SOURCE: Lipid Sciences, Inc.

May 08, 2007 08:30 ET

Lipid Sciences, Inc. Reports Financial Results for the First Quarter 2007

PLEASANTON, CA -- (MARKET WIRE) -- May 8, 2007 -- Lipid Sciences, Inc. (NASDAQ: LIPD) today reported financial results for the first quarter ended March 31, 2007. For the first quarter of 2007, the Company reported a net loss of $2.5 million, or $0.07 per share on a basic and diluted basis. This compares with a net loss of $3.0 million, or $0.11 per share, on a basic and diluted basis, for the same period in 2006.

Operating expenses for the first quarter reflected a 7% decrease in research and development expense from the same period of the previous year. This decrease is related to a reduction in option compensation expenses, and a decrease in costs related to the clinical trial for the Company's HDL Selective Delipidation therapy that is being conducted at the Washington Hospital Center in Washington, D.C. The decrease in our clinical trial expenses was attributed to the fact that the set-up costs incurred in the three months ended March 31, 2006 exceeded the ongoing recruitment and implementation costs incurred in the three months ended March 31, 2007. Operating expenses also include a 25% decrease in SG&A expense due to a reduction in: employee-related expenses, option compensation expenses, and public company expenses -- principally expenses related to legal fees.

At March 31, 2007, the Company had approximately $14.5 million in cash, cash equivalents, and short-term investments. The Company anticipates that sufficient capital is available to fund its operations, including current development projects, to the second half of 2008.

Dr. S. Lewis Meyer, President and Chief Executive Officer, noted, "Cardiovascular disease experts agree that HDL is the next, most logical target for the development of treatments to combat that disease. This consensus highlights Lipid Sciences' enormous potential to address this unmet clinical need with our HDL Therapy platform. We have already demonstrated, in a clinical trial setting, that our proprietary HDL Selective Delipidation process can consistently create a high concentration of a modified form of HDL (good cholesterol) that is known to be more effective in the body's natural process for removing lipids from arterial plaque -- reverse cholesterol transport. Lipid Sciences is also developing the next generation of HDL Therapy through our HDL Mimetic Peptide program which focuses on developing proprietary peptides that mimic the critical functional characteristics of a key protein in HDL -- apolipoprotein A-I. These mimetic peptides could be used to create 'synthetic' HDL for administration as a drug therapy to both enhance reverse cholesterol transport and reduce inflammation associated with atherosclerotic plaque."

Dr. Meyer continued, "In April we entered into an agreement to license a unique in vitro assay technology from The Children's Hospital of Philadelphia. Bringing this assay technology in-house is part of our strategy to develop an efficient and cost-effective internal laboratory capability to support our development plan for our critical HDL Mimetic Peptide program as well as for HDL Selective Delipidation."

Lipid Sciences, Inc. is a development-stage biotechnology company engaged in the research and development of products and processes intended to treat major medical indications, in which lipids, or fat components, play a key role. The Company's HDL Therapy platform (HDL Selective Delipidation and HDL Mimetic Peptides) aims to develop treatments to reverse atherosclerosis, a systemic disease of the blood vessels caused by the build-up of cholesterol-filled plaques in the vascular system and, most critically, in the coronary arteries. Regression of such plaques may have a major impact on reducing the risk of acute coronary events. The Company's Viral Immunotherapy platform focuses on the removal of the lipid coatings from lipid-enveloped viruses and other lipid-containing infectious agents by applying Lipid Sciences' proprietary delipidation technologies. The Company believes that removing the virus' protective lipid coating enhances the processing and presentation of viral proteins to stimulate the body's immune system to effectively fight the disease. Conditions that could potentially be impacted by these technologies include HIV, Hepatitis B and Hepatitis C, West Nile, SARS, influenza, and a broad range of animal health applications.

