AVI BioPharma Announces First Quarter Financial Results
PORTLAND, Ore. (May 5, 2004) - AVI BioPharma, Inc. (Nasdaq: AVII) today reported financial results for the three months ended March 31, 2004.
For the first quarter of 2004, AVI reported a net loss of $7.5 million, or $0.21 per share, compared with a net loss of $3.4 million, or $0.13 per share, for the first quarter of 2003. Revenues for the first quarter of 2004 were $99,451, compared with $257,923 for the first quarter of 2003. This decrease was due primarily to lower research contracts revenues, partially offset by increases in grant revenues.
Research and development expenses increased to $6.6 million from $2.8 million, and general and administrative expenses increased to $1.2 million from $933,401 in the first quarter of 2004, compared with the first quarter of 2003. Approximately $3.0 million of this increase in research and development was due to the company contracting for the production of GMP subunits, which will be used by the company to manufacture compounds for future clinical trials. This increase was anticipated and included in the calculation of the 2004 financial guidance.
AVI had cash, cash equivalents and short-term securities of $36.4 million as of March 31, 2004, a decrease of $1.2 million from December 31, 2003. This decrease is due primarily to $7.7 million used in operations and $318,342 used for purchases of property and equipment and patent related costs, offset by the receipt of $7.0 million in net proceeds from the exercise of warrants issued to several institutional investors for the purchase of 1,623,377 shares of the company's common stock at $4.62 per share. These warrants had been issued pursuant to a direct equity placement of the company's common stock in December 2003 under the company's effective shelf registration.
"Our recent clinical and corporate progress clearly supports our focus on rapidly and efficiently commercializing drugs that can improve lives," said Denis R. Burger, Ph.D., chief executive officer of AVI. "In March, we reported favorable results from a key clinical study evaluating the efficacy of our orally administrated NeuGene® antisense technology, AVI-4557, that inhibits the enzyme responsible for the metabolism of approximately half of currently marketed drugs. We believe this marks the first demonstration of efficacy in a human clinical study with an orally administered antisense compound and improves our positions in developing corporate partners for this program.
"Additionally, we recently strengthened our leadership having added respected, highly qualified new members to our management team," added Dr. Burger. "We are delighted to report that, Dr. Peter O'Hanley, senior vice president of clinical development and regulatory affairs, and Ray Cummings, vice president of business development, are already actively contributing to our programs."
Product Pipeline Update
Technology Overview
AVI is developing products principally based on its NeuGene antisense technology. 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 novel synthetic backbone, instead of the modified backbones of competing technologies. AVI believes that this chemistry allows NeuGene antisense agents to be more stable, specific, efficacious and safer than second-generation antisense compounds in clinical development by others. NeuGene technology is the only third-generation antisense drug technology in mid- to late-stage clinical trials.
AVI focuses on three program areas including cardiovascular disease, viral disease, and cancer. In addition, AVI applies its technology to certain other clinical applications that are particularly amenable to antisense drug development.
In the cancer program, AVI has a second technology called 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 expressed in most cancers and is believed to promote tumor growth and to shield the tumor from immune attack. Avicine has demonstrated a benefit in combination with standard cancer treatments, including chemotherapy.
Cardiovascular Disease Program
Resten-NG® is a NeuGene antisense drug for treating cardiovascular restenosis, or the re-narrowing of a coronary artery following angioplasty. Resten-NG inhibits the expression of the c-myc gene, which plays a key role in the development of the pathology leading to restenosis. A nonexclusive license has been granted to Medtronic, Inc. for AVI's antisense compounds deployed on stents or certain other devices for treating restenosis. At the September 2003 Transcatheter Cardiovascular Therapeutics conference, AVI announced Phase II clinical trial data showing that Resten-NG delivered via catheter during balloon angioplasty procedures resulted in an approximate 75% reduction in the restenosis rate. At the April 2003 American College of Cardiology meeting, results from two independent studies were presented that additionally demonstrated the potential of treating cardiovascular restenosis by delivering Resten-NG systemically using the company's proprietary delivery technology, possibly lessening the need for, or as an adjunct to, special drug delivery catheters or drug-coated stents. In August 2003, AVI announced a Phase II clinical trial with Resten-NG coupled with this patented delivery technology at the University of Nebraska Medical Center. AVI intends to have clinical trials initiated in mid-2004 in Europe with Resten-NG delivered on a stent. These trials are designed to lead into studies to meet the regulatory requirements for a CE Mark, constituting marketing approval for the European Union.
