Zalicus Reports Financial Results for the Third Quarter 2012

  Zalicus Reports Financial Results for the Third Quarter 2012

Business Wire

CAMBRIDGE, Mass. -- November 08, 2012

Zalicus Inc. (NASDAQ: ZLCS) a biopharmaceutical company that discovers and
develops novel treatments for patients suffering from pain, today reported
financial results for the third quarter ended September 30, 2012.

“We are focusing our resources and efforts on advancing the clinical
development of our ion channel programs including Z160, our first-in-class,
oral N-type calcium channel blocker for the treatment of chronic neuropathic
pain and Z944, a novel oral T-type calcium channel blocker,” commented Mark
H.N. Corrigan, MD, President and CEO of Zalicus. “During the third quarter we
advanced Z160 into a Phase 2a clinical trial for chronic back pain and remain
on track to initiate a second Phase 2a clinical trial with Z160 in
postherpetic neuralgia in the fourth quarter of this year.”

Third Quarter 2012 and Recent Accomplishments:

Pipeline Progress:

  *Advanced Z160, a first-in-class, oral, state dependent, selective N-type
    calcium channel (Cav 2.2) blocker into the first of two planned Phase 2a
    clinical trials for neuropathic pain. Patient enrollment in the first of
    these Phase 2a studies, in lumbosacral radiculopathy (LSR), a form of
    chronic lower back pain, began in the third quarter of 2012. The second
    Phase 2a clinical trial with Z160, in postherpetic neuralgia, is expected
    to begin enrolling patients in the fourth quarter of 2012.
  *Initiated a Phase 1 multiple ascending dose (MAD) clinical study with
    Z944, its novel, oral, T-type calcium channel blocker which has
    demonstrated efficacy in a number of preclinical inflammatory pain models
    and other disease models. The initiation of this MAD study follows the
    successfully completed Phase 1 single ascending dose study in which Z944
    was determined to be generally well-tolerated and a maximum tolerated dose
    was achieved. T-type calcium channels have been recognized as key targets
    for therapeutic intervention in a broad range of cell functions and have
    been implicated in pain signaling. Assuming Z944 successfully completes
    the MAD study, Z944 could enter Phase 2 clinical development in the first
    quarter of 2013.

Third Quarter 2012 Financial Results (Unaudited):

As of September 30, 2012, we had cash, cash equivalents, restricted cash and
short-term investments of approximately $45.0 million compared to $44.1
million on June 30, 2012.

For the quarter ended September 30, 2012, revenue was $3.5 million, compared
to $2.4 million for the quarter ended September 30, 2011. The increase in
revenue from the 2011 to the 2012 period was primarily due to increased Exalgo
royalties from Covidien and increased collaborative revenue from Novartis.
Zalicus recognized $1.4 million in royalty revenue from Covidien based on
Exalgo sales for the quarter ended September 30, 2012. This represents an 11%
increase in revenue from Exalgo compared to the quarter ended June 30, 2012.

For the quarter ended September 30, 2012, net loss was $12.2 million, or $0.10
per share, compared to a net loss of $9.3 million, or $0.09 per share, in the
quarter ended September 30, 2011.

Research and development expenses were $12.1 million in the quarter ended
September 30, 2012, compared to $8.9 million in the quarter ended September
30, 2011. The increase in R&D expense from the 2011 period to the 2012 period
was primarily due to increased development expenses related to Z160, Synavive
and Z944. Zalicus terminated all development activities related to Synavive in
the quarter ended September 30, 2012 and as a result, we expect research and
development expenses to decrease for the quarter ending December 31, 2012 and
for the year ending December 31, 2013.

General and administrative expenses were $2.2 million in the quarter ended
September 30, 2012, compared to $2.6 million for the quarter ended September
30, 2011. We expect general and administrative expenses for the quarter ending
December 31, 2012 to be consistent with such expenses during the quarter ended
September 30, 2012.

