Avalon Pharmaceuticals Reports Second Quarter 2008 Results
13 Agosto 2008 - 9:00AM
Business Wire
Avalon Pharmaceuticals, Inc. (Nasdaq:AVRX), a clinical-stage
biopharmaceutical company focused on the discovery and development
of novel cancer therapeutics, today announced financial and
operational results for the second quarter of 2008. For the three
months ended June 30, 2008, net loss was $5.6 million, compared
with $5.8 million in the second quarter of 2007. As of June 30,
2008, cash, cash equivalents and marketable securities totaled
$16.7 million. The Company also announced today that it is
restructuring its operations and reducing its workforce by
approximately one-third. �In the second quarter of 2008, we reached
an important milestone for Avalon in naming AVN316 as the lead
clinical candidate for our Beta-catenin Pathway Inhibitor program,�
stated Kenneth C. Carter, Ph.D., President and CEO. �This compound,
which is a potent inhibitor of the intractable Beta-catenin
pathway, is the first compound to be named as a clinical candidate
from our unique drug discovery platform, AvalonRx�. We believe this
nomination provides validation for our unique drug discovery
approach and we expect additional first-in-class compounds will be
identified using AvalonRx in the future.� �Given the difficult
current funding environment, we have decided to restructure our
operations in order to narrow our focus to those product
development programs with the greatest potential value,� continued
Dr. Carter. �We believe the operational changes we are making will
allow us to advance our key programs as we continue seeking
additional sources of capital and will position us well for success
after we have raised additional funds.� Conference Call &
Webcast Information Avalon Pharmaceuticals� senior management will
host a conference call at 1:00 p.m. Eastern Daylight Time today, to
discuss the quarterly results and recent business developments.
Live audio of the conference call will be available to investors,
members of the news media and the general public by dialing
877-548-7913 (in the U.S.) and 719-325-4932 (internationally), and
providing the participant pass code, 3593548. To access the call by
live webcast, please visit the Investor Relations section of our
website at http://www.Avalonrx.com. An archived version of the
webcast will also be available for seven (7) days on Avalon's
website. Recent Developments AVN316 was nominated as the lead
clinical candidate in the Company�s Beta-catenin Pathway Inhibitor
program. The Company identified small molecule allosteric
inhibitors of the Aurora/Centrosome pathway and identified the
target in the pathway as the Polo-Like Kinase 3 (PLK3) protein.
During the quarter, AVN944 advanced to treatment at 400 mg twice a
day in both the Phase I hematological and the Phase IIa pancreatic
clinical trials. Two patients at the 400 mg dose level experienced
elevated bilirubin. The Company has suspended treatment at the 400
mg dose level but is continuing dosing patients who are at lower
dose levels while reviewing all relevant data to determine whether
a maximum tolerated dose has been reached. The Company announced
steps to restructure its operations and reduce its future cash burn
rate. Financial Results and Condition Net loss was $5.6 million for
the three months ended June 30, 2008, compared with $5.8 million in
the second quarter of 2007. The lower loss in 2008 was principally
due to lower operating expenses and higher revenues in the 2008
period. Revenues for the second quarter of 2008 were $137,000,
compared with $78,000 for the same period of 2007. Revenues in both
periods were from the Company�s collaboration with Novartis
Institutes for Biomedical Research. Total costs and expenses from
operations were $5.8 million in the second quarter of 2008,
compared with the $6.1 million reported for the second quarter of
2007. General and administrative expenses decreased in the 2008
period principally due to lower stock compensation expense and
other costs related to personnel and consultants. Research and
development expenses increased in the 2008 period due to higher
clinical trial costs related to AVN944. As of June 30, 2008, the
Company had $16.7 million in cash, cash equivalents and marketable
securities. Of that amount, $4.5 million was held in a restricted
account to serve as collateral for long-term debt. The Company
estimates that its existing capital resources will not be
sufficient to fund its planned operations significantly beyond
December 31, 2008. Management continues to pursue additional
funding sources; however, there is no assurance that the Company
will raise capital sufficient to enable it to continue its
