ARIAD Reports Fourth Quarter and Year-End 2002 Results; Increased Cancer Product Focus and Cost Reductions Also Announced.Business Editors/Health/Medical Writers BIOWIRE2K CAMBRIDGE, Mass.--(BUSINESS WIRE)--March 11, 2003 ARIAD ARIAD Allison Research Index of Art and Design Pharmaceuticals, Inc. (Nasdaq: ARIA) today announced results for the fourth quarter and the year ended December 31, 2002. Financial Highlights Due primarily to R&D expenses related to advancing the Company's portfolio of product candidates to treat cancer, the Company reported a net loss of $6.8 million or $0.20 per share for the fourth quarter of 2002 as compared to a net loss of $6.1 million or $0.20 per share for the same period in 2001. For the year ended December 31, 2002, the Company reported a net loss of $27.8 million or $0.86 per share as compared to $19.8 million or $0.68 per share for the year ended December 31, 2001. At December 31, 2002, the Company reported cash, cash equivalents and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of $26.9 million and working capital of $21.1 million, compared to cash, cash equivalents and marketable securities of $47.2 million and working capital of $42.8 million, at December 31, 2001. Prioritized Product Development Programs and Decreased Expenditures ARIAD also announced today that it will focus its resources primarily on developing its three lead anti-cancer small-molecule product candidates - AP23573, which is in phase 1 development, to treat solid tumors and other malignancies, AP23464 to block the spread of cancer (metastases Metastasis (plural, metastases) A tumor growth or deposit that has spread via lymph or blood to an area of the body remote from the primary tumor. Mentioned in: Malignant Melanoma ) and to treat certain forms of leukemia leukemia (l  kē`mēə), cancerous disorder of the blood-forming tissues (bone marrow, lymphatics, liver, spleen) characterized by excessive production of immature or mature , and AP23841
to treat cancer that has spread to bone (bone metastases bone metastases Oncology Cancer that has spread from a primary tumor to the bone ) and to treat
primary bone cancers (e.g., osteogenic sarcoma osteogenic sarcoman. See osteosarcoma. ). The Company has extended the development timelines for its regulated gene and cellular therapy product candidates for graft-vs-host disease and anemia so that vector manufacturing challenges may be addressed. These product portfolio management decisions, along with the implementation of additional cost-saving measures, will enable ARIAD to reduce its workforce by 20% and its cash burn rate for the full year 2003 by approximately 33% to $18 million (compared with a burn rate of $26.5 million in 2002). This estimate does not take into account any revenues that may be generated from product partnering initiatives now underway. "By strategically narrowing our corporate focus on development programs in cancer therapeutics, we have reduced our dependence on equity capital during one of the most severe and prolonged bear markets," said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. "We are now fully devoted to developing those product candidates which we believe represent our most valuable commercial opportunities and to generating revenues through product partnering and intellectual property licensing, such as our NF-(kappa Kappa Used in regression analysis, Kappa represents the ratio of the dollar price change in the price of an option to a 1% change in the expected price volatility. Notes: Remember, the price of the option increases simultaneously with the volatility. )B and ARGENT ar·gent n. 1. Heraldry The metal silver, represented by the color white. 2. Archaic Silver or something resembling it. (TM) cell-signaling technologies." Other Corporate Highlights The most important development during the year 2002 for ARIAD was the emergence of cancer therapeutics as its primary product development focus. Three small-molecule lead product candidates having novel mechanisms of action were advanced by the Company. The AP23573 and AP23841 class of drugs, known as mTOR inhibitors, starves cancer cells cells once believed to be peculiar to cancers, but now know to be epithelial cells differing in no respect from those found elsewhere in the body, and distinguished only by peculiarity of location and grouping. See also: Cancer by inhibiting nutrient uptake (metabolic arrest) and growth factor stimulation. AP23464, a Src/Abl inhibitor, blocks the process by which certain solid tumors migrate from primary to distant sites; it also inhibits a key enzyme that is abnormally active in forms of leukemia. All three product candidates demonstrate highly potent targeted anti-cancer activity. Equally important, these product candidates represent a comprehensive approach to treating cancer that addresses the greatest need - novel therapies for patients with aggressive and advanced-staged disease for whom current treatments are inadequate or ineffective. By the end of the fourth quarter of 2002, a key corporate milestone was achieved as projected. An Investigational New Drug application (IND) was filed with the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) in support of initiating Phase 1 clinical trials phase 1 clinical trial Phase 1 study. See Phase study. of AP23573. Dosing of patients with refractory refractory Material that is not deformed or damaged by high temperatures, used to make crucibles, incinerators, insulation, and furnaces, particularly metallurgical furnaces. or advanced cancers will begin shortly in the first of two clinical trials at major cancer centers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . AP23573 can also be used to block the migration and proliferation proliferation /pro·lif·er·a·tion/ (pro-lif?er-a´shun) the reproduction or multiplication of similar forms, especially of cells.prolif´erativeprolif´erous pro·lif·er·a·tion n. of vascular smooth muscle Vascular smooth muscle refers to the particular type of smooth muscle found within, and composing the majority of the wall of blood vessels. Vascular smooth muscle contracts or relaxes to both change the volume of blood vessels