deCODE genetics Announces Second Quarter 2006 Financial
Results
Positive trial results, advances in clinical development
of compounds in heart attack, asthma and peripheral
artery disease
Progress in developing DNA-based
diagnostics in type 2 diabetes, heart attack, breast
cancer and prostate cancer
deCODE genetics (Nasdaq:DCGN) today announced its consolidated financial results
for the quarter ended June 30, 2006. A conference call to discuss the quarter’s
results and recent operating highlights will be webcast live tomorrow, Wednesday,
August 9, at 8:00am Eastern Daylight Time/12 noon GMT/1pm British Summer Time
(details below).
Revenue for the quarter ended June 30, 2006 was $10.4 million, compared to
$11.4 million for the same period a year ago. For the first six months of 2006,
revenue was $20.5 million, compared to $21.0 million for the first six months
of 2005. At June 30, 2006, the company had $11.7 million in deferred revenue,
which will be recognized over future reporting periods.
Net loss for the second quarter 2006 was $18.3 million, compared to $13.3
million for the second quarter last year. Net loss for the first six months
of 2006 was $38.6 million, compared to $30.3 million for the first six months
of last year. These increases are the result principally of higher research
and development expense related to clinical trials and preclinical development
work in the company’s lead drug development programs. Reported results also
reflect share-based compensation under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123R (FAS 123R) of $1.0 million,
or $0.02 per basic and diluted share, for the second quarter 2006, and $1.9
million, or $0.04 per basic and diluted share, for the first six months of
2006.
Basic and diluted net loss per share was $0.34 for the second quarter 2006,
compared to $0.25 for the year-ago period. For the first six months of 2006,
basic and diluted net loss per share was $0.71, compared to $0.56 for the first
six months of 2005. At the close of the second quarter 2006, the company had
approximately 55.5 million shares outstanding.
At June 30, 2006, the company had $115.5 million in cash and investments,
compared to $155.6 million at December 31, 2005. In July, the company increased
its cash position by approximately $27.8 million, the net proceeds from a registered
direct share offering to new and existing shareholders.
Research and development expense for proprietary programs was $13.2 million
for the second quarter of this year, compared to $11.0 million for the same
period last year. For the first six months of 2006, R&D expense was $28.7
million, compared to $19.3 million for the same period last year. These increases
are principally the result of costs associated with the advancement of the
company’s lead drug discovery and development programs.
Selling, general and administrative expenses for the second quarter 2006 were
$4.4 million, compared to $4.7 million for the same period last year. For the
first six months of 2006, SG&A expenses were $9.7 million, compared to
$8.9 million for the first six months of 2005. SG&A figures for 2006 include
share-based compensation expense under FAS 123R amounting to $0.5 million for
the second quarter and $1.0 million for the first six months of 2006.
“Reflecting our focus on product development, deCODE is advancing the clinical
development of a growing number of compounds for the treatment and prevention
of major diseases. In the past few months we have reported positive clinical
trial results in asthma and launched the next stage of trials for our lead
and follow-on compounds in heart attack and in our program in PAD. We have
also made significant progress in our efforts to apply our gene discovery work
to the development of DNA-based diagnostics, a complement to our drug development
work and, we believe, a potentially significant opportunity for applying the
medical and commercial value of our great capabilities in human genetics. We
are delivering on our strategy through world-leading science and focused and
efficient operations, bringing towards the market products with major commercial
potential in some of the biggest unmet needs in medicine,” said Kari Stefansson,
CEO of deCODE.
Recent highlights include:
Research and Development
Heart attack: DG031. In May, deCODE began patient enrollment in its pivotal
Phase III trial for DG031, the company’s lead developmental compound for the
prevention of heart attack. DG031 is designed to decrease risk of heart attack
by decreasing the production of leukotriene B4 (LTB4), a pro-inflammatory molecule
that is an end product of the leukotriene pathway. deCODE discovered the important
role of this pathway in modulating heart attack risk through its population
genetics research in Iceland and replication studies in many European and American
populations. The Phase III trial, the Leukotrienes in Coronary Artery Disease
(LTCAD) study, will enroll approximately 3400 patients and will focus on the
group at highest identifiable risk: African-American heart patients who carry
an at-risk variant of one of the genes deCODE has linked to heart attack risk
through this pathway. The trial will also include patients without the at-risk
variant. The primary endpoint is a composite of reduction in fatal and non-fatal
heart attack and stroke, hospitalization for unstable angina, and the need
for urgent revascularization. The trial is being conducted under a Special
Protocol Assessment with the US Food and Drug Administration (FDA).
Heart attack: DG051. deCODE has submitted an investigational new drug application
(IND) to the FDA for DG051, the company’s follow-on investigational compound
for the prevention of heart attack. Like DG031, DG051 is designed to decrease
risk of heart attack by decreasing the production of (LTB4). In preclinical
studies DG051 has been shown in human blood ex vivo and in animal models to
be a potent inhibitor of LTB4 production. The company is preparing to begin
Phase I clinical testing of DG051 pending clearance by the FDA.
Asthma: CEP-1347. deCODE announced positive results from its Phase IIa clinical
trial of Cephalon’s CEP-1347 in asthma. Data on patients receiving active drug
in the trial were consistent with a dose-dependent improvement in certain key
parameters of lung function examined in the study, including methacholine challenge
test and peak expiratory flow rates, as well as in a biomarker associated with
asthma severity and inflammation. The trial, conducted by deCODE under a research
collaboration and licensing agreement with Cephalon, was based upon deCODE’s
discovery of variants in the gene encoding the MAP3K9 kinase as risk factors
for the development of asthma. The MAP3K9 kinase acts within a pathway targeted
by CEP-1347.
