WELLESLEY, Mass., Nov. 1 /PRNewswire-FirstCall/ -- Coley Pharmaceutical Group, Inc. (NASDAQ:COLY), a biopharmaceutical company discovering and developing a novel class of drug candidates known as TLR Therapeutics(TM), today reported financial results for the third quarter and nine months ended September 30, 2007.
Financial Results for the Third Quarter
Net loss decreased in the third quarter of 2007 by $2.1 million to $6.4 million from a loss of $8.5 million in the same period of 2006. The decrease in net loss is due primarily to a $3.0 million reduction in operating expenses.
Revenue of $5.1 million in the third quarter of 2007 was substantially unchanged compared to the same period of 2006.
Research and development (R&D) expenses totaled $8.6 million for the three months ended September 30, 2007 versus $11.0 million in the same period of 2006. The $2.4 million decrease in R&D expenses is primarily due to a reduction in clinical trial and drug development expenses associated with the suspension of the ACTILON(TM) clinical development program. Consistent with Coley's strategy to pioneer the development of second-generation TLR Therapeutics, discovery research and preclinical expenses within R&D increased $0.8 million over the same quarter in the prior year.
General and administrative (G&A) expenses were $2.8 million in the third quarter of 2007 versus $3.4 million in the third quarter of 2006. This decrease is primarily attributable to a reduction in external consulting fees.
As of September 30, 2007, unrestricted cash, cash equivalents and marketable securities totaled $87.8 million compared to $107.0 million as of December 31, 2006. Shares outstanding at September 30, 2007 were approximately 26.6 million.
Financial Results for Nine Months Ended September 30, 2007
For the nine months ended September 30, 2007, Coley reported a net loss of $28.2 million versus $24.6 million in the same period of 2006. The $3.6 million increase in net loss is due primarily to a $16.8 million purchased technology charge which was associated with Coley's acquisition in June 2007 of 3M Company's therapeutic Toll-like receptor (TLR) assets, partially offset by an $11.0 million increase in revenue and a $3.7 million decrease in operating expenses.
Revenue increased by $11.0 million to $26.0 million in the nine months ended September 30, 2007 compared to the same period of 2006. Collaborator revenue increased by $10.4 million due primarily to license fees recognized in the second quarter of 2007 from Merck & Co., Inc. and Dynavax Technologies Corporation.
R&D expenses decreased by $5.3 million to $27.4 million for the nine months ended September 30, 2007 versus $32.7 million in the same period of 2006 primarily as a result of suspending the clinical development of ACTILON.
2007 year-to-date cash used by operations decreased by $14.9 million to $13.4 million compared to $28.3 million during the same period in 2006. The decrease is primarily due to an increase of $10.0 million in cash received from collaborators and a reduction in operating expenses, excluding the charge for purchased technology.
RECENT EVENTS -- Coley initiated a Phase I clinical safety trial of CPG 52364, its proprietary, orally-available, small molecule TLR7, 8 and 9 antagonist drug candidate. CPG 52364 is designed to specifically inhibit TLRs 7, 8 and 9 and to block inappropriate immune system activity underlying certain autoimmune diseases, including systemic lupus erythematosus, rheumatoid arthritis and psoriasis. -- Coley's partner, Pfizer, selected an additional TLR9 agonist drug candidate for development for the potential treatment of cancers. The compound was discovered and characterized by Coley as part of a Screening Agreement signed by the two companies in 2005. Under the agreement, Pfizer funds research, development and characterization of novel TLR9 agonists and has exclusive rights to two of these newly discovered compounds. This second generation drug candidate should complement Pfizer's ongoing clinical programs for PF-3512676, Coley's most advanced TLR9 agonist therapeutic drug candidate for the treatment of cancer. -- Pfizer is currently investigating PF-3512676 in combination with non-cytotoxic anti-cancer agents. A Phase II clinical trial evaluating PF-3512676 in combination with Tarceva(R) for the treatment of refractory non-small cell lung cancer, and a Phase I clinical trial evaluating PF-3512676 in combination with Pfizer's anti-CTLA4 antibody, tremelimumab, for the treatment of advanced melanoma are both underway. Pfizer is currently planning additional clinical trials with PF-3512676 to evaluate its safety and potential efficacy in other cancer indications. -- Coley has received a milestone payment of $3.0 million from GlaxoSmithKline. The milestone payment was triggered by the initiation of GSK's Phase III clinical trial of its MAGE-A3 immunotherapeutic, incorporating VaxImmune, in patients with early-stage, completely resected non-small cell lung cancer (stage IB, II or IIIA NSCLC). -- sanofi-aventis completed a Phase I safety study of AVE-0675 in the US. The French regulatory authority (AFSSAPS) has approved the protocol for a second Phase I study with AVE-0675.
UPDATED 2007 Financial Guidance
Coley adjusted its full year financial guidance for net loss, R&D expenses, cash burn and year end cash, based on nine month financial results and on the timing and cost of ongoing and planned clinical trials. Coley estimates its full-year 2007 net loss to be in the range of $35.0 million to $37.0 million, full year R&D expenses to be approximately $37.0 million inclusive of stock compensation expense and estimated cash burn to be between $28.0 million to $30.0 million. Cash and securities at December 31, 2007 are estimated to range from $77.0 million to $79.0 million.
Coley will host an investor conference call at 4:30 p.m. U.S. Eastern Time on November 1, 2007 with company management to discuss third quarter 2007 financial results.
