Connetics Reports Second Quarter Results.PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BUSINESS WIRE)--July 28, 1998--Connetics Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CNCT CNCT Connect CNCT Certified Network Computer Technician ) today reported financial results for the second quarter ended June 30, 1998. The net loss for the second quarter of 1998 was $9.0 million or ($0.54) per share, which included a $4 million one-time charge for the license of gamma interferon. Excluding the charge for gamma interferon the net loss was $5.0 million or $(0.30) per share, compared to a net loss of $8.8 million, or ($0.88) per share, for the second quarter of 1997. The Company recorded second quarter revenues of $1.7 million from product sales of RIDAURA(R), a treatment for rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , as compared to $1.6 million for the second quarter of 1997 ($1.5 million on an adjusted basis to reflect the December 1997 disposition of RIDAURA rights in Canada). The Company also recorded $1.6 million in licensing revenue in connection with an agreement with Suntory Pharmaceuticals for CONXN(R). As of June 30, 1998, Connetics had $17.6 million in cash and short-term investments. "We continue to make significant progress executing our business plan despite a difficult financial market for the biotech sector," stated Thomas G. Wiggans, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "This progress was reflected in the second quarter by Connetics' $14 million relaxin re·lax·in n. A female hormone secreted by the corpus luteum that helps soften the cervix and relax the pelvic ligaments in childbirth. relaxin, n license agreement for Japan, growth in RIDAURA revenue, license of ACTIMMUNE(R), and completion of a $10 million financing. Our LUXIQ(tm) ViaFoam product is pending approval by 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. , and we expect to begin our Phase III relaxin trial for scleroderma scleroderma or progressive systemic sclerosis Chronic disease that hardens the skin and fixes it to underlying structures. Swelling and collagen buildup lead to loss of elasticity. The cause is unknown. soon. We look forward to a strong second half of 1998 for Connetics." In April, Connetics entered into a development, commercialization, and supply agreement with Suntory Pharmaceuticals, a division of Suntory Limited, of Osaka Japan, for CONXN (recombinant human relaxin-H2) for the treatment of scleroderma. Under the terms of the agreement, Suntory will pay approximately $14 million (approximately JP(Y) 1.7 billion) in license fees and milestone payments based upon development progress in the U.S. and Japan. Suntory will be responsible for all development and commercialization expenses in Japan and will pay royalties on sales in Japan for the treatment of scleroderma. To date, Suntory has paid a license fee of approximately $1.6 million. In addition, Suntory will purchase relaxin materials from Connetics. Connetics has retained rights to all other indications in Japan and all ex-Japan rights for CONXN. Also in April, Connetics raised $10 million through a self-managed private placement consisting of the Company's sale of 2,162,163 shares of unregistered common stock. The shares in the offering were sold to Alta BioPharma Partners, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control of San Francisco. In May, Connetics licensed U.S. marketing rights to ACTIMMUNE (interferon gamma-1b interferon gamma-1b Actimmune Pharmacologic class: Biological response modifier Therapeutic class: Antineoplastic Pregnancy risk category C Action) from Genentech, Inc., for the management of CGD CGD Chronic granulomatous disease, see there (chronic granulomatous disease Chronic Granulomatous Disease DefinitionChronic granulomatous disease (CGD) is an inherited disorder in which white blood cells lose their ability to destroy certain bacteria and fungi. ) and U.S. development and commercialization rights for other indications of gamma interferon. ACTIMMUNE is currently marketed for the management of CGD in the U.S. (generating net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for Genentech of $3.5 million in 1997). Connetics, through a subsidiary company, will assume the revenue stream from ACTIMMUNE and conduct additional clinical development in the licensed fields. Under the terms of the agreement, Genentech will continue to manufacture the product. Connetics has paid Genentech $4 million in common stock and will pay certain development and commercialization milestones, and royalties on sales. In July, after the close of the second quarter, Connetics announced the initiation of a Phase III trial of Clobetasol ViaFoam, a foam formulation of clobetasol propionate clobetasol propionate (klōbā´t  sol´ prō´pē for the treatment of severe