About Zalicus

Zalicus Inc. (Nasdaq: ZLCS) is a biopharmaceutical company that discovers and
develops novel treatments for patients suffering from pain. Zalicus has a
portfolio of proprietary clinical-stage product candidates targeting pain such
as Z160 and Z944 and has entered into multiple revenue-generating
collaborations with large pharmaceutical companies relating to other products,
product candidates and drug discovery technologies. Zalicus applies its
expertise in the discovery and development of selective ion channel modulators
and its combination high throughput screening capabilities to discover
innovative therapeutics for itself and its collaborators in the areas of pain,
inflammation, oncology and infectious disease. To learn more about Zalicus,
please visit www.zalicus.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 concerning Zalicus, its
product candidates, their potential and the plans for their clinical
development, the Zalicus selective Ion channel modulation technology and
related preclinical product candidates, Zalicus’ combination drug discovery
technology, cHTS, and its financial condition, results of operations, and
other business plans. These forward-looking statements about future
expectations, plans, objectives and prospects of Zalicus may be identified by
words like "believe," "expect," "may," "will," "should," "seek," “plan” or
“could” and similar expressions and involve significant risks, uncertainties
and assumptions, including risks related to the sale and marketing of Exalgo
by Covidien, risks related to the development and regulatory approval of
Zalicus’ product candidates, including risks relating to formulation and
clinical development of Z160 and Z944, the unproven nature of the Zalicus drug
discovery technologies, the ability of the Company or its collaboration
partners to initiate and successfully complete clinical trials of its product
candidates, the Company's ability to obtain additional financing or funding
for its research and development, and those other risks that can be found in
the "Risk Factors" section of Zalicus' annual report on Form 10-K on file with
the Securities and Exchange Commission and the other reports that Zalicus
periodically files with the Securities and Exchange Commission. Actual results
may differ materially from those Zalicus contemplated by these forward-looking
statements. These forward-looking statements reflect management’s current
views and Zalicus does not undertake to update any of these forward-looking
statements to reflect a change in its views or events or circumstances that
occur after the date of this release except as required by law.

(c) 2012 Zalicus Inc. All rights reserved.

Zalicus Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

                Three months ended September    Nine months ended September
                 30,                              30,
                 2012           2011             2012           2011
Revenue:
Collaborations   $ 3,381         $ 2,300         $ 8,423         $ 5,042
and other
Government
contracts and    137             128           339             505        
grants
                                                                  
Total revenue    3,518           2,428         8,762           5,547      
                                                                  
Operating
expenses:
Research and     12,050            8,871          32,493            25,678
development
General and      2,201             2,563          7,172             8,030
administrative
Amortization     974               1,285          2,920             3,855
of intangible
Restructuring    (17         )    —             1,112           —          
                                                                  
Total
operating        15,208          12,719        43,697          37,563     
expenses
                                                                  
Loss from        (11,690     )     (10,291    )   (34,935     )     (32,016    )
operations
Interest         35                33             120               100
income
Interest         (532        )     (358       )   (1,686      )     (579       )
expense
Other income     13              148           20              2          
                                                                  
Net loss
before benefit   (12,174     )     (10,468    )   (36,481     )     (32,493    )
for income
taxes
Income tax       —               1,217         441             1,217      
benefit
                                                                  
Net loss         $ (12,174   )   $ (9,251     )   $ (36,040   )   $ (31,276    )
                                                                  
Net loss per
share— basic     $ (0.10     )   $ (0.09      )   $ (0.32     )   $ (0.32      )
and diluted
                                                                  
Weighted
average number
of common
shares used in
net loss per     124,562,900     99,214,522    114,069,137     96,712,208 
share
calculation—
basic and
diluted
                                                                  
Comprehensive    $ (12,171   )   $ (9,286     )   $ (36,022   )   $ (31,286    )
loss


Zalicus Inc.

Condensed Consolidated Balance Sheets

(in thousands except per share data)

(Unaudited)
                                                               
                                                  September 30,   December 31,
                                                  2012            2011
Assets
Current assets:
Cash and cash equivalents                         $  8,971        $ 2,750
Restricted cash                                      —              50
Short-term investments                               34,265         45,124
Accounts receivable                                  3,098          1,886
Prepaid expenses and other current assets           1,039        1,397    
                                                                  
Total current assets                                 47,373         51,207
Property and equipment, net                          3,869          5,258
Intangible asset, net                                18,627         21,546
Restricted cash and other assets                    1,816        1,872    
                                                                  
Total assets                                      $  71,685      $ 79,883   
                                                                  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                  $  2,191        $ 1,743
Accrued expenses and other current liabilities       6,090          6,133
Accrued restructuring                                189            —
Deferred revenue                                     4,928          3,349
Current portion of term loan payable                 6,137          4,035
Current portion of lease incentive obligation       284          284      
                                                                  
Total current liabilities                            19,819         15,544
Term loan payable, net of current portion            10,426         15,099
Deferred revenue, net of current portion             1,035          3,000
Deferred rent, net of current portion                494            605
Lease incentive obligation, net of current           945            1,159
portion
Other long-term liabilities                          28             563
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000 shares      —              —
authorized; no shares issued and outstanding
Common stock, $0.001 par value; 200,000 shares
authorized; 126,932 and 99,239 shares issued         127            99
and outstanding at September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital                           371,537        340,518
Accumulated other comprehensive income (loss)        10             (8       )
Accumulated deficit                                 (332,736 )    (296,696 )
                                                                  
Stockholders’ equity                                38,938       43,913   
                                                                  
Total liabilities and stockholders’ equity        $  71,685      $ 79,883   

Contact:

Zalicus Inc.
Justin Renz, 617-301-7575
CFO
JRenz@zalicus.com
or
Gina Nugent, 617-460-3579
gnugent@zalicus.com
 
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