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Anacor Pharmaceuticals Reports Second Quarter 2013 Financial Results



  Anacor Pharmaceuticals Reports Second Quarter 2013 Financial Results

Business Wire

PALO ALTO, Calif. -- August 8, 2013

Anacor Pharmaceuticals (NASDAQ:ANAC) announced today its financial results for
the second quarter ended June 30, 2013.

“We had a busy second quarter as we finalized preparations for our NDA for
tavaborole, which was submitted on July 26^th. This is an exciting time at
Anacor as we begin to reap the benefits of the investments that we’ve made in
drug development over the last decade and plan the commercialization of our
later stage products,” said David Perry, Chief Executive Officer of Anacor
Pharmaceuticals.

Second Quarter 2013 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.

       * On July 26, 2013, we submitted a New Drug Application (NDA) to the
         U.S. Food and Drug Administration (FDA) for tavaborole, the first
         drug in our clinical pipeline to reach this milestone.

  * 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 July 2013, we initiated a MUSE (maximal use systemic exposure)
         study in children with atopic dermatitis to measure blood levels when
         AN2728 is applied under maximal use conditions.

Research Agreement

On April 5, 2013, we entered into a research agreement with the Bill & Melinda
Gates Foundation (the Gates Foundation) to discover drug candidates intended
to treat two filarial worm diseases (onchocerciasis, or river blindness, and
lymphatic filariasis, commonly known as elephantiasis) and tuberculosis. Under
the agreement, the Gates Foundation will pay Anacor up to $17.7 million to
conduct research activities directed at discovering potential drug candidates
for these neglected diseases. In addition, the Gates Foundation purchased
shares of Anacor’s common stock for net proceeds of approximately $5.0
million.

Corporate

  * In June 2013, we entered into a loan agreement with Hercules Technology
    Growth Capital, Inc. and Hercules Technology III, L.P. (Hercules) to
    provide up to $45.0 million in capital in three tranches. We borrowed the
    first tranche of $30.0 million upon the execution of the loan agreement on
    June 7, 2013 and used approximately $22.6 million to repay the remaining
    obligations under our loan agreement with Oxford Finance LLC and Horizon
    Technology Finance Corporation.
  * In August 2013, we held our second Investor Day to highlight our two lead
    products in development, tavaborole for onychomycosis and AN2728 for
    atopic dermatitis. In addition to Anacor management presentations, the
    following key opinion leaders in onychomycosis and atopic dermatitis gave
    presentations on the disease areas:

       * Onychomycosis

            * Ted Rosen, M.D., Professor of Dermatology at Baylor College of
              Medicine and Chief of Dermatology at the Houston Veterans
              Affairs Medical Center.
            * Warren Joseph, D.P.M., Attending Physician and Consultant,
              Roxborough Memorial Hospital, Philadelphia, Pennsylvania.

       * Atopic Dermatitis

            * Larry Eichenfield, M.D., Chief of Pediatric and Adolescent
              Dermatology and Medical Director of Research at Rady Children's
              Hospital, San Diego and Chief of Pediatric and Adolescent
              Dermatology and Clinical Professor of Pediatrics and Medicine
              (Dermatology) at the University of California, San Diego School
              of Medicine.
            * Julie Block, President and CEO, National Eczema Association.

A webcast of the Investor Day is currently available on Anacor’s website.

Anticipated Milestones in the Next Six Months

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

       * We currently have a final hearing for our arbitration with Valeant
         Pharmaceuticals International, Inc. (Valeant) scheduled in September
         2013 and anticipate the resolution of the arbitration in the second
         half of 2013.
       * We expect to choose a path for commercialization of tavaborole in the
         second half of 2013.

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

       * We expect to initiate a TQT (thorough QT) study in the third quarter
         of 2013 to assess the effects of AN2728 on electrocardiograms (ECGs)
         in approximately 180 healthy volunteers following multiple-dose
         administration.
       * We expect results from the MUSE and TQT studies in the second half of
         2013.
       * We expect to initiate a Phase 3 study in atopic dermatitis in the
         fourth quarter of 2013 or the first quarter of 2014, with timing
         dependent on the completion of the MUSE study.