corticosteroid-responsive dermatoses of the scalp. The Phase III trial
is a multicenter, randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. , double-blind study double-blind study, n experimental technique in clinical research in which neither the researcher nor the patient knows whether the treatment administered is considered inactive (placebo) or active (medicinal). of approximately 190 scalp psoriasis patients which will compare Clobetasol ViaFoam to a currently approved clobetasol solution and to placebo during a two week treatment regimen. Primary endpoints include changes in the clinical signs of psoriasis: plaque thickness, scaling, erythema erythema (ĕr'əthē`mə), more or less diffuse redness of the skin due to concentration of an abnormally large amount of blood within the small vessels of the skin (hyperemia), as in burns. (redness), and global response to treatment as judged by the investigator. Decreases in itching and the patient's assessment of improvement will also be evaluated. Connetics Corporation, headquartered in Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. , is focused on the acquisition, development and commercialization of marketed and late-stage development products. Connetics currently markets RIDAURA (auranofin), a treatment for rheumatoid arthritis. Several products are under development including LUXIQ, and Clobetasol ViaFoam formulations, for the treatment of certain dermatological indications; CONXN (recombinant human relaxin-H2) for the treatment of certain rheumatologic and fibrotic diseases; gamma interferon for the treatment of certain congenital, infectious, and other diseases; and TCR TCR T cell receptor. vaccines for the treatment of certain autoimmune diseases Autoimmune diseases A group of diseases, like rheumatoid arthritis and systemic lupus erythematosus, in which immune cells turn on the body, attacking various tissues and organs. Mentioned in: Complement Deficiencies, Premature Menopause . The second paragraph of this news release contains forward-looking statements that invol ve risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval. These and other factors are discussed in more depth in Connetics' 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, 1997, under the heading, "Additional Factors That May Affect Future Results", and the Company's other filings with the SEC. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements.
CONNETICS CORPORATION
Condensed Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
Revenues: 1998 1997 1998 1997
--------- --------- --------- ---------
Product $ 1,652 $1,594 $ 3,171 $ 3,047
License 1,648 -- 1,648 --
Operating expenses:
Cost of product
sales 312 257 607 483
License amortization 1,680 1,781 3,360 3,562
Research and
development 7,105 (a) 5,732 9,283 10,897
Selling, general
and administrative 3,043 2,419 5,505 4,040
--------- --------- --------- ---------
Total operating
expenses 12,140 10,189 18,755 18,982
Interest income 234 234 411 469
Interest expense (345) (443) (739) (895)
--------- --------- --------- ---------
Net loss $(8,951) $(8,804) $(14,264) $ 16,361)
========= ========= ========= =========
Net loss per share $(0.54) $(0.88) $ (0.95) $ (1.72)
========= ========= ========= =========
Shares used
to calculate
net loss
per share 6,671,968 10,008,838 15,080,685 9,543,209
========= ========== ========== =========
(a) Includes $4 million one-time charge for license of gamma
interferon
Condensed Balance Sheets
(In thousands)
June 30, December 31,
1998 1997
------- -------
(Unaudited)
Assets
Assets:
Cash and short-term investments $17,586 $14,346
Accounts receivable
and other current assets 573 1,685
Property and equipment, net 1,327 1,663
Long-term assets 9,994 13,374
------- -------
Total assets $29,480 $31,068
------- -------
Liabilities and
Stockholders' Equity
Liabilities and
stockholders' equity:
Current liabilities $11,823 $ 9,344
Other liabilities 6,223 10,915
Stockholders' equity 11,434 10,809
------- -------
Total liabilities and
stockholders' equity $29,480 $31,068
------- -------
CONTACT: Connetics Corporation John L. Higgins VP, Finance & Administration Chief Financial Officer 415-843-2800 |
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