Essential Therapeutics Reports 2001 Financial Results
WALTHAM, Mass., Feb. 21 /PRNewswire-FirstCall/ -- Essential Therapeutics, Inc. (Nasdaq: ETRX - news; formerly Microcide Pharmaceuticals, Inc.) today announced financial results for the fourth quarter and the year ended December 31, 2001. The consolidated financial results include the results of operations of The Althexis Company, Inc., from October 24, 2001 onward as a result of the merger with Althexis on that date, and the impact of the $60.0 million private equity funding completed simultaneously with the merger.
Total revenues were $10.7 million in 2001 as compared to $5.9 million in 2000. Revenues from research and license agreements with Johnson & Johnson Pharmaceutical Research & Development, L.L.C., research funding from Schering-Plough Animal Health and revenues from PLIVA Pharmaceuticals, Inc. offset the conclusion, in the first quarter of 2001, of funded research with Pfizer and Daiichi. Revenues from Johnson & Johnson included two milestones earned for the achievement of certain development goals relating to the Company's pre-clinical research to develop an orally-active, novel cephalosporin.
``Our 2001 financial results were in line with our expectations,'' commented Mark Skaletsky, Chairman and Chief Executive Officer. Mr. Skaletsky continued, ``We are well positioned to further advance our corporate objectives through continued development of our existing anti-infective programs as well as potential in-licensing of product candidates and other strategic collaborations.''
In connection with the merger with Althexis, the Company recorded a non-recurring non-cash charge of $14.7 million for acquired in-process research and development in the fourth quarter of 2001. Additionally, in connection with the $60.0 million private equity funding, the Company recorded an $8.0 million discount associated with the beneficial conversion element of the preferred stock sold as of the closing date of October 24, 2001. This $8.0 million discount will be accounted for as a deemed dividend to the preferred shareholders and will be amortized on a straight-line basis through 2006, the contractual redemption date of the preferred stock.
Excluding the non-cash charge of $14.7 million for in-process research and development, operating expenses increased from $20.4 million in 2000 to $24.5 million in 2001. Research and development expenses increased primarily due to planned contract research services related to the Company's lead optimization programs. General and administrative expenses increased primarily as a result of severance and other merger-related costs. Increased research and development expenses and general and administrative expenses also reflect the impact of the inclusion of the operations of Althexis from October 24, 2001 through year-end 2001. Net loss allocable to common stockholders for 2001 was $28.2 million or $2.28 per share as compared to a net loss allocable to common stockholders of $13.9 million or $1.23 per share in 2000. The net loss allocable to common stockholders includes the amortization of the deemed dividend to the preferred stockholders of $284,000 for the period October 24, 2001 through December 31, 2001.
Total revenues were $3.2 million in the fourth quarter of 2001 as compared to $1.6 million in the fourth quarter of 2000. Revenues from Johnson & Johnson and Schering-Plough Animal Health research and license agreements and revenue from PLIVA offset a reduction in research revenues from Pfizer and Daiichi. Revenues from Johnson & Johnson included a milestone earned during the quarter relating to the Company's pre-clinical research to develop an orally-active, novel cephalosporin.
Excluding the fourth quarter non-cash charge of $14.7 million for in-process research and development described above, operating expenses increased from $5.1 million in the fourth quarter of 2000 to $8.3 million in the fourth quarter of 2001. Increased research and development expenses and general and administrative expenses resulted primarily from planned contract research services and severance and other merger-related costs, respectively, as well as higher overall costs resulting from the combined operations of Essential with Althexis from October 24, 2001 onward. Net loss allocable to common stockholders for the fourth quarter of 2001 was $19.9 million or $1.33 per share as compared to a net loss of $3.3 million or $0.29 per share in the fourth quarter of 2000. The net loss allocable to common stockholders reflects the amortization of the deemed dividend to preferred stockholders as previously described.
At December 31, 2001, the Company's cash, cash equivalents and investments were $59.5 million.
The statements contained in this press release which are not historical facts may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statement as a result of certain risks and uncertainties. There is no assurance that any compounds discovered will successfully proceed through pre-clinical development and clinical trials, obtain requisite regulatory approvals for marketing or result in a commercially useful product. There is no assurance that the Company will successfully continue existing corporate collaborations or enter into further collaborations with respect to any of its internally funded research programs or that current collaborators will elect to proceed through the various stages of clinical development as currently anticipated or on the same schedule as we would proceed if we were conducting such trials independently. For a discussion of other risks and uncertainties affecting Essential Therapeutics' business, see the Company's annual report on Form 10-K/A for the year ended December 31, 2000 and quarterly report on Form 10-Q for the quarter ended September 30, 2001. Actual results and timing of certain events could differ materially from those indicated in the forward-looking statements as a result of these or other factors.
Essential Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Balance Sheet Data
(unaudited)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
Research revenues $1,796 $1,548 $5,557 $5,684
Milestone and
licensing revenues 1,432 58 5,109 58
Other revenues -- -- -- 122
Total revenues 3,228 1,606 10,666 5,864
Operating expenses:
Research and development 5,840 3,928 18,518 16,082
General and
administrative 2,494 1,186 6,002 4,353
Purchased in-process
research and
development 14,745 -- 14,745 --
Total operating
expenses 23,079 5,114 39,265 20,435
Loss from operations (19,851) (3,508) (28,599) (14,571)
Interest and other
income, net 268 180 674 859
Net loss before cumulative
effect of change in
accounting principle (19,583) (3,328) (27,925) (13,712)
Cumulative effect of
change in accounting
principle -- -- -- (233)
Net loss (19,583) (3,328) (27,925) (13,945)
Deemed dividend to
Series B preferred
stockholders (284) -- (284) --
Net loss allocable to
common stockholders $(19,867) $(3,328) $(28,209) $(13,945)
Basic and diluted loss per share:
Net loss before
cumulative effect of
change in accounting
principle $(1.33) $(0.29) $(2.28) $(1.21)
Cumulative effect of
change in accounting
principle -- -- -- (0.02)
Net loss per share $(1.33) $(0.29) $(2.28) $(1.23)
Weighted-average shares
used in computing basic
and diluted net loss
per share 14,944 11,405 12,359 11,320
December 31,
2001
Cash, cash equivalents and investments $ 59,534
Total assets 78,044
Notes payable - current and long-term portions 1,124
Convertible redeemable preferred stock 51,775
Stockholders' equity 15,781
SOURCE: Essential Therapeutics, Inc. |
