Avi Biopharma Announces Second Quarter Financial Results
PORTLAND, Ore. - August 6, 2002 - AVI BioPharma, Inc. (Nasdaq: AVII, AVIIW, AVIIZ), a biopharmaceutical company developing treatments for life-threatening diseases based on antisense and cancer immunotherapy technologies, today reported financial results for the three and six months ended June 30, 2002.
For the second quarter of 2002, the Company reported a net loss of $10.5 million, or $0.40 per share, compared with a net loss of $3.5 million, or $0.16 per share, for the second quarter of 2001. The second quarter 2002 net loss included a non-cash write-down of short-term securities-available-for-sale of $2.7 million for an other than temporary impairment of an equity in accordance with generally accepted accounting principles. The second quarter net loss excluding this non-cash write-down would have been $7.8 million, or $0.30 per share.
Research and development expenses during the second quarter of 2002 increased to $7.2 million from $3.2 million for the comparable quarter last year. This increase was primarily due to costs of GMP manufacturing of NeuGeneS® by an outside contractor in preparation for Phase III clinical trials and potential future commercial launch of the Resten-NG™ product.
For the six months ended June 30, 2002, AVI BioPharma reported a net loss of $18.3 million, or $0.74 per share, compared with a net loss of $6.7 million, or $0.31 per share, for the comparable period in 2001. The net loss for the first half of 2002 excluding the second quarter non-cash write-down described above would have been $15.6 million, or $0.63 per share.
Operating expenses for the first six months of 2002 were $16.3 million, compared with $7.4 million for the comparable period of 2001. First half 2002 research and development expenses increased to $14.3 million, compared with $5.8 million for the comparable period in 2001. This increase was primarily due to costs of GMP manufacturing of NeuGeneS by an outside contractor in preparation for Phase III clinical trials and potential future commercial launch of the Resten-NG product. Year-to-date 2002 general and administrative expenses increased to $2 million from $1.7 million last year. These increases were primarily due to additional expenses associated with outside collaborations, expansion of the Company's clinical development and regulatory affairs efforts, and additional preclinical and clinical testing of the Company's products.
The company had cash, cash equivalents and short-term securities of approximately $30 million as of June 30, 2002, an increase of $4.1 million from December 31, 2001. This increase was due primarily to the receipt of $21.4 million in net proceeds from a private equity financing with several institutional investors, offset by $12.7 million used in operations, $1.6 million used for purchases of property and equipment and patent related costs, and a net $3.3 million decline in the value of the company's short-term securities.
"Never in our corporate history has AVI been stronger than it is today," stated Denis R. Burger, Ph.D., AVI's chief executive officer. "We continue to reach important clinical milestones with both our AVICINE® cancer vaccine and NeuGene third-generation antisense technology platforms, and these platforms are demonstrating broad applicability in cancer, cardiovascular disease, inflammation and infection. Given our cash position, we can confidently move forward with our near-term clinical studies."
Dr. Burger further commented, "During the past several months, we have received significant recognition from the scientific community as we presented clinical study results at several prestigious scientific conferences, including the American Society of Clinical Oncology (ASCO) and the World Congress of Pharmacology. Additionally, AVI science has been featured in the July cover stories in the scientific journals Clinical Cancer Research and Drug Metabolism and Disposition."
Product Pipeline Update
Antisense
NeuGene
Antisense compounds are designed to bind to specific disease-causing gene sequences to disable or inactivate the disease process. AVI has developed proprietary third-generation antisense compounds, called NeuGeneS, which are characterized by a fully synthetic backbone, instead of the natural or modified backbones of competing technologies. This chemistry allows NeuGene antisense agents to be more stable, specific, efficacious and safer than second-generation antisense compounds in clinical development by others.
Resten-NG
Resten-NG is a NeuGene compound for treating cardiovascular
restenosis, or the re-narrowing of an artery following balloon
angioplasty. Resten-NG targets a transcription factor, and upon
entering arterial cells, it blocks the underlying cause of the disease:
smooth muscle cell activation and proliferation. AVI has demonstrated in
preclinical studies that Resten-NG significantly reduced coronary
restenosis. A global license has been granted to Medtronic, Inc. for
AVI's antisense compounds deployed on stents or other devices for
treating restenosis. AVI is currently in a Phase II trial with this
product.
Cancer
AVI is conducting a Phase I/II clinical study with its NeuGene
antisense technology in patients with solid tumors. The Company expects
to complete this study around the end of 2002. Previous studies have
shown that this antiproliferative antisense drug is both safe and
effective at shutting down cell division, a hallmark of cancer
progression.
Prostate Cancer
In August 2001, AVI announced the initiation of a study
in prostate cancer, funded by the Department of Defense. AVI presented
preclinical study results at the Annual CaP Cure prostate cancer
conference in September 2001 showing that AVI's antisense compounds
inhibit cancer cell growth and cause cell death in prostate tumors. In
December 2001, AVI was awarded a Department of Defense Prostate Cancer
Research Program grant to pursue development of therapeutics to fight
both the initial stages and the incurable metastatic forms of prostate
cancer using AVI's NeuGeneS. Also in December, AVI presented
preclinical study results at the 10th International Conference on Gene
Therapy of Cancer. In April 2002 and in June 2002, the Company
presented research showing NeuGene directed against the c-myc gene
caused cell growth inhibition and cell death in human prostate cancer
cells. AVI plans to initiate human testing in prostate cancer next
year.
Liver Enzyme Modification
AVI successfully completed a clinical trial
demonstrating that the Company's antisense drug improves the
pharmacokinetic profile of a test drug in modifying the function of a
liver enzyme that is critical to the body's processing of many drugs.