Forward-Looking Statements: This release contains forward-looking statements concerning plans, objectives, goals, strategies, study results, anticipations, expectations, future events or performance as well as all other statements that are not statements of historical fact. The forward-looking statements contained in this release reflect our current beliefs and expectations on the date of this release. Actual results, performance or outcomes may differ materially from what is expressed in the forward-looking statements. Readers are referred to the documents filed by us with the SEC, specifically the most recent reports on Form 10-K and Form 10-Q which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. In addition to those risk factors, other factors that could cause actual results to differ materially include the following: Our inability to obtain adequate funds; the significant losses we have incurred to date, and our expectation that we will incur substantial losses in the future; the failure of our technologies to prove safe or effective; our inability to obtain regulatory approval for our technologies, which are only in the clinical development stage; delay or failure to complete clinical studies; our dependence on our license agreement with Aruba International B.V.; our reliance on collaborations with strategic partners and consultants; competition in our industry, including the development of new products by others that may provide alternative or better therapies; failure to secure and enforce our intellectual property rights; risks associated with use of biological and hazardous materials; acceptance of our potential products by healthcare providers and patients; our exposure to product liability claims; and our dependence on key personnel.

This release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies are available through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at Lipid Sciences assumes no obligation to update the forward-looking statements included in this document.

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Lipid Sciences, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Operations (Unaudited)

                                                                Period from
                                                                 (May 21,
                                             Three Months Ended  1999) to
                                                  March 31,      March 31,
(In thousands, except per share amounts)       2007      2006      2007
                                             --------  --------  ---------
  Collaboration agreement revenue            $     59  $      -  $      59
  Grant revenue                                    --        22        100
                                             --------  --------  ---------
Total revenue                                      59        22        159
Operating expenses:
  Research and development(1)                   1,813     1,950     61,620
  Selling, general and administrative(2)          906     1,209     28,224
                                             --------  --------  ---------
Total operating expenses                        2,719     3,159     89,844
                                             --------  --------  ---------
Operating loss                                 (2,660)   (3,137)   (89,685)
Interest and other income                         204       140      4,364
                                             --------  --------  ---------
Loss from continuing operations                (2,456)   (2,997)   (85,321)
Income tax benefit                                 --        --      8,004
                                             --------  --------  ---------
Net loss from continuing operations            (2,456)   (2,997)   (77,317)
                                             --------  --------  ---------
Discontinued operations:
  Income from discontinued operations              --        --        582
  Income tax expense                               --        --       (179)
                                             --------  --------  ---------
Income from discontinued operations - net          --        --        403
                                             --------  --------  ---------
Net loss                                     $ (2,456) $ (2,997) $ (76,914)
                                             ========  ========  =========

Loss per share - basic and diluted:
Net loss per share                           $  (0.07) $  (0.11)
Weighted average number of common shares
 outstanding - basic and diluted               37,120    27,361

Non-cash option compensation expense
 included in operating expenses:
(1)  Research and development                      78       222
(2)  Selling, general and administrative          120       203

Lipid Sciences, Inc.
(A Development Stage Company)
Condensed Consolidated Balance Sheets (Unaudited)         March   December
(In thousands, except share amounts)                    31, 2007  31, 2006
                                                        --------  --------
Current assets:
  Cash and cash equivalents                             $ 14,459  $ 16,691
  Accounts receivable                                         72        --
  Prepaid expenses                                           288       273
  Other current assets                                        71        79
                                                        --------  --------
Total current assets                                      14,890    17,043
  Property and equipment                                     347       374
  Long-term lease deposits                                    19        19
                                                        --------  --------
Total assets                                            $ 15,256  $ 17,436
                                                        ========  ========
Current liabilities:
  Accounts payable and accrued liabilities              $  1,592  $  1,511
  Accrued related party royalties                            375       250
  Accrued compensation                                       509       680
  Taxes payable                                                2        --
  Deferred revenue                                            20        --
                                                        --------  --------
Total current liabilities                                  2,498     2,441
  Deferred rent                                               17        16
                                                        --------  --------
Total liabilities                                          2,515     2,457
                                                        --------  --------

Stockholders’ equity:
  Preferred stock, $0.001 par value; 10,000,000 shares
   authorized and issuable; no shares outstanding             --        --
  Common stock, $0.001 par value; 75,000,000 shares
   authorized; 37,120,139 and 37,120,139 shares issued
   and outstanding at March 31, 2007 and
   December 31, 2006, respectively                            37        37
  Additional paid-in capital                              89,618    89,400
  Deficit accumulated in the development stage           (76,914)  (74,458)
                                                        --------  --------
    Total stockholders’ equity                            12,741    14,979
                                                        --------  --------
Total liabilities and stockholders’ equity              $ 15,256  $ 17,436
                                                        ========  ========

Contact Information

    Deborah S. Lorenz
    Vice President, Investor Relations and Corporate Communications
    Lipid Sciences, Inc.
    Email Contact