AVI BioPharma, Inc. (NASDAQ: AVII), a developer of RNA-based
therapeutics, today reported financial results for the three and
nine months ended September 30, 2010.
For the third quarter of 2010, AVI reported an operating loss of
$3.8 million, compared with an operating loss of $2.9 million in
the third quarter of 2009. The increase in the operating loss is
the result of a $1.6 million increase in research and development
expenses and a $1.6 million increase in general and administrative
costs, offset in part by a $2.3 million increase in government
research contract revenues.
Research and development expenses were $9.1 million in the third
quarter of 2010, compared to $7.5 million in the third quarter of
2009, an increase of $1.6 million. The increase was due primarily
to increases in the research costs for the H1N1 program and higher
compensation and employee costs for additional research and
development staff. General and administrative expenses in the third
quarter were $3.4 million, compared to $1.8 million in the third
quarter of 2009, an increase of $1.6 million. The increase was
attributed to higher compensation costs, legal expenses, a
reduction in the fair value of property held for sale and
facilities costs related to AVI's new Bothell, Washington
facility.
Revenue for the third quarter of 2010 increased to $8.7 million
from $6.4 million in the third quarter of 2009 as a result of a net
increase in revenue from the new H1N1, Ebola and Marburg government
research contracts.
In the first nine months of 2010, the operating loss was $19.2
million, compared with an operating loss of $11.5 million in the
first nine months of 2009. The $7.7 million increase in the
operating loss was primarily the result of a $4.8 million increase
in general and administrative costs and a $4.3 million increase in
research and development costs, offset in part by a $1.4 million
increase in government research contract revenues.
Research and development expenses were $22.1 million in the
first nine months of 2010, compared to $17.8 million in the first
nine months of 2009, an increase of $4.3 million. The increase was
due primarily to $2.0 million in research costs for the H1N1 and
Junín projects, $1.4 million in costs for active investigational
therapeutic components, and $0.9 million in increased compensation
and employee costs from the addition of new staff. General and administrative expenses in the first nine
months of 2010 were $11.0 million, compared
to $6.2 million in the first nine months of 2009, an increase of $4.8 million. The increase was
primarily the result of a $2.6 million one-time charge related to
the April 2010 departure of AVI's former chief executive officer.
The increase was also attributable to higher compensation costs,
legal expenses, a reduction of the fair value of property held for
sale and facilities costs related to AVI's new Bothell, Washington
facility.
Revenue for the first nine months of 2010 increased to $13.9
million from $12.4 million in the first nine months of 2009 as a
result of a net increase in revenue from government research
contracts.
The net loss for the third quarter of 2010 was $7.3 million, or
$0.07 per share, compared to a net loss for the third quarter of
2009 of $8.1 million, or $0.08 per share. The $0.8 million decrease
was primarily due to the increase in the operating loss offset by a
change in the valuation of certain warrants described below. The
net loss for the first nine months of 2010 was $24.5 million, or
$0.22 per share, compared to a net loss for the first nine months
of 2009 of $28.7 million, or $0.33 per share. The $4.2 million
decrease was primarily due to the increase in the operating loss
offset by the valuation of certain warrants described below.
In connection with AVI's 2009 and prior equity financings, the
Company issued warrants that are classified as non-cash
liabilities. The amount of the warrant liability is primarily
affected by changes in AVI's stock price between each financial
reporting period and causes the warrant liability to fluctuate as
the market price of AVI's stock fluctuates. In the third quarter of
2010, the warrant valuation increased by $3.6 million relative to
the second quarter 2010. In the first nine months of 2010, the
warrant valuation increased by $5.5 million relative to the
valuation at December 31, 2009.
AVI had cash and cash equivalents of $36.0 million as of
September 30, 2010, a decrease of $12.3 million from December 31,
2009. This decrease was due primarily to the cash used in
operations during the first nine months of 2010 and cash used for
property and equipment and patent-related costs of approximately
$1.5 million, offset by cash inflows from the exercise of stock
options and warrants of $2.5 million.
