SOURCE: Novacea, Inc.

March 17, 2008 09:00 ET

Novacea Reports Fourth Quarter and Year-End 2007 Financial Results

SOUTH SAN FRANCISCO, CA--(Marketwire - March 17, 2008) - Novacea, Inc. (NASDAQ: NOVC), today reported a net loss for the fourth quarter and fiscal year 2007 of $2.6 million, or $0.10 per share, and $32.5 million, or $1.35 per share, respectively.

As of December 31, 2007, cash and cash equivalents, marketable securities and accounts receivable totaled $106.1 million. The accounts receivable balance of $11.5 million as of December 31, 2007 includes $6.1 million of cost reimbursement revenue for the third quarter of 2007, for which payment was received in January 2008, and $5.4 million of cost reimbursement revenue for the fourth quarter of 2007 related to Novacea's development efforts on Asentar™ under the exclusive worldwide license, development and commercialization agreement with Schering-Plough Corporation.

"With approximately $106 million in cash and receivables at the end of 2007, our operating capital usage during the fourth quarter was less than $4 million. Since we terminated the ASCENT-2 Phase 3 trial in advanced prostate cancer, managing our capital resources continues to be important, as we seek to fully evaluate strategic alternatives available to the company," said John P. Walker, Novacea's chairman and chief executive officer. "We project operating capital usage of $17 million to $19 million in 2008, which should be sufficient to support AQ4N (banoxantrone), an investigational anti-cancer prodrug, in an ongoing Phase 1b/2a clinical trial in patients with glioblastoma multiforme (GBM) and our continued efforts on Asentar with our partner Schering-Plough."

Financial Results

Revenue for the year ended December 31, 2007 under the collaboration agreement with Schering-Plough was $16.7 million, including $5.2 million attributable to the recognition of a portion of the upfront payments and $11.5 million related to cost reimbursement for Novacea's development efforts on Asentar during 2007.

Total research and development (R&D) expenses for the fourth quarter of 2007 were $7.5 million as compared to $5.0 million for the same period in 2006. Total R&D expenses for the year ended December 31, 2007 were $36.1 million as compared to $21.8 million for the same period in 2006. The $14.3 million increase in R&D expenses during the year ended December 31, 2007 as compared to the same period in 2006 was related primarily to higher expenses associated with Asentar, due in part to sublicensing fees paid on the license fee received from Schering-Plough under the collaboration agreement, clinical development activities on the ASCENT-2 Phase 3 clinical trial, and costs of the Phase 2 clinical trial in advanced pancreatic cancer initiated in September 2007. Additionally, the increase in R&D expenses was due partly to higher expenses on AQ4N, primarily from an up-front payment related to Novacea's acquisition of worldwide product rights, clinical development activities and product manufacturing expenses, and costs of preparing for additional AQ4N clinical trials.

Total general and administrative (G&A) expenses for the fourth quarter of 2007 and the year ended December 31, 2007 were $4.4 million and $17.3 million, respectively, compared to $3.8 million and $11.3 million, respectively, for the same periods in 2006. The increase in G&A expenses during the year ended December 31, 2007 as compared to the same period in 2006 was due primarily to higher stock-based compensation expense, consulting, legal and audit fees, including legal and other fees related to entering into the Schering-Plough agreement, and headcount- and facilities-related costs.

The net loss for the fourth quarter of 2007 was $2.6 million, or $0.10 per share, as compared to a net loss for the same period in 2006 of $7.8 million, or $0.34 per share. The net loss for the year ended December 31, 2007 was $32.5 million, or $1.35 per share, as compared to a net loss for the same period in 2006 of $29.6 million, or $1.98 per share. The net loss per share amounts were calculated using the weighted average number of shares of common stock outstanding for each period.

Financial Guidance

Total revenue in 2008 under the development and commercialization agreement with Schering-Plough is expected to include the recognition of a portion of the $60 million in upfront payments, in addition to revenue from the expected cost reimbursement for Novacea's development efforts on Asentar. Based on its current operating plans, including the estimated future reimbursement by Schering-Plough of Asentar development costs, Novacea currently projects that during 2008 its usage of operating capital, comprised of cash and cash equivalents, marketable securities and accounts receivable, will be in the range of $17 million to $19 million.

