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Zalicus Reports Financial Results for the Second Quarter 2013



  Zalicus Reports Financial Results for the Second Quarter 2013

Business Wire

CAMBRIDGE, Mass. -- August 1, 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 second quarter ended June 30, 2013.

“We made significant progress this quarter advancing the clinical development
of our novel ion channel programs Z160, a first-in-class, oral, state
dependent, selective N-type calcium channel blocker and Z944, a novel oral
T-type calcium channel blocker,” commented Mark H.N. Corrigan, MD, President
and CEO of Zalicus. “Enrollment is going well in the two Phase 2 clinical
trials of Z160 for the potential treatment of chronic neuropathic pain,
including lumbosacral radiculopathy and postherpetic neuralgia and we remain
on track to report top line data from both studies in the fourth quarter of
2013. In addition, we plan to initiate a Phase 1b study with Z944 in the third
quarter of 2013.”

Second Quarter 2013 and Recent Accomplishments:

  * Z944. Advancing Z944, a novel oral T-type calcium channel (Cav 3.1-3.3)
    blocker, into further clinical development for the treatment of pain in
    the third quarter of 2013. The planned Phase 1b study is a
    state-of-the-art experimental clinical model utilizing
    Laser-Evoked-Potentials (LEP) to provide an efficient and objective
    assessment of the activity of Z944 in an induced neuropathic pain state.
    Results from the LEP study can further inform Zalicus’s development plans
    for Z944 in a variety of potential pain indications.
  * 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. The patent 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 2 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 on the same
    primary endpoint measuring changes in weekly mean pain score using a
    numerical rating scale compared to placebo are expected to be available in
    the fourth quarter of 2013.
  * Scientific Presentations. Presented data highlighting the benefits of Z160
    and Z944 at the 32^nd Annual Scientific Meeting of the American Pain
    Society. These data demonstrated the significant progress Zalicus has made
    in validating the activity of Z160 and Z944 in preclinical models of pain.
  * Publications. Published data on the benefits of utilizing the Zalicus
    combination High-throughput Screening (cHTS) technology for the potential
    treatment of ebolavirus infections. The paper, published in Science and
    Translational Medicine, describes work conducted by Zalicus and
    collaborators from the U.S. Army Medical Research Institute of Infectious
    Disease (USAMRIID) and the University of Virginia School of Medicine to
    screen and identify drugs with antifilovirus activity.
  * Ongoing Financing. Secured a new funding commitment from Lincoln Park
    Capital in which Zalicus has the right to sell up to $25 million in shares
    of its common stock at prevailing market prices at the time of sales.

Second Quarter Financial Results (Unaudited):

As of June 30, 2013, Zalicus had cash, cash equivalents, restricted cash and
short-term investments of $20.8 million compared to $26.1 million as of March
31, 2013.

For the three months ended June 30, 2013, revenue was $3.9 million compared to
$2.9 million for the quarter ended June 30, 2012. Zalicus recognized $1.7
million in royalty revenue from Mallinckrodt based on Exalgo® net sales for
the quarter ended June 30, 2013 and Zalicus has recognized a total of $12.5
million in royalty revenue from Exalgo since its commercial launch in April
2010 through June 30, 2013.

For the quarter ended June 30, 2013, net loss was $10.6 million, or ($0.08)
per share, compared to a net loss of $10.3 million, or ($0.09) per share, in
the quarter ended June 30, 2012. The net loss amounts include $2.2 million and
$1.0 million of non-cash Exalgo intangible amortization expense in the
quarters ended June 30, 2013 and June 30, 2012, respectively. Research and
development expenses were $9.8 million in the quarter ended June 30, 2013
compared to $9.9 million in the quarter ended June 30, 2012.

General and administrative expenses were $2.1 million in the quarter ended
June 30, 2013 compared to $2.3 million in the quarter ended June 30, 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, 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, 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 June 30,         Six months ended June 30,
                    2013              2012              2013              2012
Revenue:
Royalties           $ 1,713           $ 1,250           $ 3,145           $ 2,368
cHTS services and
other                 2,178             1,674             4,420             2,876        
collaborations
                                                                           
Total revenue         3,891             2,924             7,565             5,244        
                                                                           
Operating
expenses:
Research and          9,845             9,861             16,924            20,443
development
General and           2,059             2,308             4,101             4,971
administrative
Amortization of       2,180             973               4,361             1,946
intangible
Restructuring         —                 28                —                 1,129        
                                                                           
Total operating       14,084            13,170            25,386            28,489       
expenses
                                                                           
Loss from             (10,193     )     (10,246     )     (17,821     )     (23,245     )
operations
Interest income       14                44                37                85
Interest expense      (393        )     (563        )     (833        )     (1,154      )
Other income          10                —                 8                 7            
                                                                           
Net loss before
provision for         (10,562     )     (10,765     )     (18,609     )     (24,307     )
income taxes
Income tax            —                 441               —                 441          
benefit
                                                                           
Net loss            $ (10,562     )   $ (10,324     )   $ (18,609     )   $ (23,866     )
                                                                           
Net loss per
share—basic and     $ (0.08       )   $ (0.09       )   $ (0.14       )   $ (0.22       )
diluted
                                                                           
Weighted average
number of common
shares used in
net loss per          130,226,594       113,730,060       128,734,247       108,760,065  
share
calculation—basic
and diluted
                                                                           
Comprehensive       $ (10,567     )   $ (10,331     )   $ (18,620     )   $ (23,851     )
loss
                                                                           

Zalicus Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(Unaudited)
                                                                 
                                                   June 30,       December 31,
                                                   2013           2012
Assets
Current assets:
Cash and cash equivalents                          $ 2,864        $ 4,531
Restricted cash                                      50             50
Short-term investments                               16,115         30,059
Accounts receivable                                  2,329          3,045
Prepaid expenses and other current assets            1,040          684       
                                                                   
Total current assets                                 22,398         38,369
Property and equipment, net                          3,016          3,535
Intangible asset, net                                13,293         17,654
Restricted cash and other assets                     1,803          1,817     
                                                                   
Total assets                                       $ 40,510       $ 61,375    
                                                                   
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                   $ 1,429        $ 3,261
Accrued expenses and other current liabilities       5,239          4,841
Deferred revenue                                     3,822          4,918
Current portion of term loan payable                 6,721          6,327
Current portion of lease incentive obligation        284            284       
                                                                   
Total current liabilities                            17,495         19,631
Term loan payable, net of current portion            5,310          8,772
Deferred revenue, net of current portion             —              600
Deferred rent, net of current portion                383            457
Lease incentive obligation, net of current           733            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; 133,387 and 127,019 shares issued        133            127
and outstanding at June 30, 2013 and December
31, 2012, respectively
Additional paid-in capital                           376,089        371,912
Accumulated other comprehensive income               (1       )     10
Accumulated deficit                                  (359,632 )     (341,023 )
                                                                   
Stockholders’ equity                                 16,589         31,026    
                                                                   
Total liabilities and stockholders’ equity         $ 40,510       $ 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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