"Over the past few months, I believe the execution of our
business strategy and progress in our development programs has led
to a growing appreciation within our industry and the scientific
community of our RNA-based therapeutics programs employing our
intrinsically charge-neutral PMO-based chemistries," said J. David
Boyle II, AVI's interim President and Chief Executive Officer, and
Chief Financial Officer. "This appreciation and interest is leading
to greater visibility in the industry and active dialogues with
potential pharma partners and drug development collaborators. As we
move through the fourth quarter of 2010 and into 2011, we expect
our ongoing business development efforts, program development
efforts and strategic focus will yield both expanded partnership
and program opportunities."
2010 Third Quarter and Recent Corporate
Developments
Duchenne Muscular Dystrophy (DMD) Program
-- Reported data from the completed Phase 1b/2 Study 28 of
AVI-4658 in patients with Duchenne muscular dystrophy that
demonstrated a broadly favorable safety and tolerability profile,
including adverse events that were mostly mild to moderate, not
dose related, and not probably related to study drug. Additional
data highlights include substantial new dystrophin expression and
dystrophin positive-fibers up to 55%, correct localization of
dystrophin, reduction in key inflammatory markers, the absence of
anti-dystrophin antibodies, and general stability in exploratory
markers of clinical performance. The results support the rapid
progression of the candidate into a Phase 2 study later this
year.
-- Presented data from the completed Phase 1b/2 Study 28, as
well as additional data from the AVI-4658 preclinical program, that
demonstrated the unique potential for AVI's exon skipping
technology at the 15th International Congress of the World Muscle
Society. Two presentations were delivered by Stephen B. Shrewsbury,
M.D., Senior Vice President and Chief Medical Officer at AVI. One
presentation was delivered by Dr. Francesco Muntoni, Professor of
Pediatric Neurology and Head of the Dubowitz Neuromuscular Centre
at the UCL Institute of Child Health, London, England.
-- Presented data from Study 28 patients supporting the
potential for AVI-4658 in treatment of patients with Duchenne
muscular dystrophy at the 6th Annual Meeting of the Oligonucleotide
Therapeutics Society. The presentation was delivered by Ryszard
Kole, Ph.D., Senior Vice President at AVI and an AVI Distinguished
Scientist.
-- Presented highlights of the biopsy data from Study 28, the
recently completed Phase 1b/2 clinical trial of AVI-4658, at the
XII International Congress on Neuromuscular Diseases. The
presentations were delivered by Stephen B. Shrewsbury, M.D., and
Dr. Francesco Muntoni.
-- Submitted to the U.S. Food and Drug Administration (FDA) a
series of three 12-week Good Laboratory Practice studies of
AVI-4658, one conducted in primates and two in mice at maximum
feasible doses, that led to the Investigational New Drug
application (IND) for clinical studies in the U.S. to be
opened.
-- Published data in International Journal of Toxicology that
demonstrated AVI-4658 was well tolerated in primates when injected
at up to Maximum Feasible Dose (320mg/kg) and resulted in no
adverse pulmonary, cardiovascular or neurological effects. In
addition, a standard battery of genotoxicity studies were published
demonstrating that AVI-4658 had no mutagenic potential.
Influenza Program
-- Announced results from two preclinical studies of the
therapeutic potential of AVI-7100 against a fully virulent pandemic
H1N1 virus that were highlighted by statistically significant
reductions in average viral titer versus a saline control and a
control with Tamiflu® of up to 3.9 log in a relevant ferret model.
The studies were supported by the Transformational Medical
Technologies (TMT) program of the U.S. Department of Defense, which
is funding an accelerated IND enabling program and Phase 1 trial of
AVI-7100.
-- Presented data from preclinical investigations that identify
AVI-7100 as a lead candidate with a broad safety margin and
demonstrated efficacy in influenza models challenged by H3N2 and
H1N1 at the 48th Annual Meeting of Infectious Diseases Society of
America. Patrick Iversen, Ph.D., Senior Vice President of Research
and Innovation at AVI, presented the data in a poster session.
-- Presented data from preclinical investigations of AVI-7100
for treatment of Influenza A at the 6th Annual Meeting of the
Oligonucleotide Therapeutics Society. Peter Sazani, Ph.D.,
Executive Director, Preclinical Development at AVI, presented the
data in a poster session.
