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Zalicus Reports Financial Results for the Fourth Quarter and Year End 2012



  Zalicus Reports Financial Results for the Fourth Quarter and Year End 2012

                         Provides Key Goals for 2013

Business Wire

CAMBRIDGE, Mass. -- March 6, 2013

Zalicus Inc. (Nasdaq Global Market: ZLCS), a biopharmaceutical company that
discovers and develops novel treatments for patients suffering from pain,
today reported financial results for the fourth quarter and year ended
December 31, 2012.

“We are focused on advancing the 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 2012 we made a number of advances with our novel ion
channel programs, including advancing Z160 into Phase 2a clinical development
and Z944 into the clinic. We plan to build on this success in 2013 by
generating proof-of-concept data for Z160 in multiple indications and
continuing the clinical development of Z944.”

Fourth Quarter 2012 and Recent Accomplishments:

  * Z160. Advanced Z160, a first-in-class, oral, state dependent, selective
    N-type calcium channel (Cav 2.2) blocker into the second of two Phase 2a
    clinical trials for the potential treatment of chronic neuropathic pain,
    including lumbosacral radiculopathy which began in the third quarter of
    2012 and postherpetic neuralgia which began in the fourth quarter of 2012.
    Top line data from both studies are expected to be available late in the
    second half of 2013.
  * Z944. Received a key U.S. patent issued in February 2013 providing broad
    patent coverage for Z944, a novel, oral, T-type calcium channel blocker,
    through April 2029. Z944 completed Phase 1 single and multiple ascending
    dose clinical studies in late 2012 and the Company plans to continue
    further clinical development with Z944 during 2013.
  * cHTS™. Generated approximately $7.3 million of revenue in 2012 from our
    combination High Throughput Screening (cHTS) collaborations.

2013 Zalicus Pipeline and Business Goals:

Zalicus has set the following goals for 2013, which include internal research
and development programs, collaborations and financial goals:

  * Ion Channel Programs:

       * Successfully advance Z160 through Phase 2a proof-of-concept clinical
         studies and report top-line data by year-end 2013
       * Advance Z944 through further clinical development including
         completing one experimental medicine clinical study in 2013
       * Nominate a sodium channel lead for further preclinical development in
         2013

  * Continue to expand and diversify our cHTS services to generate surplus
    cash for the Company
  * Target year-end on-going financial strength with sufficient cash through
    2014

Fourth Quarter and Year-End 2012 Financial Results (Unaudited):

As of December 31, 2012, Zalicus had cash, cash equivalents, restricted cash
and short-term investments of $36.4 million compared to $49.7 million on
December 31, 2011.

For the year ended December 31, 2012, revenue was $12.6 million compared to
$8.2 million for 2011. Zalicus recognized $5.2 million in royalty revenue from
Mallinckrodt based on Exalgo® sales for the year ended December 31, 2012 and a
total of $9.4 million in Exalgo royalty revenue from its commercial launch in
April 2010 through December 31, 2012. The increase in revenue for the year
ended December 31, 2012 was primarily due to an increase in Exalgo royalties
and collaboration revenue from Novartis. We expect revenue for the year ending
December 31, 2013 to be higher than that recorded in the year ended
December 31, 2012 due to higher expected royalties on Mallinckrodt’s net sales
of Exalgo and increased cHTS collaboration revenue.

For the year ended December 31, 2012, net loss was $44.3 million, or ($0.38)
per share, compared to a net loss of $42.0 million, or ($0.43) per share, in
the year ended December 31, 2011. Exalgo amortization expense was $3.9 million
for the year ended December 31, 2012 and $5.1 million for the year ended
December 31, 2011. Stock-based compensation expense was $1.8 million and $2.2
million in the years ended December 31, 2012, and 2011, respectively.
Depreciation expense was $1.5 million and $2.1 million in the years ended
December 31, 2012, and 2011, respectively.

Research and development expenses were $41.4 million in the year ended
December 31, 2012 compared to $35.3 million in the year ended December 31,
2011. The $6.1 million increase from the 2011 period to the 2012 period was
primarily due to an increase in expenses related to the clinical development
of Z160 and Z944. We expect research and development expense to decrease for
the year ending December 31, 2013 due to terminated development activities
related to our discontinued product candidate Synavive.

General and administrative expenses were $9.0 million in the year ended
December 31, 2012 compared to $10.4 million in the year ended December 31,
2011. We expect our general and administrative expense for the year ending
December 31, 2013 to be consistent with the year ended December 31, 2012.

