Anacor Pharmaceuticals Reports 2012 Fourth Quarter and Year-End Financial Results

  Anacor Pharmaceuticals Reports 2012 Fourth Quarter and Year-End Financial
  Results

Business Wire

PALO ALTO, Calif. -- March 14, 2013

Anacor Pharmaceuticals (NASDAQ:ANAC) announced today its financial results for
the fourth quarter and year ended December 31, 2012.

“With the positive data from both Phase 3 trials of tavaborole for the
treatment of onychomycosis, we anticipate filing an NDA around the middle of
this year, and we will continue to evaluate commercialization options to
maximize the value of tavaborole,” said David Perry, CEO of Anacor
Pharmaceuticals. “We are looking forward to the results of the ongoing Phase 2
dose-ranging study of AN2728 in adolescents with atopic dermatitis later this
month, and those results will help us determine the proper concentration and
dosing of AN2728 for our anticipated Phase 3 trials.”

Fourth Quarter 2012 Highlights and Recent Developments

Clinical

  *Tavaborole – our lead topical antifungal product candidate for the
    treatment of onychomycosis, a fungal infection of the nail and nail bed
    that affects approximately 35 million people in the United States.

       *In the first quarter of 2013, we announced the results from two Phase
         3 clinical trials in which tavaborole achieved statistically
         significant and clinically meaningful results on all primary and
         secondary endpoints.

  *AN2728 – our lead topical anti-inflammatory product candidate for the
    treatment of atopic dermatitis and psoriasis. Atopic dermatitis is a
    chronic rash characterized by inflammation and itching and affects an
    estimated 40 million people in the seven major pharmaceutical markets,
    including approximately 10% to 20% of infants and young children.

       *In December 2012, we announced positive results from a Phase 2
         safety, pharmacokinetics and efficacy trial of AN2728 in adolescents
         (ages 12 – 17) with mild-to-moderate atopic dermatitis. This was our
         second Phase 2 study of AN2728 in atopic dermatitis, and we currently
         have a third Phase 2 study ongoing, with results expected later this
         month.

Collaborations

  *Eli Lilly and Company

       *In December 2012, Lilly selected a second development candidate under
         our research and development agreement to create and develop new
         therapeutics for animal health. Under the terms of the collaboration,
         we received a $1.0 million payment for this achievement and are
         eligible to receive additional development and regulatory milestones
         as well as tiered royalties from the high single digits to the low
         double digits on future sales. Lilly is responsible for all further
         development of both candidates selected and related commercialization
         expenses for either or both candidates, if approved.

  *GlaxoSmithKline

       *In October 2012, GlaxoSmithKline (GSK) advised us that it had
         discontinued further development of AN3365, and all rights to this
         compound reverted to us. We are considering our options for further
         development, if any, of this compound.
       *We continue to work with GSK on a tuberculosis program, which was
         initiated in 2011.

Corporate

  *In October 2012, we completed an underwritten public offering of 4,000,000
    shares of our common stock with net proceeds of approximately $22.6
    million.

  *In October 2012, we filed a demand for arbitration regarding a breach of
    contract dispute between Valeant Pharmaceuticals International, Inc.,
    successor in interest to Dow Pharmaceutical Sciences, Inc. (DPS) and us,
    arising out of a master services agreement entered into by Anacor and DPS
    in March 2004 related to certain development services provided by DPS in
    connection with our efforts to develop our topical antifungal product
    candidate for the treatment of onychomycosis. We have asserted claims for
    breach of contract, breach of fiduciary duty, intentional interference
    with prospective business advantage and unfair competition. We are seeking
    injunctive relief and damages of at least $215.0 million. The hearing for
    the preliminary injunction has been set for May 6-8, 2013. We currently
    expect the resolution of the arbitration to occur in the second half of
    2013.

Anticipated Milestones in the Next Twelve Months

  *Tavaborole, our lead product candidate for the treatment of onychomycosis

       *We expect to file a NDA for tavaborole in mid-2013.