About Novacea

Novacea, Inc. is a biopharmaceutical company focused on in-licensing, developing and commercializing novel cancer therapies. Novacea has two product development candidates, including Asentar™, which has been in a Phase 3 clinical trial for androgen-independent prostate cancer, or AIPC, and in a Phase 2 trial for advanced pancreatic cancer. Asentar is part of a development and commercialization agreement with Schering-Plough Corporation. Novacea's second product candidate, AQ4N, is a hypoxia-activated prodrug that is currently in a Phase 1b/2a clinical trial in glioblastoma multiforme. More information on any of Novacea's trials can be found at www.ClinicalTrials.gov.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to financial guidance, development, clinical studies, regulatory review and approval, and commercialization of products, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date the statements are made and are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events. You should not put undue reliance on any forward-looking statements. Important factors that could cause actual performance and results to differ materially from the forward-looking statements made by Novacea include: early stage of development; the focus, conduct, enrollment and timing of Novacea's clinical trials; regulatory review and approval of product candidates; success or failure of Novacea's present and future collaboration agreements; commercialization of products; developments relating to Novacea's licensing and collaboration agreements; market acceptance of products; funding requirements; intellectual property protection for Novacea's product candidates; competing products; and other risks detailed from time to time under the heading "Risk Factors" in Novacea's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as may be updated from time to time by Novacea's future filings under the Securities Exchange Act. If one or more of these risks or uncertainties materialize, or if any underlying assumptions prove incorrect, Novacea's actual performance or results may vary materially from any future performance or results expressed or implied by these forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

Novacea is a registered trademark of Novacea, Inc., and Asentar is a trademark of Novacea, Inc. All other trademarks are property of their respective owners.


               Condensed Statements of Operations
            (in thousands, except per share amounts)


                                  Three Months Ended        Year Ended
                                     December 31,           December 31,
                                 -------------------    ------------------
                                   2007       2006        2007      2006
                                 --------   --------    --------  --------
                                     (Unaudited)       (Unaudited)   (1)

Collaboration revenue            $  7,981   $      -    $ 16,683  $    371
Operating expenses:
   Research and development         7,507      4,971      36,055    21,809
   General and administrative       4,386      3,754      17,279    11,306
                                 --------   --------    --------  --------
Total operating expenses           11,893      8,725      53,334    33,115
                                 --------   --------    --------  --------
Loss from operations               (3,912)    (8,725)    (36,651)  (32,744)
Interest and other income, net      1,284        909       4,120     3,116
                                 --------   --------    --------  --------
Net loss                         $ (2,628)  $ (7,816)   $(32,531) $(29,628)
                                 ========   ========    ========  ========
Net loss per share, basic and
 diluted                         $  (0.10)  $  (0.34)   $  (1.35) $  (1.98)
                                 ========   ========    ========  ========
Shares used in computing basic
 and diluted net loss per share    25,262     22,922      24,158    14,991



                    Condensed Balance Sheets
                        (in thousands)

                                            December 31,   December 31,
                                                 2007          2006
                                            ----------      ----------
                                             (Unaudited)       (1)
Assets
Current assets:
    Cash and cash equivalents               $   24,720      $   14,429
    Marketable securities                       69,887          50,150
    Accounts receivable                         11,522               -
    Other current assets                         1,650           1,099
                                            ----------      ----------
Total current assets                           107,779          65,678

Other assets                                     2,041             386
                                            ----------      ----------
Total assets                                $  109,820      $   66,064
                                            ==========      ==========

Liabilities and stockholders' equity
    Deferred revenue                        $    9,968      $        -
    Other current liabilities                    9,198      $    6,240
                                            ----------      ----------
Total current liabilities                       19,166           6,240

Non-current deferred revenue                    44,870               -
Other long-term liabilities                         36               -
Stockholders' equity                            45,748          59,824

                                            ----------      ----------
Total liabilities and
 stockholders' equity                       $  109,820      $   66,064
                                            ==========      ==========


(1) Derived from audited financial statements

Contact Information

  • Novacea Contact:
    Paul Laland
    Vice President, Corporate Communications
    Tel: 650-201-2688
    E-mail: Email Contact