Exhibit 99.1
ADVANCIS PHARMACEUTICAL REPORTS SECOND QUARTER 2006 RESULTS
Company's Amoxicillin PULSYS Phase III Trial Results Expected Shortly;
Commercial Launch of New Keflex 750mg Capsules Underway
GERMANTOWN, Md., Aug. 2 /PRNewswire-FirstCall/ -- Advancis Pharmaceutical
Corporation (Nasdaq: AVNC), a pharmaceutical company focused on developing and
commercializing novel anti-infective products, today announced financial and
operational results for the quarter ended June 30, 2006.
Advancis reported second quarter 2006 net Keflex product sales of $0.3
million, compared to $0.9 million in the first quarter of 2006 and $1.0 million
in the second quarter of 2005. For the first six months of 2006, revenue from
product sales was $1.2 million, compared to product sales of $2.0 million in the
first six months of 2005. In addition to product sales of Keflex, in the prior
year Advancis recognized contract revenue and reimbursed development costs under
the Company's prior collaborative agreements of $2.2 million and $5.8 million
for the three months and six months ended June 30, 2005, respectively.
Advancis reported research and development (R&D) expenses in the second
quarter of $6.8 million, down from first quarter 2006 R&D expenses of $7.2
million and second quarter 2005 R&D expenses of $10.2 million. Total expenses
for the second quarter of 2006 were $11.2 million, compared to $9.7 million in
the first quarter of 2006 and $12.8 million in the second quarter of 2005. Total
expenses in the first half of 2006 decreased to $21.0 million, from $28.9
million in the first half of 2005.
Net loss was $10.7 million for the second quarter, compared to a net loss of
$7.6 million in the first quarter of 2006 and a net loss of $9.3 million in the
second quarter of 2005. Net loss per share applicable to common stockholders
during the second quarter of 2006 was ($0.35), compared to a net loss per share
of ($0.25) in the prior quarter, and a net loss per share of ($0.34) in the
comparable quarter of last year. For the first six months of 2006, net loss
decreased to $18.3 million, or ($0.61) per share, down from a net loss of $20.7
million, or ($0.82) per share, in the first six months of 2005.
"With the launch of our new Keflex 750 capsules last month, we hope to
demonstrate the commercial potential for our branded products in the sizeable
generic antibiotic market," stated Edward M. Rudnic, Ph.D., president and
CEO of Advancis. "We are very close to receiving top-line results from our
adult Amoxicillin PULSYS Phase III trial. Assuming a successful outcome of the
clinical trial and subsequent regulatory approval, we believe our Keflex
franchise and future Amoxicillin PULSYS products could both represent
opportunities for unique versions of the number one and number three most-
prescribed oral antibiotics in the U.S."
OPERATIONAL HIGHLIGHTS
Keflex(R) Capsules (Cephalexin, USP) -- New Products Launch Advancis
reported net Keflex product sales of $0.3 million in the second quarter of 2006,
compared to $0.9 million in the first quarter of 2006 and $1.0 million in the
second quarter of 2005. Net Keflex sales totaled $1.2 million in the first half
of 2006, down from $2.0 million in the first half of 2005.
On May 15, 2006, Advancis announced that it received U.S. Food and Drug
Administration (FDA) approval of the Company's supplemental New Drug Application
(NDA) for two new Keflex strengths -- 333mg capsules and 750mg capsules.
Following FDA approval, the Company commenced its commercialization initiatives
focused solely on the Keflex 750mg capsules through a targeted and dedicated
national contract sales force of 75 sales representatives and eight Advancis
district sales managers.
Advancis and its contract sales organization, Innovex, the commercialization
division of Quintiles Transnational Corp., completed extensive sales
representative training in July 2006. The Company has shipped Keflex 750mg
capsules to pharmacies nationwide, and representatives began promoting the
product on July 17, 2006.
The new Keflex 750mg strength provides healthcare professionals a more
convenient way to deliver a total daily dose of 1500mg per day, by providing
them an option to prescribe just two daily doses of the 750mg capsules. Keflex
is approved for adult dosages ranging from one to four grams per day in divided
doses; however, the majority of prescriptions are currently written for
cephalexin 500mg three times daily -- totaling 1500mg per day.
