Anadys Pharmaceuticals Reports Third Quarter 2008 Financial Results and Highlights

Anadys Pharmaceuticals Reports Third Quarter 2008 Financial Results and
Highlights

SAN DIEGO, Oct. 23 /PRNewswire-FirstCall/ -- Anadys Pharmaceuticals, Inc.
(Nasdaq: ANDS), a clinical-stage biopharmaceutical company dedicated to
improving patient care by developing novel medicines in the areas of hepatitis
C and oncology, today reported its financial results and highlights for the
third quarter ended September 30, 2008.
"We continue to make rapid progress in both of our hepatitis C development
programs," said Steve Worland Ph.D., President and CEO of Anadys. "We
completed our first clinical study of ANA598 in healthy volunteers and have
now completed the healthy volunteer portion of our ongoing ANA773 study. For
both programs, we are very encouraged by the data and look forward to
initiating patient dosing this quarter."
Financial Results
As of September 30, 2008, the Company's cash, cash equivalents and
securities available-for-sale totaled $34.4 million.
During the third quarter of 2008 the Company had no revenue, compared to
$21.5 million for the same quarter of 2007. The revenue in the third quarter
of 2007 was primarily derived from the recognition of previously deferred
revenue associated with an upfront payment and a milestone payment under a
prior collaboration.
Research and development expenses were $7.6 million for the third quarter
of 2008 and 2007. During the third quarter of 2008, cost savings derived from
Anadys' completed strategic restructuring and associated termination of prior
development programs were offset by a significant increase in ANA598
development costs.
General and administrative expenses were $2.1 million for the third
quarter of 2008, compared to $2.4 million for the third quarter of 2007. The
$0.3 million decrease primarily resulted from cost savings derived from
Anadys' completed strategic restructuring.
Operating expenses were $9.7 million for the third quarter of 2008,
compared to $10.0 million for the third quarter of 2007. Included as a
component of Anadys' operating expenses were non-cash, share-based expenses of
$0.7 million and $1.4 million for the third quarter of 2008 and 2007,
respectively.
The net loss was $9.3 million for the third quarter of 2008, compared to
net income of $12.3 million for the third quarter of 2007. Basic and diluted
net loss per common share was $0.32 in the third quarter of 2008, compared to
net income per common share of $0.43 in the third quarter of 2007. Non-cash
share-based expense resulted in a $0.03 increase in basic and diluted net loss
per share for the third quarter of 2008 compared to a $0.05 decrease in basic
and diluted net income per share for the third quarter 2007.
During the nine months ended September 30, 2008 the Company had no
revenue, compared to $23.9 million for the same period in 2007. The revenue
recognized in the first nine months of 2007 was primarily derived from the
amortization of an upfront payment and a milestone payment under a prior
collaboration and the recognition of the previously deferred revenue upon
termination of the collaboration. Operating expenses during the nine months
ended September 30, 2008 were $25.2 million compared to $28.1 million for the
nine months ended September 30, 2007. The decrease in operating expenses was
a result of cost savings derived from Anadys' completed restructuring
partially offset by increases in development costs for ANA598 and ANA773. For
the nine months ended September 30, 2008, Anadys reported a net loss of $23.9
million, compared to $1.4 million for the same period last year. Basic and
diluted net loss per common share was $0.83 for the nine months ended
September 30, 2008, compared to $0.05 for the same period in 2007.
Recent Development Program Highlights
-- Phase Ib Clinical Trial of ANA598. Anadys has completed preparations
required to initiate a Phase Ib clinical trial of ANA598, an investigational
oral non-nucleoside polymerase inhibitor for the treatment of hepatitis C
virus (HCV) infection, and expects to initiate patient dosing shortly. ANA598
will be administered to naive genotype 1a and 1b patients at 200 mg bid
(twice-a-day), 400 mg bid or 800 mg bid over a period of three days. Anadys
expects to have viral load data from this study in the first quarter of 2009.
Based on the data from the first three cohorts, Anadys may elect to explore
once daily dosing and/or other dose levels of ANA598.
-- Conclusion of Healthy Volunteer Study in Phase I Clinical Trial of
ANA598. In September, Anadys announced preliminary results of the Phase I
clinical trial of ANA598 in healthy volunteers and finalization of the
protocol for a Phase Ib trial of ANA598 in HCV infected patients. ANA598 was
well tolerated at all doses tested, and all doses achieved plasma drug
concentrations predicted to display substantial antiviral activity based on
preclinical data. Safety and PK data from all dose levels in the Phase I
clinical trial of ANA598 will be presented in a late-breaker poster session on
November 3 at the 59th Annual Meeting of the American Association for the
Study of Liver Diseases (AASLD), to be held in San Francisco, California.
