RNAI Sirna Therapeutics

SAN FRANCISCO, Aug. 14 /PRNewswire-FirstCall/ -- Sirna Therapeutics, Inc. (NASDAQ:RNAI) reported financial results today for the quarter ended June 30, 2006. Sirna reported a net loss of $10.1 million, or $0.15 per share in the second quarter of 2006, compared to a net loss of $6.0 million, or $0.14 per share, for the same period in 2005. Revenues for the second quarter of 2006 were $0.9 million compared to $1.5 million for the same quarter in 2005. Deferred revenues from collaboration partners, included on our balance sheet at June 30, 2006, were $10.9 million. Operating expenses were $11.7 million for the three months ended June 30, 2006 compared to $7.6 million for the same period in 2005. Operating expenses for the second quarter of 2006 included $0.9 million of share-based employee compensation expense related to Sirna's adoption of Statement of Financial Accounting Standards No. 123R as of January 1, 2006. Excluding the share-based employee compensation expense, non-GAAP operating expenses for the second quarter of 2006 were $10.8 million and the non-GAAP net loss was $9.2 million or $0.14 per share. R&D expenses, excluding 123R effects, were $6.9 million for the quarter ended June 30, 2006 compared to $4.8 million in the second quarter of 2005. Our increase in R&D expenses reflects the advancement of the Company's pipeline programs toward the clinic, the manufacturing of Sirna-034 in preparation for Phase I clinical trials in hepatitis C and the relocation of core scientific teams to our new research center in San Francisco. G&A expenses, excluding 123R effects, were $3.9 million for the quarter, compared to $1.6 million in the second quarter of 2005. This increase in expenses is primarily due to the additional business development and alliance management activities necessary to establish and grow key corporate partnerships, expansion of our intellectual property estate, employee relocation expense, and Sarbanes-Oxley compliance. The Company ended the second quarter with $92.2 million in cash, cash equivalents and securities available for sale, which includes $47.4 million in net proceeds from the Company's follow-on offering completed in May 2006 and $12.0 million in cash proceeds from our partner GlaxoSmithKline as a result of the alliance entered into in March 2006. With these additional financial resources, the company is expanding its drug development activities and forecasts 2006 operating use of cash in the range of $30-$33 million. "With over $92 million in financial resources at the end of the quarter, no debt, and the potential for additional collaboration revenues, we believe that we are in an excellent financial position to execute on our strategy," said Howard W. Robin, Sirna President and CEO. "In just a short period of time, we have established valuable strategic collaborations with Allergan and GlaxoSmithKline, and we are confident that we will have continued success in our strategy of establishing increasingly valuable collaborations with companies that are leaders in their fields." Recent Highlights * The Company completed a secondary offering of 10.4 million shares at $5 per share, and received total net proceeds of approximately $47.4 million. In addition, the Company received $12.0 million in up-front payments from GlaxoSmithKline as part of its collaboration in respiratory disease. * Sirna reported the final two month and three month results from its recently completed Phase 1 trial on Sirna-027, our RNAi-based drug for AMD which is partnered with Allergan, Inc. Single ascending doses of Sirna-027 were safe and well tolerated, and all 26 patients (100%) showed visual acuity stabilization eight weeks after a single injection. In addition, at the same time point, five of 26 patients (19%) experienced clinically significant improvement in visual acuity, indicated by an improvement of at least three lines on an eye chart. Twelve weeks after a single injection, 24 of 26 patients (92%) showed visual acuity stabilization, with four of 26 patients (15%) experiencing clinically significant improvement in visual acuity. Together with Allergan, we expect to initiate a Phase 2 study in the second half of 2006. * Sirna is completing the enabling toxicology studies on Sirna-034, our RNAi-based drug for hepatitis C, and plans to file an IND with the FDA in the second half of this year. The Company has started the manufacturing of Sirna-034 for the Phase 1 clinical trial. * As part of our exclusive, multi-year collaboration with GlaxoSmithKline (GSK) in respiratory diseases, the companies initiated preclinical programs to develop RNAi-based drugs for asthma and respiratory syncytial virus. * Three key events occurred in the second quarter that solidify Sirna's intellectual property position in the field of RNAi-based medicines and drug delivery technologies: * In April, the U.S. Patent and Trademark Office issued Sirna a patent covering any chemically modified siRNA targeting I Kappa B kinase-gamma (IKK-gamma). This is the first siRNA target patent issued in the United States and sets an important precedent for Sirna's entire target patent portfolio. Importantly, the claims of the patent cover any siRNA sequence used against the gene and cover any type of chemical modification or structure. * Sirna acquired the exclusive worldwide license to the Zamore, et. al. microRNA patents from the University of Massachusetts Medical School and the non-exclusive worldwide license to the Tuschl, et. al. microRNA patents from New York's Rockefeller University. Both licenses cover microRNA technology (commonly known as antagomirs) crucial to the modulation of gene expression. The combination of these licenses, together with Sirna's existing microRNA patent portfolio, gives Sirna a leading IP position in microRNAs. * Sirna's successful opposition led to the European Patent Office (EPO) significantly