AVANIR Pharmaceuticals Reports Second Quarter of Fiscal Year 2005 Results.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- AVANIR Pharmaceuticals (AMEX AMEX See: American Stock Exchange :AVN AVN Aviation AVN Avenue AVN Adult Video News AVN Avascular Necrosis AVN Atrioventricular Node AVN Aviation Model (weather forecast model, now Global Forecast System) AVN Air Vanuatu (ICAO code) ) today reported financial results for the second quarter of fiscal 2005, ended March 31, 2005. AVANIR reported a net loss of $14.1 million, or $0.14 per share, compared to $6.7 million, or $0.09 per share, for the same period a year ago. Contributing to the loss in the second quarter were the Company's expenditures related to ongoing clinical development programs and a $7.2 million charge for the Company's acquisition of additional rights to the Neurodex(TM) technology. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the second quarter of fiscal 2005 were $14.8 million, compared to $7.6 million in the same period a year ago. Expenditures on research and development (R&D) programs accounted for 77% and 71% of total operating expenses for the quarters ended March 31, 2005 and 2004, respectively. R&D expenses for the second quarter of fiscal 2005 amounted to $11.4 million, compared to $5.4 million for the same period a year ago. This increase in R&D spending was principally attributable to the $7.2 million charge for the acquisition of additional rights to Neurodex, which was partially offset by lower expenditures as the Company completed its development work for Neurodex for the treatment of pseudobulbar pseudobulbar /pseu·do·bul·bar/ (-bul´bar) apparently, but not really, due to a bulbar lesion. pseu·do·bul·bar adj. Appearing to be due to a bulbar lesion. affect. The second quarter of fiscal 2005 was highlighted by: --Acquisition of additional rights to Neurodex, AVANIR's late-stage drug candidate for the treatment of multiple central nervous system disorders Nervous system disorders A satisfactory classification of diseases of the nervous system should include not only the type of reaction (congenital malformation, infection, trauma, neoplasm, vascular diseases, and degenerative, metabolic, toxic, or deficiency . As a result, AVANIR holds the exclusive worldwide marketing rights to Neurodex for five indications under a royalty-bearing license with The Center for Neurologic neurologic /neu·ro·log·ic/ (-loj´ik) pertaining to neurology or to the nervous system. Neurologic Having to do with the nervous system. Study, the owner of the underlying technology; --Receipt of a Special Protocol Assessment (SPA) from the 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. , which establishes agreement on the protocol under which AVANIR will conduct and analyze the data from the first of two planned Phase III clinical trials Noun 1. phase III clinical trial - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the evaluating the safety and efficacy of Neurodex in the treatment of painful diabetic neuropathy Diabetic Neuropathy Definition Diabetic neuropathy is a nerve disorder caused by diabetes mellitus. Diabetic neuropathy may be diffuse, affecting several parts of the body, or focal, affecting a specific nerve and part of the body. ; and --Presentation of data describing a unique activity profile for AVP-13358, AVANIR's novel orally active compound targeting IgE in the treatment of allergy allergy, hypersensitive reaction of the body tissues of certain individuals to certain substances that, in similar amounts and circumstances, are innocuous to other persons. Allergens, or allergy-causing substances, can be airborne substances (e.g. and asthma asthma (ăz`mə, ăs`–), chronic inflammatory respiratory disease characterized by periodic attacks of wheezing, shortness of breath, and a tight feeling in the chest. A cough producing sticky mucus is symptomatic. at the 2005 national meeting of the American Academy The American Academy in Berlin is a non-partisan academic institution in Berlin. It was founded in September 1994 by a group of prominent Americans and Germans, among them Richard Holbrooke, Henry Kissinger, Richard von Weizsäcker, Fritz Stern and Otto Graf Lambsdorff and opened in of Allergy, Asthma and Immunology immunology, branch of medicine that studies the response of organisms to foreign substances, e.g., viruses, bacteria, and bacterial toxins (see immunity). Immunologists study the tissues and organs of the immune system (bone marrow, spleen, tonsils, thymus, lymphatic (AAAAI AAAAI American Academy of Allergy Asthma and Immunology ). A comparison of R&D spending by program is shown in the table that follows.
RESEARCH AND DEVELOPMENT PROGRAM EXPENSES
----------------------------------------------------------------------
Second Fiscal Quarter Ended
-------------------------------
March 31, 2005 March 31, 2004
--------------- ---------------
Amount Percent Amount Percent
(Mils.) (Mils.)
