Novacea Reports Second Quarter 2007 Financial Results
Company Provides Update On Ascent-2 Phase 3 Trial
SOUTH SAN FRANCISCO, Calif., Aug. 14 -- Novacea, Inc. today reported financial results for the second quarter of 2007. The companyâ€™s net loss for the second quarter of 2007 was $16.0 million, or $0.69 per share. As of June 30, 2007, cash, cash equivalents and marketable securities totaled $46.2 million. In early July, the company received $72 million from Schering-Plough under the terms of the previously announced worldwide development and commercialization agreement for Asentarâ„¢, comprised of upfront payments totaling $60 million and an additional $12 million from the purchase by Schering-Plough of Novacea common stock. The company also today announced its plans to augment the robustness of its ASCENT-2 Phase 3 trial for androgen-independent prostate cancer, or AIPC.
â€œThe second quarter of 2007 included the most transformative event in the companyâ€™s history. Novacea and Schering-Plough agreed to partner on the development and commercialization of Asentar in a collaboration that provides Novacea with potential pre-commercial milestones payments of up to $380 million and tiered royalties on worldwide sales, and that featured our receipt of $72 million in early July, shortly after closing of the transaction,â€ said John P. Walker, chairman and interim chief executive officer of Novacea. â€œWe are also announcing today that we have submitted a protocol amendment to the US Food and Drug Administration (FDA) to increase the size of our 900-patient ASCENT-2 Phase 3 trial for Asentar in AIPC to 1,200 patients. Novacea and Schering-Plough believe the increase in study power will enhance the probability of detecting a meaningful therapeutic benefit for the ASCENT-2 trial.â€
Financial Results: Quarter ended June 30, 2007
Total research and development (R&D) expenses for the second quarter of 2007 were $11.4 million, compared to $5.5 million for the same period in 2006. The increase in R&D expenses from 2006 to 2007 was due primarily to $5.0 million in sublicensing fees payable by Novacea for its licenses related to Asentarâ„¢ that were based on the licensing fee payment received by Novacea under the agreement with Schering-Plough, and to advancing the clinical development of our oncology product candidates, particularly related to our ASCENT-2 Phase 3 trial as well as the development activities and related expenses for AQ4N, currently in a Phase 1b/2a clinical trial in glioblastoma multiforme. The overall increase was offset partially by immaterial R&D expenses associated with vinorelbine oral in 2007, as a result of the termination during the fourth quarter of 2006 of Novaceaâ€™s then-existing agreements related to vinorelbine oral, and the return to the licensor of all vinorelbine oral product rights in the United States and Canada.
Total general and administrative (G&A) expenses for the second quarter of 2007 were $5.4 million compared to $2.6 million for the comparable 2006 period. The increase in G&A expenses from 2006 to 2007 was due primarily to higher spending on external consulting and other services, including legal and other fees related to the development and commercialization agreement with Schering-Plough, the costs associated with being a public company, and stock-based employee compensation expense.
Novacea and Schering-Ploughâ€™s Joint Development Committee, created under the development and commercialization agreement, have submitted an ASCENT-2 protocol amendment to the FDA that proposes to increase the study population from 900 to 1,200 and the statistical power of the trial from 85 to 90 percent. â€œWe are pleased with our strong patient enrollment trends -- an average of 65 patients per month in 2007 and with a current total enrollment of more than 770 patients to date. We have notified our clinical trial sites of our study expansion proposal and have requested a meeting with the FDA to finalize our plans,â€ said Mr. Walker.
â€œWe believe this is the right plan and is a great example of our collaborative process with an experienced Schering-Plough team. As the ASCENT-2 primary endpoint is overall survival, the endpoint by which TaxotereÂ® was approved, we believe that increasing the power of the trial will optimize our chances for success with Asentar,â€ added Mr. Walker.
Novacea currently anticipates that its R&D and G&A expenses will increase in the future over current levels as it advances its product candidates into and through additional and later stages of clinical trials, and as a result of the costs associated with being a public company. Revenues expected in 2007 related to the development and commercialization agreement with Schering-Plough will include: a portion of the total $60 million upfront payments, which are currently expected to be recognized as revenue ratably over an approximate 6-year period that began on June 26, 2007, the effective date of the agreement, and will end on June 30, 2013, which Novacea believes is substantially the entire period for which it will have significant development obligations for Asentar; and revenue from cost reimbursement for Novaceaâ€™s development efforts on Asentarïƒ¤, based upon direct costs incurred by Novacea, including for the efforts of its employees working on Asentar.
Novacea currently anticipates that its capital resources as of June 30, 2007, together with the $72 million received from Schering-Plough in July, net of Novaceaâ€™s sublicense obligations, and the estimated cost reimbursement funding by Schering-Plough of Asentar development costs in 2007, will enable Novacea to end 2007 with a cash balance in the range of approximately $95 to $100 million. Given Novaceaâ€™s estimate of Schering-Ploughâ€™s planned future cost reimbursement funding of Asentar development costs and based on the companyâ€™s current plans, Novacea projects that its net cash usage in each of 2008 and 2009 will approximate $25 million.
Conference Call and Webcast Information
Members of our management team will review second quarter 2007 financial results and discuss the ASCENT-2 trial Phase 3 enhancements via a webcast and 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 866-383-7998 (United States and Canada) or 617-597-5329 (International) and typing in the passcode 83250881.
An archived replay of the webcast will be available via Novaceaâ€™s website until September 15, 2007. The replay will also be available via telephone by dialing 888-286-8010 (United States and Canada) or 617-801-6888 (International) and typing in the passcode 31474756 until September 15, 2007.
Novacea, Inc. is a biopharmaceutical company focused on in-licensing, developing and commercializing novel cancer therapies. Novacea has two product candidates in clinical trials, including Asentarâ„¢, which currently is in a Phase 3 clinical trial for androgen-independent prostate cancer, or AIPC, and is the subject of the development and commercialization agreement with Schering-Plough. Novaceaâ€™s second product candidate, AQ4N, is a hypoxia-activated prodrug that is currently in a Phase 1b/2a clinical trial in glioblastoma multiforme. More information on any of Novaceaâ€™s trials can be found at www.ClinicalTrials.gov.