Anadys Pharmaceuticals Reports Second Quarter 2009 Financial Results and Program...

Anadys Pharmaceuticals Reports Second Quarter 2009 Financial Results and
Program Highlights
Cash Reserves Augmented with Recently Completed Financing Expected to Fund
Operations into 2011

SAN DIEGO, July 30 /PRNewswire-FirstCall/ -- Anadys Pharmaceuticals, Inc.
(Nasdaq: ANDS), a biopharmaceutical company dedicated to improving patient
care by developing novel medicines for the treatment of hepatitis C, today
reported its financial results and program highlights for the second quarter
ended June 30, 2009.

"With our enhanced cash position, reduced cost structure and Phase II protocol
allowance from the FDA, we are well positioned to continue advancing the
development of ANA598 as a treatment for chronic hepatitis C," said Steve
Worland, Ph.D., President and CEO of Anadys. "ANA598 has demonstrated potent
antiviral activity and good tolerability in Phase I, as well as preclinical
properties indicative of likely synergy when used clinically in combination
regimens. The upcoming Phase II trial has several important elements,
including twelve weeks of ANA598 combination treatment and a randomized
exploration of shortening the overall duration of HCV therapy in conjunction
with ANA598 treatment. We look forward to receiving the first data from this
trial by year-end 2009 and additional data in the first half of 2010."

Financial Results

As of June 30, 2009, the Company's cash, cash equivalents and securities
available-for-sale totaled $30.6 million compared to $27.9 million as of
December 31, 2008. The increase in cash, cash equivalents and securities
available-for-sale is the result of proceeds received from a "registered
direct" offering of common stock and warrants in early June 2009, partially
offset by the year-to-date cash utilization.

Research and development expenses were $4.6 million for the second quarter of
2009, compared to $5.5 million for the second quarter of 2008. The $0.9
million decrease was primarily attributable to a $1.3 million decrease in
ANA773 development costs partially offset by $0.5 million in severance costs
recorded in conjunction with the strategic restructuring initiated in June
2009. ANA773 development costs during the second quarter of 2009 were
primarily driven by the ongoing Phase I clinical trial for the treatment of
hepatitis C. During the second quarter of 2008, ANA773 development costs were
primarily driven by the now completed 13-week GLP animal toxicology studies
and the Phase I oncology clinical trial. The ANA598 development costs during
the second quarter of 2009 were primarily associated with the 14-day healthy
volunteer study and the ongoing long-term chronic toxicology studies which
were initiated in September 2008.

General and administrative expenses were $2.5 million for the second quarter
of 2009, compared to $2.0 million for the second quarter of 2008. The $0.5
million increase primarily resulted from severance costs recorded in
conjunction with the strategic restructuring initiated in June 2009.

Operating expenses were $7.2 million for the second quarter of 2009, compared
to $7.5 million for the second quarter of 2008. Included as a component of
Anadys' operating expenses were non-cash, share-based expenses of $1.1 million
and $0.7 million for the second quarter of 2009 and 2008, respectively.

The net loss was $6.5 million for the second quarter of 2009, compared to a
net loss of $7.1 million for the second quarter of 2008. Included in the net
loss for the second quarter of 2009 is a $0.4 million gain resulting from a
reduction between issuance and June 30, 2009 in the liability associated with
common stock warrants issued in conjunction with the "registered direct"
financing. Basic and diluted net loss per common share was $0.21 in the
second quarter of 2009, compared to $0.25 in the second quarter of 2008.
Non-cash share-based expense resulted in a $0.03 and $0.02 increase in basic
and diluted net loss per share for the second quarter of 2009 and 2008,
respectively.

For the six months ended June 30, 2009, Anadys reported a net loss of $15.3
million, compared to $14.5 million for the same period last year. Basic and
diluted net loss per common share was $0.51 for the six months ended June 30,
2009 and 2008.

Operational Highlights
-- Closed Registered Direct Financing. In early June, Anadys closed a
"registered direct" offering through the sale of units to
institutional investors, with each unit consisting of one share of
common stock and a warrant to purchase 0.35 of a share of common
stock.
$17.5 million in gross proceeds were raised, with net proceeds of
approximately $16.0 million, after deducting placement agent fees and
estimated offering expenses. Proceeds from the transaction are being
used to further the development of ANA598, as well as for other
general
corporate purposes.

-- Future Operations to Focus on Development of ANA598. In June, Anadys
initiated a strategic restructuring to focus its operations on the
continued development of ANA598, in particular a Phase II study in
combination with pegylated interferon-alpha and ribavirin. The
restructuring included a reduction in Anadys' workforce expected to
generate annual savings of $4 to $5 million, while retaining the
clinical development infrastructure required to conduct the Phase II
study of ANA598, key capabilities directed toward pharmaceutical
development and next generation non-nucleosides, and a streamlined
administrative staff. Also included in the restructuring is an
expected
reduction in annual facility expense of approximately $1.8M associated
with our completed move to a smaller facility.