------- ------- ------- -------
Develop Neurodex for the treatment of
PBA (1) $7.4 65% $2.4 44%
Develop Neurodex for neuropathic
pain(1) 1.8 16% 0.5 9%
Development program for allergy and
asthma (IgE regulator) 0.5 4% 0.9 17%
Preclinical atherosclerosis research
program 0.7 6% 0.3 6%
Other preclinical research, including
potential treatments for inflammation
and infectious diseases 1.0 9% 1.3 24%
------- ------- ------- -------
Total $11.4 100% $5.4 100%
======= ======= ======= =======
(1) Includes aggregate charge of $7.2 million in quarter ended
March 31, 2005 for acquisition of additional rights to
Neurodex.
Revenues of $645,000 for the second quarter of fiscal 2005 included $420,000 in revenues that the Company recognized from the sale of Abreva(R) royalty rights, $100,000 from research contracts and licenses and $125,000 from government research grants. Revenues in the second quarter of fiscal 2004 amounted to $856,000 and included $268,000 in revenues from research contracts and licenses, $345,000 in revenues recognized from the sale of Abreva(R) royalty rights, and $241,000 from government research grants. Balance sheet highlights As of March 31, 2005, AVANIR had cash, cash equivalents, and investments in securities totaling $17.0 million, compared to $25.9 million as of September September: see month. 30, 2004. Net working capital balance was $7.1 million, deferred revenue was $20.0 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $1.6 million as of March 31, 2005. In April 2005, AVANIR completed an offering of 7,770,000 shares of Class A common stock, resulting in net offering proceeds of $15.8 million. The stock offering proceeds are not reflected in the second fiscal quarter results. Fiscal Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Net loss for the six months ended March 31, 2005 was $21.1 million, or $0.22 per share, compared to a net loss of $13.0 million, or $0.18 per share, for the same period a year ago. Total operating expenses for the first half of fiscal 2005 were $22.8 million, compared to $15.4 million in the same period a year ago. The 48% increase in operating expenses was primarily due to R&D programs and the $7.2 million charge in connection with the acquisition of additional rights to the Neurodex technology. Expenditures on R&D programs accounted for 72% and 70% of total operating expenses for the six months ended March 31, 2005 and 2004, respectively. R&D expenses for the first half of fiscal 2005 amounted to $16.5 million, compared to $10.7 million for the same period a year ago. A breakdown of major R&D spending for the six-month periods ended March 31, 2005 and 2004 is as follows:
RESEARCH AND DEVELOPMENT PROGRAM EXPENSES
----------------------------------------------------------------------
Six Months Ended
-------------------------------
March 31, 2005 March 31, 2004
--------------- ---------------
Amount Percent Amount Percent
(Mils.) (Mils.)
------- ------- ------- -------
Develop Neurodex for the treatment of
PBA (1) $9.6 58% $4.2 39%
Develop Neurodex for neuropathic
pain(1) 2.0 12% 1.1 10%
Development program for allergy and
asthma (IgE regulator) 1.2 7% 1.9 18%
Preclinical atherosclerosis research
program 1.8 11% 0.5 5%
Other preclinical research, including
potential treatments for inflammation
and infectious diseases 1.9 12% 3.0 28%
------- ------- ------- -------
Total $16.5 100% $10.7 100%
======= ======= ======= =======
(1) Includes aggregate charge of $7.2 million in the six months
ended March 31, 2005 for acquisition of additional rights to
Neurodex.
