ATLANTA, Nov. 7 /PRNewswire-FirstCall/ -- Inhibitex, Inc. today announced its financial results for the third quarter and nine months ended September 30, 2006 and confirmed its 2006 financial guidance. The Company reported that it held $64.5 million in cash, cash equivalents and short-term investments as of September 30, 2006 and continues to expect to have approximately $60 million in cash, cash equivalents and short-term investments on hand at December 31, 2006.
“Our third quarter operating results were directly in line with our expectations and guidance, and reflect the measures we enacted in the second quarter to reduce our burn rate by approximately 70% while maintaining the viability of Aurexis and our other MSCRAMM-based development programs,” stated William D. Johnston, Ph.D., president and chief executive officer of Inhibitex. “During the third quarter, we turned our focus from restructuring our operations to adopting and executing our strategy to aggressively pursue the acquisition of additional clinical-stage product candidates, through in- licensing, purchase or merger, to better balance our pipeline. We are pleased with the progress we have made in regards to this initiative, and continue to believe that we are on target to achieve our stated goal of announcing a transaction of this nature by the end of this year.”
Third Quarter 2006 Financial Results
The Company reported that its net loss for the third quarter of 2006 was $2.6 million, as compared to $9.0 million for the third quarter of last year. For the nine months ended September 30, 2006, net loss was $19.2 million, as compared to $29.1 million for the same period in 2005. The reduction in net loss in 2006 relative to 2005 was principally due to a significant decrease in research and development expenditures and an increase in interest and other income, offset in part by an increase in general and administrative expenses.
Basic and diluted net loss per share was $0.09 for the third quarter of 2006, as compared to $0.33 per share for the same quarter of 2005. For the nine months ended September 30, 2006, basic and diluted net loss per share was $0.64, as compared to $1.12 for the same period in 2005. This reduction in net loss per share in 2006 was due principally to the reduction in net loss as described above and, to a lesser extent, an increase in the number of weighted-average shares of common stock outstanding, which was a result of shares issued in connection with a financing the Company completed in August 2005.
Revenue for the third quarter of 2006 was $169,000 as compared to $328,000 for the third quarter of 2005. For the nine months ended September 30, 2006, revenue was $681,000 as compared to $774,000 for the same period in 2005. The decrease in revenue in 2006 as compared to 2005 was the result of proceeds received in 2005 from research activities performed under a materials transfer agreement that did not recur in 2006.
Research and development expense for the third quarter of 2006 was $2.5 million, as compared to $8.1 million for the third quarter of 2005. The decrease of $5.6 million in 2006 is largely the result of a $3.9 million decrease in direct clinical trial expenses, the vast majority of which were associated with the Company’s Phase III Veronate(R) clinical trial, and to a lesser extent, a $0.8 million decrease in expenditures for the manufacturing of clinical trial materials for both the Veronate and Aurexis(R) programs and a $0.6 million decrease in salaries, benefits, and share-based compensation.
For the nine months ended September 30, 2006 research and development expense decreased to $16.0 million from $26.1 million for the same period in 2005. The decrease of $10.1 million resulted primarily from a $7.3 million decrease in direct clinical trial expenses, the vast majority of which were associated with the Company’s Phase III Veronate trial, and a $2.9 million decrease in expenses related to the manufacturing of clinical trial material for the Veronate and Aurexis programs.
General and administrative expense increased to $2.0 million for the third quarter of 2006 as compared to $1.8 million for the third quarter of 2005. The increase of $0.2 million was primarily due to an increase in share-based compensation expense and depreciation and facility-related expense, offset by a reduction in market research activities and lower salaries and benefits.
For the nine months ended September 30, 2006 general and administrative expense increased to $7.3 million from $5.2 million for the same period in 2005. The increase of $2.1 million was partially the result of a $1.1 million increase in professional and legal fees and market research activities, and a $0.9 million increase in salaries, benefits, and share-based compensation expense, primarily due to the higher share-based compensation expense.
The Company recorded total share-based compensation expenses of $0.5 million, or $0.02 per share, for the third quarter of 2006, of which $0.2 million was recorded as research and development expense and $0.3 million was recorded as general and administrative expense. For the nine months ended September 30, 2006, the Company recorded total share-based compensation expenses of $1.5 million, or $0.05 per share, of which $0.6 million was recorded as research and development expense and $0.9 million was recorded as general and administrative expense.
Other income increased for the three and nine months ended September 30, 2006 by $1.1 million from the respective periods in 2005 as a result of the reversal of liability for which the obligation to provide further services or settlement has expired.
Conference Call and Webcast Information
William D. Johnston, Ph.D., president and chief executive officer, and other members of the Inhibitex senior management team will review third quarter results and provide a general update on the Company via a webcast and conference call today at 8:30 a.m. EST. To access the call, please dial 866-578-5747 (domestic) or 617-213-8054 (international) five minutes prior to the start time, and provide the access code 81196113. A replay of the call will be available from 10:30 a.m. EST on November 7, 2006 until December 7, 2006 at midnight. To access the replay, please call 888-286-8010 (domestic) or 617-801-6888 (international) and reference the access code 75166997. A live audio webcast of the call will also be available on the “Investors” section of the Company’s website, http://www.inhibitex.com. An archived webcast will be available in the Investors section of the Inhibitex website approximately two hours after the event for a period of thirty (30) days.
