GERMANTOWN, Md., Aug. 8 /PRNewswire-FirstCall/ -- Avalon
Pharmaceuticals, Inc. (Nasdaq and NYSE Arca: AVRX), a
biopharmaceutical company focused on the discovery and development
of small molecule therapeutics, today announced financial and
operational results for the second quarter and six months ended
June 30, 2006. "As we progress with AVN944 and our drug discovery
programs, the recently announced addition of a Chief Medical
Officer will help guide clinical development and regulatory
strategies," stated Kenneth C. Carter, Ph.D., President and CEO of
Avalon. "We are also very pleased with the progress of our current
partnerships and the formation of a new partnership with ChemDiv,
Inc. Through these partnerships, which expand the use of our
proprietary technology, AvalonRx(R), we are able to establish
additional cancer programs and programs in other therapeutic areas.
We have also continued to make great progress on our internal
product development programs, which are focused on treatments for
cancer and the discovery of biomarkers to guide development in all
of our programs." SECOND QUARTER AND RECENT OPERATIONAL HIGHLIGHTS
AVN944: During the quarter, the phase I dose escalation study of
AVN944 made important progress. The study is a repeat-dose dose
escalation trial in patients with advanced hematological
malignancies divided into two cohorts. Cohort 1 has patients with
acute myelogenous leukemia and cohort 2 has enrolled patients with
multiple myeloma and chronic lymphocytic leukemia. The enrollment
and progress of the trial is on schedule with five dose groups
completed and two additional groups enrolling. Avalon has also
started analysis of biomarkers from early dose levels in each
cohort, using AvalonRx(R). Internal Programs: Lead optimization
continues on both the Beta-catenin and Aurora pathway inhibitor
programs. Avalon is currently synthesizing active analogs in both
programs and is defining the structure-activity- relationship of
the series. Preliminary pharmacological studies have been completed
on multiple analogs within the Aurora pathway inhibitor program.
Additionally, the company has developed a comprehensive plan for an
expanded screening program for this year with the intention to
initiate at least three new screens in the second half of 2006.
ChemDiv, Inc. Collaboration: At the end of July 2006, Avalon
announced an oncology drug discovery and development collaboration
with ChemDiv, Inc., a leading chemistry-driven research
organization. Avalon and ChemDiv will collaborate on three of
Avalon's upcoming internal oncology screens with Avalon providing
the biology and screening resources and ChemDiv providing the
medicinal chemistry. This partnership will leverage the
capabilities of both parties and allow Avalon to work on more
discovery programs. New Chief Medical Officer: On August 1, Michael
J. Hamilton, M.D., joined as Chief Medical Officer. Dr. Hamilton
will develop clinical strategies and priorities, oversee
implementation of clinical trials, and will be responsible for
regulatory affairs and interaction with the FDA. Dr. Hamilton
brings to Avalon 20 years of expertise in the field of oncology.
Most recently, from 2000-2005, he served as Group Director of
Oncology, Medicines Development Center, and led a portfolio of U.S.
clinical oncology trials for GlaxoSmithKline. FINANCIAL DETAILS *
Total revenues increased to $417,000, for the three months ended
June 30, 2006, compared to $0 for the three months ended June 30,
2005. Total revenues increased to $956,000, for the six months
ended June 30, 2006, compared to $0 for the six months ended June
30, 2005. Substantially all 2006 revenues are related to our
collaboration agreement with MedImmune, Inc. A small portion of
revenue was attributable to our collaboration agreement with the
University of Louisville. Following a review of our collaboration
agreements, we have determined that we prematurely recorded an
aggregate of $535,000 of revenue in prior quarters under our
agreement with MedImmune. An adjustment to reduce revenue by
$535,000 was made in the second quarter of 2006 to reflect properly
total revenue recorded through June 30, 2006 under this agreement.
This adjustment does not affect the cash received from MedImmune,
all of which was correctly calculated under the terms of the
agreement. * Operating expenses. Total costs and expenses from
operations increased to $5.1 million for the three months ended
June 30, 2006, compared to $3.9 million for the three months ended
June 30, 2005. This increase is primarily related to compensation
expense related to the issuance of stock options under FAS123(R),
an increase in outside services costs related to our AVN944 drug
candidate, an increase in lab supplies expense related, in part, to
our collaboration agreement with MedImmune and other expenses
directly related to operating as a public company. Total costs and
expenses from operations decreased to $10.5 million for the six
months ended June 30, 2006, compared to $12.5 million for the six
months ended June 30, 2005. This decrease was primarily
attributable to the inclusion in the prior year period of an
upfront payment of $5.0 million to Vertex Pharmaceuticals for the
in-license of AVN944. This decrease was offset by increases in
compensation expense related to the issuance of stock options under
FAS123(R), an increase in outside services costs related to our
AVN944 drug candidate, an increase in lab supplies expense related,
in part, to our collaboration agreement with MedImmune and other
expenses directly related to operating as a public company. * Net
loss was $4.4 million for the second quarter of 2006, compared to a
net loss of $4.3 million in the second quarter of 2005. For the
first six months of 2006, net loss was $9.0 million, compared to a
net loss of $13.4 million in the first six months of 2005. * Net
loss per share applicable to common stockholders during the second
quarter of 2006 was $0.44 compared to a loss of $33.56 in the
comparable quarter of last year. During the first six months of
2006, net loss per share applicable to common stockholders was
$0.94 compared to a net loss per share of $103.92 in the first six
months of 2005. As a result of the initial public offering, which
closed on October 4, 2005 -- subsequent to the end of the second
quarter of 2005, the per share loss applicable to common
stockholders for the three- and six-month periods ending June 30,
2005, does not reflect the conversion of preferred shares into
5,021,014 shares of common stock or shares of common stock that
were sold to the public. As of June 30, 2006, cash, cash
equivalents and marketable securities totaled $26.8 million. Of
this amount, $5.5 million was held in a restricted account to serve
as collateral for our long-term debt. CONFERENCE CALL & WEBCAST
INFORMATION Avalon Pharmaceuticals' senior management will host a
conference call on Wednesday, August 9, 2006, at 8:00 a.m. EDT. Dr.
