AVANIR Reports Third Quarter Fiscal 2008 Financial Results
Thursday August 7, 8:30 am ET
Refines Timeline for Zenvia(TM) Clinical Data
ALISO VIEJO, Calif.--(BUSINESS WIRE)--AVANIR Pharmaceuticals (NASDAQ: AVNR - News) today reported financial results for the three and nine months ended June 30, 2008.
For the third quarter of fiscal 2008, AVANIR reported a net loss of $1.4 million, or $0.02 per share, compared with a net loss of $9.2 million, or $0.23 per share, for the same period in fiscal 2007. Total net revenues for the third quarter of fiscal 2008 were $2.6 million compared with $2.2 million for the same period in fiscal 2007. Total operating expenses were $5.5 million in the third quarter of fiscal 2008, compared with $10.1 million in the comparable fiscal 2007 period. In addition, cash used in continuing operations during the third quarter of fiscal 2008 was $3.2 million compared to $8.5 million of cash used in continuing operations in the third quarter of fiscal 2007. Net loss for the quarter was positively impacted by a gain on the early retirement of our outstanding debt of $1.0 million, an earned royalty on docosanol in Europe of $1.4 million, as well as the recovery of previous legal expenses of $1.2 million.
For the first nine months of fiscal 2008, AVANIR reported a net loss of $12.3 million, or $0.23 per share, compared with a net loss of $33.0 million, or $0.93 per share, for the comparable period of fiscal 2007. Total net revenues for the first nine months of fiscal 2008 were $5.8 million compared with $6.4 million for the first nine months of fiscal 2007. Total operating expenses were $18.0 million in the first nine months of fiscal 2008, compared with $32.7 million in the comparable fiscal 2007 period. In addition, cash used in continuing operations during the first nine months of fiscal 2008 was $12.2 million compared to $35.2 million in the first nine months of fiscal 2007.
“AVANIR continues to make great strides in advancing the Zenvia Phase III clinical development programs in pseudobulbar affect (PBA) and diabetic peripheral neuropathic (DPN) pain,” said Dr. Randall Kaye, AVANIR’s Chief Medical Officer. “In support of the PBA program we have completed all initiation activities at all planned STAR trial investigator sites in the U.S. and we recently began enrolling the first patients from our Latin American sites. As a result of our program management efforts, we announced that we were ahead of schedule with planned patient enrollment and intended to increase the size of the STAR trial by approximately 10%. Today we are pleased to announce that we are refining our overall enrollment timeline to the earlier end of the 15 – 18 month range. Therefore, top-line data are now expected to be available during the third calendar quarter of 2009.”
“I am very pleased with the financial and clinical performance over the last quarter,” said Keith Katkin, AVANIR’s President and CEO. “Throughout 2008 we have focused on the dual objectives of carefully managing expenses while rapidly advancing the clinical development of our promising drug candidate Zenvia. We are now seeing the full benefits of earlier restructuring, prudent cash management procedures and the strengthening of our clinical team. During the past quarter we took the opportunity to improve our balance sheet and eliminate our remaining debt, an action which resulted in a $1.2 million dollar savings to the company. As a result of this and other positive events in the third quarter, we have been able to lower our expected cash burn target for fiscal 2008 to approximately $20 to $22 million versus our previous estimate of $23 to $25 million.”
RECENT HIGHLIGHTS AND UPCOMING MILESTONES:
CLINICAL PROGRAMS AND PIPELINE
Zenvia in PBA
Announced that all planned U.S. investigator sites have been initiated and are actively screening or enrolling patients with PBA into the confirmatory Phase III STAR trial.
Announced that patient enrollment into the STAR trial in Latin America has commenced on schedule.
Announced a planned 10% expansion of target patient enrollment into the STAR trial in order to increase the statistical power of the trial and the size of the safety database.
Provided new guidance that patient enrollment is expected to be completed by the end of the first calendar quarter of 2009 versus the previous guidance of no later than the end of the second calendar quarter of 2009. Therefore, top-line data is expected no later than the third calendar quarter of 2009.
Zenvia in DPN Pain
Announced a positive outcome from a large, formal pharmacokinetic study. Two new Zenvia dosing regimens met the Company’s criteria to advance into the next Phase III study in patients with DPN pain. Both doses are expected to provide an improved cardiac risk profile and enhanced tolerability versus doses of Zenvia previously tested for that indication.
Announced that the Company intends to submit a Zenvia Phase III DPN pain study protocol to the FDA under the Special Protocol Assessment (SPA) process by 2008 year end.
COMPANY OPERATIONS
Announced that the European Patent Office has granted AVANIR a new patent, extending the period of commercial exclusivity for Zenvia in Europe into 2023. The Company has a corresponding patent application pending within the U.S. Patent and Trademark Office and is optimistic of a positive outcome based on the granting of the European patent.
Announced that the Company earned a royalty payment of approximately $1.4 million related to docosanol in Europe.
Reduced the estimated cash burn from operations (excluding financing activities and debt repayment) for fiscal 2008 to $20 to $22 million from the previous estimate of $23 to $25 million.
Announced that the Company agreed to amend the payment schedule of $12 million in Promissory Notes issued in connection with the 2006 acquisition of Alamo Pharmaceuticals that were originally due on May 24, 2009. In exchange for immediate payment, the aggregate outstanding principal amount due under the Notes was reduced by 9.25%, or approximately $1.1 million. Accordingly, the Company paid a total sum of $10.9 million on June 6, 2008 in full satisfaction of the Notes. The accelerated repayment of the Notes represents an estimated savings of approximately $1.2 million in principal and interest payments through the original Maturity Date, net of estimated lost earnings on cash balances that would have been held through the Maturity Date.
Reaffirmed that the Company believes it has sufficient capital to fund operations through the FDA approval decision date for the Zenvia PBA application, which is expected in the latter half of 2010.
BALANCE SHEET HIGHLIGHTS
As of June 30, 2008, AVANIR had cash and investments in securities totaling $47.9 million, including cash and cash equivalents of $47.0 million and restricted investments in securities of $0.9 million.
Conference Call and Webcast
Management will host a conference call with a simultaneous webcast today beginning at 11:00 a.m. Eastern time / 8:00 a.m. Pacific time to discuss its financial results and recent business developments. The call will feature Keith Katkin, President and Chief Executive Officer; Randall Kaye, MD, Senior Vice President and Chief Medical Officer; and Christine Ocampo, Vice President of Finance to discuss financial results and answer questions. Investors are invited to listen to the live webcast by visiting AVANIR's corporate website at www.avanir.com.
An archived copy of the webcast will be available on AVANIR's website for 30 days, and a telephone replay will be available through August 12, 2008, by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering the conference ID number 56449012.
