Anadys second-quarter net loss decreases to $3.0 million

Jul 29 2010

Anadys Pharmaceuticals, Inc. (Nasdaq: ANDS), a biopharmaceutical company dedicated to improving patient care by developing novel medicines for the treatment of hepatitis C, today reported its financial results and program highlights for the second quarter ended June 30, 2010.

"In the second quarter we continued to advance the development of ANA598, and we enhanced the Company's financial position through a $12.5M equity offering," said Steve Worland, Ph.D., President and CEO of Anadys.  "We believe the SVR12 data reported today, combined with an excellent resistance and safety profile, establish ANA598 at 200 mg bid as one of the most attractive agents in Phase II HCV development today."

Financial Results

As of June 30, 2010, the Company's cash, cash equivalents and securities available-for-sale totaled $22.1 million compared to $20.5 million as of December 31, 2009.  The increase in cash, cash equivalents and securities available-for-sale reflects the receipt of net proceeds of $11.4 million from our "registered direct" offering completed during June 2010 partially offset by the year-to-date cash utilization to fund our operations, including expenditures associated with our Phase II combination study of ANA598.

Total operating expenses were $4.7 million for the second quarter of 2010, compared to $7.2 million for the second quarter of 2009.  Included as a component of Anadys' operating expenses were non-cash, share-based expenses of $0.4 million and $1.1 million for the second quarter of 2010 and 2009, respectively.

Research and development expenses were $3.1 million for the second quarter of 2010, compared to $4.6 million for the second quarter of 2009.  The $1.5 million decrease was attributable to a $0.8 million decrease in severance related costs from the June 2009 strategic restructuring, including a $0.3 million decrease in share-based compensation associated with the modification of stock options, a $0.5 million decrease in ANA773 development costs and a $0.2 million decrease in facility costs associated with the relocation of our corporate headquarters in July 2009.  These items are partially offset by an increase in ANA598 development costs of $0.3 million.

General and administrative expenses were $1.6 million for the second quarter of 2010, compared to $2.5 million for the second quarter of 2009.  The $0.9 million decrease was primarily attributable to a $0.6 million decrease in severance related costs from the June 2009 strategic restructuring, including a $0.1 million decrease in share-based compensation associated with the modification of stock options.

The net loss was $3.0 million for the second quarter of 2010, compared to a net loss of $6.5 million for the second quarter of 2009.  Included in the net loss for the second quarter of 2010 is a $1.6 million gain resulting from a decrease in the liability associated with our common stock warrants from March 31, 2010 to June 30, 2010.  The warrants were issued in connection with our "registered direct" offering in June 2009.  Basic and diluted net loss per common share was $0.08 in the second quarter of 2010, compared to $0.21 in the second quarter of 2009.  Non-cash share-based expense resulted in a $0.01 and $0.03 increase in basic and diluted net loss per share for the second quarter of 2010 and 2009, respectively.

For the six months ended June 30, 2010, Anadys reported a net loss of $9.2 million, compared to $15.3 million for the same period last year.  Basic and diluted net loss per common share was $0.24 for the six months ended June 30, 2010 compared to $0.51 for the same period last year.

Recent ANA598 Highlights from Phase II Combination Study

• Reported SVR12 Results.  Today, Anadys reported that six of six patients (100%) in the ANA598 200 mg twice daily (bid) arm who were randomized to stop all treatment at Week 24 in an ongoing Phase II trial maintained undetectable levels of virus 12 weeks after stopping treatment, referred to as Sustained Virological Response 12, or SVR12.
• Reported Antiviral Results, Preliminary Safety and Tolerability.  During the second quarter 2010, Anadys provided updates on the progress of clinical data in the ANA598 Phase II combination study.  In late May, Anadys reported results for complete Early Virological Response, or cEVR, a measurement of undetectable levels of virus (<15 IU/mL) at week 12.  73% of HCV patients achieved a cEVR at ANA598 200 mg bid and 75% of HCV patients achieved a cEVR at ANA598 400 mg bid, demonstrating the comparable potency of the 200 mg bid and 400 mg bid dose levels.  Furthermore, Anadys reported a very favorable resistance profile, with only a single patient (<2%) experiencing breakthrough while receiving ANA598.  Both doses of ANA598 demonstrated a favorable safety and tolerability profile through 12 weeks, although conclusions regarding safety and tolerability cannot be made until results in more patients and potentially over longer duration are known.  At the EASL meeting in April 2010, Anadys presented a late-breaker poster which contained interim data from the Phase II combination study as of the date of the meeting and which data were subsequently updated when the completed 12-week results were released.  
• In Vitro Combination Data presented at EASL and ICAR.  Also in April 2010, Anadys presented preclinical data at EASL and at the 23rd International Conference on Antiviral Research (ICAR) showing enhanced antiviral activity and suppression of resistance when ANA598 is combined in vitro with other anti-HCV agents that act through diverse mechanisms, including protease inhibition, polymerase inhibition (both nucleoside and non-nucleoside inhibitors), NS5A inhibition and inhibition of host functions.  

Operational Highlights

• Named Steven H. Holtzman as Chairman.  In late July, Anadys named Steven H. Holtzman Chairman of the Board of Directors.  Mr. Holtzman, who is Executive Chair of Infinity Pharmaceuticals, Inc., replaces George A. Scangos, Ph.D., who resigned from the Company's Board of Directors as a result of his appointment as President and Chief Executive Officer of Biogen Idec Inc.  
• Closed Registered Direct Financing.  In early June, Anadys closed a "registered direct" offering through the sale of common stock to institutional investors.  $12.5 million in gross proceeds were raised, with net proceeds of approximately $11.4 million after deducting placement agent fees and offering expenses.  Proceeds from the transaction are being used for general corporate purposes.  In conjunction with the offering, Anadys announced the retention of Lazard Freres & Co. LLC as the Company's strategic advisor.