Conference call scheduled today at 8:00 a.m. Pacific Time SAN
DIEGO, May 13 /PRNewswire-FirstCall/ -- SGX Pharmaceuticals
(NASDAQ:SGXP) today announced its financial results for the first
quarter of 2008. For the three months ending March 31, 2008, the
Company posted total revenues of $17.0 million and net income of
$3.7 million. The revenue includes $10.8 million of revenue earned
in the quarter that was attributable to the one-time recognition of
the remaining portion of an upfront payment, which had not yet been
recognized, related to the Company's collaboration with Novartis.
Cash, cash equivalents and short-term investments totaled $30.9
million at March 31, 2008 compared to $39.0 million at December 31,
2007. "Our team has had a busy and productive quarter," said Mike
Grey, President and Chief Executive Officer of SGX. "IND enabling
studies are continuing on our MET inhibitor, SGX126, and we now
have a better understanding of the nature of the toxicity observed
with SGX523. In addition, the progress we are making in our
preclinical and late stage discovery programs is encouraging, as we
work to build a robust pipeline of targeted oncology therapies. We
are also pursuing a number of potential partnering opportunities
for our programs, with the objective of expanding our revenue
base." Pipeline Update MET Program SGX523: The unexpected toxicity
seen in the Phase I studies was compromised kidney function, as
evidenced by increased serum creatinine. Analysis of patient
samples from the Phase I studies revealed a metabolism profile that
differs markedly from that observed in previously conducted
preclinical studies. As a result of the observed toxicity, the
Company has discontinued further development of SGX523. SGX126: The
Company is continuing development of SGX126. While SGX126 shares
many of the attractive preclinical properties of SGX523, it is
structurally distinct, more potent in vivo and, based on the
results of preclinical studies, has a different metabolism profile
than that of SGX523. The Company intends to carry out further
preclinical studies on SGX126 in support of clinical development
and an IND submission is now targeted for early 2009. Additional
MET Inhibitors: In addition to SGX126, the Company has a number of
MET inhibitors with attractive potency, selectivity and
pharmacokinetic properties that it is evaluating as further MET
development candidates. BCR-ABL Program SGX393: The Company's
internal BCR-ABL program, focused on relapsed and refractory CML
patients, in particular those with the T315I mutation, is
progressing through IND-enabling studies, with an IND submission
targeted for this quarter. Novartis continues to be responsible for
the further preclinical and clinical development of BCR-ABL
inhibitors identified under the collaboration, other than SGX393.
Oncology Drug Discovery In addition to the JAK2 and RAS programs
described previously, the Company's drug discovery portfolio
includes other exciting cancer targets, such as RON, ALK, and IKKe.
The JAK2, RON, and ALK programs are the more advanced drug
discovery programs and the Company is targeting nomination of at
least two development candidates from its drug discovery portfolio
later this year. Financial Results for the Three Months Ended March
31, 2008 Total revenues in the first quarter of 2008 were $17.0
million compared to $11.0 million in the first quarter of 2007. The
increase of $6.0 million is primarily due to an increase in revenue
recognized under the Novartis collaboration. Specifically, upon the
conclusion of the research term of the collaboration in late March
2008, the Company recognized as revenue approximately $10.8 million
of deferred revenue for the portion of the upfront payment which
had not yet been earned. This increase in collaborative revenue was
offset by a decrease in revenues from the Company's federal
research grant. This decrease was primarily due to the recognition
of $3.5 million of revenue during the first quarter of 2007 in
connection with an agreement on the reimbursement of overhead costs
incurred on grant research efforts since the commencement of the
grant in July 2005. Research and development expenses totaled $11.3
million for the first quarter of 2008, compared to $10.0 million
for the same period of 2007. The increase of $1.3 million is
primarily attributable to the preclinical and clinical development
of the Company's MET and BCR-ABL inhibitors during the first
quarter of 2008. General and administrative expenses totaled $2.1
million for the first quarter of 2008, compared to $2.2 million in
the same period of 2007. For the first quarter of 2008, the Company
reported net income of $3.7 million, or $0.18 basic and diluted
earnings per share, compared to a net loss of $1.1 million, or
$0.07 basic and diluted loss per share. The net income in the first
quarter is attributable to the recognition of revenue from deferred
revenue related to the Novartis collaboration. However, the Company
expects to incur a net loss in the remaining quarters, and for the
full year of 2008. Conference Call and Webcast The Company will
hold a conference call at 8:00 a.m. Pacific Time today, May 13,
2008, to discuss these results and business highlights. Interested
participants and investors may access the teleconference call by
dialing 866-825-1709 (U.S./Canada) or 617-213-8060 (international),
participant code 72662683. A telephonic replay will be available
for seven days following the call. Access numbers for this replay
are 888-286-8010 (U.S./Canada) and 617-801-6888 (international),
participant code 83759897. About SGX Pharmaceuticals SGX
Pharmaceuticals, Inc. is a biotechnology company focused on the
discovery, development and commercialization of novel, targeted
therapeutics directed at addressing unmet medical needs in
oncology. Our drug development programs target the MET receptor
tyrosine kinase, an enzyme implicated in a broad array of cancers,
and the BCR-ABL tyrosine kinase enzyme for the treatment of Chronic
Myelogenous Leukemia, or CML. Our drug discovery activities are
focused on a portfolio of other protein and enzyme targets that
have been implicated in human cancers, including JAK2, RON, ALK,
