Nastech Announces Second Quarter 2007 Financial Results
Bothell, Wash., August 8, 2007 —Nastech Pharmaceutical Company Inc. (Nasdaq: NSTK) today reported financial results for the three- and six-month periods ended June 30, 2007.
Revenue for the three months ended June 30, 2007 was $4.9 million, compared to $11.4 million for the three months ended June 30, 2006. The 2006 period included revenue of $10.8 million related to our Parathyroid Hormone (PTH1-34) nasal spray collaboration with Procter & Gamble Pharmaceuticals, Inc. (“P&G”), including a $7.0 million milestone payment. Revenue for the six months ended June 30, 2007 was $9.9 million, compared to $18.1 million for the six months ended June 30, 2006. The 2007 period included receipt and recognition of a $2.0 million payment from QOL Medical LLC related to the June 2007 issuance of a patent by the U.S. Patent and Trademark Office for Nascobal® nasal spray. Additional revenue was recognized related to our collaboration agreement with P&G, revenue from our other agreements including Novo Nordisk A/S and Amylin Pharmaceuticals, Inc. and approximately $0.2 million in Nascobal® product revenue. The prior year six month period included recognition of approximately $3.7 million in previously deferred revenue from Merck & Co., Inc. related to our PYY(3-36) obesity program, as well as reimbursement revenue related to our development agreement with P&G, revenue from other agreements and approximately $0.6 million in Nascobal® revenue.
Net loss for the current quarter was $12.4 million, or $0.50 per share, as compared to a net loss of $0.6 million, or $0.03 per share for the prior year period. The net loss for the six months ended June 30, 2007 was $23.9 million or $0.97 per share, as compared to $8.4 million, or $0.40 per share, for the prior year period. The increase in the net loss from the prior year periods is due to a combination of lower revenue and higher spending due to increased clinical activities, headcount growth, and expenses related to research and development projects. The net loss for the prior year six month period includes a cumulative benefit from the accounting change of adopting SFAS123(R) in January 2006 of approximately $0.3 million reflecting the net cumulative impact of estimating future forfeitures in the determination of period expense for restricted stock awards, rather than recording forfeitures when they occur as permitted prior to 2006.
Research and development expenses for the current quarter increased $4.0 million to approximately $12.8 million as compared to the prior year period and increased $5.1 million to $25.6 million for the six months ended June 30, 2007 from the prior year period. This year-to-date net increase reflects an actual increase of approximately $9.2 million in R&D expenditures, primarily due to increases in clinical activities, the number of research and development employees and related infrastructure costs. The prior year six month period included a $4.1 million charge due to in-process R&D expenses related to our acquisition of RNAi intellectual property from Galenea Corp.
Selling, general and administrative expenses increased $1.4 million to approximately $5.1 million for the current quarter compared to the prior year quarter and increased $2.3 million to $9.4 million for the six months ended June 30, 2007 from the prior year period, primarily due to increases in patent and legal costs necessary to support our business model as well as our growth.
We ended the second quarter of 2007 with approximately $70.4 million in cash, cash equivalents and investments compared to $51.0 million at December 31, 2006, including $2.2 million in restricted cash at each date. The increase in our cash balance was driven by the January 2007 offering of common stock which raised net proceeds of approximately $40.9 million.
Recent Corporate Highlights
•
Achieved positive non-clinical study results for our siRNA program for treatment of influenza
•
Awarded patents relating to PYY Nasal Spray for obesity and PTH Nasal Spray for osteoporosis
•
Completed additional Phase 1 pharmacokinetic study for Carbetocin Nasal Spray to treat autism symptoms
•
Received $2 million milestone for issuance of a Nascobal® Nasal Spray patent
Conference Call and Webcast Information
Management will host a conference call to review our financial results for the period ended June 30, 2007 and recent business developments. The call is scheduled for today, August 8, 2007, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). To participate in the live conference call, U.S. residents should dial (866) 203-3206 and international callers should dial (617) 213-8848. The access code for the live conference call is 61791887. To access the 24-hour telephone replay, U.S. residents should dial (888) 286-8010 and international callers should dial (617) 801-6888. The access code for the replay is 95003056.
