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Zalicus Reports Financial Results for the First Quarter 2013



  Zalicus Reports Financial Results for the First Quarter 2013

Business Wire

CAMBRIDGE, Mass. -- May 2, 2013

Zalicus Inc. (Nasdaq Capital Market: ZLCS), a biopharmaceutical company that
discovers and develops novel treatments for patients suffering from pain,
today reported financial results for the first quarter ended March 31, 2013.

“This has been a productive quarter for Zalicus as evidenced by the extension
of our Novartis collaboration and the bolstering of our ion channel
intellectual property estate to broaden and extend exclusivity for our ion
channel programs Z160 and Z944,” commented Mark H.N. Corrigan, MD, President
and CEO of Zalicus. “Our primary focus is 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 that is
currently actively enrolling two Phase 2 clinical trials, and Z944, a novel
oral T-type calcium channel blocker that is continuing to progress in the
clinic.”

First Quarter 2013 and Recent Accomplishments:

  * Collaborations. Extended our alliance with Novartis through October 2014,
    based on the success of the cHTS discovery collaboration up to this point.
    This is Novartis’ third extension, generating up to $3.0 million in funded
    research payments to Zalicus, and further validating the value of the cHTS
    discovery technology to the advancement of novel treatments for cancer.
  * Z160. Granted a patent by the U.S. Patent and Trademark office (USPTO)
    covering novel formulations of Z160 and extending its patent protection
    and exclusivity into 2032. United States patent number 8,409,560, entitled
    “Solid Dispersion Formulations and Methods of Use Thereof,” provides broad
    coverage for a range of novel Z160 pharmaceutical compositions and methods
    of using these compositions in the treatment of pain. Z160 is a
    first-in-class, oral, state dependent, selective N-type calcium channel
    (Cav 2.2) blocker currently in 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. Granted United States patent number 8,377,968 entitled
    “N-Piperidinyl Acetamide Derivatives as Calcium Channel Blockers”
    providing broad coverage for Z944 including compositions of matter and
    certain therapeutic methods of use through April 2029. Z944 is a novel,
    oral, T-type calcium channel blocker which has demonstrated efficacy in a
    number of preclinical inflammatory pain models and other disease models.
    Z944 completed Phase 1 single and multiple ascending dose clinical studies
    in late 2012 and Zalicus plans to continue further clinical development
    with Z944 during 2013.
  * Scientific Presentations. Presented preclinical data demonstrating the
    advantages of applying Zalicus’s state-dependent ion channel screening
    approach to identify novel calcium channel blockers for the treatment of
    pain at the RSC/SCI Symposium on Ion Channels as Therapeutic Targets
    Conference. These data demonstrated the utility of inactivation state
    screening to identify novel, potent, selective and state-dependent calcium
    channel blockers with efficacy in animal models of inflammatory and
    neuropathic pain.

First Quarter Financial Results (Unaudited):

As of March 31, 2013, Zalicus had cash, cash equivalents, restricted cash and
short-term investments of $26.1 million compared to $36.4 million on December
31, 2012.

For the three months ended March 31, 2013, revenue was $3.7 million compared
to $2.3 million for the quarter ended March 31, 2012. Zalicus recognized $1.4
million in royalty revenue from Mallinckrodt based on Exalgo® sales for the
quarter ended March 31, 2013 and a total of $10.8 million in Exalgo royalty
revenue from its commercial launch in April 2010 through March 31, 2013.

For the quarter ended March 31, 2013, net loss was $8.0 million, or ($0.06)
per share, compared to a net loss of $13.5 million, or ($0.13) per share, in
the quarter ended March 31, 2012. The net loss amounts include $2.2 million
and $1.0 million in non-cash Exalgo intangible amortization expense in the
quarters ended March 31, 2013 and March 31, 2012, respectively.

Research and development expenses were $7.1 million in the quarter ended March
31, 2013 compared to $10.6 million in the quarter ended March 31, 2012. The
$3.5 million decrease from the 2012 period to the 2013 period was primarily
due to decreased clinical development expenses related to our discontinued
product candidate Synavive.

General and administrative expenses were $2.0 million in the quarter ended
March 31, 2013 compared to $2.7 million in the quarter ended March 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 and intellectual property, Zalicus’s
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,” “project” or “could” and similar expressions
and involve significant risks, uncertainties and assumptions, including risks
related to the 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.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(Unaudited)
                                                                
                                                                
                                           Three months ended
                                           March 31,
                                             2013                2012         
Revenue:
Royalties                                  $ 1,432             $ 1,118
cHTS services and other collaborations       2,242               1,202        
                                                                
Total revenue                                3,674               2,320        
                                                                
Operating expenses:
Research and development                     7,079               10,582
General and administrative                   2,042               2,663
Amortization of intangible                   2,181               973
Restructuring                                —                   1,101        
                                                                
Total operating expenses                     11,302              15,319       
                                                                
Loss from operations                         (7,628      )       (12,999     )
Interest income                              23                  41
Interest expense                             (440        )       (591        )
Other (expense) income                       (2          )       7            
                                                                
Net loss                                   $ (8,047      )     $ (13,542     )
                                                                
                                                                
Net loss per share—basic and diluted       $ (0.06       )     $ (0.13       )
                                                                
Weighted average number of common
shares used in net loss per share            127,225,319         103,790,071  
calculation – basic and diluted
                                                                
                                                                
Comprehensive loss                         $ (8,053      )     $ (13,520     )

                                                                 
Zalicus Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)
                                                                   
                                                                   
                                                 March 31,        December 31,
                                                 2013             2012
                                                                   
Assets
Current assets:
Cash and cash equivalents                        $ 3,221          $ 4,531
Restricted cash                                    50               50
Short-term investments                             21,077           30,059
Accounts receivable                                2,532            3,045
Prepaid expenses and other current assets          834              684       
                                                                   
Total current assets                               27,714           38,369
Property and equipment, net                        3,212            3,535
Intangible asset, net                              15,473           17,654
Restricted cash and other assets                   1,804            1,817     
                                                                   
Total assets                                     $ 48,203         $ 61,375    
                                                                   
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                 $ 1,426          $ 3,261
Accrued expenses and other current                 3,519            4,841
liabilities
Deferred revenue                                   4,583            4,918
Current portion of term loan payable               6,521            6,327
Current portion of lease incentive                 284              284       
obligation
                                                                   
Total current liabilities                          16,333           19,631
Term loan payable, net of current portion          7,067            8,772
Deferred revenue, net of current portion           75               600
Deferred rent, net of current portion              420              457
Lease incentive obligation, net of current         804              875
portion
Other long-term liabilities                        —                14
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; 127,265 and 127,019
shares issued                                      127              127
   and outstanding at March 31, 2013 and
December 31, 2012, respectively
Additional paid-in capital                         372,443          371,912
Accumulated other comprehensive income             4                10
Accumulated deficit                                (349,070 )       (341,023 )
                                                                   
Stockholders’ equity                               23,504           31,026    
                                                                   
Total liabilities and stockholders’ equity       $ 48,203         $ 61,375    

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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