-- Recent Events in Drug Development Programs Highlighted --
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 UPDATES 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. INVESTOR CALL 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 DATASOURCE:
Coley Pharmaceutical Group, Inc. CONTACT: Susan Hager, Sr.
Director, Investor Relations and Corporate Communications of Coley
Pharmaceutical Group, Inc., +1-781-431-9079, ; or Media, Karen L.
Bergman, , or Michelle Corral , both of BCC Partners,
+1-650-575-1509 or +1-415-794-8662, for Coley Pharmaceutical Group,
Inc. Web site: http://www.coleypharma.com/
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