Exhibit
99.1
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Contact:
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Robert S. Breuil
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(650) 864-7431
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AEROGEN, INC. REPORTS FOURTH QUARTER 2004 FINANCIAL
RESULTS
Mountain View, CA, March 9,
2005 — Aerogen,
Inc. (Nasdaq: AEGN) today announced financial results for the three months and
twelve months ended December 31, 2004.
The net loss attributable to common stockholders for the three months
ended December 31, 2004 was $2.7 million, or $0.53 per share,
compared with a net loss of $5.1 million, or $1.22 per share, for the same
period in 2003. The net loss
attributable to common stockholders for the twelve months ended December 31,
2004 was $23.2 million, or $4.86 per share, compared with $17.4 million, or
$4.22 per share, for the same period in 2003.
Aerogen’s cash balance as
of December 31, 2004 was $16.9 million.
The Company believes this cash balance is sufficient to sustain
operations into the first quarter of 2006.
In order to continue operations beyond that time, the Company will need
to raise additional capital, either through public or private financings,
collaborative relationships or other arrangements.
The results for the
twelve months ended December 31, 2004 include a charge of
$11.7 million, or $2.45 per share, reflecting a deemed dividend imputed
from the difference between the allocated proceeds and the conversion value of
the Company’s Series A-1 Convertible Preferred Stock that was issued during the
first half of 2004. There were no deemed
dividends in 2003. As
deemed dividends are only incurred upon the issuance of certain securities, and
the Company completed its planned issuance of Series A-1 Convertible Preferred
Stock in May 2004, there will be no further charges for deemed dividends
related to the Series A-1 Convertible Preferred Stock financing.
Aerogen
has concluded that it must restate its previously reported results for the
first three quarters of 2004 to correct its accounting for the Series A-1
Preferred Stock and Common Stock Warrants issued in the first and second
quarters of 2004. Due to certain rights provided to the
investors in the Series A-1 Preferred Stock, the Company has concluded that the
warrants issued in conjunction with the Series A-1 Preferred financing should
properly be accounted for as a liability, rather than as stockholders’ equity
as previously presented.
The restatements will not
affect cash flows, cash balances or operating income of the Company in any
period.
The impact of this change
on net income attributable to common stockholders included a reduction in the
deemed dividend recorded for the Series A-1 issuance of $0.7 million for the
year ended December 31, 2004.
Additionally, the value of the warrants changed from their initial
issuance values through December 31, 2004.
The resulting decrease in the warrant liability created non-operating
income for the three months ended December 31, 2004 of $1.5 million, or
$0.30 per share and for the twelve months ended December 31, 2004 the
non-operating income was $5.8 million, or $1.23 per share. The change also has the impact of increasing
total liabilities as well as the recorded amount of redeemable convertible
preferred stock, and reducing stockholders’ equity.
A full explanation of
this non-operating change in accounting, including revised financial
statements, will be made in the Company’s Form 10-K for the year ended December 31,
2004.
— more —
The terms of the Series A-1 Convertible Preferred Stock provide for
a dividend, at the rate of 6% per year, to be paid quarterly in cash or Aerogen
common stock, at the Company’s election, to each holder of Series A-1
Convertible Preferred Stock. During the
three and twelve months ended December 31, 2004, the Company elected to
pay this dividend in Aerogen common stock, resulting in charges related to
ordinary dividends of $0.5 million, or $0.09 per share, and
$1.4 million, or $0.29 per share, respectively. The Company did not pay any such dividends
during 2003.
Revenues for the three
months ended December 31, 2004 were $2.2 million, compared with $1.0
million for the same period in 2003. Revenues
for the twelve months ended December 31, 2004 were $6.2 million compared
with $4.2 million for the same period in 2003.
The increase in revenues for the three-month period ending December 31,
2004, as compared with the same period in 2003, primarily resulted from an
increase in product sales of the Aeroneb® Professional Nebulizer
System (“Aeroneb Pro”) and royalties associated with a large consumer products
company’s sales of an air freshener incorporating our aerosol generator
technology. The increase in revenues for
the twelve-month period ending December 31, 2004, as compared with the
same period in 2003, was primarily due to higher royalty revenues associated
with the consumer products company’s sales of the air freshener and royalties
on Evo Medical Solutions’ (“Evo”) sales of the Aeroneb® Go Nebulizer (“Aeroneb Go”), higher
product sales of the Aeroneb Pro, and to amortization of up-front payments
related to our distribution agreement with Evo.
Cost of products sold for
the three months ended December 31, 2004 was $1.2 million, compared with
$0.6 million for the same period in 2003.
Cost of products sold for the twelve months ended December 31, 2004
was $4.1 million, compared with $2.3 million for the same period in
2003. Cost of products sold decreased as
a percent of product sales for the three months ended December 31, 2004 as
compared to the same period in 2003, due to the improvement of margins on our
Aeroneb Pro product line. In addition, there were no sales of the lower-margin
product component to Evo in either three month period. Cost of products sold increased as a percent
of product sales for the twelve months ended December 31, 2004, as
compared to the same period in 2003, partially due to the sales of the
lower-margin product component that commenced in January 2004 under our
agreement with Evo, in addition to the increased costs related to the
manufacturing scale-up of this new product.