Cephalexin is the third most prescribed oral antibiotic in the United
States, with more than 25 million prescriptions written annually representing a
retail market size of approximately $500 million. Cephalexin is the number- one
most prescribed oral cephalosporin antibiotic and is also the number-one
recommended oral antibiotic therapy for uncomplicated skin and skin structure
infections.
Amoxicillin PULSYS Phase III Trial -- Enrollment Complete, Results
Expected Mid-August
Advancis' Phase III clinical trial, designed to support product
approval for Amoxicillin PULSYS for the treatment of adolescents and adults with
acute pharyngitis and/or tonsillitis due to Group A streptococcal infections,
completed enrollment with 620 patients on May 31, 2006. The Company's
pivotal study was designed as a 600-patient double-blind, double-dummy, non-
inferiority Phase III trial and was conducted in 50 investigator sites across
the U.S. and Canada.
Advancis expects to receive and publicly report top-line results from the
trial within the coming weeks. The Company anticipates announcing the
statistical outcome of the trial's primary endpoints -- non-inferiority of
bacterial eradication rates for patient populations under the once-daily
Amoxicillin PULSYS therapy versus the four-times-a-day penicillin comparator
therapy.
Based on its prior meetings with the FDA, Advancis believes a positive
Amoxicillin PULSYS Phase III trial, along with existing academic literature data
and analysis from the Company's prior Amoxicillin PULSYS studies, would
provide the necessary clinical data required to support a NDA filing for product
approval. If the trial is successful, Advancis expects to file a 505(b)(2) NDA
with the FDA for the product candidate by year-end 2006 or early 2007.
$12 Million Credit Facility Completed
On June 30, 2006, Advancis closed a $12 million secured credit facility
with Merrill Lynch Capital, consisting of an $8 million term loan and a $4
million revolving loan facility. The term loan was drawn in its entirety at
closing, and matures in three years. The revolving loan facility, which has not
yet been drawn, matures 45 months from the closing date, and credit available
under this facility will be limited to a percentage of the Company's
accounts receivable. Advancis expects to use the proceeds from the credit
facility for working capital and plans to repay the facility with cash flow from
operations.
FINANCIAL DETAILS
* Total revenue, resulting entirely from net Keflex product sales, was $0.3
million in the second quarter of 2006, compared to revenue of $0.9 million
in the prior quarter. Lower sequential Keflex product sales in the quarter
were mainly due to a reduction in wholesaler orders for the Company's
existing 250mg and 500mg strengths in the second quarter. Total revenue
was $3.2 million for the second quarter of 2005, consisting of both Keflex
product sales and revenue recognized under the Company's prior
collaboration for Amoxicillin PULSYS. No similar collaboration revenue was
recognized in 2006.
* Operating expenses. Second quarter research and development expenses,
primarily consisting of salaries, stock-based compensation, and related
expenses for personnel and the costs of the Company's clinical trials and
research initiatives, were $6.8 million, down from $7.2 million in the
previous quarter and $10.2 million in the second quarter of 2005.
Decreased sequential R&D expenses in the second quarter of 2006 primarily
were due to a decrease in second quarter clinical trial expenses.
Decreased year-over-year R&D expenses resulted mainly from a reduced
number of ongoing clinical trials in second quarter 2006 versus second
quarter 2005.
Selling, general and administrative (SG&A) expenses totaled $4.5 million
in the second quarter of 2006, up from $2.5 million in the first quarter
of 2006 and $2.4 million in the second quarter of 2005. Increased SG&A
expenses in the quarter were primarily due to Keflex 750mg launch costs of
approximately $1.7 million, as the Company hired district sales managers,
increased marketing expenditures, and incurred contract sales costs in
support of the launch of its new Keflex 750mg product.
Stock-based compensation recorded in the second quarter 2006 was a total
of $0.9 million, of which, $0.4 million was recorded in R&D expense and
$0.5 million was recorded in SG&A expense. In the first quarter 2006 and
second quarter 2005, total stock-based compensation expense was $0.9
million and $0.3 million, respectively.
* Net loss for the second quarter of 2006 was $10.7 million. This compares
to a net loss of $7.6 million in the first quarter of 2006, and $9.3
million in the second quarter of 2005. Higher net loss in the second
quarter of 2006 was mainly attributable to reduced revenue and increased
expenses resulting from the Company's activities supporting the launch of
its new Keflex 750mg capsules.