Further preclinical data on ANA598 will be presented at AASLD in two
additional poster presentations on November 4.
-- Initiation of Long-Term Chronic Toxicology Studies of ANA598. In
September, Anadys initiated long-term chronic toxicology studies of ANA598.
If ANA598 is successful in early stage clinical trials, it is anticipated that
the acceleration of these and other non-clinical activities into 2008 will
enable a more rapid and continuous development path into Phase II studies
during 2009.
-- Phase I Clinical Trial of ANA773 in HCV. In July, Anadys announced
that it was resuming clinical investigation of the TLR7 mechanism in HCV by
taking ANA773 into a clinical trial under a two-part protocol designed to test
ANA773 in both healthy volunteers and patients with HCV. In October, Anadys
completed dosing in healthy volunteers. Subjects received a single dose
followed by four doses taken every other day, at levels from 200 mg to 1600 mg
(with six subjects receiving active and two receiving placebo in each dose
cohort). No serious adverse events were reported. Biomarker induction
indicative of immune activation was seen in a majority of subjects beginning
at 800 mg. Some side effects commonly seen with interferon treatment,
including fever and chills, were observed at higher doses, with the frequency
and intensity of interferon-like side effects increasing with dose. One
subject at the 1200 mg dose and two subjects at the 1600 mg dose discontinued
from the trial before completion of dosing. Anadys expects to initiate Part B
of the study in HCV patients within the next few weeks. Patients in the first
cohort will receive 800 mg of ANA773 every other day for 28 days. Doses for
subsequent cohorts will be selected based on viral load and tolerability data
from the 800 mg cohort.
-- Phase I Clinical Trial of ANA773 in Oncology. Anadys continues to
enroll patients in an ongoing Phase I clinical trial of ANA773 in oncology and
has now completed enrollment in the third cohort.
Webcast of Conference Call
Anadys will host a conference call at 5:00 p.m. EDT today to discuss its
third quarter financial results and highlights and to provide an update on its
development programs. A live webcast of the call will be available online at
http://www.anadyspharma.com. A telephone replay will also be available
approximately one hour after completion of the call. To access the telephone
replay, dial 888-286-8010 (domestic) or 617-801-6888 (international), passcode
86226986. The webcast and telephone replay will be available through November
6, 2008.
About Anadys
Anadys Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company
dedicated to improving patient care by developing novel medicines in the areas
of hepatitis C and oncology. For the treatment of chronic hepatitis C, the
Company is developing two potentially complementary agents, ANA598, a non-
nucleoside polymerase inhibitor and ANA773, an oral TLR7 agonist prodrug. The
Company is also developing ANA773 for the treatment of cancer.
Safe Harbor Statement
Statements in this press release that are not strictly historical in
nature constitute "forward-looking statements." Such statements include, but
are not limited to, references to the expected timing and planned development
activities for ANA598 and ANA773, including the trial design, occurrence,
timing, and pace of future clinical trials, the timing for obtaining viral
load data and expectations regarding such data, as well as the anticipated
future clinical benefits of ANA598 and ANA773. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors,
which may cause Anadys' actual results to be materially different from
historical results or from any results expressed or implied by such forward-
looking statements. For example, the results of preclinical studies and early
clinical trials may not be predictive of future results, and Anadys cannot
provide any assurances that ANA598 or ANA773 will not have unforeseen safety
issues, will have favorable results in future clinical trials or will receive
regulatory approval. In addition, Anadys' results may be affected by
competition from other biotechnology and pharmaceutical companies, its
effectiveness at managing its financial resources, its ability to enter into
collaborations around its product candidates, its ability to successfully
develop and market products, difficulties or delays in its preclinical studies
or clinical trials, difficulties or delays in manufacturing its clinical
trials materials, the scope and validity of patent protection for its
products, regulatory developments involving its product candidates and its
ability to obtain additional funding to support its operations. Risk factors
that may cause actual results to differ are more fully discussed in Anadys'
SEC filings, including Anadys' Form 10-K for the year ended December 31, 2007
and Anadys' most recent Form 10-Q. All forward-looking statements are
qualified in their entirety by this cautionary statement. Anadys is providing
this information as of this date and does not undertake any obligation to
update any forward-looking statements contained in this document as a result
of new information, future events or otherwise.