  *AN2728, our lead product candidate for the treatment of atopic dermatitis

       *We expect data from the ongoing Phase 2 dose-ranging study in
         adolescents in March 2013.
       *Subject to the results of our Phase 2 dose-ranging study, we expect
         to finalize our development plan to prepare to initiate a Phase 3
         study in atopic dermatitis around year-end 2013.

  *We anticipate the resolution of our arbitration with Valeant in the second
    half of 2013.
  *We expect to choose a path for commercialization of tavaborole in the
    second half of 2013.

Selected Fourth Quarter and Full Year 2012 Financial Results

  *Revenues for the quarter ended December 31, 2012 were $3.3 million,
    compared to $2.6 million for the comparable period in 2011. The increase
    in revenues was primarily due to the $1.0 million development milestone
    earned in the fourth quarter of 2012 under our collaboration with Lilly,
    partially offset by decreases in revenues from our neglected diseases
    programs. Revenues for 2012 were $10.7 million compared to $20.3 million
    in 2011. Revenue from GSK was $10.8 million in 2011, which was largely
    associated with the September 2011 amendment to our collaboration
    agreement, compared to revenue from GSK of $1.3 million in 2012, primarily
    for research funding. In addition, revenue from our neglected diseases
    programs decreased in 2012 as compared to 2011.
  *Research and development expenses for the fourth quarter of 2012 were
    $12.0 million compared to $13.9 million for the comparable period in 2011.
    Research and development expenses for 2012 were $52.3 million compared to
    $56.1 million in 2011. The decrease in expenses in the last quarter of
    2012 compared to the same quarter in 2011 was primarily due to lower
    clinical trial activity in our tavaborole program and a net decrease in
    activities under our research and development collaborations. The decrease
    in expenses for 2012 compared to 2011 was mainly due to less extensive
    manufacturing efforts for AN2728 in 2012, reduced AN2898 program activity
    as we concentrated our efforts on the development of AN2728 and a net
    reduction in our research and development collaboration activities. These
    decreases were partially offset by the increased tavaborole activity
    related to our regulatory and pre-commercialization activities as we
    prepare for our 2013 NDA filing.
  *General and administrative expenses for the fourth quarter of 2012 were
    $2.8 million compared to $2.9 million for the comparable period in 2011.
    General and administrative expenses for 2012 were $11.6 million compared
    to $10.6 million in 2011. The increase for the year ended 2012 as compared
    to the same period in 2011 resulted primarily from increases in legal fees
    relating to intellectual property and corporate development activities,
    increases in our expenses for market research and other
    pre-commercialization activities for tavaborole and increased salaries and
    related expenses due to the hiring of additional personnel, partially
    offset by decreases in our stock compensation expense.
  *Cash, cash equivalents and short-term investments totaled $45.5 million at
    December 31, 2012 compared to $50.7 million at December 31, 2011.

2013 Financial Outlook

  *We believe our cash, cash equivalents and short-term investments will be
    sufficient to meet our anticipated operating requirements until we file
    our NDA for tavaborole in onychomycosis, which we expect to occur in
    mid-2013.

Conference Call and Webcast

Anacor will host a conference call at 5:00 p.m. ET / 2:00 p.m. PT today,
during which management will discuss the Company’s financial results and
recent developments. The call can be accessed by dialing (877) 291-1367
(domestic) and (914) 495-8534 (international) five minutes prior to the start
of the call. The call will also be webcast live and can be accessed on the
Events and Presentations page, under Investors, on the Company’s website at
www.anacor.com and will be available for three months following the call.