* Net loss per share applicable to common stockholders for the second
quarter of 2006 was ($0.35), compared to a loss per common share of
($0.25) in the prior quarter and ($0.34) in the second quarter of 2005.
Per share figures were computed on the basis of an average of 30.3 million
shares outstanding in the second quarter of 2006, 30.0 million shares
outstanding in the first quarter of 2006, and 27.5 million shares
outstanding in the second quarter of 2005.
* Cash and marketable securities decreased by $1.1 million during the second
quarter. Changes were composed of $10.9 million of operating losses and
$1.4 million of loan payments; offset by $7.8 million of net proceeds from
the term loan, $0.7 million of freed-up restricted cash, $1.9 million of
non-cash depreciation, amortization, and stock-based compensation, and
$0.8 million of working capital changes and other items.
* The Balance Sheet at the end of the second quarter of 2006 reflected $20.9
million of unrestricted cash, cash equivalents and marketable securities,
compared to $22.0 million as of March 31, 2006, and $29.4 million as of
December 31, 2005.
FINANCIAL GUIDANCE
Advancis' financial guidance is unchanged from recently updated forecasts
including the effect of the Company's new Keflex 750mg product and credit
facility. Total revenue for 2006 is expected to be approximately $16 million to
$17 million, resulting from sales of all Keflex products.
Net loss for the year is expected to be between $32 million and $37 million,
or approximately $1.05 to $1.25 per diluted common share. Non-cash charges for
2006, consisting primarily of stock-based compensation expenses and depreciation
and amortization, are expected to be approximately $7 million. These forecasts
include an estimated $3 million non-cash impact from expensing of stock options
under SFAS 123R.
Cash, cash equivalents, and marketable securities at the end of 2006 are
expected to be approximately $12 million to $13 million. Assuming favorable
market acceptance of the new Keflex 750mg product and the Company's current
expected level of R&D spending, Advancis anticipates that its current funds,
together with expected Keflex product sales, will be sufficient to support its
currently planned operations through 2007 and into 2008.
CONFERENCE CALL
The Company has scheduled a conference call for today, Wednesday, August 2,
2006 at 10:30 AM ET. During the call, Dr. Edward Rudnic, president and CEO, and
Robert Low, vice president, finance and acting CFO, will discuss quarterly
results and other corporate activities. Investors can call 1-800-813-8504
(domestic) and 1-706-643-7752 (international) prior to the 10:30 AM start time
and ask for the Advancis Pharmaceutical conference call hosted by Dr. Rudnic. A
replay of the call will be available on August 2, 2006 beginning at 12:30 PM ET
and will be accessible until Wednesday, August 9, 2006 at 5:00 PM ET. The replay
call-in number is 1-800-642-1687 for domestic callers and 1-706-645-9291 for
international callers. The access number is 3476789.
The conference call will also be broadcast simultaneously on the Company's
website, http://www.advancispharm.com. Investors should click on the Investor
Relations tab and are advised to go to the website at least 15 minutes early to
register, download, and install any necessary audio software. The call will also
be archived on the Advancis website.
About Advancis Pharmaceutical Corporation:
Advancis Pharmaceutical Corporation (Nasdaq: AVNC) is a pharmaceutical
company focused on the development and commercialization of anti-infective drug
products that fulfill substantial unmet medical needs in the treatment of
infectious disease. The Company is developing a portfolio of anti-infective
drugs based on its novel biological finding that bacteria exposed to antibiotics
in front-loaded staccato bursts, or "pulses," are killed more
efficiently and effectively than those under standard treatment regimens. Based
on this finding, Advancis has developed a proprietary, once-a-day pulsatile
delivery technology called PULSYS(TM). By examining the resistance patterns of
bacteria and applying its delivery technologies, Advancis has the potential to
redefine infectious disease therapy and significantly improve drug efficacy,
shorten length of therapy, and reduce drug resistance versus currently available
antibacterial products. For more on Advancis, please visit
http://www.advancispharm.com.
