Replidyne Announces Second Quarter 2008 Results From Operations

LOUISVILLE, Colo., Aug. 5 /PRNewswire-FirstCall/ -- Replidyne, Inc.
(Nasdaq: RDYN) today announced its financial results for the second quarter
and six months ended June 30, 2008.
Replidyne reported a net loss of $18.7 million for the quarter ended
June 30, 2008, or a net loss per basic and diluted common share of $0.69 per
share, compared to net income of $45.5 million, or $1.71 per basic common
share or $1.65 per common share on a fully diluted basis, for the second
quarter ended June 30, 2007. Replidyne reported a net loss of $27.7 million
for the six months ended June 30, 2008, or a net loss per basic and diluted
common share of $1.02 per share, compared to net income of $36.9 million, or
$1.39 per basic common share or $1.34 per common share on a fully diluted
basis, for the six months ended June 30, 2007. Net income for the second
quarter and six months ended June 30, 2007 was due to revenue recognized upon
termination of the Company's former commercialization and collaboration
agreement for faropenem medoxomil (faropenem) with Forest Laboratories that
ended in May 2007 resulting in the one-time recognition of previously deferred
revenue. Cash, cash equivalents and short-term investments at June 30, 2008
totaled $64.7 million.
"This second quarter we have taken several direct actions to structure our
operations to conserve our cash position," said Kenneth J. Collins,
Replidyne's President and CEO. "These actions have included the difficult
decisions to return the faropenem license to the licensor, conclude our
development efforts on the faropenem program and restructure our workforce.
We believe these actions were important steps in our effort to conclude our
ongoing strategic alternatives process."
During the second quarter of 2008, Replidyne announced that it had decided
to terminate its license agreement with Asubio Pharma Co., Ltd. (Asubio
Pharma) for faropenem. In conjunction with this decision, Replidyne also
announced that it had terminated its supply agreement with Asubio Pharma and
Nippon Soda Co., Ltd. (Nippon Soda) for production of faropenem. As a result,
the Company recorded research and development expense of $4.2 million in the
quarter, comprising a license termination fee of $3.6 million to Asubio Pharma
and reimbursement of engineering costs of $0.6 million to Nippon Soda in
accordance with the terms of the agreements. Replidyne also paid Nippon Soda
$0.9 million for delay compensation under the supply agreement, which had been
recorded in 2007.
In April 2008, Replidyne announced it had discontinued enrollment in a
placebo-controlled phase III clinical trial testing faropenem in patients with
acute exacerbation of chronic bronchitis (AECB) and restructured its
operations. In June 2008, Replidyne further restructured its operations. As
a result of these actions the Company has reduced its headcount by
23 employees and incurred approximately $2.5 million of related expense,
comprising $2.1 million of employee severance expenses and $0.4 million of
expenses related to closure of its facility in Milford, Connecticut.
Research and development expenses in the second quarter of 2008 were
$14.4 million compared to $8.4 million in the corresponding quarter of 2007.
Faropenem related expense in the quarter totaled $10.5 including $4.2 million
for the termination of the faropenem license with Asubio Pharma and related
reimbursement of engineering costs to Nippon Soda and costs for patient
monitoring and data base analysis required for the Phase III study testing
faropenem in patients with AECB that was discontinued in April 2008.
Replidyne will incur further expense related to this clinical trial to
complete required patient monitoring and data base analysis until the final
clinical report is filed with the U.S. Food and Drug Administration, which is
expected during the third quarter of 2008. Also related to faropenem,
Replidyne recorded $2.7 million of research and development expense related to
future decontamination of the MEDA Manufacturing GmbH (MEDA Manufacturing)
facility in Germany that had previously manufactured 300 mg tablets of
faropenem based on MEDA Manufacturing's communicated intention to
decontaminate the facility. Replidyne believes that following receipt of
documented decontamination expenses from MEDA Manufacturing these expenses are
to be reimbursed by Forest Laboratories under the terms of its former
collaboration agreement. Additionally, research and development expense
included increased costs for preclinical activities associated with
Replidyne's discovery research programs, primarily the C. difficile and DNA
replication inhibition programs, offset by decreased expense related to the
REP8839 program that was suspended in December 2007.
Sales, general and administrative expenses for the second quarter of 2008
were $4.7 million compared to $3.3 million in the second quarter of 2007.
Replidyne recorded $1.7 million in the second quarter of 2008 as the estimate
of the outcome, within a range of possible outcomes, from its pending
arbitration with MEDA Manufacturing. This increase was partially offset by
decreases in expenses following restructuring actions implemented in the
fourth quarter of 2007 to reduce commercial and general and administrative
headcount.
Investment income and other net for the second quarter of 2008 was
$0.4 million compared to $1.5 million for the second quarter of 2007,
primarily reflecting lower cash balances available for investment in the 2008
period.
Replidyne did not report any revenue in the second quarter of 2008.
Revenue for the second quarter of 2007 was $55.6 million. Under a February
2006 commercialization and collaboration agreement with Forest Laboratories
that terminated on May 7, 2007, Replidyne received non-refundable upfront and
milestone payments totaling $60 million that were being recognized as revenue
on a straight-line basis over approximately 15 years in accordance with
Replidyne's revenue recognition policy. Upon termination, the balance of
unamortized upfront and milestone payments of $55.2 million was fully
recognized as revenue in the second quarter of 2007. In addition, during the
second quarter of 2007 the Company recognized $0.4 million in contract revenue
for funded activity through May 7, 2007 under the agreement.
About Replidyne, Inc.
Replidyne is a biopharmaceutical company focused on discovering,
developing, and in-licensing innovative anti-infective products. Replidyne's
lead program is an investigational antibacterial agent REP3123 that targets
Gram-positive Clostridium difficile (C. difficile) bacteria and C. difficile
Infection (CDI). Replidyne is pursuing the development of other novel
anti-infective programs based on its DNA replication inhibition technology and
its in-house discovery research. The Company's operating strategy is directed
to pursuing strategic alternatives that include the merger or acquisition of
some or all of its assets, and could reduce or change its current focus on the
development of anti-infective product candidates.
Safe Harbor
This press release contains plans, intentions, objectives, estimates and
expectations that constitute forward-looking statements about Replidyne, Inc.
that involve significant risks and uncertainties. Actual results could differ
materially from those discussed due to a number of factors including, the
outcome of the Company's strategic alternatives process; resolution by the
Company of the matters raised in the Warning Letter received from the FDA in
January 2008; the success and timing of pre-clinical studies and clinical
trials; the Company's ability to obtain and maintain regulatory approval of
product candidates and the labeling under any approval that may be obtained;
plans to develop and commercialize product candidates; the loss of key
scientific or management personnel; the size and growth of the potential
markets for the Company's product candidates and the Company's ability to
serve those markets; regulatory developments in the U.S. and foreign
countries; the rate and degree of market acceptance of any future products;
the accuracy of Company estimates regarding expenses, future revenues and
capital requirements; the Company's ability to obtain and maintain
intellectual property protection for our product candidates; the success of
competing drugs that are or become available; and the performance of third
party manufacturers. These and additional risks and uncertainties are
described more fully in the Company's most recent Form 10-K filed with the SEC
under the Securities Exchange Act of 1934. Copies of filings made with the
SEC are available through the SEC's electronic data gathering analysis and
retrieval system (EDGAR) at http://www.sec.gov. All forward-looking
statements made in the press release are made as of the date hereof and the
Company assumes no obligation to update the forward-looking statements in the
document.

