ARCA BIOPHARMA, INC. (ABIO, Financial) filed Quarterly Report for the period ended 2009-09-30.
ARCA biopharma, Inc., a biopharmaceutical company, develops genetically-targeted therapies for heart failure and cardiovascular diseases. It is positioned to bring personalized therapies for the treatment of cardiovascular disease, through the use of genetics. Complementing the Company's cardiovascular science, ARCA's management team has significant experience in developing and commercializing cardiovascular products. The Company's business focus combines expertise in cardiovascular pathophysiology, molecular genetics, clinical development and product commercialization. It is currently developing Gencaro (bucindolol hydrochloride), a cardiovascular drug for the treatment of chronic heart failure. The company is based in Broomfield, Colorado. Arca Biopharma, Inc. has a market cap of $19.66 million; its shares were traded at around $2.59 with and P/S ratio of 1.29.
ARCAs R&D expenses were $9.2 million for the nine months ended September 30, 2009 as compared to $8.4 million for the corresponding period of 2008, an increase of approximately $850,000. For the nine months ended September 30, 2009, clinical study costs increased approximately $2.2 million for clinical development projects initiated by Nuvelo on the NU 172 and NU 206 compounds obtained in the Merger. These expenses consist primarily of pre-clinical studies ongoing during the nine month period, costs related to collaborative development arrangements assumed in the Merger, and personnel costs of former Nuvelo employees on transition plans. Employees on transition plans were employed for periods up to twelve weeks after the Merger to facilitate the transition of the business to ARCA. For the nine months ended September 30, 2009, ARCAs development expense under the collaboration agreement with Archemix totaled approximately $875,000. The obligation to fund such development expenses under the collaboration agreement concluded early in the third quarter of 2009. R&D costs associated with our development of Gencaro have decreased approximately $1.3 million in the nine months ended September 30, 2009 period compared to the same period of 2008. The decrease was primarily attributable to decreased spending on manufacturing and process control projects. During 2008 there were significant manufacturing process development projects in support of the NDA filing and in anticipation of commercial launch. There were no projects of similar scale during the nine months ended September 30, 2009.
ARCAs SG&A expenses were $2.0 million for the three months ended September 30, 2009, as compared to $2.7 million for the corresponding period in 2008, a decrease of approximately $650,000. ARCAs SG&A expenses were $11.2 million for the nine months ended September 30, 2009, as compared to $6.0 million for the corresponding period of 2008, an increase of approximately $5.2 million.
As result of the restructuring plan, ARCA recorded a restructuring charge of $1.2 million for personnel-related termination costs in the second quarter of 2009, of which $795,000 relates to severance amounts to be paid in cash and $387,000 relates to the acceleration of vesting on outstanding stock options. In the third quarter of 2009, ARCA reduced the restructuring charge by $120,000 due to a change in estimate of severance costs. ARCA expects to complete all payments associated with these restructuring charges by the end of 2009.
During the third quarter of 2009, ARCA negotiated early terminations of the lease obligations related to the facilities in Sunnyvale, CA and San Carlos, CA, which were assumed in the Merger. The leases were terminated in consideration of payments by ARCA to the landlords consisting of: (i) retention by the landlords of security deposits totaling $1.0 million; (ii) cash payments totaling $5.4 million; (iii) draw down by the landlord of the Sunnyvale facility of the $6.0 million letter of credit previously issued to secure tenant obligations under the lease; and (iv) issuance of warrants to purchase ARCAs common stock with an estimated fair value of $377,000 in accordance with the provisions of the San Carlos facility lease termination. As a result of the early lease terminations, ARCA wrote-off the accrued facility exit cost balance relating to the Sunnyvale facility of $11.0 million and the unfavorable lease liability and deferred rent balances of $848,000 relating to the San Carlos facility, accrued transaction costs of $100,000, and recognized a net charge for terminating the leases of approximately $1.2 million. The $1.2 million net charge is classified as restructuring expense in the consolidated statement of operations.
Interest and other expense was $71,000 for the three months ended September 30, 2009, as compared to $21,000 for the comparable 2008 period. Interest and other expense was $184,000 for the nine months ended September 30, 2009, as compared to $60,000 for the comparable 2008 period. The increases in interest and other expense in the 2009 periods over the 2008 periods were primarily due to interest on the outstanding indebtedness under the Credit Facility and convertible notes. The convertible notes were converted into common stock upon closing of the Merger on January 27, 2009. The outstanding indebtedness under the Credit Facility was repaid in full in July 2009. Interest expense for the remainder of 2009 is expected to be minimal.
Read the The complete ReportABIO is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
ARCA biopharma, Inc., a biopharmaceutical company, develops genetically-targeted therapies for heart failure and cardiovascular diseases. It is positioned to bring personalized therapies for the treatment of cardiovascular disease, through the use of genetics. Complementing the Company's cardiovascular science, ARCA's management team has significant experience in developing and commercializing cardiovascular products. The Company's business focus combines expertise in cardiovascular pathophysiology, molecular genetics, clinical development and product commercialization. It is currently developing Gencaro (bucindolol hydrochloride), a cardiovascular drug for the treatment of chronic heart failure. The company is based in Broomfield, Colorado. Arca Biopharma, Inc. has a market cap of $19.66 million; its shares were traded at around $2.59 with and P/S ratio of 1.29.