PAD – DG041. Following positive Phase I results earlier this year, the company
in June began enrolling patients in a Phase IIa clinical trial for DG041, deCODE’s
developmental compound for the treatment of peripheral artery disease, or PAD.
The trial is examining safety and tolerability, dosing, and the effect of different
dose levels on platelet function and a range of serum biomarkers associated
with atherosclerosis. The trial will be randomized, double-blind, placebo-controlled,
and will enroll approximately 150 patients with intermittent claudication due
to PAD. The trial will enroll both patients with and without the gene variants
that deCODE has linked to risk of PAD.
Prostate cancer. In May, deCODE reported the discovery of a common genetic
variant that predisposes to prostate cancer. It is one of the first genetic
risk factors ever found to confer risk of a common type of cancer in the general
population. The variant was discovered in Iceland and confirmed in several
American and Swedish cohorts. About 19% of men of European ancestry with prostate
cancer carry at least one copy of the variant, which confers an approximately
60% increase in risk of the disease and accounts for approximately 8% of cases.
The variant confers roughly the same increase in risk among African Americans
but is twice as common. The variant thus accounts for approximately 16% of
prostate cancer among African American men and thereby contributes to the higher
incidence of the disease among African Americans. The variant is also associated
with more aggressive forms of prostate cancer, and deCODE is utilizing the
discovery as the basis for developing a diagnostic test that may aid in identifying
individuals at high risk and those who would benefit from more aggressive therapy.
Breast cancer. deCODE has linked a variant within a gene called BARD1 (BRCA1-associated
RING domain 1) to increased risk of breast cancer in the general population.
In a study of a total of more than 2000 patients and controls in Iceland, the
variant was found in 5.4% of breast cancer patients and 3.1% of controls, corresponding
to an 80% increase in risk for carriers of the variant in the general population.
Among women who carry this variant as well as the Icelandic founder risk mutation
in the BRCA2 gene, the likelihood of developing breast cancer may approach
certainty. Carriers of the BARD1 variant, with or without the BRCA2 mutation,
also had an increased risk of subsequent primary breast tumors after the first
breast cancer diagnosis. deCODE is applying this finding to develop a DNA-based
diagnostic test.
Corporate Alliances
DNA-based diagnostics. deCODE and Illumina have formed a strategic alliance
to co-develop and commercialize DNA-based diagnostic tests in several major
disease areas. The alliance will employ Illumina’s platform for high-multiplex
single-nucleotide polymorphism (SNP) genotyping to develop tests for gene variants
deCODE has previously shown to have impact on the risk of a growing number
of common diseases with major public health impact. The alliance is focusing
initially on the development of diagnostic tests for variants in genes involved
in heart attack, type 2 diabetes, and breast cancer.
Finance
In July, deCODE completed the sale of 6 million shares of its common stock,
netting proceeds of approximately $27.8 million.
Personnel
Birgit Stattin Norinder. In June, deCODE appointed
Birgit Stattin Norinder to the company’s Board of Directors. Ms
Norinder has held senior clinical development
and regulatory affairs positions in Europe and the United States at Pfizer,
Astra, Glaxo and Pharmacia & Upjohn. She was CEO and Chairman of UK-based
Prolifix Ltd, from 1998 until the merger of Prolifix and TopoTarget in 2002.
She currently serves on the boards of several biotechnology companies and
is Chairman of the Board of Betagenon AB.
Earl Collier. In July, deCODE appointed Earl M.
“Duke” Collier, Jr, to its Board of Directors. Mr. Collier is Executive
Vice President at Genzyme Corp.
He has previously served as President of Vitas Healthcare, was a
partner at the Washington, DC-based law firm of Hogan and Hartson, and
served as Deputy
Administrator of the Health Care Finance Administration in the Department
of Health and Human Services. Mr. Collier received his BA from Yale University
and his JD from the University of Virginia.
About deCODE
deCODE genetics (Nasdaq:DCGN) is a global leader in applying human genetics
to develop drugs for common diseases. Our population approach has enabled
us to discover and target key biological pathways involved in conditions
ranging from heart attack to cancer. We are turning these discoveries into
new medicine to better treat and prevent many of the biggest challenges to
public health. deCODE is delivering on the promise of the new genetics.SM
Visit us on the web at www.decode.com.
Conference Call Information
A conference call, during which deCODE President and CEO Kari Stefansson and
CFO Lance Thibault will discuss second quarter financial results and recent
operating highlights, will be webcast tomorrow, Wednesday, August 9, at 8:00am
EDT/12 noon GMT/1pm British Summer Time. The webcast can be accessed via
the Investors section of deCODE’s website, www.decode.com, or through www.earnings.com.
A replay of the call will be available on these websites for at least one
week following the call. A digitized telephone replay of the call can be
accessed for the week following the call by dialing 1 800 475 6701 from the
US, or +1 320 365 3844 from outside the US. The access code is 838195.
Any statements contained in this presentation that relate to future plans,
events or performance are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to a number of risks and uncertainties that could cause
actual results, and the timing of events, to differ materially from those described
in the forward-looking statements. These risks and uncertainties include, among
others, those relating to technology and product development, integration of
acquired businesses, market acceptance, government regulation and regulatory
approval processes, intellectual property rights and litigation, dependence
on collaborative relationships, ability to obtain financing, competitive products,
industry trends and other risks identified in deCODE’s filings with the Securities
and Exchange Commission deCODE undertakes no obligation to update or alter
these forward-looking statements as a result of new information, future events
or otherwise.
Second
Quarter 2006 Financial Results
(PDF / 111KB)