ZymoGenetics Reports First Quarter 2005 Financial Results; Momentum Continues with Three Product Candidates in Clinical Development.SEATTLE -- ZymoGenetics, Inc. (Nasdaq:ZGEN) today reported its financial results for the first quarter ended March 31, 2005. The company reported a net loss for the quarter of $18.8 million, or $0.33 per share, reflecting continuing investment in the development of its pipeline of product candidates. For the first quarter of 2004, ZymoGenetics had a net loss of $18.9 million, or $0.36 per share. The company ended the quarter in a strong financial position, with $300.3 million of cash and investments. "ZymoGenetics continues to build clinical momentum," stated Bruce L.A. Carter, 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. . "We reported initial results of the rhThrombin Phase 2 clinical trials phase 2 clinical trial Phase 2 study. See Phase study. and plan to start the pivotal Phase 3 study later this year. Clinical studies for TACI-Ig in four indications are moving at a good pace, and we will report interim results of the IL-21 Phase 1 study at the American Society of Clinical Oncology American Society of Clinical Oncology, or ASCO, is an organization that represents all clinical oncologists. Every year, ASCO holds a large symposium where physicians and researchers meet to convey and discuss research and ideas. annual meeting later this month," added Dr. Carter. Revenues for the quarter increased to $12.0 million, compared to $5.7 million for the same period in the prior year. The increase resulted from higher option and license fee revenues. In the first quarter of 2005, the company completed a license agreement with Eli Lilly and Company Eli Lilly and Company (NYSE: LLY) is a global pharmaceutical company and one of the world's largest corporations. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States. related to certain human Protein C patents and received a one-time lump sum Lump sum A large one-time payment of money. payment. Additionally, approximately $3.5 million of deferred revenue was recognized related to two major transactions completed in the fourth quarter of 2004: the strategic alliance with Serono S.A. and the license of recombinant Factor XIII factor XIII n. A factor in the clotting of blood that is converted by thrombin into its active form, which cross-links subunits of the fibrin clot to form insoluble fibrin. Also called Laki-Lorand factor. to Novo Nordisk A/S. 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 quarter increased, as expected. Expenses increased by 24% to $30.5 million, compared to $24.6 million for the first quarter of 2004. The increase largely resulted from higher costs related to the company's product development programs. The company has continued to ramp-up its development efforts over the past year, with the start of clinical trials for Interleukin-21 in metastatic Metastatic The term used to describe a secondary cancer, or one that has spread from one area of the body to another. Mentioned in: Coagulation Disorders metastatic pertaining to or of the nature of a metastasis. melanoma and renal cell carcinoma renal cell carcinoma or hypernephroma Malignant tumour of the cells that cover and line the kidney. It usually affects persons over age 50 who have vascular disorders of the kidneys. It seldom causes pain, unless it is advanced. and the expansion of the TACI-Ig program into four ongoing clinical trials in systemic lupus erythematosus Systemic Lupus Erythematosus Definition Systemic lupus erythematosus (also called lupus or SLE) is a disease where a person's immune system attacks and injures the body's own organs and tissues. Almost every system of the body can be affected by SLE. , 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. , multiple myeloma multiple myeloma A malignant proliferation of abnormal plasma cells that populate the marrow-containing bones of the body. The affected plasma cells produce myeloma protein, a monoclonal antibody that replaces normal antibodies in the blood, thereby increasing susceptibility and non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma . Additionally, costs have increased related to rhThrombin market research and pre-launch planning, and start-up of operations in the company's new pilot-scale protein manufacturing facility. Company Highlights The company's clinical development programs continued to advance in 2005, demonstrated by the following highlights: rhThrombin --Presented summary results of four Phase 2 clinical studies in 130 patients undergoing peripheral artery bypass surgery Bypass surgery A surgical procedure that grafts blood vessels onto arteries to reroute the blood flow around blockages in the arteries (arteriosclerosis). , spinal surgery, arteriovenous arteriovenous /ar·te·rio·ve·nous/ (-ve´nus) both arterial and venous; pertaining to or affecting an artery and a vein. ar·te·ri·o·ve·nous adj. Abbr. graft construction or liver resection surgery. Study