Viral Disease Program
AVI has used its proprietary NeuGene antisense agents to focus on RNA viruses to target West Nile virus (WNV), the SARS coronavirus, Hepatitis C virus (HCV), and Dengue virus as well as many of the viruses included on the Domestic Homeland Security list of bioterrorism viruses. In its WNV program, the company filed an application with the U.S. Food and Drug Administration (FDA) in May 2003 to obtain Orphan Drug designation for its NeuGene drug candidate, AVI-4020, and submitted an IND the following month. The company initiated a Phase Ib clinical trial to treat WNV in September 2003. This trial met its primary safety endpoint and also demonstrated a favorable pharmacokinetic profile with drug detected in cerebrospinal fluid. AVI filed an application for Orphan Drug designation for AVI-4179 targeting the coronavirus implicated in SARS in August 2003. In the following month, the company received positive preclinical test results from The Scripps Research Institute. AVI plans to focus its future anti-viral drug development program on viral diseases with large and stable markets, the first of which is HCV, with Dengue virus to follow.
Cancer Program
AVI has completed a Phase Ib clinical trial with its NeuGene drug candidate AVI-4126, which demonstrated the effectiveness of systemic delivery into solid tumor tissues for both breast and prostate cancer patients. AVI-4126 targets the oncogene c-myc. Over-expression of c-myc has been described in many types of cancers.
In December 2001, AVI reported Phase II data demonstrating that Avicine provided a survival benefit to patients with pancreatic cancer. In this study, patients were treated with Avicine alone, or with Avicine in combination with the chemotherapeutic agent 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. The company plans to initiate an additional Phase II clinical program with Avicine in pancreatic cancer in 2004, instead of an originally planned Phase III. This Phase II program was selected due to considerations of cost, timeline and study design. The company anticipates moving into a future Phase III clinical trial if an appropriate partner, with whom to share the costs of the program, is identified.
Other Clinical Opportunities
Drug Metabolism Program
AVI has successfully completed clinical trials demonstrating that its antisense drug improved the pharmacokinetic profile of two different test drugs by down-regulating the liver enzyme that is critical to the body's processing of many drugs. Two clinical studies completed in late 2002 showed that AVI-4557 down-regulated cytochrome P450, which resulted in an improved pharmacokinetic profile of a test drug. In March 2004, AVI announced positive clinical results from a study of AVI-4557 to evaluate the oral route of administration. Additional Phase II trials will be designed after establishing strategic relationships with pharmaceutical partners.
Polycystic Kidney Disease Program
AVI completed a Phase Ib clinical trial in 2002 to evaluate the safety and pharmacokinetics of AVI-4126 in adult patients with polycystic kidney disease (PKD) and with varying degrees of compromised kidney function. Results of the study showed an excellent safety profile and no adverse effect on kidney function. The company has designed a Phase II clinical study in the early onset form of PKD that is often lethal for children. AVI plans to initiate this trial in the second half of 2004.
Conference Call
AVI BioPharma has scheduled an investor conference call regarding this announcement, and its current and planned business activities, to be held today, beginning at 2:00 p.m. Eastern Time. Those interested in listening to the conference call live via the Internet may do so by visiting the company's web site. A replay will be available on the site for 14 days. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering reservation number 7021268.
About AVI BioPharma
AVI BioPharma develops therapeutic products for the treatment of life-threatening diseases using two technology platforms: third-generation NeuGene antisense drugs and cancer immunotherapy. AVI's lead NeuGene antisense compound is designed to target cell proliferation disorders, including cardiovascular restenosis, cancer and polycystic kidney disease. In addition to targeting specific genes in the body, AVI's antiviral program uses NeuGene antisense compounds to target single-stranded RNA viruses, including West Nile virus, SARS coronavirus, calicivirus and hepatitis C. AVI' second technology, Avicine®, is a therapeutic cancer vaccine with late-stage trials planned for the treatment of pancreatic cancer. More information about AVI is available on the company's Web site at http://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 company's Securities and Exchange Commission filings.
[Tables to Follow]
AVI BIOPHARMA, INC.
(A Development-Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended March 31, | ||
| 2004 | 2003 | |
| Revenues, from license fees, grants & research contracts | $99,451 | $257,923 |
| Operating expenses: | ||
| Research and development | 6,613,988 | 2,805,895 |
| General and administrative | 1,238,201 | 933,401 |
| 7,852,189 | 3,739,296 | |
| Other income: | ||
| Interest income, net | 220,226 | 62,556 |
| Net loss | $(7,532,512) | $(3,418,817) |
| Net loss per share basic and diluted | $(0.21) | $(0.13) |
| Shares used in per share calculations | 35,610,687 | 26,567,968 |
BALANCE SHEET HIGHLIGHTS
(unaudited)
| March 31, 2004 |
December 31, 2003 | |
|---|---|---|
| Cash, cash equivalents and short-term securities | $36,409,579 | $37,599,136 |
| Total current assets | 37,157,224 | 38,390,519 |
| Total assets | 45,801,796 | 47,145,023 |
| Total current liabilities | 2,750,411 | 3,750,993 |
| Total shareholders' equity | $43,051,385 | $43,394,030 |