 17,044
Total assets 60,027 25,536
Total current liabilities 33,507 7,288
Total shareholders' equity $ 23,630 $ 15,732
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