Kenneth C. Carter, President and CEO, Gary Lessing, Executive Vice
President and CFO and Dr. David Bol, Vice President, Pharmaceutical
Development, will discuss the quarterly results and other corporate
activities. Live audio of the conference call will be available to
investors, members of the news media and the general public by
dialing 866-314-4865 (in the U.S.) and 617-213-8050
(internationally) and providing the participant passcode 45355581.
To access the call by live webcast, please visit the Investor
Relations section of our website at http://www.avalonrx.com/. An
archived version of the webcast will also be available through
September 30, 2006 on Avalon's website. About Avalon
Pharmaceuticals Avalon Pharmaceuticals is a biopharmaceutical
company focused on the discovery and development of small molecule
therapeutics for the treatment of cancer. Avalon seeks to discover
and develop novel therapeutics through the use of a comprehensive,
innovative and proprietary suite of technologies based upon
large-scale gene expression analysis which it calls AvalonRx(R).
This platform facilitates drug discovery by expanding the range of
therapeutic targets for drug intervention, including targets and
target pathways frequently considered intractable using
conventional HTS approaches, allows more informed decisions about
which compounds to advance towards clinical trials, and facilitates
drug development through identification of biomarkers of efficacy
that can stratify patients or provide early indicators of response.
Avalon Pharmaceuticals was established in 1999 and is headquartered
in Germantown, Maryland. This announcement contains, in addition to
historical information, certain forward-looking statements that
involve risks and uncertainties, in particular, related to progress
in our drug discovery programs and our MedImmune and Novartis
collaborations, use of the proceeds of the private placement in
future drug discovery programs, the potential to expand Avalon's
cancer pipeline, the ability to take greater advantage of the
AvalonRx(R) engine and clinical progress in the development of
AVN944. Such statements reflect the current views of Avalon
management and are based on certain assumptions. Actual results
could differ materially from those currently anticipated as a
result of a number of factors, risks and uncertainties including
the risk that the discovery programs and collaborations may not be
successful, the cancer pipeline may not be expanded, Avalon may not
be able to take greater advantage of the AvalonRx(R) engine and
AVN944 will not progress successfully in its clinical trials, and
other risks described in our SEC filings. There can be no assurance
that our development efforts will succeed, that AVN944 will receive
required regulatory clearance or, even if such regulatory clearance
is received, that any subsequent products will ultimately achieve
commercial success. The information in this Release should be read
in conjunction with the Risk Factors set forth in our 2005 Annual
Report on Form 10-K and updates contained in subsequent filings we
make with the SEC. AVALON PHARMACEUTICALS, INC. STATEMENTS OF
OPERATIONS (in thousands except for per share amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2006 2005
2006 2005 Revenues $417 $- $956 $- Costs and expenses: Research and
development 3,338 2,621 6,487 10,013 General and administrative
1,795 1,285 4,048 2,450 Total costs and expenses 5,133 3,906 10,535
12,463 Loss from operations (4,716) (3,906) (9,579) (12,463) Total
other income (expense): 287 (72) 592 (218) Net Loss $(4,429)
$(3,979) $(8,987) $(12,680) Accretion of redeemable convertible
preferred stock issuance costs - (370) - (741) Net loss attributed
to common stockholders $(4,429) $(4,349) $(8,987) $(13,421) Net
loss attributed to common stockholders per common share -- basic
and diluted $(.44) $(33.56) $(.94) $(103.92) Weighted average
number of common share -- basic and diluted 10,100,052 129,597
9,557,757 129,147 AVALON PHARMACEUTICALS, INC. BALANCE SHEETS (in
thousands) June 30, December 31, 2006 2005 (Unaudited) ASSETS Cash,
cash equivalents and marketable securities $21,283 $21,436
Restricted cash and securities 5,520 6,313 Property and equipment,
net 9,843 10,997 Other assets, net 1,934 2,536 Total assets $38,580
$41,282 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
$5,143 $5,514 Long-term liabilities 8,036 9,885 Total stockholders'
equity 25,401 25,883 Total liabilities and stockholders' equity
$38,580 $41,282 Contacts: Avalon Pharmaceuticals, Inc. Noonan Russo
Gary Lessing Wendy Lau (Media) Executive Vice President and CFO
Tel: (212) 845-4272 Tel: (301) 556-9900 Fax: (301) 556-9910 Matthew
Haines (Investors) Email: Tel: (212) 845-4235 DATASOURCE: Avalon
Pharmaceuticals, Inc. CONTACT: Gary Lessing, Executive Vice
President and CFO of Avalon Pharmaceuticals, Inc., +1-301-556-9900,
Fax: +1-301-556-9910, or email: ; or Media: Wendy Lau,
+1-212-845-4272, or Investors: Matthew Haines, +1-212-845-4235,
both of Noonan Russo, for Avalon Pharmaceuticals, Inc. Web site:
http://www.avalonrx.com/
Copyright