Advanced Life Sciences Announces 2010 Fourth Quarter and Full Year Financial Results and Reverse Stock Split

Mar 24, 2011, 08:00 ET from Advanced Life Sciences Holdings, Inc.

CHICAGO, March 24, 2011 /PRNewswire/ -- Advanced Life Sciences Holdings, Inc. (OTC Bulletin Board: ADLS), a biopharmaceutical company engaged in the discovery, development and commercialization of novel drugs in the therapeutic areas of infection, oncology and respiratory diseases, today announced its financial results for the fourth quarter and full year ended December 31, 2010 and the approval of a 1-for-30 reverse stock split of the Company's issued and outstanding common stock.

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Dr. Michael Flavin, Chairman and CEO of Advanced Life Sciences, commented: "During the fourth quarter, we continued to make progress toward our strategic objectives including the Restanza community acquired bacterial pneumonia (CABP) program and biodefense initiatives. Since the completion of our Agreement with the United States Food and Drug Administration (FDA) for the Special Protocol Assessment (SPA), we have discussed the Restanza opportunity with several potential strategic partners. Their views match that of ours in that there is an urgent need for new antibiotics that work through novel mechanisms of action, and that there is an alarming dearth of late-stage compounds that represent real partnering opportunities for companies that need to expand their antibiotic franchises. They also recognize that the regulatory landscape has shifted and companies developing antibiotics need to deal with the new set of guidelines.  They believe that we have made significant progress in defining the new environment through our work with the FDA. We are hopeful that we will be able to convert this interest into a meaningful collaboration."

"As announced earlier this year, the Company has engaged in a strategic alternatives review process.  While we continue to take steps to improve the financial standing of our Company, we believe that a potential strategic transaction, partnership or acquisition will be in the best interest of all our shareholders," said Dr. Flavin. "In the meantime, we will continue to advance our discussions and opportunities to work with the US Government regarding Restanza's potential in biodefense and global health."

The net loss allocable to common shareholders for the three months ended December 31, 2010 was $3.3 million or ($0.01) per share compared to a net loss allocable to common shareholders of $1.5 million or ($0.02) per share for the three months ended December 31, 2009. All share and per share information is presented on a pre-split basis. The increase in the net loss for the quarter is primarily due to a non-cash impairment charge which was partially offset by reduced salary and benefit costs and other operating expenses associated with the development of the Company's lead antibiotic, Restanza.

Cash used for operating activities during the quarter was approximately $1.0 million. In the fourth quarter, the Company raised approximately $0.8 million in proceeds through the use of a Standby Equity Distribution Agreement and made a $0.4 million commercial loan principal payment to further reduce outstanding debt. The Company ended the year with cash totaling approximately $0.2 million. Cash used for operating activities for the full year was approximately $6.4 million.

Full Year Expense Analysis, 2010 versus 2009:

  • Research and development expenses decreased $2.0 million to approximately $2.5 million for the year ended December 31, 2010 from approximately $4.5 million for the year ended December 31, 2009. The decrease in R&D expense is due to lower government grant expenses associated with the Company's biodefense development program for Restanza as well as reduced salary and benefit costs and other operating expenses.
  • Selling, general and administrative expenses decreased $1.9 million to $4.4 million for the year ended December 31, 2010 from $6.3 million for the year ended December 31, 2009. The decrease primarily reflects lower salary and benefit costs and other operating expenses.

Fourth Quarter Expense Analysis, 2010 versus 2009:

  • Research and development expenses decreased by $1.1 million to approximately $0.2 million for the three months ended December 31, 2010 compared to $1.3 million for the three months ended December 31, 2009 due to lower government grant expenses associated with the Company's biodefense development program for Restanza.
  • Selling, general and administrative expenses were reduced to $0.6 million for the three months ended December 31, 2010 from $0.9 million during the fourth quarter of last year due to reduced salary and benefit costs and other operating expenses.

2010 Achievements

  • Achieved an agreement with the US Food & Drug Administration on the SPA for Restanza in CABP which provides a clear roadmap to approval;
  • Responded to BARDA requests for information relating to a potential funding award to develop Restanza as a biodefense and public health countermeasure;
  • Submitted a full contract proposal in response to a Broad Agency Announcement (BAA) issued by the National Institutes of Allergy and Infectious Diseases (NIAID) for the development of Restanza in IV formulation for the therapeutic treatment of multiple category A and B bacterial threats;
  • Reported potent Restanza in vitro data in Burkholderia pseudomallei and Burkholderia mallei, which are important biodefense and global health related pathogens and announced positive data from an in vitro study assessing Restanza against 30 strains of Burkholderia pseudomallei, further highlighting its ability to address serious bacterial infections that are becoming untreatable due to the increasing public health threat of bacterial resistance to currently marketed antibiotics;
  • Presented Restanza biodefense data and exhibited at the 50th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy;
  • Announced positive results from in vitro and in vivo studies assessing the efficacy of Restanza against the species of Plasmodium that cause malaria and entered into a Cooperative Research and Development Agreement (CRADA) with The Walter Reed Army Institute of Research to allow the institute to perform advanced animal efficacy testing of Restanza against various Plasmodium species that cause malaria;
  • Expanded the collaboration with the U.S. Government to include the evaluation of Restanza's activity against sexually transmitted infections (STIs), such as gonorrhea;
  • Announced positive results from preclinical toxicology and pharmacokinetic studies of an intravenous (IV) formulation of Restanza that support its use in a hospital setting;
  • Reduced outstanding debt by $3.9 million in 2010 by completing a debt-for-equity exchange and a $1.9 million commercial loan principal payment;
  • Awarded a $245,000 cash tax grant by the U.S. Internal Revenue Service through the Qualifying Therapeutic Discovery Project;
  • Announced the publication of a research paper in the journal Bioorganic and Medicinal Chemistry Letters that reports data using the Company's core triterpenoid platform technology in the discovery and development of new cancer therapeutic agents.

