GERMANTOWN, Md., March 7 /PRNewswire-FirstCall/ -- Avalon
Pharmaceuticals, Inc. (Nasdaq and ArcaEx(R): AVRX), a
biopharmaceutical company focused on the discovery and development
of small molecule therapeutics, today announced financial and
operational results for the quarter and twelve months ended
December 31, 2005. "2005 was a pivotal year for Avalon and we
believe it will be the springboard for our growth in future years,"
stated Kenneth C. Carter, Ph.D., President and CEO of Avalon. "We
became a clinical stage oncology company by advancing AVN944 into a
Phase I trial, made significant progress in drug discovery with two
of our internal drug discovery programs moving into lead
optimization and established two new discovery partnerships. In
addition, we improved our financial position through the completion
of our IPO." FOURTH QUARTER AND RECENT OPERATIONAL HIGHLIGHTS --
AVN944: Our U.S. Phase I clinical trial with AVN944 began
enrollment of patients. At present, three patients have completed a
full cycle of dosing, and no adverse effects of study drug have
been observed. The Phase I clinical trial is an open-label, repeat
dose-escalation study for the evaluation of the safety and
tolerability of AVN944 in adult patients with advanced
hematological malignancies including those with leukemia, lymphoma
or myeloma. The study is designed to determine the optimal dose
with which to advance to Phase II efficacy trials, and determine
the utility of a set of biomarkers discovered through AvalonRx(R)
in identifying responsive patients. In the current study, as many
as 36 patients could receive AVN944 at or near this optimal dose.
Currently, this trial is being conducted at four leading cancer
centers in the United States, including the University of Arkansas
for Medical Sciences, The University of Texas MD Anderson Cancer
Center, Stanford University, and The Ohio State University
Comprehensive Cancer Center -- Arthur G. James Cancer Hospital and
Richard J. Solove Research Institute. Information on the trial,
including other site locations when they initiate treatment, is
available at the National Institutes of Health clinical trial
database at http://www.clinicaltrials.gov/ (a service of the U.S.
National Institutes of Health developed by the National Library of
Medicine). -- .-catenin and Aurora kinase programs: In the fourth
quarter, sufficient progress was completed on characterization and
exploratory chemistry around hits from Avalon's two discovery
programs, so that one family was selected from each program for
lead optimization. Avalon's goal is to select a compound from each
program by the end of 2006 for full pre-clinical development. --
MedImmune and Novartis programs: Significant progress continued on
the MedImmune program during the fourth quarter and we anticipate
screening to be initiated around the MedImmune target pathway in
first quarter of 2006. The scientific plan for the Novartis program
was developed during the fourth quarter of 2005 with the majority
of the work related to the collaboration expected in 2006. --
Private Financing: In February 2006, Avalon raised $7.25 million
through a private placement of common stock to Biotech Value Fund
and other institutional investors. The proceeds from this financing
will allow us to expand our internal oncology drug discovery
programs and take greater advantage of the AvalonRx(R) engine
without compromising our progress on AVN944 and other more mature
programs. -- Addition to the Board of Directors: Effective March 1,
2006, William H. Washecka joined the board of directors. This
addition brings the Avalon Board to nine members and adds a proven
leader with significant expertise in finance, accounting and
business planning. FINANCIAL DETAILS -- Total revenues increased to
$795,889, for the three months ended December 31, 2005, compared to
$775,000 for the three months ended December 31, 2004.
Substantially all 2005 revenues are related to the collaboration
agreement with MedImmune, Inc. A small portion of revenue was
attributable to collaborations with Novartis and the University of
Louisville. Total revenues decreased to $1,543,532, for the twelve
months ended December 31, 2005, compared to $1,900,000 for the
twelve months ended December 31, 2004. All 2005 revenues were
earned during the last half of 2005. -- Operating expenses. Total
costs and expenses from operations increased to $4.0 million for
the three months ended December 31, 2005, compared to $3.7 million
for the three months ended December 31, 2004. This increase is
primarily related to an accrual for year-end performance bonuses
and audit fees. Total costs and expenses from operations increased
to $20.9 million for the twelve months ended December 31, 2005,
compared to $15.0 million for the twelve months ended December 31,
2004. The twelve month period during 2005 included a $5 million
expense related to our in-licensing agreement with Vertex
Pharmaceuticals. -- Net loss was $3.0 million for the fourth
quarter of 2005, compared to a net loss of $3.0 million in the
fourth quarter of 2004. For the twelve months of 2005, net loss was
$19.3 million, compared to a net loss of $13.7 million in the
twelve months of 2004. -- Net loss per share applicable to common
stockholders during the fourth quarter of 2005 was $(0.37) compared
to a loss of $(26.02) in the comparable quarter of last year.