REPLIDYNE, INC.

CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)

June 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $40,746 $43,969
Short-term investments 23,970 46,297
Prepaid expenses and other current assets 1,177 2,429
Total current assets 65,893 92,695

Property and equipment, net 1,105 1,905
Other assets 80 90
Total assets $67,078 $94,690

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $12,201 $12,255
Total current liabilities 12,201 12,255

Other long-term liabilities - 31
Total liabilities 12,201 12,286

Commitments and contingencies

Stockholders' equity 54,877 82,404
Total liabilities and stockholders' equity $67,078 $94,690

REPLIDYNE, INC.

CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007

Revenue $- $55,647 $- $58,571

Costs and expenses:

Research and
development 14,444 8,364 22,062 17,811

Sales, general and
administrative 4,666 3,280 6,619 6,815

Total costs and
expenses 19,110 11,644 28,681 24,626

Income (loss)
from operations (19,110) 44,003 (28,681) 33,945

Investment income
and other, net 380 1,487 992 2,993

Net income (loss) $(18,730) $45,490 $(27,689) $36,938

Net income (loss)
per share - basic $(0.69) $1.71 $(1.02) $1.39

Net income (loss)
per share - diluted $(0.69) $1.65 $(1.02) $1.34

Weighted average
common shares
outstanding - basic 27,029 26,677 27,022 26,649

Weighted average
common shares
outstanding - diluted 27,029 27,651 27,022 27,612

SOURCE Replidyne, Inc.

Mark Smith, Chief Financial Officer of Replidyne, +1-303-996-5535