About Keflex:
Keflex(R) Capsules (Cephalexin, USP) is a first-generation cephalosporin
antibiotic shown to be active against strains of both gram-positive and gram-
negative aerobes in vitro and in clinical infections. Keflex is indicated for
treatment of the following infections: respiratory tract infections, otitis
media, skin and skin structure infections, bone infections, and genitourinary
tract infections. Keflex is currently available in 250mg capsules, 500mg
capsules, 750mg capsules, and powder for oral suspension. Keflex is
contraindicated in patients with known allergy to the cephalosporin group of
antibiotics. Before therapy with cephalexin is instituted, careful inquiry
should be made to determine whether the patient has had previous
hypersensitivity reactions to cephalexin, cephalosporins, penicillins, or other
drugs. Keflex should be administered with caution in the presence of markedly
impaired renal function or a history of gastrointestinal disease, particularly
colitis. More information on Keflex and prescribing information are available at
http://www.keflex.com
This announcement contains historical financial information as of and for
three-month and six-month periods ended June 30, 2006 and June 30, 2005 that is
unaudited, and Advancis assumes no obligation to update this information based
on new information or future performance except as may be specifically required
by applicable law or regulation. The unaudited annual financial information is
subject to audit by independent accountants on an annual basis following the
close of each calendar year.
This announcement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended. These statements are based on
Advancis' current expectations and assumptions. These statements are not
guarantees of future performance and are subject to a number of risks and
uncertainties that would cause actual results to differ materially from those
anticipated. The words, "believe," "expect," "intend," "anticipate," and
variations of such words, and similar expressions identify forward-looking
statements, but their absence does not mean that the statement is not forward-
looking. Statements in this announcement that are forward-looking include, but
are not limited to, statements about the Company's product development and
commercialization schedule, including, particularly, future plans with respect
to its Amoxicillin PULSYS products; any statements regarding expected milestone
or expense reimbursement payments; Dr. Rudnic's comments and expectations
concerning the Company; the Company's initiatives to develop improved
antibiotics; the Company's existing and anticipated collaborative agreements;
and any financial forecasts and projections for the full year of 2006 and
thereafter included under the Financial Guidance section of this announcement.
The actual results realized by Advancis could differ materially from these
forward-looking statements, depending in particular upon the risks and
uncertainties described in the Company's filings with the Securities and
Exchange Commission. These include, without limitation, risks and uncertainties\
relating to the Company's financial results and the ability of the Company to
(1) reach profitability, (2) prove that the preliminary findings for its product
candidates are valid, (3) receive required regulatory approvals, (4)
successfully conduct clinical trials in a timely manner, (5) establish its
competitive position for its products, (6) develop and commercialize products
that are superior to existing or newly developed competitor products, (7)
develop products without any defects, (8) have sufficient capital resources to
fund its operations, (9) protect its intellectual property rights and patents,
(10) implement its sales and marketing strategy, (11) successfully attract and
retain collaborative partners, (12) successfully commercialize and gain market
acceptance for its Keflex products, (13) successfully obtain sufficient
manufactured quantities of its drug products at acceptable rates, and (14)
retain its senior management and other personnel. Existing and prospective
investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of today's date. Advancis undertakes no
obligation to update or revise the information in this announcement, whether as
a result of new information, future events or circumstances or otherwise.
