Neurogen Corporation Announces Third Quarter 2008 Financial Results and Updates Operations
Business Wire - Friday 11/07/2008 7:00 AM ET
BRANFORD, Conn.--(BUSINESS WIRE)--
Neurogen Corporation (Nasdaq: NRGN), a drug development company focused on improved drugs for psychiatric and neurological disorders, today announced financial and operational results for the three and nine month periods ended September 30, 2008.
Highlights for the quarter include:
-- Successful completion of Phase 2a clinical studies in Restless
Legs Syndrome ("RLS") and Parkinson's disease with aplindore,
Neurogen's dopamine D2 partial agonist.
-- Consistent with Neurogen's previously announced restructuring
plan, non-Generally Accepted Accounting Principles ("GAAP")
recurring operating expenses (research and development plus
general and administrative expenses) for the third quarter of
2008 decreased to $8.3 million, reflecting a 48% decrease from
$15.9 million in the third quarter of 2007.
-- Neurogen ended the third quarter of 2008 with $34.3 million in
total cash and marketable securities.
Stephen R. Davis, President and CEO commented, "We will continue to focus our resources on the development of our D2 partial agonist, aplindore, for the treatment of Restless Legs Syndrome and Parkinson's disease. We were very pleased to report positive Phase 2a results with Aplindore in both of these disorders last month. Not only did we see very strong signals of efficacy, but in both studies aplindore's partial agonist profile appeared to be very well tolerated at the doses we plan to take forward. This offers the potential advantage of fewer side-effects and shorter titration periods and the possibility of no required titration in RLS."
Research and development expenses for the third quarter of 2008 decreased to $6.3 million from $12.9 million in the third quarter of 2007 and for the nine month period of 2008, decreased to $26.3 million from $48.2 million in the comparable period of 2007. The decrease in R&D expenses for the quarter was due primarily to decreases in salaries, benefits and lower spending in Neurogen's clinical and preclinical drug development programs.
General and administrative expenses for the third quarter of 2008 decreased to $2.0 million, compared to $3.0 million for the same period in 2007, and for the nine month period of 2008, decreased to $4.9 million from $10.3 million for the comparable period of 2007. The decrease for the quarter was due mainly to decreases in salaries, benefits, legal and patent expenses.
Neurogen had no operating revenue for the third quarter of 2008, compared to $7.5 million for the third quarter of 2007, and no operating revenue for the nine month period of 2008, compared to $15.4 million for the comparable period of 2007. The decrease in operating revenue for the quarter was due to the previously announced conclusion of the research component of Neurogen's VR1 collaboration with Merck.
During the third quarter, the Company recognized certain non-recurring charges and gains related to previously announced restructurings and the Company's April 2008 private equity financing, which affected net loss for the three and nine month periods ended September 30, 2008 and are discussed further below. On a GAAP basis, including non-recurring matters, Neurogen recognized a net loss for the third quarter of 2008 of $6.5 million and a net loss attributable to common stockholders of $31.7 million, or $0.52 per share on 61.1 million weighted average shares outstanding. On a non-GAAP basis, excluding non-recurring matters, net loss for the quarter totaled $8.1 million, or $0.13 per share. This compares to a non-GAAP (excluding the acceleration of certain revenues associated with the conclusion of the research component of Neurogen's VR1 collaboration with Merck) net loss during the third quarter of 2007 of $13.0 million, or $0.31 per share on 41.9 million weighted average shares outstanding.
On a GAAP basis, including non-recurring matters, the Company recognized a net loss for the nine months ended September 30, 2008 of $29.5 million and a net loss attributable to common stockholders of $60.1 million, or $1.24 per share on 48.5 million weighted average shares outstanding. On a non-GAAP basis, excluding non-recurring matters, net loss for the period totaled $30.7 million, or $0.63 per share. This compares to a non-GAAP (excluding the acceleration of certain revenues associated with the conclusion of the research component of Neurogen's VR1 collaboration with Merck) net loss of $49.0 million, or $1.17 per share on 41.8 million weighted average shares outstanding for the nine month period ended September 30, 2007.
