Inhibitex Reports Fourth Quarter and 2006 Fiscal Year Financial Results.Net Cash Burn Expected to Significantly Narrow in 2007 ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Inhibitex, Inc. (Nasdaq: INHX) today announced its financial results for the fourth quarter and twelve months ended December December: see month. 31, 2006. The Company reported that it held $61.4 million in cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments as of December 31, 2006. "In 2006, we began a transformation of Inhibitex - a transformation we look forward to completing in 2007," stated Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. H. Plumb, president and chief executive officer. "We remain focused on broadening our development pipeline through in-licensing, acquisition or merger activities. To implement this strategy, we have significantly cut our net cash burn rate and expect to maintain a solid cash position as we appraise appraise v. to professionally evaluate the value of property including real estate, jewelry, antique furniture, securities, or in certain cases the loss of value (or cost of replacement) due to damage. these opportunities. We also intend to continue to seek ways to further leverage or monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. our MSCRAMM MSCRAMM Microbial Surface Components Recognizing Adhesive Matrix Molecules platform and related intellectual property, which we have already demonstrated in 2007 with our recent agreement with the 3M Company for the development of diagnostic products." The Company reported that its net loss for the fourth quarter of 2006 was $11.9 million, as compared to $9.5 million in the same period of 2005. The increase in net loss was principally due to charges of $9.1 million recorded in the fourth quarter of 2006 as outlined below, of which $5.3 million were recorded as research and development expense and $3.8 million as general and administrative expense. The fourth quarter charges consisted of a reserve of $3.2 million related to an unfavorable decision by an arbitrator arbitrator n. one who conducts an arbitration, and serves as a judge who conducts a "mini-trial," somewhat less formally than a court trial. In most cases the arbitraror is an attorney, either alone or as part of a panel. in an action brought against the Company by Nabi Biopharmaceuticals ("Nabi") relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the termination of a contract manufacturing agreement, $1.6 million for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and termination obligations payable to former employees and $1.0 million associated with expenses incurred in connection with merger and acquisition activities. In addition, the Company recorded non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. in the fourth quarter totaling $3.3 million, $2.8 million of which related to the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of certain leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. and laboratory equipment and $0.5 million of which related to the acceleration of share-based compensation expense due to the termination of certain employees. These charges were offset by a significant decrease in clinical trial expenses and other research and development expenditures and a decrease in other ongoing general and administrative expenses. For the twelve months ended December 31, 2006, net loss was $31.1 million, as compared to $38.6 million for the same period in 2005. The reduction in net loss in 2006 was due to a significant decrease in research and development expenditures and an increase in interest and other income, offset in part by the $9.1 million of charges recorded in the fourth quarter of 2006 as outlined above and increases in other general and administrative expenses. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share was $0.39 for the fourth quarter of 2006, as compared to $0.31 per share for the same period in 2005. This increase in net loss per share for the quarter was due to the increase in net loss as described above. For the twelve months ended December 31, 2006, basic and diluted net loss per share was $1.03, as compared to $1.43 for the same period in 2005. The reduction in net loss per share in 2006 was due principally to the reduction in net loss for the year as described above and, to a lesser extent, an increase in the number of weighted-average shares of common stock outstanding, which was a result of shares issued in connection with a financing the Company completed in August 2005. Revenue for the fourth quarter of 2006 was $164,000, as compared to $163,000 for the same period in 2005. For the twelve months ended December 31, 2006, revenue was $846,000, as compared to $936,000 for the same period in 2005. The small decrease in revenue in 2006 as compared to 2005 was the result of higher proceeds received in 2005 from research activities performed under a materials transfer agreement. Research and development expense for the fourth quarter of 2006 was $7.4 million, as compared to $8.3 million for the same period in 2005. This decrease of $0.9 million was largely the result of a $3.9 million decrease in direct clinical trial expenses, the vast majority of which were associated with the Company's Phase III Noun 1. phase III - 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 FDA Veronate([R]) clinical trial, a $1.0 million decrease in salaries, benefits, and share-based compensation expense and decreases in other expenses of $0.6 million, offset by a $2.5 million increase in expenditures for the manufacturing of clinical trial materials, which was the result of the Company recording a reserve in 2006 based upon the unfavorable results of an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the proceeding with Nabi, a $1.4 million non-cash impairment charge related to leasehold improvements and laboratory equipment at the Company's laboratory facilities, and $0.7 million associated with the recognition of severance and termination obligations and the acceleration of share-based compensation expense related to terminated employees. For the twelve months ended December 31, 2006, research and development expense decreased to $23.4 million from $34.5 million in 2005. This decrease of $11.1 million resulted primarily from an $11.2 million decrease in direct clinical trial expenses, the vast majority of which was associated with the Company's Phase III Veronate trial, a $0.4 million decrease in expenses related to the manufacturing of clinical trial material, a $1.1 million decrease in salaries and benefits as well as decreases in other expenses of $0.8 million, offset in part by a $1.7 million increase in depreciation and facility expense, of which $1.4 million was the result of a non-cash