-- Presented data from a preclinical evaluation of AVI-7100 in a
pandemic flu ferret model at the 50th Interscience Conference on
Antimicrobial Agents and Chemotherapy (ICAAC) Annual Meeting.
Patrick Iversen, Ph.D., presented the data in a poster session.
Hemorrhagic Fever Programs
-- Published data in Nature Medicine that demonstrated AVI-6002
and AVI-6003, the respective lead therapeutic candidates against
Ebola and Marburg viruses, provide post-exposure efficacy in
non-human primates. Treatment of Ebola virus-infected primates with
AVI-6002 led to 60% survival, and treatment of Marburg-infected
primates with AVI-6003 conferred 100% survival.
-- Entered into a new contract for up to approximately $291
million through the TMT program for the advanced development of
AVI's hemorrhagic fever virus therapeutic candidates, AVI-6002 and
AVI-6003, for Ebola and Marburg viruses, respectively. If TMT
exercises all four segments comprising the contract, activities
undertaken by AVI would include all clinical and licensure
activities necessary to obtain FDA regulatory approval of each
therapeutic candidate and would provide for a total funding award
to AVI of up to approximately $291 million over a period of
approximately six years.
-- In December 2006 we entered into a two year research contract
with the Defense Threat Reduction Agency (DTRA) of the Department
of Defense to fund development of our RNA-based therapeutic
candidates for Ebola, Marburg and Junín hemorrhagic viruses. In
November 2010, the Company and DTRA agreed that the key activities
under this contract had been completed and that further activities
under this contract would cease and this contract would be deemed
concluded. As of September 30, 2010, AVI has recognized revenue of
$38.2 million with respect to this contract and expects to complete
all activities under this contract in 2010.
Dengue Program
-- Presented data from preclinical investigations of AVI-6006 in
Dengue virus infected mouse and ferret models at the 48th Annual
Meeting of Infectious Diseases Society of America. Patrick Iversen,
Ph.D., presented the data in a poster session.
-- Presented data from a preclinical evaluation of AVI-6006 in a
Dengue virus infected mouse model at the 50th ICAAC Annual Meeting.
Patrick Iversen, Ph.D., presented the data in a poster session.
Antibacterial Program
-- Granted key claims by the U.S. Patent and Trademark Office
for phosphorodiamidate morpholino oligomers (PMOs) as antibacterial
agents that cover the use of peptide-conjugated phosphorodiamidate
morpholino oligomers (PPMOs) to target the acyl carrier protein
(AcpP), a gene considered essential for bacterial growth in both
gram positive and gram negative bacteria.
Corporate Developments
-- Appointed Graham Johnson, a 30-year biotech veteran with
experience in the design, discovery and development of novel
therapeutics, including an extensive background in infectious
diseases and neuroscience, as Senior Vice President, Preclinical
Development and Research. Appointed Patrick Iversen, Ph.D., Senior
Vice President of Research and Innovation, and Ryszard Kole, Ph.D.,
Senior Vice President and an AVI Distinguished Scientist.
-- Announced the award of five cash grants to AVI totaling
approximately $1.2 million under the U.S. Government's Qualifying
Therapeutic Discovery Project program. AVI was awarded grants for
each of the five project applications submitted for the company's
Duchenne muscular dystrophy program and four infectious disease
programs.
2010 Guidance
For 2010, AVI confirms guidance for expenditures for operations,
net of government funding and other collaborative efforts, to be
approximately $21 million to $25 million. AVI 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
AVI does not continue to receive the funding from its current
contracts, its guidance may change.
Upcoming Corporate Presentations
AVI is planning to present at upcoming investment and industry
conferences, including: -- Maxim Group Growth Conference, November
18, 2010, New York, New York
Conference Call
A conference call to review the financial results and provide a
corporate update will be held today, November 9, 2010, at 5:00 p.m.