During the twelve months of 2005, net loss per share applicable to
common stockholders was $(9.58) compared to a net loss per share of
$(117.65) in the twelve months of 2004. At the end of 2005,
8,407,376 common shares were outstanding, compared to 2,129,388
weighted average number of common shares outstanding at December
31, 2005. -- As of December 31, 2005, cash, cash equivalents and
marketable securities totaled $27.7 million. Of this amount, $6.3
million was held in a restricted account to serve as collateral for
our long-term debt. CONFERENCE CALL & WEBCAST INFORMATION
Avalon Pharmaceutical's senior management will host a conference
call on Wednesday, March 8, 2006 at 8:00 am EST. During the call,
Dr. Kenneth C. Carter, President and CEO, Gary Lessing, Executive
Vice President and Chief Financial Officer and Dr. David Bol, Vice
President, Pharmaceutical Development will discuss the quarterly
and annual results and other corporate activities. Live audio of
the conference call will be available to investors, members of the
news media and the general public by dialing (866) 202-3048 (in the
U.S.) and (617) 213-8843 (internationally) and providing the
participant passcode 38984860. To access the call by live webcast,
please visit the Investor Relations section of our website at
http://www.avalonrx.com/. An archived version of the webcast will
also be available through April 30, 2006 on Avalon's website. About
Avalon Pharmaceuticals, Inc. Avalon Pharmaceuticals is a
biopharmaceutical company focused on the discovery and development
of small molecule therapeutics for the treatment of cancer. Avalon
seeks to discover and develop novel therapeutics through the use of
a comprehensive, innovative and proprietary suite of technologies
based upon large-scale gene expression analysis which it calls
AvalonRx(R). This platform facilitates drug discovery by expanding
the range of therapeutic targets for drug intervention, including
targets and target pathways frequently considered intractable using
conventional HTS approaches, allows more informed decisions about
which compounds to advance towards clinical trials, and facilitates
drug development through identification of biomarkers of efficacy
that can stratify patients or provide early indicators of response.
Avalon Pharmaceuticals was established in 1999 and is headquartered
in Germantown, Maryland. This announcement contains, in addition to
historical information, certain forward-looking statements that
involve risks and uncertainties, in particular, related to progress
in our drug discovery programs and our Medimmune and Novartis
collaborations, use of the proceeds of the private placement in
future drug discovery programs, the potential to expand Avalon's
cancer pipeline, the ability to take greater advantage of the
AvalonRx(R) engine and clinical progress in the development of
AVN944. Such statements reflect the current views of Avalon
management and are based on certain assumptions. Actual results
could differ materially from those currently anticipated as a
result of a number of factors, risks and uncertainties including
the risk that the discovery programs and collaborations may not be
successful, the cancer pipeline may not be expanded, Avalon may not
be able to take greater advantage of the AvalonRx(R) engine and
AVN944 will not progress successfully in its clinical trials, and
other risks described in our SEC filings. There can be no assurance
that our development efforts will succeed, that AVN944 will receive
required regulatory clearance or, even if such regulatory clearance
is received, that any subsequent products will ultimately achieve
commercial success. AVALON PHARMACEUTICALS, INC. STATEMENTS OF
OPERATIONS (Unaudited) Dollars in thousands except for per share
amounts. Three Months Ended Twelve months Ended December 31,
December 31, 2005 2004 2005 2004 Revenues $796 $775 $1,544 $1,900
Costs and expenses: Research and development 2,601 2,535 15,789
10,680 General and administrative 1,432 1,116 5,066 4,325 Total
costs and expenses 4,033 3,652 20,855 15,005 Loss from operations
(3,237) (2,876) (19,311) (13,105) Total other income (expense): 263
(106) 15 (554) Net Loss (2,974) (2,982) (19,296) (13,659) Accretion
of convertible preferred Stock issuance costs (0) (363) (1,111)
(1,449) Net loss attributed to common stockholders $(2,974)
$(3,345) $(20,407) $(15,108) Net loss attributed to common
stockholders per common share - basic and diluted $(0.37) $(26.02)
$(9.58) $(117.65) Weighted average number of common share - basic
and diluted* 8,057,996 128,545 2,129,388 128,417 * Includes the
issuance of 2,700,000 shares of common stock and the conversion of
all outstanding preferred stock and convertible notes into
5,525,166 shares of common stock upon the close of the IPO in
October 2005. AVALON PHARMACEUTICALS, INC. BALANCE SHEETS
(Unaudited) Dollars in thousands. December 31, December 31, 2005
2004 ASSETS Cash, cash equivalents and marketable securities
$21,435 $8,209 Total current assets $23,365 $8,833 Restricted cash
and securities 6,313 6,100 Total assets $41,282 $29,292 LIABILITIES
AND STOCKHOLDERS' DEFICIT Total current liabilities $5,515 $3,288
Long-term liabilities 9,884 11,366 Total stockholders' equity
25,883 14,638 Total liabilities, redeemable convertible preferred
stock and stockholders' deficit $41,282 $29,292 Contacts: Avalon
Pharmaceuticals, Inc. Noonan Russo Gary Lessing Wendy Lau (Media)
Executive Vice President and CFO Tel: (212) 845-4272 Tel: (301)
556-9900 Jane Petrino (Investors) Fax: (301) 556-9910 Tel: (212)
845-4274 Email: DATASOURCE: Avalon Pharmaceuticals, Inc. CONTACT:
Gary Lessing, Executive Vice President and CFO of Avalon
Pharmaceuticals, Inc., +1-301-556-9900, fax, +1-301-556-9910, ; or
Media - Wendy Lau, +1-212-845-4272, or Investors - Jane Petrino,
+1-212-845-4274, both of Noonan Russo Web site:
http://www.avalonrx.com/
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