Development Program Highlights

ANA598

ANA598 is the Company's non-nucleoside HCV polymerase inhibitor.
-- Finalization of ANA598 Phase II Protocol. Anadys has finalized its
protocol and received FDA clearance for the Phase II study of ANA598
in
combination with pegylated interferon-alpha and ribavirin for the
treatment of chronic hepatitis C. In the Phase II study, naive
genotype
1 patients will receive ANA598 or placebo in combination with
Pegasys(R)
(peginterferon alfa-2a) and Copegus(R) (ribavirin, USP) (a current
standard of care, or SOC) for 12 weeks at dose levels of 200 mg or 400
mg twice daily (bid), each with a loading dose of 800 mg bid on day
one.
After week 12, patients will continue to receive SOC alone. Patients
who have undetectable levels of virus at weeks 4 and 12 will be
randomized to stop all treatment at either week 24 or 48. The primary
endpoint of the study is the proportion of patients who achieve
undetectable levels of virus at week 12 (complete Early Virological
Response or cEVR). Response at week 4 will also be assessed to
provide
the rate of Rapid Virological Response, or RVR. Patients will be
followed for 24 weeks after stopping therapy to determine the rate of
Sustained Virological Response, or SVR. Ninety patients are planned
to
be enrolled in this study - thirty patients receiving ANA598 and
fifteen
receiving placebo at each dose level. The study will be conducted at
a
number of clinical sites in the United States. Patient dosing in the
trial is expected to commence in the next several weeks. Anadys
expects
to receive RVR data from the 200 mg dose group by year-end.
-- Reported Potent Antiviral Activity/Good Tolerability in HCV at EASL.
In
April 2009, data demonstrating potent antiviral activity and good
tolerability of ANA598 as a single agent at all dose levels in a Phase
Ib study in HCV patients were reported at the EASL conference. The
median viral load reduction over three days ranged from 2.4 to 2.9
log10
in the three dose groups studied. No patient at any dose level showed
evidence of viral rebound while on ANA598 and there were no serious
adverse events.
-- Reported 14-day Healthy Volunteer Study Results. In April 2009,
Anadys
reported results from a 14-day study of ANA598 in healthy volunteers.
ANA598 was generally well-tolerated in all cohorts in the study with
no
serious adverse events. Three instances of mild-to-moderate rash were
observed at the higher dose levels. Pharmacokinetic results from this
trial confirmed the plasma half-life of ANA598 of approximately 24
hours, and demonstrated that steady-state levels of ANA598 in plasma
are
reached after six to seven days of dosing.

-- Dosing Completed in Long-Term Chronic Toxicology Studies. The dosing
period is completed in two long-term, chronic toxicology studies of
ANA598 (26 weeks duration in rats and 39 weeks duration in monkeys).
At
the 13-week interim, the toxicology profile of ANA598 in both species
was very favorable. While 39-week data from the monkey study is not
yet
available, a preliminary assessment of the results from the 26-week
study in rats indicates a similar profile to that seen in rats at 13
weeks, in which the only adverse finding was a marginal decrease in
the
rate of weight gain in females at 1000 mg/kg, the highest dose tested.

Complete results from both studies are expected at the end of the
third
quarter 2009.

ANA773

ANA773 is the Company's oral inducer of endogenous interferons that acts via
the toll like receptor 7 (TLR7) pathway.
-- Phase I Clinical Trial in HCV. Nine patients have completed dosing at
2000 mg in the Company's trial of ANA773 in HCV patients, and the
final patient is currently being dosed. During the second quarter the
Company reported evidence of viral load reduction in a majority of
patients who received ANA773 at 1600 mg. Anadys expects to present
further results from this study later this year and intends to explore
partnership opportunities as a potential path to continue the
development of ANA773.
-- Reported PK/PD Data for ANA773 in HCV at EASL. In April 2009, the
pharmacokinetic (PK) and pharmacodynamic (PD) data from the healthy
volunteer portion of the Phase I clinical trial of ANA773 in HCV were
reported at the EASL conference. ANA773 was generally well tolerated
with no serious adverse events. Plasma drug levels were proportional
to
dose, and there was a dose-dependent induction of well-recognized
interferon dependent biomarkers.

-- Phase I Clinical Trial in Oncology. In order to focus its resources
on
ANA598, Anadys recently elected to stop enrollment of new patients in
the ongoing Phase I oncology trial of ANA773. Anadys plans for
currently enrolled patients to continue to receive ANA773 until
disease
progression is observed and to conclude the trial once all patients
reach this point.