RAS and IKKe. More information on the pipeline and drug discovery
platform can be found at http://www.sgxpharma.com/ and in the
Company's various filings with the Securities and Exchange
Commission. Forward-Looking Statements Statements in this press
release that are not strictly historical in nature are
forward-looking statements. These statements include, but are not
limited to, statements related to research and development
programs, plans for 2008 and beyond, expectations regarding the
nomination of development candidates and the timing of the filing
of INDs and commencement and success of IND enabling activities and
preclinical and clinical studies, partnership opportunities, the
potential of the Company's inhibitors as treatments for certain
cancers, the potentially distinct properties of the Company's
compounds, partnering opportunities for the Company's research and
development programs and the ability to discover, develop, build a
pipeline of and commercialize cancer therapeutics. These statements
are only predictions based on current information and expectations
and involve a number of risks and uncertainties. Actual events or
results may differ materially from those projected in any of such
statements due to various factors, including the risks and
uncertainties inherent in drug discovery, development and
commercialization, which include, without limitation, the potential
failure of development candidates to advance through preclinical
studies or demonstrate safety and efficacy in clinical testing and
the ability to file INDs or commence IND enabling activities or
preclinical or clinical studies in the referenced time frames. The
results of early preclinical studies or clinical trials may not be
predictive of future results, and the Company cannot provide any
assurances that any of its compounds or development candidates will
have favorable results in preclinical studies or future clinical
trials. In addition, results may be affected by the initiation,
implementation and conclusion of its collaborations, cash generated
or used in connection with new or existing collaborations, the
failure to successfully complete collaborations or partnerships or
enter into new collaborations on any of its research and
development programs, competition from other biotechnology and
pharmaceutical companies, its effectiveness at managing its
financial resources, the level of resources that its collaborative
partners devote to development of its product candidates, the scope
and validity of patent protection for its products, and its ability
to obtain additional funding to support its operations. For a
discussion of these and other factors, please refer to the risk
factors described in the Company's annual report on Form 10- K for
the year ended December 31, 2007, as well as other filings with the
Securities and Exchange Commission. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof. This caution is made under the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. All forward-looking statements are qualified in their
entirety by this cautionary statement and SGX undertakes no
obligation to revise or update this press release to reflect events
or circumstances after the date hereof. SGX PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) (unaudited) Three Months Ended March 31, 2008 2007
Revenue: Collaborations and commercial agreements $15,001 $5,647
Grants 1,971 5,321 Total revenue 16,972 10,968 Operating expenses:
Research and development 11,349 10,018 General and administrative
2,121 2,233 Total operating expenses 13,470 12,251 Income (loss)
from operations 3,502 (1,283) Interest income and expense, net 219
185 Net income (loss) $3,721 $(1,098) Net income (loss) per common
share: Basic $0.18 $(0.07) Diluted $0.18 $(0.07) Shares used to
compute basic and diluted net income (loss) per common share: Basic
20,530 15,228 Diluted 21,089 15,228 Three Months Ended Three Months
Ended March 31, 2008 (1) March 31, 2007 (1) Stock- Stock- based
Reported based Reported compensation GAAP compensation GAAP
non-GAAP expense results non-GAAP expense results Net income (loss)
$4,347 $(626) $3,721 $(109) $(989) $(1,098) Basic net income (loss)
per common share: $0.21 $(0.03) $0.18 $(0.01) $(0.06) $(0.07)
Diluted net income (loss) per common share: $0.21 $(0.03) $0.18
$(0.01) $(0.06) $(0.07) Research and development expenses $11,055
$294 $11,349 $9,517 $501 $10,018 General and administrative
expenses $1,789 $332 $2,121 $1,745 $488 $2,233 SGX PHARMACEUTICALS,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited) March 31, December 31, 2008 2007 Assets Cash, cash
equivalents and short-term investments $30,867 $38,990 Accounts
receivable 1,645 2,706 Other current assets 1,847 1,187 Property
and equipment, net 3,842 3,889 Other assets 4,285 4,284 Total
assets $42,486 $51,056 Liabilities and stockholder's equity Current
liabilities $12,190 $24,991 Deferred revenue, long-term 904 1,042
Other liabilities, net of current portion - - Stockholder's equity
29,392 25,023 Total liabilities and stockholder's equity $42,486
$51,056 1) In addition to disclosing financial results calculated
in accordance with generally accepted accounting principles (GAAP),
this table contains non-GAAP financial measures that exclude the
effect of non-cash stock compensation expense. The Company believes
that the presentation of results excluding non-cash stock
compensation expense provides meaningful supplemental information
to both management and investors that is indicative of the
Company's core operating results. The Company believes these
non-GAAP financial measures facilitate comparison of operating
results across reporting periods, and uses these non-GAAP financial
measures when evaluating its financial results, as well as for
internal planning and forecasting purposes. These non-GAAP
financial measures should not be considered a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
DATASOURCE: SGX Pharmaceuticals, Inc. CONTACT: Bonnie Feldman, Sr.
Director, Investor Relations, +1-858-344-8860, or Todd Myers, or
Chief Financial Officer, +1-858-558-4850, both of SGX
Pharmaceuticals Web site: http://www.sgxpharma.com/
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