AVI BioPharma, Inc. (NASDAQ: AVII), a developer of RNA-based drugs,
today reported financial results for the three and six months ended
June 30, 2010.
For the second quarter of 2010 AVI reported an operating loss of
$7.7 million compared with an operating loss of $5.1 million in the
second quarter of 2009. The increase in the operating loss is the
result of a $2.6 million one-time charge for severance and stock
compensation costs related to the April 2010 departure of AVI's
former chief executive officer.
Research and development expenses were $6.9 million in the
second quarter of 2010, compared to $5.8 million in the second
quarter of 2009, an increase of $1.1 million. The increase was due
primarily to increases in research and development costs related to
the Junín and H1N1 programs. General and administrative expenses in
the second quarter were $4.7 million, compared to $2.2 million in
the second quarter of 2009, an increase of $2.5 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.
Revenue for the second quarter of 2010 increased to $4.0 million
from $2.9 million in the second quarter of 2009 as a result of a
net increase in revenue from government research contracts.
In the first half of 2010, the operating loss was $15.4 million,
compared with an operating loss of $8.6 million in the first half
of 2009. The $6.8 million increase in the operating loss was
primarily the result of a $0.9 million decrease in revenue, a $2.7
million increase in research and development costs, and a $3.2
million increase in general and administrative costs.
Research and development expenses were $13.0 million in the
first half of 2010, compared to $10.3 million in the first half of
2009, an increase of $2.7 million. The increase was due primarily
to a $1.7 million increase in clinical trial costs for our Duchenne
muscular dystrophy program, and a $1.0 million increase related to
the Junín and H1N1 programs. General and administrative expenses in
the first half of 2010 were $7.6 million, compared to $4.4 million
in the first half of 2009, an increase of $3.2 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, a $0.4 million increase in legal expenses and a $0.3
million increase in rent expense related to the relocation of a
significant portion of AVI's operations to the Bothell, Washington
facility.
Revenue for the first half of 2010 decreased to $5.2 million
from $6.1 million in the first half of 2009 as a result of a net
reduction in revenue from government research contracts.
The net loss for the second quarter of 2010 was $16.7 million,
or $0.15 per share, compared to a net loss for the second quarter
of 2009 of $19.7 million, or $0.23 per share. The $3.0 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 half of 2010 was $17.2 million,
or $0.16 per share, compared to a net loss for first half of 2009
of $20.6 million, or $0.25 per share. The $3.4 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 equity financings, it 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 second quarter of 2010, the warrant valuation
increased $9.0 million relative to the first quarter 2010. In the
first half of 2010, the warrant valuation increased $1.9 million
relative to the valuation at December 31, 2009.
AVI had cash and cash equivalents of $36.7 million as of June
30, 2010, a decrease of $11.6 million from December 31, 2009. This
decrease was due primarily to the cash used in operations during
the first half of 2010 and cash used for property and equipment and
patent-related costs of approximately $1.0 million.
"Over the last few months we have carefully refined our business
strategy to focus on the application of our RNA-based platforms for
rare and infectious diseases, and a revitalization of efforts to
leverage our programs and platforms through strategic partnering,"
said J. David Boyle II, AVI's interim President and Chief Executive
Officer, and Chief Financial Officer. "With a commitment to
building a stronger foundation promoting the success of our
employees, the meeting of corporate objectives, and the building of
value for our shareholders, along with recent concrete successes
across several programs, I believe AVI is re-energized and is
achieving a new level of prominence and validation in the field of
RNA drug development."
2010 Second Quarter and Recent Corporate Developments
Duchenne Muscular Dystrophy (DMD)
-- Announced topline biopsy data from the Phase 1b/2 clinical trial of
AVI-4658, AVI's lead therapeutic candidate being developed as a
systemically administered treatment for a substantial subgroup of
patients with Duchenne muscular dystrophy, demonstrating the first ever
reported generation of new dystrophin-positive muscle fibers of more
than 50% of normal in a patient with DMD following systemic
administration of a therapeutic candidate.
-- 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 taking place
July 17-22, 2010 in Naples, Italy. The presentations were by Stephen B.
Shrewsbury, M.D., Senior Vice President and Chief Medical Officer at
AVI, and Dr. Francesco Muntoni, Professor of Pediatric Neurology and
Head of the Dubowitz Neuromuscular Centre at the UCL Institute of Child
Health, London, England.
-- Obtained an open Investigational New Drug application ("IND") allowing
for clinical studies in the U.S. for AVI-4658 following review by the
U.S. Food and Drug Administration ("FDA").
