Anacor Pharmaceuticals Reports First Quarter 2014 Financial Results

  Anacor Pharmaceuticals Reports First Quarter 2014 Financial Results

Business Wire

PALO ALTO, Calif. -- May 7, 2014

Anacor Pharmaceuticals, Inc. (NASDAQ:ANAC) today announced its financial
results for the first quarter ended March 31, 2014.

“We made important progress in the first quarter on our two lead programs -
Kerydin and AN2728,” said Paul Berns, President and Chief Executive Officer of
Anacor Pharmaceuticals. “We have had a constructive dialogue with the FDA
throughout its review of our New Drug Application for Kerydin, and we are
preparing for Kerydin’s launch later this year, pending FDA approval. In
addition, we recently initiated the pivotal Phase 3 studies of AN2728 for the
treatment of mild-to-moderate atopic dermatitis which are continuing to enroll
at sites throughout the United States.”

First Quarter 2014 Highlights and Recent Developments

Clinical Update and Anticipated Milestones

  *Kerydin (tavaborole) – our lead topical antifungal product candidate for
    the treatment of mild-to-moderate onychomycosis of the toenail.
    Onychomycosis is a fungal infection of the nail and nail bed that affects
    approximately 35 million people in the United States according to Podiatry
    Today.

       *Kerydin has a PDUFA V goal date of July 29, 2014 and, subject to FDA
         approval, we anticipate launching Kerydin in the second half of 2014.
       *In the first quarter of 2014, we initiated a clinical study of
         Kerydin to evaluate its efficacy, safety and local tolerability when
         treating mild-to-moderate toenail onychomycosis in conjunction with
         debridement, as needed. The objective of this study is to examine how
         Kerydin performs in treating mild-to-moderate onychomycosis of the
         toenail when podiatrists incorporate it into their typical
         onychomycosis treatment regimen, which may include debridement and
         other adjunctive treatments, but may not include any oral antifungal
         therapy.

  *AN2728 – our lead topical anti-inflammatory product candidate for the
    treatment of mild-to-moderate atopic dermatitis. Atopic dermatitis is a
    chronic rash characterized by inflammation and itch. According to the
    National Eczema Association, almost 18million people in the United States
    have atopic dermatitis, and approximately 8% - 18% of all infants and
    children are affected by the disease.

       *In February 2014, we successfully completed an End of Phase 2 meeting
         with the FDA and reached agreement on the major parameters of the
         Phase 3 trial design.
       *In March 2014, we enrolled the first patient in the pivotal Phase 3
         studies of AN2728 to treat patients with mild-to-moderate atopic
         dermatitis. We plan to enroll approximately 750 patients in each of
         two Phase 3 clinical trials.
       *We expect data from the Phase 3 studies of AN2728 in mild-to-moderate
         atopic dermatitis in the second half of 2015.

Upcoming Presentation of Study Results

In the first quarter of 2014, we completed an in vitro penetration study in
which we evaluated the ability of Kerydin to penetrate through nails that have
been painted with up to four coats of nail polish. The results of this study
are being presented at the Society of Investigative Dermatology Annual
Meeting, which is being held from May 7 – 10, 2014.

Selected First Quarter 2014 Financial Results

Revenues for the quarter ended March 31,  2014 were $4.2 million, compared to
$1.7 million for the comparable period in 2013. The increase in revenues from
the same period in 2013 is primarily due to $2.7 million of revenue recorded
in the first quarter of 2014 from our research collaborations with The Bill
and Melinda Gates Foundation and the Defense Threat Reduction Agency, which
commenced in April and October of 2013, respectively. This increase is
partially offset by a decrease in revenue recognized under our collaboration
agreement with GlaxoSmithKline, LLC.

Research and development expenses were $15.9 million for the first quarter of
2014, compared to $11.2 million for the same quarter in 2013. The increase in
research and development expenses from the prior year period is primarily due
to a $4.7 million increase in clinical trial and drug development expenses for
our AN2728 program, partially offset by a $1.0 million decrease in expenses
related to our Kerydin program.

General and administrative expenses for the first quarter of 2014 were $8.3
million, compared to $4.7 million for the comparable period in 2013. The
increase from the prior year period is primarily due to $3.7 million in
stock-based compensation and benefits related to changes in the executive
management team and $1.3 million in pre-launch sales and marketing expenses
for Kerydin recorded in the first quarter of 2014, partially offset by a
decrease in legal fees.