To access the live audio broadcast or the subsequent archived recording of the call, please visit the Investor Center section of the Coley website at http://www.coleypharma.com. Please log onto Coley's website several minutes prior to the start of the call to ensure adequate time for any software download that may be required. A replay of this webcast will be available through November 15, 2007.
Investors may participate in the conference call by dialing either +1-888-713-4217 in the U.S. or +1-617-213-4869 outside the U.S. and typing in the passcode 20929767. A replay of this call will be available at +1-888-286-8010 (U.S.) or +1- 617-801-6888 (international) using the passcode 82770375 until November 15, 2007.
The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com and institutional investors can access the call via http://www.streetevents.com.
About Coley Pharmaceutical Group
Coley Pharmaceutical Group, Inc. is an international biopharmaceutical company, headquartered in Wellesley, Massachusetts, USA, that discovers and develops TLR Therapeutics(TM), a new class of investigational drug candidates that direct the human immune system to fight cancers, allergy and asthma disorders, autoimmune diseases and to enhance the effectiveness of vaccines. Coley has established a pipeline of TLR Therapeutic product candidates currently advancing through clinical development and has additional product candidates in preclinical development. Coley has product development, research and license agreements with Pfizer, sanofi-aventis, GlaxoSmithKline, Merck, Novartis Vaccines and the United States government. For further information on Coley Pharmaceutical Group please visit http://www.coleypharma.com.
Safe Harbor Statement
Certain statements in this news release concerning Coley's business are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to Coley's estimated financial results for the fiscal year ending December 31, 2007. Any or all of the forward-looking statements in this press release may turn out to be wrong. They can be affected by inaccurate assumptions Coley might make or by known or unknown risks and uncertainties, including, but not limited to: the early stage of product development; uncertainties as to the future success of ongoing and planned clinical trials; the risk that results from early stage clinical trials may not be indicative of results in later stage trials; the unproven safety and efficacy of products under development; intellectual property rights and litigation; competitive products; and other risks identified in Coley's filings with the Securities and Exchange Commission including, but not limited to, Coley's Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Consequently, no forward-looking statement can be guaranteed, and actual results may vary materially. Coley undertakes no obligation to publicly update forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law.
Coley Pharmaceutical Group, Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 30, December 31, 2007 2006 Assets Cash, cash equivalents and marketable securities $87,779 $107,046 Accounts receivable 875 448 Deferred royalty fees 4,967 6,258 Property and equipment, net 5,418 4,597 Other assets 4,032 3,926 Total assets $103,071 $122,275 Liabilities and Shareholders' Equity Current liabilities $6,670 $6,206 Deferred revenue (current and long-term) 31,373 41,469 Note payable 3,439 3,117 Payable due to 3M (current and long-term) 12,255 - Other long-term liabilities 922 841 Shareholders' equity 48,412 70,642 Total liabilities and shareholders' equity $103,071 $122,275 Coley Pharmaceutical Group, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Revenue Collaborative agreements $4,155 $4,387 $22,769 $12,395 Government contracts and grants 957 701 3,223 2,619 Total revenue 5,112 5,088 25,992 15,014 Operating expenses Research and development 8,633 10,966 27,372 32,685 Purchased technology - - 16,757 - General and administrative 2,799 3,413 9,614 9,385 Royalty expense 507 539 2,964 1,599 Total operating expenses 11,939 14,918 56,707 43,669 Loss from operations (6,827) (9,830) (30,715) (28,655) Other income, net 406 1,346 2,558 4,051 Net loss ($6,421) ($8,484) ($28,157) ($24,604) Net loss per share Basic and diluted net loss per share ($0.24) ($0.32) ($1.06) ($0.94) Weighted average shares used to compute basic and diluted loss per share 26,566 26,314 26,503 26,203 Note 1: For the nine months ended September 30, 2007, the Company recorded charges of $1.5 million associated with the Company's January 2007 decision to suspend its independent clinical development of ACTILON of which $0.9 million was recorded within research and development expenses and $0.6 million was recorded within general and administrative expenses. Note 2: For the nine months ended September 30, 2007, the Company recorded a $16.8 million charge for research assets purchased from 3M. Note 3: The following tables show stock-based compensation expense included in the condensed consolidated statement of operations for the three and nine months ended September 30, 2007 and 2006. (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Research and development $672 $627 $2,170 $1,880 General and administrative 800 731 2,581 2,102 Total stock-based compensation expense $1,472 $1,358 $4,751 $3,982 Coley Pharmaceutical Group, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended September 30, 2007 2006 Net cash used in operating activities ($13,409) ($28,335) Cash flows from investing activities Net maturities of marketable securities 36,751 3,078 First annual payment for purchased technology (5,000) - Purchases of property and equipment (1,532) (672) Other (111) 46 Net cash provided by investing activities 30,108 2,452 Cash flows from financing activities Principal payments of capital lease obligations (129) (714) Proceeds from stock option exercises 205 537 Proceeds from repayment of shareholder note - 44 Net cash provided by (used in) financing activities 76 (133) Exchange rate effect on cash and cash equivalents 705 442 Net increase (decrease) in cash and cash equivalents 17,480 (25,574) Cash and cash equivalents, beginning of period 52,505 85,911 Cash and cash equivalents, end of period $69,985 $60,337 Marketable securities, end of period $17,794 $53,571 Cash, cash equivalents, and marketable securities, end of period $87,779 $113,908
Source: Coley Pharmaceutical Group, Inc.
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