ADVANCIS PHARMACEUTICAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Revenues:
Product sales $ 336,357 $ 1,030,479 $ 1,196,588 $ 2,030,354
Contract revenue - 285,087 - 701,754
Reimbursement of
development costs - 1,885,273 - 5,095,387
Total revenue 336,357 3,200,839 1,196,588 7,827,495
Cost and expenses:
Cost of product
sales 25,021 102,746 77,606 178,777
Research and
development 6,762,016 10,228,995 13,963,216 23,468,640
Selling, general and
administrative 4,459,196 2,424,855 6,931,783 5,254,417
Total expenses 11,246,233 12,756,596 20,972,605 28,901,834
Loss from operations (10,909,876) (9,555,757) (19,776,017) (21,074,339)
Interest income 232,826 274,336 526,588 436,414
Interest expense (25,312) (31,411) (50,283) (63,510)
Other income (loss) (23,185) - 976,815 -
Net loss $ (10,725,547) $ (9,312,832) $ (18,322,897) $ (20,701,435)
Basic and diluted
net loss per share
applicable to
common stockholders $ (0.35) $ (0.34) $ (0.61) $ (0.82)
Shares used in
calculation of
basic and diluted
net loss per share 30,281,280 27,519,395 30,162,840 25,146,631
ADVANCIS PHARMACEUTICAL CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2006 2005
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 15,320,713 $ 18,116,968
Marketable securities 5,573,401 11,314,090
Restricted cash - 418,244
Accounts receivable, net 73,980 756,764
Notes receivable from officer 121,500 121,500
Inventories, net 491,779 219,451
Prepaid expenses and other
current assets 922,098 797,253
Total current assets 22,503,471 31,744,270
Property and equipment, net 13,070,815 14,450,627
Restricted cash 870,840 1,182,680
Deposits and other assets 1,341,336 884,312
Intangible assets, net 8,956,165 9,535,003
Total assets $ 46,742,627 $ 57,796,892
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 1,404,995 $ 1,686,487
Accrued expenses and advances 6,958,162 7,071,731
Lines of credit and short-term
debt 8,047,093 895,204
Deferred contract revenue - -
Total current liabilities 16,410,250 9,653,422
Lines of credit - 597,208
Note payable 75,000 75,000
Accrued severance - noncurrent
portion 278,646 1,235,394
Deferred contract revenue 11,625,000 11,625,000
Deferred rent and credit on lease
concession 1,272,180 1,268,857
Total liabilities 29,661,076 24,454,881
Stockholders' equity:
Preferred stock, undesignated - -
Common stock, par value 303,006 297,652
Capital in excess of par value 146,199,765 144,766,213
Deferred stock-based
compensation - (623,051)
Accumulated deficit (129,418,205) (111,095,308)
Accumulated other comprehensive
loss (3,015) (3,495)
Total stockholders' equity 17,081,551 33,342,011
Total liabilities and
stockholders' equity $ 46,742,627 $ 57,796,892
ADVANCIS PHARMACEUTICAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------------
2006 2005
-------------- --------------
Cash flows from operating activities:
Net loss $ (18,322,897) $ (20,701,435)
Adjustments to reconcile net income
to net cash used
in operating activities:
Depreciation and amortization 1,961,118 2,034,447
Stock-based compensation 1,761,118 840,324
Deferred rent and credit on lease
concession 3,323 37,890
Amortization of premium on
marketable securities 218,548 278,849
Loss on disposal of fixed assets 23,185 -
Recognition of advance payment on
potential sale of Keflex (1,000,000) -
Changes in:
Accounts receivable 682,784 (117,150)
Inventories (272,328) (219,388)
Prepaid expenses and other
current assets (124,845) 344,456
Deposits other than on property
and equipment - (100,000)
Accounts payable (281,492) (1,225,169)
Accrued expenses and advances (46,180) 1,780,825
Deferred contract revenue - 3,702,859
Net cash used in operating
activities (15,397,666) (13,343,492)
Cash flows from investing activities:
Purchase of marketable securities (9,632,379) -
Sale of marketable securities 15,155,000 8,705,000
Purchases of property and equipment (50,653) (1,373,976)
Deposits on property and equipment (250,000) (24,822)
Proceeds from sale of fixed assets 25,000 -
Restricted cash 730,084 (10,026)
Net cash provided by investing
activities 5,977,052 7,296,176
Cash flows from financing activities:
Proceeds from issuance of long-term
debt, net of issue costs 7,792,976 -
Payments on lines of credit (1,445,319) (511,122)
Proceeds from private placement of
common stock, net of issue costs - 25,770,184
Proceeds from exercise of common
stock options 276,702 20,705
Net cash provided by financing
activities 6,624,359 25,279,767
Net increase (decrease) in cash and
cash equivalents (2,796,255) 19,232,451
Cash and cash equivalents, beginning
of period 18,116,968 10,395,757
Cash and cash equivalents, end of
period $ 15,320,713 $ 29,628,208
SOURCE Advancis Pharmaceutical Corporation
-0- 08/02/2006
/CONTACT: Robert Low, Vice President, Finance & Acting CFO,
+1-301-944-6690, rlow@advancispharm.com, or Bob Bannon, Senior Director,
Investor Relations, +1-301-944-6710, rbannon@advancispharm.com, both of
Advancis Pharmaceutical Corporation/
/Web site: http://www.advancispharm.com
http://www.keflex.com /