limiting the scope of the claims of the Kreutzer-Limmer patent, which is held by a third-party patent holder. The claims have now been limited to methods of making and using double stranded RNA with structures that we believe are not commercially relevant to the discovery and development of RNAi-based medicines. * Shares of Sirna Therapeutics were added to the Russell 3000 Index and Russell 2000 Index, effective June 30, 2006. Conference Call Information Sirna Therapeutics President and CEO Howard W. Robin and his senior management team will discuss progress to date in their clinical and preclinical programs and provide an overview of financial results during a conference call on Monday, August 14th at 4:30 p.m. EDT (1:30 p.m. PDT). A live audio webcast of the call will be available at the Company's corporate web site at http://www.sirna.com/. Participants are urged to log on to the web site 15 minutes prior to the scheduled start time to download and install any necessary audio software. To access the live telephonic broadcast, domestic callers should dial (877) 502-9273; international callers may dial (913) 981-5582. An audio webcast replay will be available on Sirna's web site, http://www.sirna.com/, for 14 days. Additionally, a telephonic replay of the call will be maintained through Monday, August 28, 2006. To access the replay, please dial (888) 203-1112 from the U.S. or (719) 457-0820 when calling internationally, using confirmation code 1274601. About Sirna Therapeutics Sirna Therapeutics is a clinical-stage biotechnology company developing RNAi-based therapies for serious diseases and conditions, including age-related macular degeneration (AMD), hepatitis C, dermatology, asthma, respiratory syncytial virus (RSV) and Huntington's disease. Sirna Therapeutics completed its Phase 1 clinical trial for Sirna-027 in AMD in 2005 and with its strategic partner, Allergan, Inc., will move Sirna-027 into Phase 2 clinical trials in the second half of 2006. Sirna has selected a clinical candidate for hepatitis C virus, Sirna-034, which the Company plans to bring into Phase 1 clinical trials by the end of 2006. Sirna has established an exclusive multi-year strategic alliance with GlaxoSmithKline for the development of siRNA compounds for the treatment of respiratory diseases. Sirna has a leading intellectual property portfolio in RNAi covering over 250 mammalian gene and viral targets and over 200 issued or pending patents covering other major aspects of RNAi technology, including the microRNA technology. More information on Sirna Therapeutics is available on the Company's web site at http://www.sirna.com/ . Safe Harbor Statement Statements in this press release which are not strictly historical are "forward-looking" statements which should be considered as subject to many risks and uncertainties. For example, most drug candidates do not become approved drugs. The development of Sirna-027 and Sirna-034 as well as Sirna's other programs are still at a relatively early stage. All of these programs, and Sirna's ability to obtain milestone and royalty payments for them, are subject to significant risks and unknowns, are highly contingent upon future successes, and require significant funding. In addition, patent applications may not result in issued patents, and issued patents may not be enforceable or could be invalidated. Other risks and uncertainties include, among others, Sirna's early stage of development, Sirna's history and expectation of losses and need to raise capital, Sirna's need to obtain clinical validation and regulatory approval for Sirna-027, Sirna-034 and Sirna's other product candidates, any of which could have negative results, Sirna's need to engage collaborators, Sirna's need to obtain and protect intellectual property, and the risk of third-party patent infringement claims. These and additional risk factors are identified in Sirna's Securities and Exchange Commission filings, including Forms 10-K and 10-Q and in other SEC filings. Sirna undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release. Contacts: Stephan Herrera Executive Director, Investor Relations Sirna Therapeutics, Inc. 415.281.2704 Brandon Belcher The Ruth Group 646.536.7009 SIRNA THERAPEUTICS, INC. CONDENSED BALANCE SHEETS (In thousands) June 30, December 31, 2006 2005 (Unaudited) (Note 1) ASSETS Cash, cash equivalents and securities available for sale $92,177 $45,692 Property and equipment, net 2,954 1,906 Other assets, net 3,482 1,919 $98,613 $49,517 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $10,618 $6,699 Deferred revenue, long-term 6,865 2,917 Other long-term liabilities 264 275 Stockholders' equity 80,866 39,626 $98,613 $49,517 Note 1. Derived from audited financial statements. SIRNA THERAPEUTICS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except for per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenues: Contract revenue $852 $51 $1,278 $94 Contract manufacturing revenue -- 1,477 -- 1,942 Total revenues 852 1,528 1,278 2,036 Operating expenses: Cost of contract manufacturing -- 1,264 -- 1,658 Research and development 7,186 4,780 12,826 10,884 General and administrative 4,493 1,550 7,874 3,720 Total operating expenses 11,679 7,594 20,700 16,262 Loss from operations (10,827) (6,066) (19,422) (14,226) Interest and other income 753 116 1,370 291 Interest expense -- -- -- (25) Net loss $(10,074) $(5,950) $(18,052) $(13,960) Net loss per common share, basic and diluted $(0.15) $(0.14) $(0.29) $(0.34) Weighted average common shares outstanding, basic and diluted 66,126 41,577 63,129 41,527 DATASOURCE: Sirna Therapeutics, Inc. CONTACT: Stephan Herrera, Executive Director, Investor Relations of Sirna Therapeutics, Inc., +1-415-281-2704; or Brandon Belcher of The Ruth Group, +1-646-536-7009, for Sirna Therapeutics, Inc. Web site: http://www.sirna.com/

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