Novacea Reports First Quarter 2008 Financial Results
Company Announces Reduction in Workforce to Focus on Managing Capital Resources
SOUTH SAN FRANCISCO, CA - May 12, 2008 (MARKET WIRE via COMTEX News Network) -- Novacea, Inc. (NASDAQ: NOVC), today reported a net loss for the first quarter 2008 of $1.2 million, or $0.05 per share. The company also announced that it intends to reduce its workforce over the next two months to approximately 15 employees. Novacea is taking these actions in furtherance of its goal of managing capital resources, while evaluating various strategic alternatives for the company.
As of March 31, 2008, cash and cash equivalents, marketable securities and accounts receivable totaled $102.2 million, as compared to $106.1 million as of December 31, 2007. The accounts receivable balance of $4.8 million as of March 31, 2008 includes $4.3 million of cost reimbursement revenue for the first quarter of 2008 related to Novacea's development efforts on Asentar(TM) under the company's worldwide license, development and commercialization agreement with Schering-Plough Corporation, which was terminated in April 2008.
"With approximately $102 million in cash and receivables at the end of the first quarter of 2008, our operating burn rate during the first quarter was approximately $4 million, and in line with our prior guidance. We believe our decision to further reduce planned expenditures in 2008, including placing a hold on the Phase 2a portion of our AQ4N study in glioblastoma multiforme, should result in a total operating burn rate for 2008 of approximately $15 million. Based on our anticipated level of monthly operating expenditures by the end of 2008, we estimate that our operating burn rate for 2009 should be in the $6 million to $8 million range," said John P. Walker, Novacea's chairman and chief executive officer. "Since Schering-Plough returned the rights of Asentar to Novacea, we have re-evaluated our positioning relative to various strategic alternatives. By reducing our planned expenditures related to Asentar and AQ4N and implementing a workforce reduction, we will have taken actions designed to afford us the maximum flexibility in pursuing our strategic alternatives in oncology as well as other disease areas. While we believe the company is in a good financial position, the workforce reduction was a very difficult decision for the management team, and we extend our sincere gratitude and appreciation to all of the affected employees," added Mr. Walker.
Financial Results
Revenue for the quarter ended March 31, 2008 under the collaboration agreement with Schering-Plough was $6.8 million, including $2.5 million attributable to the recognition of a portion of the upfront payments and $4.3 million related to cost reimbursement for Novacea's development efforts on Asentar during the first quarter of 2008.
Total research and development (R&D) expenses for the first quarter of 2008 were $5.5 million as compared to $7.6 million for the same period in 2007. The $2.1 million decrease in R&D expenses during the quarter ended March 31, 2008 as compared to the same period in 2007 was related primarily to reduced development activities and product manufacturing expenses for AQ4N and to the lower level of clinical development activities in our ASCENT-2 Phase 3 clinical trial in AIPC, which began in the first quarter of 2006 and was terminated in November 2007. Total general and administrative (G&A) expenses for the first quarter of 2008 were $3.4 million, as compared to $3.9 million for the same period in 2007.
The net loss for the first quarter of 2008 was $1.2 million, or $0.05 per share, as compared to a net loss for the same period in 2007 of $10.6 million, or $0.46 per share. The net loss per share amounts were calculated using the weighted average number of shares of common stock outstanding for each period.
Corporate and Development Update and Reduction in Workforce
Following the workforce reduction, Novacea will have approximately 15 employees who, in addition to maintaining the operations of the company, will assist primarily in the following areas:
-- Evaluating potential strategic options;
-- Winding-down and finalizing the analysis of the ASCENT-2 Phase 3
clinical trial;
-- Preparing a complete response to the FDA regarding releasing the
clinical hold on the Asentar IND;
-- Presenting preliminary findings from ASCENT-2 at an investigator
meeting during the upcoming American Society of Oncology meeting in
Chicago;
-- Completing the necessary activities on the Phase 1b portion
(enrollment completed) of the Phase 1b/2a GBM trial with AQ4N, while
placing the Phase 2a portion of the trial on hold.
Financial Guidance
As a result of the termination of the Collaboration Agreement with Schering-Plough in April 2008, the company anticipates that it will recognize as revenue in 2008 the entire remaining deferred revenue balance of $52.4 million as of March 31, 2008 related to the $60 million in upfront payments that the Company received from Schering in 2007.
Based on its current operating plans, including the estimated future reimbursement by Schering-Plough of Asentar development costs, Novacea currently projects that for total year 2008 its usage of operating capital, comprised of cash and cash equivalents, marketable securities and accounts receivable, will be approximately $15 million. The company is providing severance assistance to the employees affected directly by the workforce reduction, and anticipates related cash payments totaling approximately $0.8 million in 2008.
Conference Call and Webcast Information
Members of Novacea's management team will review first quarter 2008 financial results and its other announcements via a conference call today at 4:30 p.m. Eastern Time. The webcast can be accessed in the Investor Relations section of Novacea's website at www.novacea.com. The live audio of the conference call is also accessible via telephone to investors, members of the news media and the general public by dialing either 866.825.3209 (United States and Canada) or 617.213.8061 (international) prior to the scheduled call time and provide the access code 80229601.
A replay of the call will be available approximately two hours after the conclusion of the call and will be accessible through June 12, 2008. To access the replay, please dial 888.286.8010 (domestic) or 617.801.6888 (international) and provide the access code 97196101.