Webcast of Conference Call

Anadys will host a conference call at 5:00 pm Eastern Daylight Time today to
discuss its second quarter 2009 financial results and highlights and to
provide an update on its development programs. A live webcast of the call
will be available online at 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 85411914. The webcast and telephone replay will be
available through August 13, 2009.

About Anadys

Anadys Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to
improving patient care by developing novel medicines for the treatment of
hepatitis C. The Company believes hepatitis C represents a large unmet medical
need in which meaningful improvements in treatment outcomes may be attainable
with the introduction of new medicines. The Company is developing ANA598, a
non-nucleoside polymerase inhibitor for the treatment of hepatitis C. The
Company has also investigated the potential of ANA773, an oral, small-molecule
inducer of endogenous interferons that acts via the Toll-like receptor 7, or
TLR7, pathway in hepatitis C.

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 (i) the expectation that Anadys' current cash
position will fund operations into 2011; (ii) the antiviral and tolerability
profile of ANA598, which may not be duplicated in future clinical studies of
longer duration; (iii) preclinical properties indicative of likely synergy
when used clinically in combination regimens; (iv) the expectation that Anadys
will receive RVR data from the 200 mg dose group by year-end and additional
data during the first half of 2010; (v) expectations regarding the amount of
cost-savings associated with the reduction in force and facilities move; (vi)
the ability to achieve EVR, RVR and SVR in the Phase II study; (vii) the
expectation to begin patient dosing in the ANA598 Phase II study within the
next several weeks; and (viii) plans to explore partnership opportunities as a
potential path to continue the development of 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 and early
clinical studies may not be predictive of future results, and Anadys cannot
provide any assurances that ANA598 will not have unforeseen safety issues or
will have favorable results in the planned Phase II trial. 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 transactions 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 future products 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, 2008 and Anadys' Current Report on
Form 8-K filed on June 4, 2009. 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 Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----

Operating expenses
Research and development $4,648 $5,501 $11,524 $11,510
General and administrative 2,532 1,975 4,587 4,020
----- ----- ----- -----
Total operating expenses(1) 7,180 7,476 16,111 15,530

Interest income and other, net 210 384 381 995
Gain from valuation of common
stock warrant liability 440 - 440 -
--- --- --- ---
Total other income, net 650 384 821 995

Net loss(1) $(6,530) $(7,092) $(15,290) $(14,535)
======= ======= ======== ========
Net loss per share,
basic and diluted(1) $(0.21) $(0.25) $(0.51) $(0.51)
====== ====== ====== ======
Shares used in calculating
net loss per share, basic
and diluted 31,493 28,731 30,173 28,714
====== ====== ====== ======

(1) Includes non-cash operating expenses of $1,062 and $668 determined in
accordance with Statement of Financial Accounts Standards No. 123(R),
"Share-Based Payment" (SFAS No. 123(R)) or approximately $0.03 and $0.02
effect on basic and diluted net loss per common share for the three months
ended June 30, 2009 and 2008, respectively. Research and development
expense and general and administrative expense includes $616 and $446,
respectively, of non-cash operating expenses determined in accordance with
SFAS No. 123(R) for the three months ended June 30, 2009. Includes
non-cash operating expenses of $1,746 and $1,329 determined in accordance
with SFAS No. 123(R) or approximately $0.06 and $0.05 effect on basic and
diluted net loss per common share for the six months ended June 30, 2009
and 2008, respectively. Research and development expense and general and
administrative expense includes $944 and $802, respectively, of non-cash
operating expenses determined in accordance with SFAS No. 123(R) for the
six months ended June 30, 2009.

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

June 30, December 31,
2009 2008
(Unaudited) (Audited)
Assets

Cash, cash equivalents and securities
available-for-sale $30,620 $27,936
Other current assets 2,576 2,202
Noncurrent assets 956 1,536
------- -------
Total assets $34,152 $31,674
======= =======

Liabilities and Stockholders' Equity

Current liabilities $8,733 $5,813
Other long-term liabilities 32 36
Stockholders' equity 25,387 25,825
------- -------
Total liabilities and stockholders' equity $34,152 $31,674
======= =======

Pegasys(R) and Copegus(R) are registered trademarks of Hoffman-La Roche Inc.

SOURCE Anadys Pharmaceuticals, Inc.

Investors, Amy Conrad of Anadys Pharmaceuticals, Inc., +1-858-530-3607,
aconrad@anadyspharma.com; or Media, Ian Stone, ian.stone@russopartnersllc.com,
or David Schull, david.schull@russopartnersllc.com, both of Russo Partners,
LLC, +1-619-528-2220, for Anadys Pharmaceuticals, Inc.