Revenues of $1.5 million for the first half of fiscal 2005 included $928,000 in revenues that the Company recognized from the sale of Abreva(R) royalty rights, $300,000 in revenues relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc achievement of milestones under the ACO ACO Aircraft Certification Office (FAA) ACO Ant Colony Optimization ACO Automobile Club de l'Ouest (Le Mans racing governing body) ACO Australian Chamber Orchestra (Sydney, Australia) HUD Hud (h  d), a pre-Qur'anic prophet of Islam. Hud unsuccessfully exhorted his South Arabian people, the Ad, to worship the One God. license agreement for docosanel 10%
cream, and $286,000 from government research grants. Revenues in the
first half of fiscal 2004 amounted to $2.4 million, which included
$271,000 in revenues from research contracts and licenses, $881,000 in
revenues recognized from the sale of Abreva royalty rights, and $440,000
from government research grants.Conference Call and Webcast Management will host a conference call with a simultaneous webcast on May 16, 2005 at 1:30 Pacific/4:30 Eastern to discuss second quarter of fiscal 2005 operating performance. The call/webcast will feature President and Chief Executive Officer Gerald J. Yakatan, Ph.D., and Vice President and Chief Financial Officer Gregory P. Hanson, CMA CMA - Concert Multithread Architecture from DEC. . The webcast will be available live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by accessing AVANIR's web site at www.avanir.com. Please go to the web site at least ten minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. Replays of the webcast will be available for 90 days, and a phone replay will be available through May 23, 2005 by dialing 888-266-2081 (domestic) and 703-925-2533 (international) and entering the passcode 703112. The Company AVANIR Pharmaceuticals is a drug discovery and development company focused on developing and commercializing novel therapeutic products for the treatment of chronic diseases. Our product candidates address therapeutic markets that include central nervous system and cardiovascular cardiovascular /car·dio·vas·cu·lar/ (-vas´ku-ler) pertaining to the heart and blood vessels. car·di·o·vas·cu·lar adj. Abbr. disorders, inflammation inflammation, reaction of the body to injury or to infectious, allergic, or chemical irritation. The symptoms are redness, swelling, heat, and pain resulting from dilation of the blood vessels in the affected part with loss of plasma and leucocytes (white blood , and infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. . The Company's first commercialized product, Abreva, is marketed in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. by GlaxoSmithKline Consumer Healthcare and is the leading over-the-counter product for the treatment of cold sores cold sore: see herpes simplex. . Further information about AVANIR can be found at www.avanir.com. Except for the historical information presented herein, matters discussed in this press release contain 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. that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Statements that are not historical facts, including statements that are preceded by, followed by, or that include such words like "estimate," "anticipate," "believe," "intend," "plan," or "expect" or similar statements are forward-looking statements. In regard to financial projections, risks and uncertainties include risks associated with milestones and royalties earned from licensees, and results of clinical trials or product development efforts, as well as risks shown in the Company'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. and from time-to-time in other publicly available information regarding the Company. Copies of such information are available from AVANIR upon request. Such publicly available information sets forth many risks and uncertainties related to AVANIR's business and technology. The company disclaims any intent or obligation to update these forward-looking statements.
AVANIR PHARMACEUTICALS
Summary Consolidated Financial Information (Unaudited)
Three months ended Six months ended
March 31, March 31,
-------------------------- ---------------------------
2005 2004 2005 2004
------------- ------------ ------------- -------------
Revenues $644,733 $855,837 $1,533,098 $2,365,482
Operating
expenses:
Research and
development 11,428,170 5,372,641 16,482,411 10,742,129
General and
administrative 1,973,792 1,510,332 3,825,967 2,912,423
Sales and
marketing 1,398,391 722,086 2,497,219 1,580,597
Cost of product
sales -- -- 3,102 210,090
------------- ------------ ------------- -------------
Total
operating
expenses 14,800,353 7,605,059 22,808,699 15,445,239
------------- ------------ ------------- -------------
Loss from
operations (14,155,620) (6,749,222) (21,275,601) (13,079,757)
Interest income 125,147 56,726 246,979 112,268
Interest
expense (25,324) (9,719) (46,945) (20,527)
Other income
(expense), net 4,850 11,722 (62,071) 19,369
------------- ------------ ------------- -------------
Loss before
income taxes (14,050,947) (6,690,493) (21,137,638) (12,968,647)
Provision for
income taxes -- (62) (1,898) (2,120)
------------- ------------ ------------- -------------
Net loss $(14,050,947) $(6,690,555) $(21,139,536) $(12,970,767)
============= ============ ============= =============
Net loss per
share:
Basic and
diluted $(0.14) $(0.09) $(0.22) $(0.18)
============= ============ ============= =============
Weighted average
number of
common shares
outstanding:
Basic and
diluted 98,262,726 71,285,690 97,044,095 71,248,769
============= ============ ============= =============
Consolidated Balance Sheet Data: March 31, September 30,
2005 2004
------------------------------------------ ------------- -------------
Cash and cash equivalents $8,206,486 $13,494,083
Short-term, long-term and restricted
investments in securities 8,759,526 12,412,446
------------- -------------
Total cash and investments $16,966,012 $25,906,529
============= =============
Net working capital $7,082,454 $16,653,621
Total assets $28,849,859 $37,403,953
Deferred revenue $19,980,970 $21,009,115
Total liabilities $27,290,767 $27,206,694
Shareholders' equity $1,559,092 $10,197,259
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