Avalon (NASDAQ:AVRX)
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Avalon Pharmaceuticals, Inc. (Nasdaq:AVRX), a clinical-stage
biopharmaceutical company focused on the discovery and development of
novel cancer therapeutics, today announced financial and operational
results for the second quarter of 2008. For the three months ended June
30, 2008, net loss was $5.6 million, compared with $5.8 million in the
second quarter of 2007. As of June 30, 2008, cash, cash equivalents and
marketable securities totaled $16.7 million. The Company also announced
today that it is restructuring its operations and reducing its workforce
by approximately one-third.
“In the second quarter of 2008, we reached an
important milestone for Avalon in naming AVN316 as the lead clinical
candidate for our Beta-catenin Pathway Inhibitor program,”
stated Kenneth C. Carter, Ph.D., President and CEO. “This
compound, which is a potent inhibitor of the intractable Beta-catenin
pathway, is the first compound to be named as a clinical candidate from
our unique drug discovery platform, AvalonRx®.
We believe this nomination provides validation for our unique drug
discovery approach and we expect additional first-in-class compounds
will be identified using AvalonRx in the future.”
“Given the difficult current funding
environment, we have decided to restructure our operations in order to
narrow our focus to those product development programs with the greatest
potential value,” continued Dr. Carter. “We
believe the operational changes we are making will allow us to advance
our key programs as we continue seeking additional sources of capital
and will position us well for success after we have raised additional
funds.”
Conference Call & Webcast Information
Avalon Pharmaceuticals’ senior management will
host a conference call at 1:00 p.m. Eastern Daylight Time today, to
discuss the quarterly results and recent business developments. Live
audio of the conference call will be available to investors, members of
the news media and the general public by dialing 877-548-7913 (in the
U.S.) and 719-325-4932 (internationally), and providing the participant
pass code, 3593548. 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An archived version of the webcast will also be available for seven (7)
days on Avalon's website.
Recent Developments
AVN316 was nominated as the lead clinical candidate in the Company’s
Beta-catenin Pathway Inhibitor program.
The Company identified small molecule allosteric inhibitors of the
Aurora/Centrosome pathway and identified the target in the pathway as
the Polo-Like Kinase 3 (PLK3) protein.
During the quarter, AVN944 advanced to treatment at 400 mg twice a day
in both the Phase I hematological and the Phase IIa pancreatic
clinical trials. Two patients at the 400 mg dose level experienced
elevated bilirubin. The Company has suspended treatment at the 400 mg
dose level but is continuing dosing patients who are at lower dose
levels while reviewing all relevant data to determine whether a
maximum tolerated dose has been reached.
The Company announced steps to restructure its operations and reduce
its future cash burn rate.
Financial Results and Condition
Net loss was $5.6 million for the three months ended June 30, 2008,
compared with $5.8 million in the second quarter of 2007. The lower loss
in 2008 was principally due to lower operating expenses and higher
revenues in the 2008 period. Revenues for the second quarter of 2008
were $137,000, compared with $78,000 for the same period of 2007.
Revenues in both periods were from the Company’s
collaboration with Novartis Institutes for Biomedical Research.
Total costs and expenses from operations were $5.8 million in the second
quarter of 2008, compared with the $6.1 million reported for the second
quarter of 2007. General and administrative expenses decreased in the
2008 period principally due to lower stock compensation expense and
other costs related to personnel and consultants. Research and
development expenses increased in the 2008 period due to higher clinical
trial costs related to AVN944.
As of June 30, 2008, the Company had $16.7 million in cash, cash
equivalents and marketable securities. Of that amount, $4.5 million was
held in a restricted account to serve as collateral for long-term debt.
The Company estimates that its existing capital resources will not be
sufficient to fund its planned operations significantly beyond December
31, 2008. Management continues to pursue additional funding sources;
however, there is no assurance that the Company will raise capital
sufficient to enable it to continue its operations past year end. A
failure to raise additional funds in the near term would require Avalon
to reduce its operating and capital expenditures, scale back or
eliminate some or all of its research and development programs or
license to third parties products or technologies that it would
otherwise seek to develop itself. There is no assurance that the Company
could continue as a going concern if this were the case.
Restructuring
Avalon today announced plans to restructure its operations to focus
primarily on its existing collaborations and on the pre-clinical and
clinical development of its Beta-catenin inhibitor program. As a part of
its restructuring plans, the Company is limiting its investment in the
development of AVN944 as it seeks to identify development partners for
this program. In connection with the restructuring of its operations,
the Company is implementing across-the-board workforce reductions to
lower the Company’s headcount by about one
third to approximately 35 employees going forward. The Company expects
to take restructuring charges related to this workforce reduction and
the restructuring of its operations of between $0.9 million and $1.1
million for severance and related costs.
About Avalon Pharmaceuticals
Avalon is a biopharmaceutical company focused on the discovery,
development and commercialization of first-in-class cancer therapeutics.
AvalonRx® is the
company’s proprietary platform which is based
on large-scale biomarker identification and monitoring, used to discover
and develop therapeutics for pathways that have historically been
characterized as "undruggable." Avalon 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 our expectations for 2008, the amount of any
future restructuring charges, our expectations for raising additional
capital, our ability to identify new first-in-class therapeutic
compounds, our ability to fund operations until December 31, 2008,
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, we may not be successful in
partnering any of our internal programs, including AVN944, or in signing
new discovery partnerships, we may not be successful in raising
additional capital necessary to fund our operations 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 2007 Annual Report on Form 10-K and
updates contained in subsequent filings we make with the SEC.
AVALON PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months EndedJune 30,
Six Months EndedJune 30,
2008
2007
2008
2007
Revenues
$
137
$
78
$
187
$
809
Costs and expenses:
Research and development
4,509
4,066
8,869
8,178
General and administrative
1,281
2,043
3,413
4,271
Total costs and expenses
5,790
6,109
12,282
12,449
Loss from operations
(5,653
)
(6,031
)
(12,095
)
(11,640
)
Total other income
75
222
268
486
Net loss
$
(5,578
)
$
(5,809
)
$
(11,827
)
$
(11,154
)
Net loss attributed to common stockholders per common share -
basic and diluted
$
(0.33
)
$
(0.40
)
$
(0.69
)
$
(0.82
)
Weighted average number of common shares - basic and diluted
17,033,042
14,672,577
17,031,620
13,547,779
AVALON PHARMACEUTICALS, INC.
BALANCE SHEETS
(in thousands)
June 30,
December 31,
2008
2007
(Unaudited)
ASSETS
Cash, cash equivalents and marketable securities
$
12,196
$
23,250
Restricted cash and securities
4,458
5,275
Property and equipment, net
6,657
7,325
Other assets, net
1,263
1,455
Total assets
$
24,574
$
37,305
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
$
4,847
$
4,685
Long-term liabilities
5,228
6,446
Total stockholders’ equity
14,499
26,174
Total liabilities and stockholders’
equity
$
24,574
$
37,305