Condensed Consolidated Financial Statements

Anadys Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Revenues $-- $21,489 $-- $23,892

Operating expenses
Research and development(1) 7,581 7,602 19,091 21,275
General and administrative 2,084 2,444 6,104 6,844
Total operating expenses (2) 9,665 10,046 25,195 28,119

Interest income and other, net 316 864 1,311 2,855

Net (loss) income (2) $(9,349) $12,307 $(23,884) $(1,372)

Net (loss) income per share,
basic and diluted (2) $(0.32) $0.43 $(0.83) $(0.05)

Share used in calculating net
(loss) income per share,
basic and diluted 28,775 28,651 28,734 28,637

(1) Includes $- and $77 as additional research and development expense,
which represents an estimate of the net payable due to Novartis of
ANA975 research and development costs for the three months ended
September 30, 2008 and 2007, respectively. Includes ($47) and ($514)
as an offset in research and development expense, which represents an
estimate of the net reimbursement by Novartis of ANA975 research and
development costs for the nine months ended September 30, 2008 and
2007, respectively.

(2) Includes non-cash operating expenses of $738 and $1,392 determined in
accordance with Statement of Financial Accounts Standards No. 123(R),
"Share-Based Payment" (SFAS No. 123(R)) or approximately $0.03 and
$0.05 effect on basic and diluted net (loss) income per common share
for the three months ended September 30, 2008 and 2007, respectively.
Research and development expense and general and administrative
expense includes $326 and $412 of non-cash operating expenses
determined in accordance with SFAS No. 123(R) for the three months
ended September 30, 2008. Includes non-cash operating expenses of
$2,065 and $3,502 determined in accordance with SFAS No. 123(R) or
approximately $0.07 and $0.12 effect on basic and diluted net loss per
common share for the nine months ended September 30, 2008 and 2007,
respectively. Research and development expense and general and
administrative expense includes $949 and $1,116 of non-cash operating
expenses determined in accordance with SFAS No. 123(R) for the nine
months ended September 30, 2008.

Anadys Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

September 30, December 31,
2008 2007
(Unaudited) (Audited)
Assets

Cash, cash equivalents and securities
available-for-sale $34,352 $56,495
Other current assets 2,442 1,004
Noncurrent assets 1,999 4,027
Total assets $38,793 $61,526

Liabilities and Stockholders' Equity

Current liabilities $5,549 $5,415
Other long-term liabilities 38 432
Stockholders' equity 33,206 55,679
Total liabilities and stockholders' equity $38,793 $61,526

SOURCE Anadys Pharmaceuticals, Inc.

Investors, James T. Glover SVP, Operations & CFO of Anadys Pharmaceuticals,
Inc., +1-858-530-3763, jglover@anadyspharma.com; or Media, Ian Stone,
ian.stone@russopartnersllc.com or David Schull,
david.schull@russopartnersllc.com, both of Russo Partners, LLC,
+1-619-814-3510, for Anadys Pharmaceuticals, Inc.