Highlight of Business Operations:
ARCAs research and development, or R&D, expenses were $1.1 million for the three months ended September 30, 2009 as compared to $3.8 million for the corresponding period of 2008, a decrease of $2.7 million. Substantially all of the costs for the 2009 quarter related to development of Gencaro. Costs for personnel, license fees, manufacturing, and clinical study projects decreased compared to the 2008 period. Personnel costs decreased approximately $750,000 due to the companys change in strategy and related restructuring implemented in the second quarter of 2009. Licensing fees decreased $500,000 because in third quarter of 2008, ARCA paid a milestone license fee for Gencaro of $500,000 in conjunction with its NDA submission. There was no similar fee during the comparable 2009 period. Manufacturing process development work decreased $525,000 for the 2009 quarter compared to 2008. In 2008 ARCA had significant projects underway in this area to support the NDA and prepare for commercialization. There were no projects of similar scale during the three months ended September 30, 2009. Clinical and regulatory project costs decreased approximately $710,000 compared to the same period in 2008. In 2008 ARCA had Phase I clinical studies underway and was preparing clinical sites for possible FDA inspection. The studies have been completed with no similar costs in the three months ended September 30, 2009, and clinical site audit preparation also decreased significantly in this period.ARCAs R&D expenses were $9.2 million for the nine months ended September 30, 2009 as compared to $8.4 million for the corresponding period of 2008, an increase of approximately $850,000. For the nine months ended September 30, 2009, clinical study costs increased approximately $2.2 million for clinical development projects initiated by Nuvelo on the NU 172 and NU 206 compounds obtained in the Merger. These expenses consist primarily of pre-clinical studies ongoing during the nine month period, costs related to collaborative development arrangements assumed in the Merger, and personnel costs of former Nuvelo employees on transition plans. Employees on transition plans were employed for periods up to twelve weeks after the Merger to facilitate the transition of the business to ARCA. For the nine months ended September 30, 2009, ARCAs development expense under the collaboration agreement with Archemix totaled approximately $875,000. The obligation to fund such development expenses under the collaboration agreement concluded early in the third quarter of 2009. R&D costs associated with our development of Gencaro have decreased approximately $1.3 million in the nine months ended September 30, 2009 period compared to the same period of 2008. The decrease was primarily attributable to decreased spending on manufacturing and process control projects. During 2008 there were significant manufacturing process development projects in support of the NDA filing and in anticipation of commercial launch. There were no projects of similar scale during the nine months ended September 30, 2009.
ARCAs SG&A expenses were $2.0 million for the three months ended September 30, 2009, as compared to $2.7 million for the corresponding period in 2008, a decrease of approximately $650,000. ARCAs SG&A expenses were $11.2 million for the nine months ended September 30, 2009, as compared to $6.0 million for the corresponding period of 2008, an increase of approximately $5.2 million.
As result of the restructuring plan, ARCA recorded a restructuring charge of $1.2 million for personnel-related termination costs in the second quarter of 2009, of which $795,000 relates to severance amounts to be paid in cash and $387,000 relates to the acceleration of vesting on outstanding stock options. In the third quarter of 2009, ARCA reduced the restructuring charge by $120,000 due to a change in estimate of severance costs. ARCA expects to complete all payments associated with these restructuring charges by the end of 2009.
During the third quarter of 2009, ARCA negotiated early terminations of the lease obligations related to the facilities in Sunnyvale, CA and San Carlos, CA, which were assumed in the Merger. The leases were terminated in consideration of payments by ARCA to the landlords consisting of: (i) retention by the landlords of security deposits totaling $1.0 million; (ii) cash payments totaling $5.4 million; (iii) draw down by the landlord of the Sunnyvale facility of the $6.0 million letter of credit previously issued to secure tenant obligations under the lease; and (iv) issuance of warrants to purchase ARCAs common stock with an estimated fair value of $377,000 in accordance with the provisions of the San Carlos facility lease termination. As a result of the early lease terminations, ARCA wrote-off the accrued facility exit cost balance relating to the Sunnyvale facility of $11.0 million and the unfavorable lease liability and deferred rent balances of $848,000 relating to the San Carlos facility, accrued transaction costs of $100,000, and recognized a net charge for terminating the leases of approximately $1.2 million. The $1.2 million net charge is classified as restructuring expense in the consolidated statement of operations.
Interest and other expense was $71,000 for the three months ended September 30, 2009, as compared to $21,000 for the comparable 2008 period. Interest and other expense was $184,000 for the nine months ended September 30, 2009, as compared to $60,000 for the comparable 2008 period. The increases in interest and other expense in the 2009 periods over the 2008 periods were primarily due to interest on the outstanding indebtedness under the Credit Facility and convertible notes. The convertible notes were converted into common stock upon closing of the Merger on January 27, 2009. The outstanding indebtedness under the Credit Facility was repaid in full in July 2009. Interest expense for the remainder of 2009 is expected to be minimal.
Read the The complete ReportABIO is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