results showed that rhThrombin appeared to be safe and well tolerated, there was no evidence of increased incidence of antibody formation relative to placebo, and the anticipated hemostatic hemostatic /he·mo·stat·ic/ (he?mo-stat´ik) 1. causing hemostasis, or an agent that so acts. 2. due to or characterized by stasis of the blood. he·mo·stat·ic adj. effect was demonstrated. --Completed manufacture and release of rhThrombin drug product, using the commercial manufacturing process, for use in the Phase 3 pivotal study. --Completed Phase 2 data analysis and developed proposed pivotal study design to support an End of Phase 2 meeting with 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 has been scheduled in late June. TACI-Ig --Together with its collaborator Serono, continued to treat patients in four Phase 1b clinical studies in systemic lupus erythematosus, rheumatoid arthritis, multiple myeloma and Non-Hodgkin's lymphoma. --Completed enrollment in the "proof of concept" part of the rheumatoid arthritis study, in which 24 patients will receive bi-weekly doses of TACI-Ig or placebo. IL-21 --Completed treatment and follow-up of the first 12 patients in the Phase 1 study of IL-21 in metastatic melanoma and metastatic renal cell carcinoma. --Interim Phase 1 study results accepted for oral presentation at the American Society of Clinical Oncology (ASCO ASCO American Society of Clinical Oncology ASCO Association of Schools and Colleges of Optometry (since 1941; Rockville, Maryland) ASCO Australian Standard Classification of Occupations ASCO Automatic Switch Company ) 2005 annual meeting, May 13-17 in Orlando, Florida. About ZymoGenetics ZymoGenetics is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic proteins for the prevention or treatment of human diseases. The Company is developing a diverse pipeline of potential proprietary product candidates that are moving into and through clinical development. These span a wide array of clinical opportunities that include bleeding, 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 and cancer. ZymoGenetics intends to commercialize these product candidates through internal development, collaborations with partners and out-licensing of patents from its extensive patent portfolio. For further information, visit www.zymogenetics.com. Forward Looking Statements This press release contains "forward-looking statements" 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. These forward-looking statements are based on the current intent and expectations of the management of ZymoGenetics. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. ZymoGenetics' actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements because of risks associated with our unproven discovery strategy, preclinical and clinical development, regulatory oversight, intellectual property claims and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other risks detailed in ZymoGenetics' public filings with the Securities and Exchange Commission, including ZymoGenetics' 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, 2004. Except as required by law, ZymoGenetics undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
ZYMOGENETICS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
------------------
2005 2004
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Revenues:
Royalties $ 2,381 $ 2,410
Option fees 2,659 1,875
License fees and milestone payments 6,915 1,404
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Total revenues 11,955 5,689
Operating expenses:
Research and development, excluding noncash
stock-based compensation 23,595 19,063
General and administrative, excluding noncash
stock-based compensation 5,674 3,935
Noncash stock-based compensation expense 1,245 1,572
-------- --------
Total operating expenses 30,514 24,570
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Loss from operations (18,559) (18,881)
Other expense, net (228) (15)
-------- --------
Net loss $(18,787)$(18,896)
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Basic and diluted net loss per share $ (0.33)$ (0.36)
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Weighted-average number of shares used in
computing net loss per share 57,672 52,701
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BALANCE SHEETS
(in thousands)
March 31, December 31,
2005 2004
------------ ------------
(unaudited)
Cash, cash equivalents and short-term
investments $ 300,288 $ 324,998
Other current assets 10,039 9,512
Property and equipment, net 72,103 71,960
Other assets 5,563 5,714
------------ ------------
Total assets $ 387,993 $ 412,184
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Current liabilities $ 33,712 $ 37,149
Lease obligations 66,225 66,085
Other non-current liabilities 26,604 30,400
Shareholders' equity 261,452 278,550
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Total liabilities and shareholders'
equity $ 387,993 $ 412,184
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