Essential Therapeutics' Parenteral Cephalosporin Enters Phase I Clinical Trials finally...
Company Reports 2nd Quarter 2002 Financial Results
WALTHAM, Mass., July 25 /PRNewswire-FirstCall/ -- Essential Therapeutics, Inc. (Nasdaq: ETRX - News) announced today that its partner, Johnson & Johnson Pharmaceutical Research & Development, L.L.C. (J&JPRD), has recently initiated Phase I clinical trials with a prodrug version of its lead cephalosporin candidate. This prodrug is converted metabolically into a cephalosporin that has broad-spectrum activity against clinically important antibiotic resistant gram-positive bacteria such as Methicillin-Resistant staphylococcus, Penicillin-Resistant Streptococcus and Vancomycin-Resistant Enterococcus faecalis, as shown in in vitro testing.
Essential Therapeutics also today announced financial results for the second quarter ended June 30, 2002. The consolidated financial results reflect the impact of the Company's restructuring, previously announced on June 10, 2002. In connection with the Company's elimination of several of its early stage discovery programs, the Company recorded total restructuring charges of $10.7 million, consisting of non-cash charges of $7.5 million and cash charges of $3.2 million. The $7.5 million in non-cash charges consist primarily of a $6.3 million write-off of goodwill associated with the acquisition of The Althexis Company in the prior year and $800,000 of reductions in the carrying value of certain research equipment now held for sale. The cash charges consist primarily of $1.4 million in severance and related costs and $1.4 million in lease costs for excess facilities.
"We are very pleased that J&JPRD has initiated Phase I clinical testing of our cephalosporin candidate," commented Mark Skaletsky, Chairman, President and Chief Executive Officer. "We have also completed our restructuring plan and look forward to moving our lead compound, ETRX 101, into additional Phase II studies, as well as our antibiotic and antifungal compounds into development."
Total revenues were $2.3 million in the second quarter of 2002 as compared to $1.9 million in the second quarter of 2001. The increase was primarily due to increased research funding from the Company's Research and License Agreement with Schering-Plough Animal Health. Operating expenses increased from $5.7 million in the second quarter of 2001 to $19.6 million, including the previously discussed $10.7 million in restructuring charges. Excluding the restructuring charge, the increase of $3.2 million was driven by the inclusion of the operations of The Althexis Company and Maret Pharmaceuticals in the second quarter of 2002, subsequent to these acquisitions in October 2001 and March 2002, respectively. Net loss allocable to common shareholders for the second quarter of 2002, including the $10.7 million restructuring charge, was $17.5 million or $0.95 per share as compared to $3.7 million or $0.32 per share for the second quarter of 2001.
For the first half of 2002, total revenues were $5.4 million as compared to $4.5 million in the first half of 2001. The increase over the prior period was primarily due to the increased research funding from the Company's Research and License Agreement with Schering-Plough Animal Health. Operating expenses increased to $35.1 million for the first half of 2002 from $10.9 million in the first half of 2001, due to the $10.7 million restructuring charge, the previously disclosed $7.7 million non-cash charge for purchased in-process research and development associated with the acquisition of Maret Pharmaceuticals incurred in the first quarter of 2002, as well as the inclusion of the operations of The Althexis Company and Maret Pharmaceuticals in the first half of 2002, subsequent to these acquisitions in October 2001 and March 2002, respectively. Net loss allocable to common shareholders for the first half of 2002 was $30.0 million or $1.72 per share as compared to $6.1 million, or $0.53 per share in the first half of 2001. The Company had $43 million in cash and cash equivalents at June 30, 2002.
About Essential Therapeutics
Essential Therapeutics is committed to the development of breakthrough biopharmaceutical products for the treatment of life-threatening diseases. With an emerging pipeline of lead programs and product candidates in the anti-infective and hematology/oncology therapy areas, Essential Therapeutics is dedicated to commercializing novel small molecule products addressing important unmet therapeutic needs. Additional information on Essential Therapeutics can be obtained at essentialtherapeutics.com.
Statements contained herein that are not historical fact may be 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, that are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements made by the Company. These factors include, but are not limited to, the Company's ability to: (i) maintain appropriate cash reserves and fund operations; (ii) successfully take discovered compounds through pre-clinical development, clinical trials and commercialization; (iii) obtain required governmental approvals; (iv) move its platform of product candidates and pre-clinical candidates forward; (v) successfully move ETRX 101 into additional Phase II studies as well as move the antibiotic and antifungal compounds into development; (vi) provide prodrug formulations that eliminate injection-site irritation; and (vii) complete IND-enabling studies on schedule, or at all. For a discussion of other risks and uncertainties affecting Essential Therapeutics' business, see the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. 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
(in thousands, except per share amounts)
(unaudited)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
REVENUES:
Research revenue $1,826 $961 $3,864 $2,731
Milestone, licensing and other
revenue 449 892 1,516 1,784
Total Revenues 2,275 1,853 5,380 4,515
OPERATING EXPENSES:
Research and development 6,399 4,406 11,959 8,477
General and administrative 2,525 1,340 4,708 2,463
Purchased in-process research and
development -- -- 7,702 --
Restructuring charges 10,720 -- 10,720 --
Total operating expenses 19,644 5,746 35,089 10,940
Loss from operations (17,369) (3,893) (29,709) (6,425)
Interest and other income, net 261 166 515 337
Net loss (17,108) (3,727) (29,194) (6,088)
Accretion of deemed dividend to
Series B
preferred stockholders (425) -- (850) --
Net loss allocable to common
stockholders $(17,533) $(3,727) $(30,044) $(6,088)
Basic and diluted net loss per
common share $(0.95) $(0.32) $(1.72) $(0.53)
Weighted-average shares used in
computing basic and diluted net
loss per common share 18,408 11,509 17,491 11,486
Essential Therapeutics, Inc.
Balance Sheet Data
(in thousands)
(unaudited)
June 30, 2002
Cash, cash equivalents and
investments $43,784
Total assets 53,723
Notes payable--current and long-term
portions 714
Convertible redeemable preferred
stock 52,626
Stockholders' deficit (6,628)
Total liabilities and stockholders'
deficit 53,723
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