The study is based on the results of preclinical studies using AVI's
NeuGene antisense technology targeting liver cytochrome enzymes, which
control metabolism of most drugs. Data from the trial will be presented
at scientific forums later this year.
Polycystic Kidney Disease
In December 2001, AVI initiated a Phase I/II
clinical study in patients with polycystic kidney disease (PKD).
Preclinical studies have demonstrated that AVI-4126 is effective in
preventing some of the clinical manifestations of PKD. In early August
2002, AVI announced that it had completed a Phase Ib clinical study that
evaluate the safety and pharmacokinetics of three doses of AVI-4126 in
patients with PKD and with varying degrees of compromised kidney
function. Patients in this study did not demonstrate serious adverse
experience, nor was their kidney function adversely affected.
Cancer Immunotherapy
AVICINE
AVICINE is a therapeutic cancer vaccine designed to elicit an immune response to a well-characterized, tumor-associated antigen, human chorionic gonadotropin (hCG). The hCG hormone is naturally produced during pregnancy, and is believed to stimulate growth and shield the embryo from immune system attack. The hCG hormone is expressed in most, if not all, cancers as a membrane-associated tumor marker, and is believed to promote tumor growth and vascularization and to render patients immunologically unresponsive to the tumor. The role of hCG in cancer and pregnancy is widely believed to be analogous. Thus, AVICINE stimulates the immune system to mount an attack against cancer cells expressing this hormone.
Pancreatic Cancer
In December 2001, AVI reported Phase II data
demonstrating that AVICINE provided substantial survival benefit to
patients with pancreatic cancer. In this study, patients were treated
with AVICINE alone, or with AVICINE in combination with the chemotherapy
agent Gemzar®. Those treated with AVICINE reported one-year
survival data similar to historical results for those treated with
Gemzar, without the vaccine-related side effects often associated with
Gemzar. A one-year survival rate of 30% was reported for patients
treated with AVICINE plus Gemzar, which is approximately double the
survival rate for either treatment alone. In May 2002, AVI presented
complete survival data from the Phase II pancreatic cancer study at the
American Society of Clinical Oncology (ASCO) meeting. As noted above,
later this year or early next year the company plans to begin a Phase
III clinical program with AVICINE for treating pancreatic cancer.
AVI BioPharma has scheduled an investor conference call regarding this announcement to be held today, beginning at 11:00 a.m. Eastern Time. A telephone replay will be available until midnight, Eastern Time August 8, 2002, by dialing (888) 266-2081, and entering reservation number 6106653.
Those interested in listening to the conference call live via the Internet may do so by visiting the company's Web site at www.avibio.com. A replay will be available on the site for 14 days.
About AVI BioPharma
AVI BioPharma develops therapeutic products for the treatment of life-threatening diseases using two technology platforms: NeuGene antisense drugs and cancer immunotherapy. Its lead cancer agent, AVICINE, a therapeutic cancer vaccine, has completed three Phase II trials in colorectal and pancreatic cancer and is initiating a Phase III pivotal trial in pancreatic cancer, with a supporting study in colorectal cancer. The first application of its NeuGene compounds, Resten-NG, is designed to treat cancer, cardiovascular restenosis and other cell proliferation disorders by inhibiting the production of a cellular transcription factor, the oncogene c-myc. It is currently in Phase II trials for restenosis and in a Phase I/II trial for cancer. AVI has recently completed a Phase I NeuGene antisense study that successfully down-regulated the liver enzyme Cytochrome P450 and modified drug metabolism. More information about AVI is available on the Company's Web site at www.avibio.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, the results of research and development efforts, the results of preclinical and clinical testing, the effect of regulation by the FDA and other agencies, the impact of competitive products, product development, commercialization and technological difficulties, and other risks detailed in the Companies' Securities and Exchange Commission filings.
[Tables to Follow]
AVI BIOPHARMA, INC.
(A Development-Stage Company)
STATEMENTS OF OPERATIONS
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
2002* |
2001* |
2002* |
2001* |
|
| Revenues, from license fees, grants & research contracts | $197,691 |
$87,264 |
$435,386 |
$103,244 |
| Operating expenses: | ||||
| Research and development | 7,224,095 |
3,162,667 |
14,273,215 |
5,755,282 |
| General and administrative | 895,706 |
709,527 |
1,980,225 |
1,673,658 |
_________ 8,119,801 |
_________ 3,872,194 |
_________ 16,253,440 |
_________ 7,428,940 |
|
| Other income (loss): | ||||
| Interest income, net | 111,207 |
238,915 |
191,058 |
600,971 |
| Write-down of short-term securities- available-for-sale |
(2,686,956) |
- |
(2,686,956) |
- |
_________ (2,575,749) |
_________ 238,915 |
_________ (2,495,898) |
_________ 600,971 |
|
| Net income (loss) | $(10,497,859) |
$(3,546,015) |
$(18,313,952) |
$(6,724,725) |
| Net income (loss) per share basic and diluted | $ (0.40) |
$ (0.16) |
$ (0.74) |
$ (0.31) |
| Shares used in per share calculations | 26,353,017 |
21,785,140 |
24,905,613 |
21,658,113 |
BALANCE SHEET HIGHLIGHTS
| June 30, 2002* |
December 31, 2001** | |
|---|---|---|
| Cash, cash equivalents and short-term securities | $29,679,640 | $25,597,121 |
| Total current assets | 30,265,576 | 27,511,076 |
| Total assets | 37,531,705 | 33,815,113 |
| Total current liabilities | 3,955,415 | 3,281,066 |
| Total shareholders' equity | $33,576,290 | $30,534,047 |
* Unaudited
** Derived from audited statements