About Anacor Pharmaceuticals

Anacor is a biopharmaceutical company focused on discovering, developing and
commercializing novel small-molecule therapeutics derived from its boron
chemistry platform. Anacor has discovered eight compounds that are currently
in development. Its two lead product candidates are topically administered
dermatologic compounds — tavaborole, an antifungal for the treatment of
onychomycosis, and AN2728, an anti-inflammatory PDE-4 inhibitor for the
treatment of atopic dermatitis and psoriasis. In addition to its two lead
programs, Anacor has discovered three other wholly-owned clinical product
candidates — AN2718 and AN2898, which are backup compounds to tavaborole and
AN2728, respectively, and AN3365 (formerly referred to as GSK2251052, or
GSK‘052), an antibiotic for the treatment of infections caused by
Gram-negative bacteria, which previously was licensed to GlaxoSmithKlineLLC,
or GSK. GSK has returned all rights to the compound to us and we are
considering our options for further development, if any, of this compound. We
have also discovered three other compounds that we have out-licensed for
further development — two are licensed to Eli Lilly and Company for the
treatment of animal health indications and the third compound, AN5568, also
referred to as SCYX-7158, is licensed to Drugs for Neglected Diseases
initiative, or DNDi, for human African trypanosomiasis (HAT, or sleeping
sickness). We also have a pipeline of other internally discovered topical and
systemic boron-based compounds in development. For more information, visit
http://www.anacor.com.

Forward-Looking Statements

This release contains forward-looking statements, including statements
regarding our milestones, clinical plans and financial projections.Our actual
results may differ materially from those indicated in these forward-looking
statements due to risks and uncertainties, including the timing of filing of
our NDA for tavaborole; the timing and potential outcome of our arbitration
with Valeant; the timing of data from our Phase 2 study and the initiation of
a Phase 3 study for AN2728; risks relating to patient accrual and execution on
clinical plans; the potential for success of tavaborole and our AN2728
compound; the size of the markets in onychomycosis, atopic dermatitis and
psoriasis; the decision and timing of any further development of AN3365;
financial projections related to our cash balance and use of cash as well as
our ability to fund operations as currently conducted beyond the planned
tavaborole NDA filing; and other matters that are described in Anacor’s Annual
Report on Form 10-K filed with the Securities and Exchange Commission,
including the risk factors set forth in that filing. Investors are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this release and we undertake no obligation to update
any forward-looking statement in this press release.

                                                  


ANACOR PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)
                                                     
                   Three Months Ended                Year Ended

                   December 31,                      December 31,
                    2012          2011           2012         2011       
                   (unaudited)
Revenues:
Contract revenue   $ 3,288         $ 2,596         $ 10,740        $ 20,306   
Total revenues       3,288            2,596            10,740         20,306
                                                                      
Operating
expenses:
Research and         11,999           13,922           52,318         56,097
development (1)
General and
administrative      2,762          2,870          11,614        10,552     
(1)
Total operating     14,761         16,792         63,932        66,649     
expenses
                                                                      
Loss from            (11,473    )     (14,196    )     (53,192    )   (46,343    )
operations
Interest income      19               22               72             148
Interest expense     (1,006     )     (365       )     (2,914     )   (1,396     )
Loss on early
extinguishment       ––               ––               ––             (313       )
of debt
Other expense       (16        )    (10        )    (53        )   (40        )
Net loss           $ (12,476    )   $ (14,549    )   $ (56,087    )   $ (47,944  )
Net loss per
common share –     $ (0.36      )   $ (0.52      )   $ (1.76      )   $ (1.71    )
basic and
diluted.
Weighted-average
number of common
shares used in
calculating net     34,618,080     28,192,721     31,901,966    28,109,302 
loss per common
share – basic
and diluted
                                                                      
(1) Includes the following noncash, stock-based compensation expenses:

Research and
development        $ 489            $ 679            $ 1,973             $ 2,594
expenses
General and
administrative       378              509            1,629                 1,810
expenses

                             


ANACOR PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEET DATA

(in thousands)

                             December 31,
                                  2012                    2011 (1)
                             
Cash, cash equivalents and   $     45,516                $    50,682
short-term investments
Total assets                       51,071                     55,789
Notes payable                      25,667                     17,313
Accumulated deficit                (215,211    )              (159,124    )
Total stockholders’ equity         4,811                      13,899
                                                                          
(1) Derived from the audited financial statements included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2011.

Contact:

Anacor Pharmaceuticals, Inc.
Geoff Parker, 650-543-7516
Chief Financial Officer
or
DeDe Sheel, 650-543-7575
Director, Investor Relations and Corporate Communications
 
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