Research and development
expenses for the three months ended December 31, 2004 were $3.1 million,
compared with $2.6 million for the same period in 2003. The increase in research and development
spending in the three-month period ended December 31, 2004, as compared
with the same period of 2003, was primarily due to increased spending related
to initiation of a Phase 2 clinical trial for our aerosolized antibiotic
product, partially offset by decreased facility-related expenses. Research and development expenses for the
twelve-month period ended December 31, 2004 were $11.2 million, compared
with $11.7 million for the same period in 2003. The decrease in research and development
spending in the twelve-month period ended December 31, 2004, as compared
with the same period in 2003, was primarily due to reduction in payroll-related
expenses resulting from fewer employees, decreased facility-related expenses,
and a decrease in research and development spending related to absorbed
manufacturing costs as we continue to scale-up commercial operations and
increase our sales. These reductions
were
2
partially offset by
increased spending on activities related to initiation of a Phase 2 clinical
trial for our aerosolized antibiotic product.
Selling, general and
administrative expenses for the three months ended December 31, 2004 were
$2.0 million, as compared with $1.6 million for the same period in 2003. The
increase in selling, general and administrative spending in the three-month
period ended December 31, 2004, as compared with the same period of 2003,
was primarily due to increased market research activity related to initiation
of our Phase 2 clinical trial for our aerosolized antibiotic product. Selling, general and administrative expenses
for the twelve-month period ended December 31, 2004 were $6.8 million, as
compared with $6.5 million for the same period in 2003. The increase in
selling, general and administrative spending in the twelve-month period ended December 31,
2004 was primarily due increased legal expenses associated with restructuring
and financing activities in the first quarter of 2004, offset by reduced
spending on marketing and selling programs.
Operating
Activities
During the fourth
quarter, Aerogen focused on furthering development of its lead pharmaceutical
product, an aerosolized antibiotic (amikacin), targeting the treatment of
ventilator-associated pneumonia. Aerogen’s
pharmaceutical products are drug-device combination products that utilize its
OnQ®
Aerosol Generator. The Company has been
granted Fast Track Designation for its Combination Product: Amikacin Pulmonary
Delivery System for Ventilator-Associated Pneumonia from the United States Food
and Drug Administration and is now conducting a multi-center Phase 2
clinical trial in over 100 patients. The data from this trial are expected to
be available in 2005. In addition, as a
result of ongoing in-licensing activities of proprietary compounds, Aerogen
anticipates that a second product will enter a Phase 2 clinical trial by
mid-year 2005. “We are excited about the
progress our clinical development programs have made over the last year and
look forward to expanding our pipeline of pharmaceutical products,” said Dr.
Jane Shaw, Aerogen Chairman and CEO.
Aerogen will host an investor teleconference call today, March 9th, at 5:00 p.m. Eastern Time, during which we will discuss today’s earnings release. To join the teleconference call, dial (800) 895-3606; international callers should dial (785) 424-1065. The teleconference ID is “Aerogen.” This call is being webcast by Thomson/CCBN and can be accessed at Aerogen’s Web site at www.aerogen.com.
A
replay of the conference call will be available from 8:00 p.m. (ET) today,
March 9th, through 11:59 p.m. (ET) on Tuesday, March 22nd. Callers in the United States should dial
(800) 938-1602 for the replay, and international callers should dial (402)
220-1548. No access code is required.
Aerogen,
a specialty pharmaceutical company, develops products based on its OnQ Aerosol
Generator technology to improve the treatment of respiratory disorders in the
acute care setting. Aerogen has presented
the results of its first Phase 2 clinical study evaluating delivery of
aerosolized amikacin for the treatment of ventilator-associated pneumonia; an
additional Phase 2 study is currently underway.
Following amikacin, additional drug products targeting improved
respiratory therapy in the acute care setting are in the feasibility and
pre-clinical stages of development.
Aerogen’s Aeroneb Professional Nebulizer System is marketed world-wide
for use
3
in
hospitals. Aerogen’s Aeroneb Go
Nebulizer for home use is currently marketed in the U.S., Japan and certain
European countries. Aerogen also has
development collaborations with pharmaceutical and biotechnology companies for
use of its technology in the delivery of novel compounds that treat respiratory
and other disorders. Aerogen is
headquartered in Mountain View, California, with a campus in Galway, Ireland.
For more information, visit www.aerogen.com.
