Neurogen Corporation Announces 2008 Financial Results
Thursday March 19, 7:00 am ET
BRANFORD, Conn.--(BUSINESS WIRE)--Neurogen Corporation (NASDAQ: NRGN - News), a drug development company focused on improved drugs for psychiatric and neurological disorders, today announced financial results for the year and quarter ended December 31, 2008 and updated it’s operating plan.
Highlights for 2008 and the Company’s current operating plan include:
Successful completion in 2008 of Phase 2a clinical studies in Restless Legs Syndrome (“RLS”) and Parkinson’s disease with aplindore, Neurogen’s dopamine D2 partial agonist.
The recent commencement of screening and enrollment of patients in a Phase 2b study in Parkinson’s disease and a Phase 2b study in RLS.
Decreases in 2008 of 48 percent in research and development expenses and 45 percent in general and administrative expenses from 2007.
The sale of non-core assets including Neurogen’s chemical library and C5a program.
Neurogen ended the fourth quarter of 2008 with $31.1 million in total cash and marketable securities.
Stephen R. Davis, President and CEO, said, "In 2008, we dramatically restructured and refocused Neurogen to concentrate on the advancement of our clinical programs. We were pleased to report positive results with aplindore in both our Parkinson’s disease and our Restless Legs Syndrome Phase 2a studies while simultaneously reducing our cost basis and monetizing non-core assets. In each study, aplindore demonstrated robust efficacy and very promising tolerability profiles, consistent with our target of improving on the side effects of currently available drugs for each of these disorders. In 2009, we will continue to carefully invest our capital as we move forward with the screening and enrollment of patients in the Phase 2b studies in Parkinson’s disease and RLS, and simultaneously pursue partnering opportunities.”
Operating revenue for the twelve months ended December 31, 2008 decreased to $3.0 million from $15.4 million for the comparable period of 2007. In the fourth quarter of 2008, Neurogen reported $3.0 million in operating revenues due to the previously reported sale of its chemical library. This was an increase from no operating revenues reported in the fourth quarter of 2007. The decrease for the twelve month period was due to the previously disclosed conclusion in 2007 of the research portion of the Company’s VR1 collaboration with Merck & Co. offset in part by the fourth quarter 2008 sale of Neurogen’s chemical library.
Research and development expenses for the twelve month period decreased 48 percent to $31.6 million from $61.0 million in the comparable period of 2007. For the fourth quarter of 2008 R&D expenses decreased 59 percent to $5.3 million from $12.8 million in the fourth quarter of 2007. The decrease for the last quarter and the twelve month period was due primarily to decreased spending in Neurogen’s clinical and preclinical drug development programs and drug discovery research operations over the four quarters of 2008 as part of our restructuring plans.
General and administrative expenses for the twelve month period decreased 45 percent to $7.1 million from $12.8 million for the comparable period of 2007 and for the fourth quarter of 2008 decreased 12 percent to $2.2 million from $2.5 million for the same period in 2007. The decrease for the twelve month and quarter periods is due mainly to decreases in salaries, benefits and supply expenses as part of our restructuring plans.
Restructuring and asset impairment charges for 2008 were $5.1 and $11.0 million, respectively. Neurogen had no such charges in 2007.
During the 12 month period, the Company recognized certain non-recurring charges and gains related to previously announced restructurings and the Company’s April 2008 private equity financing, which affected net loss for the three and twelve month periods ended December 31, 2008, as discussed further below.
On a GAAP basis, including non-recurring matters, Neurogen recognized a net loss for the fourth quarter of 2008 of $4.8 million, or $0.07 per share on 68 million weighted average shares outstanding. On a non-GAAP basis, excluding non-recurring matters, net loss for the quarter totaled $7.2 million, or $0.11 per share. These results compare to a GAAP net loss during the fourth quarter of 2007 of $14.9 million, or $0.36 per share on 42 million weighted average shares outstanding.
On a GAAP basis, including non-recurring matters, the Company recognized a net loss for the twelve months ended December 31, 2008 of $34.3 million and a net loss attributable to common stockholders of $64.9 million, or $1.22 per share on 53 million weighted average shares outstanding. On a non-GAAP basis, excluding non-recurring matters, net loss for the period totaled $37.9 million, or $0.71 per share. These results compare to a GAAP net loss of $55.7 million, or $1.33 per share, and a non-GAAP (excluding the acceleration of certain revenues associated with the conclusion of the research component of Neurogen’s VR1 collaboration with Merck & Co.) net loss of $61.5 million, or $1.47 per share, each on 42 million weighted average shares outstanding for the twelve month period ended December 31, 2007.
Neurogen’s total cash and marketable securities as of December 31, 2008 totaled $31.1 million.
Non-recurring matters
Neurogen recognized restructuring and asset impairment charges of $16.1 million for the twelve month period ended December 31, 2008. These charges are associated with reductions in workforce announced on February 5, 2008 and April 9, 2008 and a non-cash asset impairment charge of $11.0 million related to the value of certain of the Company’s facilities previously used for research activities as well as equipment associated with these buildings.
In April 2008, Neurogen closed a private placement offering of exchangeable preferred stock and warrants with certain institutional investors. On July 25, 2008, following approval of the Company’s stockholders, the preferred shares issued in the financing converted to common shares, and the Company’s stockholders approved the authorization of additional shares underlying the warrants.
In connection with the securities issued in the April financing and in accordance with the required GAAP treatment of these instruments, Neurogen recognized a non-cash charge of approximately $30.6 million for the twelve-month period ended December 31, 2008 related to the preferred stock and a non-cash gain of approximately $16.7 million for the twelve-month period ended December 31, 2008 related to the warrants. No related charges or gains were taken during the three-month period ended December 31, 2008. The non-cash charges reflected the calculation of contingent preferred dividends, accretion of the preferred stock to redemption value and the amortization of discount associated with the preferred stock, as well as a beneficial conversion feature. Pursuant to GAAP, these items are considered deemed preferred dividends and were added to net loss, resulting in a net loss attributable to common stockholders of $64.9 million for the twelve month period ended December 31, 2008. The non-cash gain recorded in the second and third quarters related to a decrease in the liability associated with the ascribed value of the warrants as a result of a decrease in the Company’s stock price from date of issuance on April 7, 2008 through July 25, 2008. Upon shareholder approval of the authorization of common shares underlying the warrants on July 25, 2008, the warrant was reclassified as an equity instrument.
Webcast
Neurogen will host a conference call and webcast to discuss fourth quarter results at 8:30 a.m. ET today, March 19, 2009. The webcast will be available in the Investor Relations section of www.neurogen.com and will also be archived there. A replay of the call will be available after 10:30 a.m. ET on March 19, 2009 and accessible through the close of business, March 26, 2009. To replay the conference call, dial 888-286-8010, or for international callers, 617-801-6888, and use the pass code: 19996576.
