Avalon (NASDAQ:AVRX)
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GERMANTOWN, Md., May 9 /PRNewswire-FirstCall/ -- Avalon Pharmaceuticals, Inc. (NASDAQ:AVRX) today announced financial and operational results for the fiscal quarter ended March 31, 2007. For the three months ended March 31, 2007, total revenues were $0.7 million and net loss was $5.3 million. As of March 31, 2007, cash, cash equivalents and marketable securities totaled $24.6 million.
"Avalon is off to a good start in 2007 as demonstrated by the status of our AVN944 program, which is progressing well through the Phase I trial," stated Kenneth C. Carter, Ph.D., President and CEO of Avalon. "Preparations are well underway for Phase II trials of AVN944 in both hematological cancers and solid tumors. Our recently announced collaboration with Merck this quarter is a very significant event for our company. We also continue to build a pipeline of first-in-class drugs for Avalon and our growing list of partners."
AVN944:
-- Data from the ongoing Phase I study of AVN944 show that AVN944
demonstrates a good safety profile, has dose-dependent
pharmacokinetics, induces biomarkers of programmed cell death in cancer
cells from patients and has clear biologic activity in a subset of the
patients that have been treated thus far. For the lymphoma and myeloma
arm, patients are currently being treated with 150 mg twice daily. For
the leukemia arm of the study, patients are currently being treated
with 200 mg twice daily. To date, 37 patients have completed a total of
83 28-day cycles of treatment. Correlation of biomarkers and clinical
activity suggest that gene expression patterns in patients' malignant
cells may predict those patients most likely to benefit from AVN944
treatment.
-- The Company gave two poster presentations regarding AVN944 at the
recent American Association for Cancer Research Annual Meeting held
April 14-18, 2007, in Los Angeles. The first presentation described
the potent antiproliferative activity of AVN944 in human endothelial
cells (HUVEC), and showed that the compound prevents blood vessel
formation in a mouse model. "Results of this study provide new insight
into the mechanism of action of AVN944," stated Zoë Weaver, Ph.D.,
staff scientist at Avalon and lead investigator in the study. "The
suppression of blood vessel growth, without any adverse effects to the
mice, gives us a strong rationale to include solid tumors, especially
those that may be more sensitive to agents that inhibit tumor
angiogenesis, in our Phase II."
-- The second study described the generation of biomarkers that may have
utility in identifying patients most likely to benefit from AVN944
therapy. "Our biomarker-driven approach to drug development allows us
the opportunity to enrich our clinical trials with patient populations
more sensitive to AVN944 therapy," stated Jeffrey Strovel, Ph.D.,
senior scientist at Avalon and lead investigator in the study. "We can
now validate these gene signatures for utility in patient
stratification in our upcoming Phase II trials, as well as for their
use as prognostic signatures. If this approach works, it could
significantly accelerate the development of AVN944 and enhance its
utility as a marketed product."
Partnership with Merck:
-- In March 2007, Avalon entered into a drug discovery, development and
commercialization agreement with Merck & Co., Inc., to identify and
develop inhibitors against a selected target in the area of oncology.
Avalon will use its AvalonRx(R) platform to screen a select set of
compounds from Merck's proprietary compound library and identify hits
against this target that is generally regarded as "intractable" based
on the difficulty in identifying inhibitors. Avalon will select
compound families and optimize these compounds to a preclinical
candidate selection stage. Merck will be responsible for the clinical
development, regulatory approval and commercialization of any potential
product candidates. Under the terms of the agreement Avalon may receive
discovery, development, regulatory and commercial milestones payments
exceeding $200 million as well as royalties on any potential future
marketed products.
Existing Partnerships:
-- During the quarter, the Company began the screening phase of the
Novartis collaboration which triggered a $500,000 payment to Avalon for
research support. Data analysis of the results of the screen is now
underway.
-- During the quarter, Avalon's drug discovery collaboration with
MedImmune completed the high throughput screening phase of the project,
and now characterization of several compound series has advanced to a
decision point by MedImmune on selection of compounds for lead
optimization. Avalon did not recognize revenues from the collaboration
with MedImmune pending that decision.
Internal Programs:
-- Avalon's programs to identify inhibitors of the Beta-catenin pathway
and to identify inhibitors of the Aurora pathway are currently in lead
optimization activities. It is the company's intent to select a
preclinical candidate for one of these programs in 2007.
-- Significant progress is being made on the early stage drug discovery
programs targeting the Survivin and Myc pathways. These programs
target two pathways that are critically involved in cancer cell
survival and have been recognized as conventionally intractable.
New Chief Financial Officer
-- The Company recently announced that C. Eric Winzer, 50, will become the
company's new Chief Financial Officer effective July 2, 2007. Mr.
Winzer will succeed Gary Lessing, who has chosen to leave the company
to pursue entrepreneurial opportunities. Mr. Winzer was most recently
with Invitrogen Corporation (NASDAQ:IVGN), a provider of life science
technologies for disease research and drug discovery, from 2000 to
2006, where he served as Senior VP and Chief Financial Officer,
Executive Sponsor for Invitrogen's ERP implementation and VP, Finance.
Stockholder Rights Plan
-- The Avalon Board of Directors approved the adoption of a Stockholder
Rights Plan. The Rights Plan is designed to deter coercive takeover
tactics and to prevent an acquirer from gaining control of the company
without offering a fair and adequate price and terms to all of the
company's stockholders. A full description of the Rights Plan is
contained in our publicly available filings with the Securities and
Exchange Commission.