To
the extent any statements made in this release relate to information that is
not historical, these statements are necessarily forward-looking. As such, they
are subject to the occurrence of many events outside of Aerogen’s control and
other uncertainties, and are subject to various risk factors that could cause
Aerogen’s actual results to differ materially from those expressed in any
forward-looking statement. The risk
factors include, without limitation, the need for additional funding, the
inherent risks of product development, clinical outcomes, regulatory risks and
risks related to proprietary rights, market acceptance and competition, and are
described in Aerogen’s reports and other filings with the U.S. Securities and
Exchange Commission, including Aerogen’s Annual Report on Form 10-K for the
year ended December 31, 2003, filed with the Securities and Exchange
Commission (“SEC”) on April 14, 2004 and Aerogen’s Quarterly Report filed
on Form 10-Q for the quarter ended September 30, 2004 filed with the SEC
on November 15, 2004. Aerogen does not undertake any obligation to update
forward-looking statements.
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS ATTACHED
4
Aerogen, Inc.
Condensed Consolidated Statements of Operations
(In thousands,
except per share data)
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Three
Months Ended
December 31,
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Twelve
Months Ended
December 31,
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2004
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2003
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2004
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2003
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Revenues:
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Product
sales
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$
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1,445
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$
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538
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$
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4,428
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$
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3,198
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Research
and development
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—
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182
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—
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348
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Royalty
and other
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796
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250
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1,820
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625
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Total
revenues
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2,241
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970
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6,248
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4,171
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Costs
and expenses:
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Cost
of products sold
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1,248
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602
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4,051
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2,296
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Research
and development
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3,113
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2,633
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11,185
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11,744
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Selling,
general and administrative
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2,009
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1,647
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6,789
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6,507
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Total
costs and expenses
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6,370
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4,882
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22,025
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20,547
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Loss
from operations
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(4,129
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)
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(3,912
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)
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(15,777
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)
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(16,376
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)
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Interest
income (expense), net
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83
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(921
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)
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(372
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)
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(996
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)
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Decrease
in warrant liability
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1,519
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—
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5,840
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—
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Other
income (expense), net
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371
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(312
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)
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235
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(47
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)
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Net
loss
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(2,156
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)
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(5,145
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)
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(10,074
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)
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(17,419
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)
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Dividends
related to convertible preferred stock
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(494
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)
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—
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(13,097
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)
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—
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Net
loss attributable to common stockholders
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$
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(2,650
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)
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$
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(5,145
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)
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$
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(23,171
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)
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$
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(17,419
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)
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Net
loss per share, basic and diluted
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$
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(0.53
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)
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$
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(1.22
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)
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$
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(4.86
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)
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$
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(4.22
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)
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Weighted
- average shares used in computing net loss per share, basic and diluted
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5,024
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4,223
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4,765
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4,126
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5
Aerogen, Inc.
Condensed
Consolidated Balance Sheet
(In thousands)
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December 31,
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2004
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2003
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$
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16,883
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$
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762
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Accounts
receivable
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1,225
|
|
445
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Inventories,
net
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775
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301
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Prepaid
expenses and other current assets
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942
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|
428
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|
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Total
current assets
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19,825
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1,936
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|
|
|
|
|
|
|
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Property
and equipment, net
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2,964
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|
3,901
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Goodwill
and intangible assets, net
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2,098
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1,931
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Restricted
cash
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—
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1,200
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Other
assets
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868
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|
608
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Total
assets
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$
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25,755
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$
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9,576
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current
liabilities:
|
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Accounts
payable
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$
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1,043
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$
|
937
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Deferred
revenue, current
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|
500
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|
500
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Dividends
payable
|
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1,094
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|
—
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Convertible
debentures, net
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|
—
|
|
1,486
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|
|
Accrued
liabilities
|
|
1,873
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|
1,194
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Total
current liabilities
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|
4,510
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|
4,117
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|
|
|
|
|
|
|
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Deferred
rent
|
|
234
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|
1,658
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Deferred
revenue, non-current
|
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1,848
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|
1,875
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Warrant
liability
|
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10,296
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|
—
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Other
long-term liabilities
|
|
267
|
|
246
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|
|
Total
liabilities
|
|
17,155
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|
7,896
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|
|
|
|
|
|
|
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Redeemable
convertible preferred stock, par value $0.001
Authorized: 5,000 shares; issued and
outstanding:
1,099 and no shares at December 31, 2004 and 2003
(Liquidation preference: $32,963 at
December 31, 2004)
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15,749
|
|
—
|
|
|
|
|
|
|
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Stockholders’
equity:
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Common
stock, par value $0.001:
Authorized: 95,000 shares; issued and
outstanding:
5,318 and 4,396 shares at December 31, 2004 and 2003, respectively
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6
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4
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Additional
paid-in capital
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111,691
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110,991
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Notes
receivable from stockholders
|
|
(292
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)
|
(280
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)
|
|
Deferred
stock-based compensation, net
|
|
—
|
|
(264
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)
|
|
Accumulated
other comprehensive income (loss)
|
|
991
|
|
700
|
|
|
Accumulated
deficit
|
|
(119,545
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)
|
(109,471
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)
|
|
Total
stockholders’ equity
|
|
(7,149
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)
|
1,680
|
|
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Total
liabilities and stockholders’ equity
|
|
$
|
25,755
|
|
$
|
9,576
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# # #