Selected Second Quarter 2013 Financial Results

Revenues for the quarter ended June 30,  2013 were $3.4 million, compared to
$2.6 million for the comparable period in 2012. The increase in revenues from
2012 is primarily due to revenue for research services performed under the
Gates Foundation Agreement.

Research and development expenses were $10.1 million for the second quarter of
2013, compared to $14.1 million for the same quarter in 2012. The decrease in
research and development expenses from 2012 is comprised of a decrease in
clinical expenses for tavaborole and preclinical studies for AN2728, offset by
an increase in research expenses under our new research agreement with the
Gates Foundation.

General and administrative expenses for the second quarter of 2013 were $5.1
million, compared to $2.7 million for the comparable period in 2012. The
increase from 2012 is primarily due to an increase in legal fees resulting
from the legal proceedings for our disputes with Valeant.

Cash, cash equivalents, short-term investments and restricted investments
totaled $51.1 million, including restricted investments of $5.3 million, at
June 30, 2013.

2013 Financial Outlook

We believe that our existing capital resources, including the available funds
under our debt facility with Hercules, will be sufficient to meet our
anticipated operating requirements until mid-2014.

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, an antibiotic for the treatment of
infections caused by Gram-negative bacteria. 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 and potential
outcome of our arbitration with Valeant; the timing of data from our safety
studies 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; financial projections related to our cash
balance and use of cash as well as our ability to fund operations as currently
conducted through mid-2014; and other matters that are described in Anacor’s
Annual Report on Form 10-K for the year ended December 31, 2012, and
subsequent Quarterly Reports on Form 10-Q 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
except as required by law.

 
ANACOR PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)
                                                  
                     Three Months Ended            Six Months Ended
                                                   June 30,
                     June 30,
                     2013           2012           2013           2012
                     (unaudited)                   (unaudited)
Revenues:                                                        
Contract revenue     $3,424         $2,562         $5,132         $4,979      
Total revenues       3,424          2,562          5,132          4,979
                                                                   
Operating
expenses:
Research and         10,146         14,100         21,305         26,768
development (1)
General and          5,086          2,671          9,802          6,101       
administrative (1)
Total operating      15,232         16,771         31,107         32,869      
expenses
                                                                   
Loss from            (11,808    )   (14,209    )   (25,975    )   (27,890    )
operations
Interest income      14             19             28             40
Interest expense     (903       )   (638       )   (1,814     )   (1,292     )
Other expense        (18        )   (12        )   (32        )   (25        )
Loss on early
extinguishment of    (1,381     )   ––             (1,381     )   ––          
debt
Net loss             $(14,096   )   $(14,840   )   $(29,174   )   $(29,167   )
Net loss per
common share –       $(0.36     )   $(0.47     )   $(0.78     )   $(0.95     )
basic and diluted
Weighted-average
number of common
shares used in
calculating net      39,273,330     31,504,723     37,569,275     30,706,036
loss per common
share – basic and
diluted
                                                                              
(1) Includes the following noncash, stock-based compensation expenses:
                                                                              
Research and
development          $741           $510           $1,166         $988
expenses
General and
administrative       514            390            848            870
expenses
                                                                              

ANACOR PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEET DATA

(in thousands)
                                                                 
                                                   June 30,       December 31,
                                               2013               2012 (1)
                                               (unaudited)
                                                
Cash, cash equivalents and short-term          $45,822            $45,516
investments
Restricted investments                         5,289              197
Total assets                                   56,971             51,071
Notes payable                                  27,714             25,667
Accumulated deficit                            (244,385    )      (215,211  )
Total stockholders’ equity                     2,457              4,811

__________________
            Derived from the audited financial statements included in the
      (1)   Company’s Annual Report on Form 10-K for the year ended December
            31, 2012.

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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