Equity Financing:
-- In January 2007, Avalon closed a $10 million private placement to
institutional investors. A total of 3 million shares of Avalon's common
stock were issued in the private placement at a price per share of
$3.34.
Financial Highlights:
-- Total revenues increased to $0.7 million for the three months ended
March 31, 2007, compared to $0.5 million for the three months ended
March 31, 2006. All revenues during the quarter were related to our
collaboration with Novartis.
-- Operating expenses. Total costs and expenses from operations increased
to $6.3 million for the three months ended March 31, 2007, compared to
$5.4 million for the three months ended March 31, 2006.
-- Net loss was $5.3 million for the first quarter of 2007, compared to a
net loss of $4.6 million in the first quarter of 2006.
-- Net loss per share applicable to common stockholders during the first
quarter of 2007 was $0.43 compared to a loss of $0.51 in the comparable
quarter of last year.
As of March 31, 2007, cash, cash equivalents and marketable securities totaled $24.6 million. Of this amount, $5.5 million was held in a restricted account to serve as collateral for our long-term debt.
CONFERENCE CALL & WEBCAST INFORMATION
Avalon Pharmaceuticals' senior management will host a conference call on Thursday, May 10, 2007 at 8:00 a.m. Eastern Daylight Savings Time, to discuss the quarterly results. Live audio of the conference call will be available to investors, members of the news media and the general public by dialing (866) 202-3109 (in the U.S.) and (617) 213-8844 (internationally), and providing the participant pass code, 34650950. To access the call by live webcast, please visit the Investor Relations section of our website at http://www.avalonrx.com/. An archived version of the webcast will also be available through June 30, 2007 on Avalon's website.
About Avalon Pharmaceuticals
Avalon Pharmaceuticals is a biopharmaceutical company focused on the discovery and development of potential first-in-class cancer therapeutics. Avalon has a lead product in Phase I clinical development (AVN944), preclinical programs to develop inhibitors for the Beta-catenin and Aurora pathways, discovery programs for Survivin and Myc pathway inhibitors, and value generating partnerships with Merck, MedImmune, Medarex, and Novartis. By utilizing AvalonRx(R), our platform technology based upon the proprietary use of large-scale gene expression, we are uniquely positioned to develop therapeutics focused on pathways that have historically been characterized as "undruggable". Avalon was established in 1999 and is headquartered in Germantown, Md.
Forward Looking Statements
This announcement contains, in addition to historical information, certain forward-looking statements that involve risks and uncertainties, in particular, related to progress in our drug discovery programs and our collaborations, and clinical progress in the development of AVN944. Such statements reflect the current views of Avalon management and are based on certain assumptions. Actual results could differ materially from those currently anticipated as a result of a number of factors, risks and uncertainties including the risk that the discovery programs and collaborations may not be successful and that AVN944 will not progress successfully in its clinical trials, and other risks described in our SEC filings. There can be no assurance that our development efforts will succeed, that AVN944 will receive required regulatory clearance or, even if such regulatory clearance is received, that any subsequent products will ultimately achieve commercial success. The information in this Release should be read in conjunction with the Risk Factors set forth in our 2006 Annual Report on Form 10-K and updates contained in subsequent filings we make with the SEC.
AVALON PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(in thousands except for per share amounts)
(Unaudited)
Three Months Ended
March 31,
2007 2006
Revenues $731 $539
Costs and expenses:
Research and development 4,111 3,149
General and administrative 2,228 2,253
Total costs and expenses 6,339 5,402
Loss from operations (5,608) (4,863)
Total other income 263 305
Net Loss $(5,345) $(4,558)
Net loss per share - basic and diluted $(0.43) $(0.51)
Weighted average number of
shares - basic and diluted 12,410,483 9,009,437
AVALON PHARMACEUTICALS, INC.
BALANCE SHEETS
(in thousands)
March 31 December 31,
2007 2006
(Unaudited)
ASSETS
Cash, cash equivalents and marketable
securities $19,095 $14,910
Restricted cash and securities 5,520 5,520
Property and equipment, net 8,641 8,923
Other assets, net 1,721 2,038
Total assets $34,977 $31,391
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 4,356 $5,641
Long-term liabilities 7,863 7,876
Total stockholders' equity 22,758 17,874
Total liabilities and stockholders' equity $34,977 $31,391
Contacts:
Avalon Pharmaceuticals, Inc. Russo Partners, LLC
David D. Muth Wendy Lau (Media)
Executive Vice President Tel: (212) 845-4272
and Chief Business Officer
Tel: (301) 556-9900 The Trout Group LLC
Fax: (301) 556-9910 Chad Rubin (Investors)
Email: Tel: (646) 378-2947
DATASOURCE: Avalon Pharmaceuticals, Inc.
CONTACT: David D. Muth, Executive Vice President and Chief Business
Officer, Avalon Pharmaceuticals, Inc., +1-301-556-9900, Fax: +1-301-556-9910,
; Media: Wendy Lau, of Russo Partners, LLC, +1-212-845-4272,
Investors: Chad Rubin, of The Trout Group LLC, +1-646-378-2947
Web site: http://www.avalonrx.com/