Neurogen's total cash and marketable securities as of September 30, 2008 totaled $34.3 million.
Operating matters
Neurogen also announced today that it has completed its assessment of its suspended insomnia clinical study utilizing bilayer tablets of adipiplon, Neurogen's GABA alpha-3 partial agonist. As previously announced in the second quarter of 2008, Neurogen suspended this study due to a higher than anticipated rate of unwanted next-day effects observed. Following suspension, the Company has broken the blind on data from the study and conducted additional pharmacokinetic assessments of the bilayer tablets. The results of the Company's investigation indicate that unwanted effects were observed in both the 6 milligram and the 9 milligram doses administered in the study, but at a higher rate in the 9 milligram dose. Neurogen also observed pharmacokinetic variability with current adipiplon formulations, and specifically with the bilayer tablet, that may result in increased risk for unwanted next day effects, particularly at higher dose levels. To advance adipiplon further in development, Neurogen believes it would be necessary to reformulate adipiplon and examine doses that produce lower blood levels than those administered in the suspended study. Given the Company's current focus on the development of aplindore in RLS and Parkinson's disease, Neurogen does not plan to advance adipiplon in further studies at this time.
Neurogen also updated its VR1 collaboration with Merck. Based upon Merck's completion of additional clinical pharmacology studies, Neurogen believes Merck will not be moving collaboration compounds into additional studies for chronic oral administration in pain and cough, but instead has narrowed its focus to the consideration of the development of VR1 antagonists using non-oral routes of administration in these indications or for acute care indications.
Non-recurring matters
Neurogen recognized a restructuring charge of $5.1 million for the nine month period ended September 30, 2008. These charges are associated with reductions in workforce announced on February 5, 2008 and April 9, 2008. Neurogen also took a non-cash asset impairment charge of $3.2 million and $10.4 million for the three and nine month periods, respectively, related to the value of the Company's facilities previously used for research activities as well as equipment that will be disposed with the sale of the buildings.
In April 2008, Neurogen closed a private placement offering of exchangeable preferred stock and warrants with certain institutional investors. On July 25, 2008, following approval of the Company's stockholders, the preferred shares issued in the financing converted to common shares, and the Company's stockholders approved the authorization of additional shares underlying the warrants.
In connection with the securities issued in the April financing and in accordance with the required GAAP treatment of these instruments, Neurogen recognized a non-cash charge of approximately $25.2 million and $30.6 million for the three- and nine-month periods, respectively, related to the preferred stock and a non-cash gain of approximately $4.7 million and $16.7 million for the three- and nine-month periods, respectively, related to the warrants. The non-cash charges reflected the calculation of contingent preferred dividends, accretion of the preferred stock to redemption value and the amortization of discount associated with the preferred stock, as well as a beneficial conversion feature. Pursuant to GAAP, these items are considered deemed preferred dividends and were added to net loss, resulting in a net loss attributable to common stockholders of $31.7 million and $60.1 million for the three- and nine-month periods ended September 30, 2008. The non-cash gain recorded in the second and third quarters related to a decrease in the liability associated with the ascribed value of the warrants as a result of a decrease in the Company's stock price from date of issuance on April 7, 2008 through July 25, 2008. Upon shareholder approval of the authorization of common shares underlying the warrants on July 25, 2008, this deemed liability was satisfied.
Webcast
The Company will host a conference call and webcast to discuss third quarter results at 8:30 a.m. EST today, November 7, 2008. The webcast will be available in the Investor Relations section of www.neurogen.com and will also be archived there. A replay of the call will be available after 10:30 a.m. ET today and accessible through the close of business, November 14, 2008. To replay the conference call, dial 888-286-8010, or for international callers, 617-801-6888, and use the pass code: 82581866.
About Neurogen
Neurogen Corporation is a drug development company focusing on small-molecule drugs to improve the lives of patients suffering from psychiatric and neurological disorders with significant unmet medical need. Neurogen conducts its drug development independently and, when advantageous, collaborates with world-class pharmaceutical companies to access additional resources and expertise. |