impairment charge related to the Company's laboratory facilities, and a $0.7 million increase in salaries, benefits and share-based compensation expense related to the recognition of severance and termination obligations and the acceleration of share-based compensation expense related to terminated employees. General and administrative expense increased to $5.4 million for the fourth quarter of 2006, as compared to $2.2 million for the same period in 2005. The increase of $3.2 million was primarily due to a $1.4 million increase in salaries, benefits, and share-based compensation expense principally associated with severance and termination benefits and the acceleration of share-based compensation expense related to terminated employees, a $1.4 million increase in depreciation and facility-related expense as the result of an impairment charge related to leasehold improvements and furniture at the Company's corporate offices, and an increase of $1.0 million in professional fees incurred in connection with merger and acquisition activities that were expensed in the fourth quarter of 2006, offset by decreases in other expenses of $0.6 million. For the twelve months ended December 31, 2006, general and administrative expense increased to $12.8 million from $7.4 million in 2005. The increase of $5.4 million was primarily due to a $2.3 million increase in salaries, benefits, and share-based compensation, of which $1.5 million was related to severance and termination benefits and the acceleration of share-based compensation recorded during the fourth quarter, and $0.8 million was primarily the result of higher share-based compensation expense related to the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123(R) in 2006. In addition, professional and legal fees and market research expenses increased $1.6 million, of which $1.0 million was recorded in the fourth quarter of 2006 in connection with merger and acquisition activities, and depreciation and facility-related expense increased $1.6 million, of which $1.4 million was associated with an impairment charge recorded during the fourth quarter of 2006 related to leasehold improvements and furniture at the Company's corporate offices, offset by decreases in other expenses of $0.1 million. The Company recorded total share-based compensation expense of $1.2 million, or $0.04 per share, in the fourth quarter of 2006, of which $0.5 million was recorded as research and development expense and $0.7 million was recorded as general and administrative expense. Of the $1.2 million, $0.5 million related to the acceleration of share-based compensation expense due to the termination of certain employees. For the twelve months ended December 31, 2006, the Company recorded total share-based compensation expense of $2.6 million, or $0.09 per share, of which $1.1 million was recorded as research and development expense and $1.5 million was recorded as general and administrative expense. Share-based compensation expense in 2006 was recorded pursuant to SFAS 123(R), which the Company adopted on January January: see month. 1, 2006. Other income for the twelve months ended December 31, 2006 increased by $1.1 million in 2006 from 2005 as a result of the recognition of previously deferred liability for which the obligation of the Company to provide further services or settlement expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. during 2006. Financial Guidance As of December 31, 2006, the Company reported a balance of cash, cash equivalents and short-term investments of $61.4 million, which met its previously provided financial guidance. Based on its current operating plan, and subject to the financial or operational impact of any in-licensing, acquisition or merger transaction that it may enter into or a change in its strategy during 2007, the Company anticipates that its net cash burn for 2007 will be less than $11 million. This amount includes an anticipated reduction in accounts payable and accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. of approximately $7 million to satisfy certain accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. , scheduled severance and termination obligations and amounts currently reserved for cancellation payments due to Nabi, and approximately $1.5 million related to the repayment of existing debt and capital leases during the year. Recent Corporate Developments The Company reported that on February 7, 2007 an arbitrator ruled that it was liable to Nabi for cancellation payments and restitution In the context of Criminal Law, state programs under which an offender is required, as a condition of his or her sentence, to repay money or donate services to the victim or society; with respect to maritime law, the restoration of articles lost by jettison, done when the in the aggregate amount of approximately $4.5 million as a result of the Company's termination of a contract manufacturing agreement with Nabi during 2006. Of this amount, the Company recorded a charge of $3.2 million in the fourth quarter of 2006 in addition to a $1.3 million charge that it had previously reserved for in the second quarter of 2006. The ruling obligates the Company to make this payment to Nabi within 30 days of the arbitrator's decision, or incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. interest at a rate of 9% per annum Per annum Yearly. . The Company is evaluating all of its options in this matter, including whether to seek to have the ruling set aside. On January 4, 2007 the Company announced that it had entered into a license and commercialization agreement with the 3M Company ("3M") for the development of various diagnostic products using the Company's MSCRAMM protein platform. Under the terms of the agreement, Inhibitex granted 3M an exclusive global license to use its MSCRAMM protein platform for the development of certain diagnostic products in exchange for license fees, future milestone payments, financial support of research and development activities and royalty payments, $4.0 million of which the Company expects to realize over the next two years. On December 22, 2006 the Company announced that its Board of Directors had appointed Russell H. Plumb to succeed William D. Johnston, Ph.D. as President and Chief Executive Officer effective December 30, 2006. On June 29, 2006, the Company announced plans to pursue clinical development opportunities beyond its MSCRAMM platform through in-licensing, acquisition or merger activities in order to expand its development pipeline. The Company indicated that it intended to preserve its cash resources to implement this plan by delaying the initiation of planned clinical trials for Aurexis and seeking corporate partners that could provide financial and other synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. capabilities to support the development and maximize its potential and the potential of its other MSCRAMM programs. Conference Call and Webcast Information Russell H. Plumb, president and chief executive officer, and other members of the Inhibitex senior management team will review fourth quarter and 2006 results and provide a general update on the Company via a webcast and conference call today at 8:30 a.m. ET. To access the call, please dial (866) 510-0704 (domestic) or (617) 597-5362 (international) five minutes prior to the start time, and provide the access code 42957606. A replay of the call will be available from 10:30 a.m. ET on March 8, 2007 until April 7, 2007 at midnight. To access the replay, please call (888) 286-8010 (domestic) or (617) 801-6888 (international) and reference the access code 46571469. A live audio webcast of the call will also be available on the "Investors" section of the Company's website, www.inhibitex.com. An archived webcast will be available in the Investors section of the Inhibitex website approximately two hours after the event for a period of thirty (30) days. About Inhibitex Inhibitex, Inc. is a biopharmaceutical company focused on the discovery, development and commercialization of anti-infective an·ti-in·fec·tive adj. Capable of preventing or counteracting infection. n. An anti-infective agent or drug. anti-infective 1. counteracting infection. 2. a substance that counteracts infection. products for the diagnosis, prevention and treatment of serious infections. The Company is focused on broadening its pipeline by supplementing its proprietary MSCRAMM technology through in-licensing, acquisition or merger. The Company's current pipeline consists of Aurexis([R]), a clinical-stage humanized monoclonal antibody monoclonal antibody, an antibody that is mass produced in the laboratory from a single clone and that recognizes only one antigen. Monoclonal antibodies are typically made by fusing a normally short-lived, antibody-producing B cell (see immunity) to a fast-growing being developed for the treatment of serious Staphylococcus aureus Staphylococcus au·re·us n. A bacterium that causes furunculosis, pyemia, osteomyelitis, suppuration of wounds, and food poisoning. Staphylococcus aureus Staphylococcus pyogenes bloodstream blood·stream n. The flow of blood through the circulatory system of an organism. bloodstream the blood flowing through the circulatory system in the living body. infections, and preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. programs that include a partnership with Wyeth to develop staphylococcal staphylococcal pertaining to Staphylococcus spp. staphylococcal clumping test used as a means of measuring the quantity of fibrinogen-split products in a sample of blood. vaccines and a collaboration Working together on a project. See collaborative software. and joint development agreement with Dyax to develop fully human monoclonal antibodies This is a list of monoclonal antibodies, antibodies which are clones of a single parent cell. When used as medications, the generic names end in -mab (see "Nomenclature of monoclonal antibodies"). against MSCRAMM proteins on enterococci enterococci bacteria in the genus Enterococcus. . The Company also has a license and commercialization agreement with 3M for the development of various diagnostic products using Inhibitex's MSCRAMM protein platform. For additional information about the Company, please visit www.inhibitex.com. Inhibitex([R]), MSCRAMM([R]), Veronate([R]), and Aurexis([R]) are registered trademarks of Inhibitex, Inc. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains 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 that involve substantial risks and uncertainties. All statements, other than statements of historical facts included in this press release, including statements regarding the Company's intent to broaden its pipeline through in-licensing, acquisition or merger activities; its intent to continue to seek ways to further leverage or monetize its MSCRAMM platform and related intellectual property; the Company's focus on developing a pipeline of anti-infective development programs; the amount the Company expects to realize from the agreement it has with 3M over the next two years; the Company's intention to assess it options regarding the arbitrator's decision in the action brought against it by Nabi; the Company's plan to substantially reduce its burn rate from operations in 2007; the Company's estimated net cash burn rate during 2007 and anticipated reductions in accounts payable, accrued expenses and debt are forward-looking statements. These plans, intentions, expectations or estimates may not actually be achieved and various important factors could cause actual results or events to differ materially from the forward-looking statements that the Company makes, including risks related to its ability to find suitable in-licensing, acquisition or merger opportunities in a timely manner or on acceptable terms and conditions, if at all; its ability to find corporate entities willing to enter into and execute license agreements or collaboration arrangements relating to its MSCRAMM platform on reasonable terms, if at all; Wyeth and 3M not terminating or revising their respective agreements with the Company; maintaining adequate resources to continue to support its MSCRAMM-based research and development efforts; obtaining, maintaining and protecting the intellectual property incorporated into and supporting its product candidates; maintaining expenses, revenues and other cash expenditures substantially in line with planned or anticipated amounts; and other cautionary statements contained elsewhere herein and in its 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 year ended December 31, 2005 and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for March 31, 2006, June 30, 2006, September 30, 2006 as filed with the Securities and Exchange Commission, or SEC, on March 13, 2006, May 10, 2006, August 7, 2006, and November 7, 2006, respectively. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. There may be events in the future that the Company is unable to predict accurately, or over which it has no control. The Company's business, financial condition, results of operations, and prospects may change. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the Federal securities laws to update and disclose material developments related to previously disclosed information. The Company qualifies all of the information contained in this press release, and particularly its forward-looking statements, by these cautionary statements. [TABLE OMITTED] [TABLE OMITTED] |
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