deCODE genetics Announces Second Quarter 2006 Financial Results
Tuesday August 8, 4:01 pm ET
Positive Trial Results, Advances in Clinical Development of Compounds in Heart Attack, Asthma and Peripheral Artery Disease
Progress in Developing DNA-based Diagnostics in Type 2 Diabetes, Heart Attack, Breast Cancer and Prostate Cancer
REYKJAVIK, Iceland, Aug. 8 /PRNewswire-FirstCall/ -- deCODE genetics (Nasdaq: DCGN - News) today announced its consolidated financial results for the quarter ended June 30, 2006. A conference call to discuss the quarter's results and recent operating highlights will be webcast live tomorrow, Wednesday, August 9, at 8:00am Eastern Daylight Time/12 noon GMT/1pm British Summer Time (details below).
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Revenue for the quarter ended June 30, 2006 was $10.4 million, compared to $11.4 million for the same period a year ago. For the first six months of 2006, revenue was $20.5 million, compared to $21.0 million for the first six months of 2005. At June 30, 2006, the company had $11.7 million in deferred revenue, which will be recognized over future reporting periods.
Net loss for the second quarter 2006 was $18.3 million, compared to $13.3 million for the second quarter last year. Net loss for the first six months of 2006 was $38.6 million, compared to $30.3 million for the first six months of last year. These increases are the result principally of higher research and development expense related to clinical trials and preclinical development work in the company's lead drug development programs. Reported results also reflect share-based compensation under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123R (FAS 123R) of $1.0 million, or $0.02 per basic and diluted share, for the second quarter 2006, and $1.9 million, or $0.04 per basic and diluted share, for the first six months of 2006.
Basic and diluted net loss per share was $0.34 for the second quarter 2006, compared to $0.25 for the year-ago period. For the first six months of 2006, basic and diluted net loss per share was $0.71, compared to $0.56 for the first six months of 2005. At the close of the second quarter 2006, the company had approximately 55.5 million shares outstanding.
At June 30, 2006, the company had $115.5 million in cash and investments, compared to $155.6 million at December 31, 2005. In July, the company increased its cash position by approximately $27.8 million, the net proceeds from a registered direct share offering to new and existing shareholders.
Research and development expense for proprietary programs was $13.2 million for the second quarter of this year, compared to $11.0 million for the same period last year. For the first six months of 2006, R&D expense was $28.7 million, compared to $19.3 million for the same period last year. These increases are principally the result of costs associated with the advancement of the company's lead drug discovery and development programs.
Selling, general and administrative expenses for the second quarter 2006 were $4.4 million, compared to $4.7 million for the same period last year. For the first six months of 2006, SG&A expenses were $9.7 million, compared to $8.9 million for the first six months of 2005. SG&A figures for 2006 include share-based compensation expense under FAS 123R amounting to $0.5 million for the second quarter and $1.0 million for the first six months of 2006.
"Reflecting our focus on product development, deCODE is advancing the clinical development of a growing number of compounds for the treatment and prevention of major diseases. In the past few months we have reported positive clinical trial results in asthma and launched the next stage of trials for our lead and follow-on compounds in heart attack and in our program in PAD. We have also made significant progress in our efforts to apply our gene discovery work to the development of DNA-based diagnostics, a complement to our drug development work and, we believe, a potentially significant opportunity for applying the medical and commercial value of our great capabilities in human genetics. We are delivering on our strategy through world-leading science and focused and efficient operations, bringing towards the market products with major commercial potential in some of the biggest unmet needs in medicine," said Kari Stefansson, CEO of deCODE.
Recent highlights include:
Research and Development
* Heart attack: DG031. In May, deCODE began patient enrollment in its
pivotal Phase III trial for DG031, the company's lead developmental
compound for the prevention of heart attack. DG031 is designed to
decrease risk of heart attack by decreasing the production of
leukotriene B4 (LTB4), a pro-inflammatory molecule that is an end
product of the leukotriene pathway. deCODE discovered the important
role of this pathway in modulating heart attack risk through its
population genetics research in Iceland and replication studies in many
European and American populations. The Phase III trial, the
Leukotrienes in Coronary Artery Disease (LTCAD) study, will enroll
approximately 3400 patients and will focus on the group at highest
identifiable risk: African-American heart patients who carry an at-risk
variant of one of the genes deCODE has linked to heart attack risk
through this pathway. The trial will also include patients without the
at-risk variant. The primary endpoint is a composite of reduction in
fatal and non-fatal heart attack and stroke, hospitalization for
unstable angina, and the need for urgent revascularization. The trial
is being conducted under a Special Protocol Assessment with the US Food
and Drug Administration (FDA).
* Heart attack: DG051. deCODE has submitted an investigational new drug
application (IND) to the FDA for DG051, the company's follow-on
investigational compound for the prevention of heart attack. Like
DG031, DG051 is designed to decrease risk of heart attack by decreasing
the production of (LTB4). In preclinical studies DG051 has been shown
in human blood ex vivo and in animal models to be a potent inhibitor of
LTB4 production. The company is preparing to begin Phase I clinical
testing of DG051 pending clearance by the FDA.