operations past year end. A failure to raise additional funds in
the near term would require Avalon to reduce its operating and
capital expenditures, scale back or eliminate some or all of its
research and development programs or license to third parties
products or technologies that it would otherwise seek to develop
itself. There is no assurance that the Company could continue as a
going concern if this were the case. Restructuring Avalon today
announced plans to restructure its operations to focus primarily on
its existing collaborations and on the pre-clinical and clinical
development of its Beta-catenin inhibitor program. As a part of its
restructuring plans, the Company is limiting its investment in the
development of AVN944 as it seeks to identify development partners
for this program. In connection with the restructuring of its
operations, the Company is implementing across-the-board workforce
reductions to lower the Company�s headcount by about one third to
approximately 35 employees going forward. The Company expects to
take restructuring charges related to this workforce reduction and
the restructuring of its operations of between $0.9 million and
$1.1 million for severance and related costs. About Avalon
Pharmaceuticals Avalon is a biopharmaceutical company focused on
the discovery, development and commercialization of first-in-class
cancer therapeutics. AvalonRx� is the company�s proprietary
platform�which is based on�large-scale�biomarker identification and
monitoring, used to discover and develop therapeutics for pathways
that have historically been characterized as "undruggable." Avalon
is headquartered in Germantown, MD. Forward Looking Statements This
announcement contains, in addition to historical information,
certain forward-looking statements that involve risks and
uncertainties, in particular, related to our expectations for 2008,
the amount of any future restructuring charges, our expectations
for raising additional capital, our ability to identify new
first-in-class therapeutic compounds, our ability to fund
operations until December 31, 2008, progress in our drug discovery
programs and our collaborations, and clinical progress in the
development of AVN944. Such statements reflect the current views of
Avalon management and are based on certain assumptions. Actual
results could differ materially from those currently anticipated as
a result of a number of factors, risks and uncertainties including
the risk that the discovery programs and collaborations may not be
successful and that AVN944 will not progress successfully in its
clinical trials, we may not be successful in partnering any of our
internal programs, including AVN944, or in signing new discovery
partnerships, we may not be successful in raising additional
capital necessary to fund our operations and other risks described
in our SEC filings. There can be no assurance that our development
efforts will succeed, that AVN944 will receive required regulatory
clearance or, even if such regulatory clearance is received, that
any subsequent products will ultimately achieve commercial success.
The information in this Release should be read in conjunction with
the Risk Factors set forth in our 2007 Annual Report on Form 10-K
and updates contained in subsequent filings we make with the SEC. �
AVALON PHARMACEUTICALS, INC. STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share and per share amounts) � � Three Months
EndedJune 30, � Six Months EndedJune 30, 2008 � 2007 2008 � 2007 �
� Revenues $ 137 $ 78 $ 187 $ 809 � Costs and expenses: Research
and development 4,509 4,066 8,869 8,178 General and administrative
� 1,281 � � 2,043 � � 3,413 � � 4,271 � Total costs and expenses �
5,790 � � 6,109 � � 12,282 � � 12,449 � Loss from operations (5,653
) (6,031 ) (12,095 ) (11,640 ) � � � � Total other income � 75 � �
222 � � 268 � � 486 � Net loss $ (5,578 ) $ (5,809 ) $ (11,827 ) $
(11,154 ) � Net loss attributed to common stockholders per common
share - basic and diluted $ (0.33 ) $ (0.40 ) $ (0.69 ) $ (0.82 ) �
Weighted average number of common shares - basic and diluted
17,033,042 14,672,577 17,031,620 13,547,779 � � � AVALON
PHARMACEUTICALS, INC. BALANCE SHEETS (in thousands) � June 30,
December 31, 2008 2007 (Unaudited) ASSETS Cash, cash equivalents
and marketable securities $ 12,196 $ 23,250 Restricted cash and
securities 4,458 5,275 Property and equipment, net 6,657 7,325
Other assets, net 1,263 1,455 Total assets $ 24,574 $ 37,305 �
LIABILITIES AND STOCKHOLDERS� EQUITY Current liabilities $ 4,847 $
4,685 Long-term liabilities 5,228 6,446 Total stockholders� equity
14,499 26,174 Total liabilities and stockholders� equity $ 24,574 $
37,305 �
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