About Inhibitex
Inhibitex, Inc., headquartered in Alpharetta, Georgia, is a biopharmaceutical company focused on the discovery and development of antibody-based products for the prevention and treatment of serious, life- threatening infections. All of the Company’s drug development programs are based on its proprietary MSCRAMM protein platform. MSCRAMM proteins are located on the surface of pathogenic organisms, and play a key role in the initiation and spread of infections. The Company’s pipeline consists of Aurexis for the treatment of S. aureus bloodstream infections and five preclinical programs that include a collaboration and joint development agreement with Dyax to develop fully human monoclonal antibodies against MSCRAMM proteins on enterococci and a partnership with Wyeth to develop staphylococcal vaccines. For additional information about the Company, please visit http://www.inhibitex.com.
Inhibitex(R), MSCRAMM(R), Veronate(R), and Aurexis(R) are registered trademarks of Inhibitex, Inc.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts included in this press release, including statements regarding the Company’s estimated balance of cash, cash equivalents and short- term investments as of December 31, 2006 and the belief that the Company will achieve its goal of completing an in-licensing, acquisition or merger transaction by the end of 2006, are forward-looking statements. These plans, intentions, expectations or estimates may not actually be achieved and various important factors could cause actual results or events to differ materially from the forward-looking statements that the Company makes, including risks related to the ability of the Company to find suitable in-licensing, acquisition or merger opportunities in a timely manner and on acceptable terms and conditions, if at all; the clinical and economic viability of the MSCRAMM platform; maintaining adequate resources to continue to support its MSCRAMM- based research and development efforts; obtaining, maintaining and protecting the intellectual property incorporated into and supporting its product candidates; maintaining expenses, revenues and other cash expenditures substantially in line with planned or anticipated amounts; and other cautionary statements contained elsewhere herein and in its Annual Report on Form 10-K for the year ended December 31, 2005 and its Quarterly Report on Form 10-Q for March 31, 2006 and June 30, 2006 as filed with the Securities and Exchange Commission, or SEC, on March 13, 2006, May 10, 2006 and August 7, 2006, respectively. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release.
There may be events in the future that the Company is unable to predict accurately, or over which it has no control. The Company’s business, financial condition, results of operations, and prospects may change. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the Federal securities laws to update and disclose material developments related to previously disclosed information. The Company qualifies all of the information contained in this press release, and particularly its forward- looking statements, by these cautionary statements.
CONTACTS: Inhibitex, Inc. Russell H. Plumb Chief Financial Officer (678) 746-1136 rplumb@inhibitex.com Laura Perry (Investors) Stern Investor Relations, Inc. (212) 362-1200 laura@sternir.com INHIBITEX, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED BALANCE SHEETS (unaudited) September 30, December 31, 2006 2005 ASSETS Current assets: Cash and cash equivalents $26,804,984 $33,842,937 Short-term investments 37,687,922 53,288,016 Prepaid expenses and other current assets 1,677,133 1,917,436 Accounts receivable 219,671 44,923 Total current assets 66,389,710 89,093,312 Property and equipment, net 6,834,275 8,175,074 Total assets $73,223,985 $97,268,386 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $915,787 $1,879,191 Accrued expenses 2,883,504 5,316,906 Current portion of notes payable 833,333 1,319,445 Current portion of capital lease obligations 837,510 869,043 Current portion of deferred revenue 191,667 191,667 Other current liabilities 152,727 1,152,702 Total current liabilities 5,814,528 10,728,954 Long-term liabilities: Notes payable, net of current portion 833,333 1,458,333 Capital lease obligations, net of current portion 1,029,175 1,646,323 Deferred revenue, net of current portion 575,000 687,500 Other liabilities, net of current portion 1,178,306 1,294,210 Total long-term liabilities 3,615,814 5,086,366 Stockholders’ equity: Preferred stock, $.001 par value; 5,000,000 shares authorized at September 30, 2006 and December 31, 2005; none issued and outstanding - - Common stock, $.001 par value; 75,000,000 shares authorized at September 30, 2006 and December 31, 2005; 30,275,152 and 30,219,715 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively 30,275 30,220 Common stock warrants 11,517,743 11,514,793 Additional paid-in capital 213,019,213 212,210,931 Deferred stock compensation - (772,347) Deficit accumulated during the development stage (160,773,588) (141,530,531) Total stockholders’ equity 63,793,643 81,453,066 Total liabilities and stockholders’ equity $73,223,985 $97,268,386 INHIBITEX, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine months Ended September 30, September 30, 2006 2005 2006 2005 Revenue: License fees and milestones $37,500 $37,500 $112,500 $112,500 Collaborative research and development 125,000 125,000 375,000 375,000 Grants and other revenue 6,127 165,823 193,579 286,474 Total revenue 168,627 328,323 681,079 773,974 Operating expense: Research and development. 2,510,667 8,085,411 15,985,417 26,113,015 General and administrative 1,953,787 1,846,377 7,328,153 5,205,724 Total operating expense 4,464,454 9,931,788 23,313,570 31,318,739 Loss from operations (4,295,827) (9,603,465) (22,632,491) (30,544,765) Other (expense) income, net 1,002,250 (51,857) 1,059,993 (51,857) Interest income, net 704,996 608,943 2,329,441 1,537,562 Net loss $(2,588,581) $(9,046,379) $(19,243,057) $(29,059,060) Basic and diluted net loss per Share $(0.09) $(0.33) $(0.64) $(1.12) Weighted average shares used to compute basic and diluted net loss per share 30,272,775 27,326,530 30,253,888 25,898,716
Inhibitex, Inc.
CONTACT: Russell H. Plumb, Chief Financial Officer of Inhibitex, Inc.,+1-678-746-1136, or rplumb@inhibitex.com; or Investors, Laura Perry ofStern Investor Relations, Inc., +1-212-362-1200, or laura@sternir.com, forInhibitex, Inc.
Web site: http://www.inhibitex.com//