and the local blood pressure, a mechanism that cells - the primary cause of narrowing and blockage blockage of intestine, urethra, etc. See obstruction under anatomical location, e.g. intestinal, urethral. blockage Wax, see there of coronary and peripheral arteries Peripheral Arteries are the arteries (specifically arterioles and capillaries) which are furthest from the heart (mouth, hands, and feet). In some cases blockages in the peripheral arteries may be treated with catheterization and balloon dilatation instead of surgery. . With the advent of a newly emerging medical technology - drug-delivery stents to reduce reblockage of injured arteries following angioplasty angioplasty (ăn`jēōplăs'tē), any surgical repair of a blood vessel, especially balloon angioplasty or percutaneous transluminal coronary angioplasty, a treatment of coronary artery disease. and stenting - active discussions have been initiated with potential medical device partners that may open up this second clinical and commercial opportunity for AP23573 delivered in vascular stents. Total Year 2002 Financial Overview For the year ended December 31, 2002, the Company reported a net loss of $27.8 million, or $.86 per share, compared to a net loss of $19.8 million, or $.68 per share, for the prior year. R&D expenses for the year ended December 31, 2002 increased to $23.0 million, or 39.0%, from $16.6 million for 2001 due primarily to greater product development and manufacturing costs in support of the Company's IND for AP23573 filed with the FDA in December 2002. General and administrative expenses for 2002 increased to $5.7 million, or 28.0%, from $4.5 million for 2001 due primarily to increased professional and legal expenses and increased personnel and other general expenses. Net interest income for the year ended December 31, 2002, decreased to $826,000 from $1.3 million for 2001 primarily as a result of declining interest rates. Fourth Quarter 2002 Financial Overview For the quarter ended December 31, 2002, the Company incurred a net loss of $6.8 million, or $0.20 per share, compared to a net loss of $6.1 million, or $0.20 per share for the quarter ended December 31, 2001. R&D expenses increased to $5.4 million, or 4.0%, from $5.2 million in the comparable year-ago quarter primarily due to the product development and manufacturing costs for AP23573 in support of its IND filing. General and administrative expenses increased to $1.5 million, or 30.0%, from $1.2 million in the comparable year-ago quarter. Net interest income for the fourth quarter of 2002 decreased to $26,000 from $196,000 reported in the comparable year-ago quarter primarily as a result of declining interest rates and a lower level of invested funds. ARIAD is engaged in the discovery and development of breakthrough medicines that regulate cell signaling Cell signaling is part of a complex system of communication that governs basic cellular activities and coordinates cell actions. The ability of cells to perceive and correctly respond to their microenvironment is the basis of development, tissue repair, and immunity as well as with small molecules. The Company is developing a comprehensive approach to the treatment of cancer and is primarily focused on a series of product candidates for targeted oncology indications. ARIAD also has an exclusive license to pioneering technology and patents related to the discovery, development and use of drugs that regulate NF-(kappa)B cell-signaling activity, which has been implicated im·pli·cate tr.v. im·pli·cat·ed, im·pli·cat·ing, im·pli·cates 1. To involve or connect intimately or incriminatingly: evidence that implicates others in the plot. 2. in many major diseases. Additional information about ARIAD can be found on the web at http://www.ariad.com. Some of the matters discussed herein are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements are identified by the use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such statements are based on management's current expectations and are subject to certain factors, risks and uncertainties that may cause actual results, outcome of events, timing and performance to differ materially from those expressed or implied by such forward-looking statements. These risks include, but are not limited to, risks and uncertainties regarding the Company's ability to conduct preclinical and clinical studies of its product candidates and the results of such studies, regulatory oversight, intellectual property claims, the timing, scope, cost and outcome of legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , future capital needs, key employees, dependence on the Company's collaborators and manufacturers, markets, economic conditions, products, services, prices, reimbursement rates, competition and other risks detailed in the Company's public filings with the Securities and Exchange Commission, including ARIAD's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2001. The information contained in this document is believed to be current as of the date of original issue. The Company does not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in the Company's expectations, except as required by law.
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except
share and Per share Three Months Ended Year Ended
data December 31, December 31,
2002 2001 2002 2001
(Unaudited)
Total research revenue $ 42 $ 1 $ 67 $ 4
Operating expenses:
Research and development 5,376 5,183 23,018 16,587
General and
administrative 1,506 1,155 5,718 4,469
Total operating
expenses 6,882 6,338 28,736 21,056
Interest income, net 26 196 826 1,293
Net loss $(6,814) $ (6,141) $ (27,843) $ (19,759)
Net loss per common share
basic and diluted $ (.20) $ (.20) $ (.86) $ (.68)
Weighted average number of
shares of common stock
outstanding basic and
diluted 33,744,085 27,261,520 29,256,767 25,875,663
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
December 31, December 31,
2002 2001
Cash, cash equivalents and marketable
securities $ 26,850 $ 47,186
Total assets $ 35,104 $ 55,361
Total liabilities $ 13,252 $ 12,268
Stockholders' equity $ 21,852 $ 43,093
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