About Zalicus

Zalicus Inc. (Nasdaq Global Market: 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 its plans for 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,
including expected 2013 royalties on Mallinckrodt’s net sales of Exalgo, and
other business plans. These forward-looking statements about future
expectations, plans, objectives and prospects of Zalicus and its product
candidates 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 formulation and clinical development of its product candidates Z160 and
Z944, the unproven nature of the Zalicus ion channel drug discovery
technology, risks related to the sale and marketing of Exalgo by Mallinckrodt,
the ability of Zalicus’s collaboration partners to initiate and successfully
complete clinical trials of their partnered product candidates, Zalicus’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) 2013 Zalicus Inc. All rights reserved.

Zalicus Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(Unaudited)
                                                                         
                     Three months ended                 Twelve months ended
                     December 31,                       December 31,
                                                         
                     2012              2011             2012              2011
                                                                           
                                                                           
Revenue:
Collaborations       $ 3,674           $ 2,553          $ 12,097          $ 7,595
and other
Government
contracts and          114               84               453               589         
grants
                                                                           
Total revenue          3,788             2,637            12,550            8,184       
                                                                           
Operating
expenses:
Research and           8,930             9,616            41,423            35,294
development
General and            1,805             2,370            8,977             10,400
administrative
Amortization           972               1,286            3,892             5,141
of intangible
Restructuring          (18         )     —                1,094             —           
                                                                           
Total
operating              11,689            13,272           55,386            50,835      
expenses
                                                                           
Loss from              (7,901      )     (10,635    )     (42,836     )     (42,651    )
operations
Interest               30                36               150               136
income
Interest               (487        )     (397       )     (2,173      )     (976       )
expense
Other income           71                18               91                20          
                                                                           
Net loss
before benefit         (8,287      )     (10,978    )     (44,768     )     (43,471    )
for income
taxes
Benefit for            —                 211              441               1,428       
income taxes
                                                                           
Net loss             $ (8,287      )   $ (10,767    )   $ (44,327     )   $ (42,043    )
                                                                           
Net loss per
share—basic          $ (0.06       )   $ (0.11      )   $ (0.38       )   $ (0.43      )
and diluted
                                                                           
Weighted
average number
of common
shares used in
net loss               126,989,856       99,231,443       117,316,968       97,347,193  
  per share
calculation
—basic and
diluted
                                                                           
Net loss             $ (8,287      )   $ (10,767    )   $ (44,327     )   $ (42,043    )
                                                                           
Other
comprehensive
loss:
Unrealized
gain on                —                 22               18                12          
investments
                                                                           
Comprehensive        $ (8,287      )   $ (10,745    )   $ (44,309     )   $ (42,031    )
loss
                                                                                        
                                                                                        

Zalicus Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)
                                                                 
                                                   December 31,
                                                   2012           2011
Assets
Current assets:
Cash and cash equivalents                          $ 4,531        $ 2,750
Restricted cash                                      50             50
Short-term investments                               30,059         45,124
Accounts receivable                                  3,045          1,886
Prepaid expenses and other current assets            684            1,397     
                                                                   
Total current assets                                 38,369         51,207
Property and equipment, net                          3,535          5,258
Intangible asset, net                                17,654         21,546
Restricted cash and other assets                     1,817          1,872     
                                                                   
Total assets                                       $ 61,375       $ 79,883    
                                                                   
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                   $ 3,261        $ 1,743
Accrued expenses and other current                   4,841          6,133
liabilities
Deferred revenue                                     4,918          3,349
Current portion of term loan payable                 6,327          4,035
Current portion of lease incentive                   284            284       
obligation
                                                                   
Total current liabilities                            19,631         15,544
Term loan payable, net of current portion            8,772          15,099
Deferred revenue, net of current portion             600            3,000
Deferred rent, net of current portion                457            605
Lease incentive obligation, net of current           875            1,159
portion
Other long-term liabilities                          14             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; 127,019 and 99,239 shares
issued                                               127            99
  and outstanding at December 31, 2012 and
2011, respectively
Additional paid-in capital                           371,912        340,518
Accumulated other comprehensive income               10             (8       )
(loss)
Accumulated deficit                                  (341,023 )     (296,696 )
                                                                   
Stockholders’ equity                                 31,026         43,913    
                                                                   
Total liabilities and stockholders’ equity         $ 61,375       $ 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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