Anacor Pharmaceuticals Reports Third Quarter 2013 Financial Results

  Anacor Pharmaceuticals Reports Third Quarter 2013 Financial Results

Business Wire

PALO ALTO, Calif. -- November 7, 2013

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

“We had an eventful third quarter – we filed an NDA for tavaborole, our most
advanced product candidate, and received acceptance for filing from the FDA.
In addition, in October we negotiated a $142.5 million settlement of our
disputes with Valeant Pharmaceuticals, which will provide us with significant
flexibility as we pursue our business plan,” said David Perry, Chief Executive
Officer of Anacor Pharmaceuticals.

Third Quarter 2013 Highlights and Recent Developments

Clinical Update and Anticipated Milestones

  *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 October 1, 2013, we announced that our New Drug Application (NDA)
         for tavaborole was accepted for filing by the U.S. Food and Drug
         Administration (FDA) indicating that the application was sufficiently
         complete to permit a substantive review. The Prescription Drug User
         Fee Act (PDUFA) V goal date is July 29, 2014.
       *Subject to FDA approval, we anticipate launching tavaborole in the
         second half of 2014.

  *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. We expect results
         from this study by the end of 2013.
       *In August 2013, we initiated a TQT (thorough QT) study in
         approximately 180 healthy volunteers. We expect results from this
         study by the end of 2013.
       *Subject to the results of the MUSE and TQT studies, and an End of
         Phase 2 Meeting with the FDA, we expect to initiate a Phase 3 study
         in atopic dermatitis in the first half of 2014.

Research Agreement

On October 16, 2013, we entered into a research agreement with the United
States Department of Defense, Defense Threat Reduction Agency (DTRA) to design
and discover new classes of systemic antibiotics over a three and a half year
period. The work of a consortium including Anacor, the University of
California, Berkeley, and Colorado State University is funded by a $13.5
million award from DTRA's R&D Innovation and Systems Engineering Office, which
was established to search for and execute strategic investments in innovative
technologies for combating weapons of mass destruction. The $13.5 million
award is available to fund $2.7 million of research reimbursements for the
first eleven month period through September 30, 2014, and an additional $5.0
million and $5.7 million will become available upon DTRA exercising their
options to fund the subsequent twelve- and nineteen-month periods,
respectively.

Corporate

On October 27, 2013 we entered into a settlement agreement with Valeant
Pharmaceuticals International, Inc. (Valeant) in which Valeant agreed to pay
us $142.5 million to settle all existing and future claims, including the
recent arbitration with Valeant related to Dow Pharmaceutical Sciences (DPS),
our dispute with Medicis Pharmaceutical Corporation and all other disputes
between Anacor, Valeant and DPS related to Anacor’s intellectual property,
confidential information and contractual rights. We received the payment on
November 7, 2013.

Selected Third Quarter 2013 Financial Results

Revenues for the quarter ended September 30,  2013 were $3.6 million, compared
to $2.5 million for the comparable period in 2012. The increase was due to
revenue recognized for research services performed under the Gates Foundation
agreement in the third quarter of 2013, partially offset by declines in
revenues for research work performed under other research and development
agreements, including our agreements with not-for-profit organizations for
neglected diseases and with Medicis.

Research and development expenses were $12.5 million for the third quarter of
2013, compared to $13.6 million for the same quarter in 2012. Research and
development expenses decreased from the same quarter in 2012 primarily due to
a decrease in expenses for the tavaborole program, partially offset by an
increase in expenses related to our AN2728 program and our new research
agreement with the Gates Foundation.

General and administrative expenses for the third quarter of 2013 were $6.8
million, compared to $2.8 million for the comparable period in 2012. The
increase in general and administrative expenses in the third quarter of 2013
compared to the same period in 2012 was primarily due to an increase in legal
fees from our legal proceedings related to our disputes with Valeant and
Medicis, as well as market research activities for tavaborole.

Cash, cash equivalents, short-term investments and restricted investments
totaled $39.3 million, including restricted investments of $4.7 million, at
September 30, 2013.

Financial Outlook

We anticipate ending 2013 with at least $160.0 million in cash, cash
equivalents, short-term investments, and restricted investments, including the
Valeant arbitration settlement proceeds of $142.5 million. We believe that
these capital resources will be sufficient to meet our anticipated operating
requirements for at least the next twelve months.

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 Anacor’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 Anacor’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. Anacor has also discovered three
other compounds that have been out-licensed for further development — one is
licensed to Eli Lilly and Company for the treatment of an animal health
indication, the second 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) and the third compound is
licensed to GlaxoSmithKline, LLC for development in tuberculosis. Anacor also
has 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 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 timing for
potential approval of tavaborole by the FDA; 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 for at least
the next 12 months; 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 those filings. 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                      Nine Months Ended

                       September 30,                           September 30,
                        2013           2012               2013           2012       
                       (unaudited)                             (unaudited)
Revenues:
Contract revenue       $ 3,611           $ 2,473             $ 8,743           $ 7,452      
Total revenues           3,611              2,473                8,743              7,452
                                                                                  
Operating
expenses:
Research and             12,460             13,551               33,765             40,319
development (1)
General and
administrative          6,809            2,751              16,611           8,852      
(1)
Total operating         19,269           16,302             50,376           49,171     
expenses
                                                                                  
Loss from                (15,658    )       (13,829    )         (41,633    )       (41,719    )
operations
Interest income          15                 13                   43                 53
Interest expense         (1,135     )       (616       )         (2,949     )       (1,908     )
Other expense            (31        )       (12        )         (63        )       (37        )
Loss on early
extinguishment          ––               ––                 (1,381     )      ––         
of debt
Net loss               $ (16,809    )     $ (14,444    )       $ (45,983    )     $ (43,611    )
Net loss per
common share –         $ (0.41      )     $ (0.46      )       $ (1.19      )     $ (1.41      )
basic and
diluted.
Weighted-average
number of common
shares used in
calculating net          40,586,376         31,551,714           38,586,027         30,989,986
loss per common
share – basic
and diluted
                                                                                               
(1) Includes the following noncash, stock-based compensation expenses:
                                                                                               
                                                                                               
Research and
development            $ 744              $ 496                $ 1,910            $ 1,484
expense
General and
administrative           545                381                  1,393              1,251
expenses



ANACOR PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEET DATA

(in thousands)
                                                      
                                   September 30,              December 31,
                                      2013                     2012 (1)  
                                   (unaudited)
                                   
Cash, cash equivalents
and short-term                     $   34,684                 $   45,516
investments
Restricted investments                 4,652                      197
Total assets                           44,881                     51,071
Notes payable                          27,922                     25,667
Accumulated deficit                    (261,194   )               (215,211  )
Total stockholders’                    (12,221    )               4,811
equity (deficit)
                                                                            
(1) Derived from the audited financial statements included in Anacor’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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