* Asthma: CEP-1347. deCODE announced positive results from its Phase IIa
clinical trial of Cephalon's CEP-1347 in asthma. Data on patients
receiving active drug in the trial were consistent with a dose-
dependent improvement in certain key parameters of lung function
examined in the study, including methacholine challenge test and peak
expiratory flow rates, as well as in a biomarker associated with asthma
severity and inflammation. The trial, conducted by deCODE under a
research collaboration and licensing agreement with Cephalon, was based
upon deCODE's discovery of variants in the gene encoding the MAP3K9
kinase as risk factors for the development of asthma. The MAP3K9 kinase
acts within a pathway targeted by CEP-1347.
* PAD - DG041. Following positive Phase I results earlier this year, the
company in June began enrolling patients in a Phase IIa clinical trial
for DG041, deCODE's developmental compound for the treatment of
peripheral artery disease, or PAD. The trial is examining safety and
tolerability, dosing, and the effect of different dose levels on
platelet function and a range of serum biomarkers associated with
atherosclerosis. The trial will be randomized, double-blind, placebo-
controlled, and will enroll approximately 150 patients with
intermittent claudication due to PAD. The trial will enroll both
patients with and without the gene variants that deCODE has linked to
risk of PAD.
* Prostate cancer. In May, deCODE reported the discovery of a common
genetic variant that predisposes to prostate cancer. It is one of the
first genetic risk factors ever found to confer risk of a common type
of cancer in the general population. The variant was discovered in
Iceland and confirmed in several American and Swedish cohorts. About
19% of men of European ancestry with prostate cancer carry at least one
copy of the variant, which confers an approximately 60% increase in
risk of the disease and accounts for approximately 8% of cases. The
variant confers roughly the same increase in risk among African
Americans but is twice as common. The variant thus accounts for
approximately 16% of prostate cancer among African American men and
thereby contributes to the higher incidence of the disease among
African Americans. The variant is also associated with more aggressive
forms of prostate cancer, and deCODE is utilizing the discovery as the
basis for developing a diagnostic test that may aid in identifying
individuals at high risk and those who would benefit from more
aggressive therapy.
* Breast cancer. deCODE has linked a variant within a gene called BARD1
(BRCA1-associated RING domain 1) to increased risk of breast cancer in
the general population. In a study of a total of more than 2000
patients and controls in Iceland, the variant was found in 5.4% of
breast cancer patients and 3.1% of controls, corresponding to an 80%
increase in risk for carriers of the variant in the general population.
Among women who carry this variant as well as the Icelandic founder
risk mutation in the BRCA2 gene, the likelihood of developing breast
cancer may approach certainty. Carriers of the BARD1 variant, with or
without the BRCA2 mutation, also had an increased risk of subsequent
primary breast tumors after the first breast cancer diagnosis. deCODE
is applying this finding to develop a DNA-based diagnostic test.
Corporate Alliances
* DNA-based diagnostics. deCODE and Illumina have formed a strategic
alliance to co-develop and commercialize DNA-based diagnostic tests in
several major disease areas. The alliance will employ Illumina's
platform for high-multiplex single-nucleotide polymorphism (SNP)
genotyping to develop tests for gene variants deCODE has previously
shown to have impact on the risk of a growing number of common diseases
with major public health impact. The alliance is focusing initially on
the development of diagnostic tests for variants in genes involved in
heart attack, type 2 diabetes, and breast cancer.
Finance
* In July, deCODE completed the sale of 6 million shares of its common
stock, netting proceeds of approximately $27.8 million.
Personnel
* Birgit Stattin Norinder. In June, deCODE appointed Birgit Stattin
Norinder to the company's Board of Directors. Ms Norinder has held
senior clinical development and regulatory affairs positions in Europe
and the United States at Pfizer, Astra, Glaxo and Pharmacia & Upjohn.
She was CEO and Chairman of UK-based Prolifix Ltd, from 1998 until the
merger of Prolifix and TopoTarget in 2002. She currently serves on the
boards of several biotechnology companies and is Chairman of the Board
of Betagenon AB.
* Earl Collier. In July, deCODE appointed Earl M. "Duke" Collier, Jr, to
its Board of Directors. Mr. Collier is Executive Vice President at
Genzyme Corp. He has previously served as President of Vitas
Healthcare, was a partner at the Washington, DC-based law firm of Hogan
and Hartson, and served as Deputy Administrator of the Health Care
Finance Administration in the Department of Health and Human Services.
Mr. Collier received his BA from Yale University and his JD from the
University of Virginia.
About deCODE
deCODE genetics (Nasdaq: DCGN - News) is a global leader in applying human genetics to develop drugs for common diseases. Our population approach has enabled us to discover and target key biological pathways involved in conditions ranging from heart attack to cancer. We are turning these discoveries into new medicine to better treat and prevent many of the biggest challenges to public health. deCODE is delivering on the promise of the new genetics.(SM) Visit us on the web at www.decode.com.
Conference Call Information
A conference call, during which deCODE President and CEO Kari Stefansson and CFO Lance Thibault will discuss second quarter financial results and recent operating highlights, will be webcast tomorrow, Wednesday, August 9, at 8:00am EDT/12 noon GMT/1pm British Summer Time. The webcast can be accessed via the Investors section of deCODE's website, www.decode.com, or through www.earnings.com. A replay of the call will be available on these websites for at least one week following the call. A digitized telephone replay of the call can be accessed for the week following the call by dialing 1 800 475 6701 from the US, or +1 320 365 3844 from outside the US. The access code is 838195. |