Cash, cash equivalents and investments totaled $146.7 million at March 31,
2014, compared to $166.8 million at December 31, 2013. Investment balances at
March 31, 2014 and December 31, 2013 include short-term and long-term
investments, as well as $4.2 million and $4.6 million of restricted
investments, respectively.

Conference Call and Webcast

Anacor will host a conference call at 4:30 p.m. ET / 1:30 p.m. PT today,
during which management will discuss Anacor’s financial results and recent
developments. The call may 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’s two lead product candidates are topically
administered dermatologic compounds — Kerydin, a topical antifungal in
development for the potential treatment of mild-to-moderate onychomycosis, and
AN2728, an anti-inflammatory PDE-4 inhibitor in development for the potential
treatment of mild-to-moderate atopic dermatitis and psoriasis. In addition to
its two lead product candidates, Anacor has discovered three other
wholly-owned clinical product candidates — AN2718 and AN2898, which are backup
compounds to Kerydin and AN2728, respectively, and AN3365, an antibiotic in
development 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
tuberculosis. Anacor also has a pipeline of other internally discovered
topical and systemic boron-based compounds in earlier stages of research and
pre-clinical development. For more information, visit http://www.anacor.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements
regarding the progress, timing and results of our clinical trials, safety and
efficacy of our product candidates, timing and potential approval of our
product candidates and timing and potential commercial success of our
products. These statements constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words “may,” “might,” “will,” “should,”
“estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,”
“believe” and other similar expressions are intended to identify forward
looking statements. Readers 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. These forward looking statements are
based on estimates and assumptions by our management that, although we believe
to be reasonable, are inherently uncertain and subject to a number of risks
and uncertainties. The following represent some, but not necessarily all, of
the factors that could cause actual results to differ from historical results
or those anticipated or predicted by our forward-looking statements: any delay
or failure by the FDA to approve Kerydin; our ability to timely and
successfully launch, either alone or with a partner, Kerydin; any issues or
delays arising during the course of our Phase 3 studies or other clinical
trials relating to AN2728; any delay or failure by the FDA to approve AN2728;
our ability to timely and successfully launch, either alone or with a partner,
AN2728; and the other risks identified in our periodic filings, including our
Annual Report on Form 10-K for the year ended December 31, 2013.

                                                      
ANACOR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                           March 31,
                                            2014               2013       
                                           (unaudited)
Revenues:
Contract revenue                           $ 4,158             $ 1,708      
Total revenues                               4,158                1,708
                                                                             
Operating expenses:
Research and development (1)                 15,935               11,159
General and administrative (1)              8,328              4,716      
Total operating expenses                    24,263             15,875     
                                                                             
Loss from operations                         (20,105    )         (14,167    )
                                                                             
Interest income                              64                   14
Interest expense                             (1,089     )         (911       )
Other expense                               (42        )        (14        )
Net loss                                   $ (21,172    )       $ (15,078    )
                                                                             
Net loss per common share –                $ (0.51      )       $ (0.42      )
basic and diluted


Weighted-average number of
common shares used in                        41,739,272           35,846,287
calculating net loss per
common share - basic and
diluted
                                                                             
                                                                             
(1) Includes the following
noncash, stock-based
compensation expenses:
                                                                             
Research and development                   $ 1,085              $ 425
expenses
General and administrative                 $ 3,651              $ 334
expenses

                                                        
                                                                  
ANACOR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in thousands)
                                                                  
                                             March 31,            December 31,
                                              2014               2013 (1) 
                                             (unaudited)
                                                                  
Cash, cash equivalents and                   $ 146,737            $ 166,815
investments (2)
Total assets                                   156,921              172,165
Notes payable                                  28,233               28,018
Accumulated deficit                            (151,618 )           (130,446 )
Total stockholders’ equity                     105,691              121,432

                                                                             

(1) Derived from the audited financial statements included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2013.
(2) Investment balances at March 31, 2014 and December 31, 2013 include
short-term and long-term investments as well as $4.2 million and $4.6 million
of restricted investments, respectively.

Contact:

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