Influenza Program
-- Entered into a new contract under the Transformational Medical
Technologies program ("TMT") of the U.S. Department of Defense to
advance the development of AVI-7100 as a medical countermeasure
against the pandemic H1N1 influenza virus (swine flu). The contract
provides for funding of up to $18 million for studies enabling an "IND"
application with the FDA, the study of an intranasal delivery
formulation, and the funding of a Phase 1 clinical trial to obtain
human safety data to support potential use under an Emergency Use
Authorization.
-- Secured increased funding of up to approximately $4.0 million under a
pre-existing contract through the TMT program. The increased funding
supports, in cooperation with TMT, continued preclinical development of
AVI's lead influenza drug candidate against H1N1, as well as expanded
preclinical evaluation against H5N1 (avian flu) and drug resistant H1N1
and H3N2 flu strains. This funding is in addition to the $4.1 million
received under the initial contract terms and brings total funding for
this agreement up to $8.1 million.
Hemorrhagic Fever Programs
-- 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.
Antibacterial Program
-- Published in The Journal of Infectious Diseases new data
demonstrating the potential utility of phosphorodiamidate morpholino
based oligomers (PMOs) as a novel class of antimicrobial agents. The
publication describes preclinical studies demonstrating the in vitro
and in vivo efficacy of peptide-conjugated phosphorodiamidate
morpholino oligomers (PPMOs) against the Burkholderia cepacia complex
by targeting AcpP, a protein known to be important for bacterial
growth. Published in conjunction with the study is an editorial
entitled New Horizons in Treating Burkholderia Species Infections which
addresses these studies and the underlying PMO-based technology
opportunity as antimicrobials.
Corporate Developments
-- Entered an agreement on April 20, 2010 with a group of shareholders. As
part of the agreement, the AVI Board of Directors appointed J. David
Boyle II Interim President and Chief Executive Officer. The interim CEO
appointment follows Dr. Leslie Hudson's resignation as President, Chief
Executive Officer and a director of AVI. The Board of Directors has
initiated a search for CEO candidates, which includes both external and
internal candidates.
-- Anthony Chase, Christopher Garabedian and Dr. Hans Wigzell joined AVI's
Board of Directors, and William Goolsbee was appointed Chairman. AVI's
Board is now currently comprised of seven directors, all of whom are
independent.
2010 Guidance Update
For 2010, AVI updates guidance for expenditures for operations,
net of government funding and other collaborative efforts, to be
approximately $21 million to $25 million. This is a reduction from
our previous guidance for expenditures for operations, net of
government funding and other collaborative efforts, of $23 million
to $27 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:
-- Rodman & Renshaw 12th Annual Healthcare Conference, September 12-15,
2010, New York, New York
-- UBS Global Life Sciences Conference, September 20-22, 2010, New York,
New York
-- JMP Securities Healthcare Conference, September 27-28, 2010, New York,
New York
Conference Call
A conference call to review the financial results and provide a
corporate update will be held today, August 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, will host the call.
The conference call may be accessed by dialing 800.261.3417 for
domestic callers and 617.614.3673 for international callers. The
passcode for the call is 43924630 and please specify to the
operator that you would like to join the "AVI BioPharma second
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, we are 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 our highly differentiated
RNA antisense-based technology platform, we have 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 our
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 expectations regarding future
expenses, funding from government and other sources; and 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.
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 our drug
candidates and/or our antisense-based technology platform; any of
our 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.
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 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)
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenues from license fees,
grants and research
contracts $ 3,997 $ 2,945 $ 5,201 $ 6,095
Operating expenses:
Research and development 6,931 5,804 13,020 10,299
General and administrative 4,733 2,206 7,577 4,426
---------- ---------- ---------- ----------
Operating loss (7,667) (5,065) (15,396) (8,630)
Other income (loss):
Interest (expense)
income and other, net 51 (31) 87 (15)
(Increase) decrease
on warrant valuation (9,040) (14,572) (1,931) (11,950)
---------- ---------- ---------- ----------
Net loss $ (16,656) $ (19,668) $ (17,240) $ (20,595)
========== ========== ========== ==========
Net loss per share--
basic and diluted $ (0.15) $ (0.23) $ (0.16) $ (0.25)
========== ========== ========== ==========
Shares used in per share
calculations 110,383 85,664 110,404 83,235
========== ========== ========== ==========
BALANCE SHEET HIGHLIGHTS
(unaudited)
(in thousands)
June 30, December 31,
2010 2009
----------- -----------
Cash and cash equivalents $ 36,742 $ 48,275
Total current assets 39,932 51,310
Total assets 48,667 60,027
Total current liabilities 37,268 33,507
Total shareholders' equity $ 8,441 $ 23,630
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