Alternatively, log on tohttp://www.nastech.com to access a live webcast or the subsequent 30-day archive. Please connect to the Investor section of Nastech’s website several minutes prior to the start of the live conference call to ensure adequate time for any software download that may be necessary.
About Nastech
Nastech is a biopharmaceutical company developing innovative products based on proprietary molecular biology-based drug delivery technologies. Nastech and our collaboration partners are developing products for multiple therapeutic areas including osteoporosis, obesity, diabetes, autism, respiratory diseases and inflammatory conditions. Additional information about Nastech is available athttp://www.nastech.com.
Nastech Forward-Looking Statements
Statements made in this press release may be forward-looking statements within the meaning of Federal Securities laws that are subject to certain risks and uncertainties and involve factors that may cause actual results to differ materially from those projected or suggested. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to: (i) the ability of Nastech to obtain additional funding; (ii) the ability of Nastech to attract and/or maintain manufacturing, research, development and commercialization partners; (iii) Nastech’s and/or a partner’s ability to successfully complete product research and development, including preclinical and clinical studies and commercialization; (iv) Nastech’s and/or a partner’s ability to obtain required governmental approvals; and (v) Nastech’s and/or a partner’s ability to develop and commercialize products that can compete favorably with those of competitors. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in Nastech’s most recent periodic reports on Form 10-K and Form 10-Q that are filed with the Securities and Exchange Commission. Nastech assumes no obligation to update and supplement forward-looking statements because of subsequent events.
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Contacts:
Nastech Ed Bell Director, Investor Relations (425) 908-3639 ir@nastech.com
Russo Partners, LLC Matthew Haines (Investors/Media) (212) 845-4235
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NASTECH PHARMACEUTICAL COMPANY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2006
2007
2006
2007
(Unaudited)
Revenue
License and research fees
$
11,238
$
4,733
$
17,537
$
9,405
Government grants
—
102
—
202
Product revenue
173
25
592
245
Total revenue
11,411
4,860
18,129
9,852
Operating expenses:
Cost of product revenue
62
9
301
68
Research and development
8,766
12,764
20,567
25,638
Selling, general and administrative
3,736
5,115
7,082
9,400
Total operating expenses
12,564
17,888
27,950
35,106
Loss from operations
(1,153
)
(13,028
)
(9,821
)
(25,254
)
Other income (expense):
Interest income
718
948
1,356
1,905
Interest and other expense
(125
)
(287
)
(233
)
(558
)
Loss before cumulative effect of change in accounting principle
(560
)
(12,367
)
(8,698
)
(23,907
)
Cumulative effect of change in accounting principle
—
—
291
—
Net Loss
$
(560
)
$
(12,367
)
$
(8,407
)
$
(23,907
)
Basic and diluted net loss per share:
Prior to cumulative effect of change in accounting principle
$
(0.03
)
$
(0.50
)
$
(0.41
)
$
(0.97
)
Cumulative effect of change in accounting principle
—
—
0.01
—
Net loss per common share — basic and diluted
$
(0.03
)
$
(0.50
)
$
(0.40
)
$
(0.97
)
Shares used in computing net loss per share - basic and diluted
21,238
24,910
20,965
24,730
December 31,
June 30,
Selected Balance Sheet Data(In Thousands)
2006
2007
(Unaudited)
Cash, cash equivalents and investments (includes restricted cash of approximately $2,155)
$
50,993
$
70,379
Accounts receivable, net
2,798
360
Property and equipment, inventories and other assets
20,041
20,917
Total assets
73,832
91,656
Working capital
42,833
58,322
Accumulated deficit
(142,493
)
(166,400
)
Stockholders’ equity
43,336
63,401
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