Eastern time (2:00 p.m. Pacific time). J. David Boyle II, AVI's
Interim President and Chief Executive Officer, and Chief Financial
Officer, and Stephen B. Shrewsbury, AVI's Senior Vice President and
Chief Medical Officer, will host the call. The conference call may
be accessed by dialing 800.573.4842 for domestic callers and
617.224.4327 for international callers. The passcode for the call
is 29591329 and please specify to the operator that you would like
to join the "AVI BioPharma third quarter 2010 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
novel RNA-based therapeutics for rare and infectious diseases, as
well as other select disease targets. Applying pioneering
technologies developed and optimized by AVI, the Company is able to
target a broad range of diseases and disorders through distinct
RNA-based mechanisms of action. Unlike other RNA-based approaches,
our technologies can be used to directly target both messenger RNA
(mRNA) and precursor messenger RNA (pre-mRNA) to either
down-regulate (inhibit) or up-regulate (promote) the expression of
targeted genes or proteins. By leveraging its highly differentiated
RNA antisense-based technology platform, AVI has built a pipeline
of potentially transformative therapeutic agents, including a
clinical stage Duchenne muscular dystrophy candidate and
anti-infective candidates for influenza and hemorrhagic fever
viruses. For more information, visit www.avibio.com.
Forward-Looking Statements and
Information
In order to provide AVIs investors with an understanding of its
current results and future prospects, this press release contains
statements that are forward-looking. Any statements contained in
this press release that are not statements of historical fact may
be deemed to be forward-looking statements. Words such as
"believes," "anticipates," "plans," "expects," "will," "intends,"
"potential," "possible" and similar expressions are intended to
identify forward-looking statements. These forward-looking
statements include statements about the development of AVI's
product candidates, including preclinical development, filing of an
IND application, completion of a Phase 1 human safety clinical
trial, clinical development and FDA approval, expectations
regarding funding from government and other sources and
expectations regarding partnering opportunities and other strategic
transactions.
These forward-looking statements involve risks and
uncertainties, many of which are beyond AVI's control. Known risk
factors include, among others: development of any of AVI 7100, AVI
6002 or AVI 6003 may not result in funding from the TMT in the
anticipated amounts or on a timely basis, if at all; clinical
trials may not demonstrate safety and efficacy of any of AVI's drug
candidates and/or its antisense-based technology platform; any of
AVI's drug candidates may fail in development, may not receive
required regulatory approvals, or be delayed to a point where they
do not become commercially viable; and AVI may not be able to
secure partnering or other strategic transactions with respect to
the development of its product candidates on favorable terms or at
all.
Any of the foregoing risks could materially and adversely affect
AVI's business, results of operations and the trading price of its
common stock. For a detailed description of risks and uncertainties
AVI faces, you are encouraged to review the official corporate
documents filed with the Securities and Exchange Commission. AVI
does not undertake any obligation to publicly update its
forward-looking statements based on events or circumstances after
the date hereof.
AVI BIOPHARMA, INC.
(A Development-Stage Company)
SUMMARY STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenues from license
fees, grants and
research contracts $ 8,702 $ 6,353 $ 13,903 $ 12,448
Operating expenses:
Research and
development 9,059 7,473 22,080 17,770
General and
administrative 3,440 1,800 11,017 6,226
----------- ----------- ----------- -----------
Operating loss (3,797) (2,920) (19,194) (11,548)
Other non-operating
(loss) income:
Interest (expense)
income and other, net 82 (132) 170 (147)
(Increase) decrease on
warrant valuation (3,578) (5,038) (5,509) (16,989)
----------- ----------- ----------- -----------
Net loss $ (7,293) $ (8,090) $ (24,533) $ (28,684)
=========== =========== =========== ===========
Net loss per share--
basic and diluted $ (0.07) $ (0.08) $ (0.22) $ (0.33)
=========== =========== =========== ===========
Shares used in per
share calculations 111,767 95,261 110,863 87,493
=========== =========== =========== ===========
BALANCE SHEET HIGHLIGHTS
(unaudited)
(in thousands)
September 30, December 31,
2010 2009
-------------- --------------
Cash and cash equivalents $ 35,967 $ 48,275
Total current assets 42,314 51,310
Total assets 50,860 60,027
Total current liabilities 43,765 33,507
Total shareholders' equity $ 4,163 $ 23,630
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