Reverse Stock Split

The Company also announced today that a 1-for-30 reverse split of its common stock will take effect at 5:00 p.m. on Monday, March 28, 2011. The Company's common stock will be quoted on the OTC Bulletin Board on a split-adjusted basis beginning upon the opening of trading on March 29, 2011, under the symbol of ADLSD.OB. After 20 business days, the symbol will revert back to ADLS.OB.

As a result of the reverse stock split, every 30 shares of the Company's common stock issued and outstanding or reserved for issuance immediately prior to the effective time will be converted into one share of common stock. Fractional shares will not be issued and stockholders who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split will receive an amount in cash the closing sales price of the Company's common stock as reported on the OTC Bulletin Board on March 28, 2011.

Letters of transmittal are expected to be sent to stockholders by the company's transfer agent, VStock Transfer LLC, shortly after the effectiveness of the reverse stock split. No action by the Company's stockholders is required prior to receipt of these letters.

The reverse stock split was approved by the Company's stockholders at the Company's annual meeting of stockholders held on April 8, 2010. The number of shares of common stock subject to outstanding stock warrants and options, and the exercise prices and conversion ratios of those securities, will automatically be proportionately adjusted for the 1-for-30 ratio provided for by the reverse stock split.

As part of the amendment to its certificate of incorporation to effect the reverse stock split, Advanced Life Sciences Holdings, Inc. will also reduce its authorized shares of capital stock from 625,000,000 to 25,666,666 shares and its authorized shares of common stock from 620,000,000 to 20,666,666 shares.

Business Outlook and Goals for 2011

  • Support pending government funding submissions and submit additional proposals to develop Restanza as a biodefense and public health countermeasure;
  • Advance discussions with prospective pharmaceutical company and government partners as part of our evaluation of strategic alternatives for the company;
  • In-license additional value-enhancing pipeline candidates.

Financial Guidance for 2011

Advanced Life Sciences has taken certain cost cutting measures including a company-wide compensation reduction plan to further reduce its operating expenses.  To fund ongoing operations in 2011, the Company intends to raise additional capital through the sale of equity while pursuing potential government contracts and commercial partnerships.  The Company has approximately 25 million shares, on a pre-split basis, available for sale under the current equity facility with Dutchess Capital.  There are approximately 184 million authorized shares, on a pre-split basis, remaining for subsequent equity financing opportunities.  The  Company is currently in default on its outstanding credit facility with Leaders Bank.  Under the provisions of the loan agreement, Leaders Bank has certain rights and remedies including accelerating the loan repayment in which case the Company may have to file for bankruptcy protection.  The Company is in discussions with Leaders Bank to resolve the current default.

Conference Call Details

Advanced Life Sciences will host a conference call and live webcast at 9:00 a.m. Eastern Time on Thursday, March 24, 2011 to discuss the Company's fourth quarter and year end financial results.

The conference call will be webcast simultaneously over the Internet. Please visit the Investor Relations section of the Advanced Life Sciences corporate website www.advancedlifesciences.com. Alternatively, callers may participate in the conference call by dialing 888-713-4211 (domestic) or 617-213-4864 (international). The passcode for the conference call is 86880056. Investors are advised to dial into the call at least ten minutes prior to the call to register. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PAVMV3UD3. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

About Advanced Life Sciences

Advanced Life Sciences is a biopharmaceutical company engaged in the discovery, development and commercialization of novel drugs in the therapeutic areas of infection, cancer and respiratory diseases. The Company's lead candidate, Restanza, is a novel once-a-day oral antibiotic in late-stage development for the treatment of respiratory tract infections including CABP and biodefense pathogens including anthrax, plague and tularemia. For more information, please visit us on the web at www.advancedlifesciences.com or follow us on twitter at http://twitter.com/advancedlifesci.

Forward-Looking Statements

Any statements contained in this press release that relate to future plans, events or performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements represent our management's judgment regarding future events.  The Company does not undertake any obligations to update any forward-looking statements whether as a result of new information, future events or otherwise.  Our actual results could differ materially from those discussed herein due to several factors including the success and timing of our clinical trials and our ability to obtain and maintain regulatory approval and labeling of our product candidates; our plans to develop and commercialize our product candidates; the loss of key scientific or management personnel; the size and growth of potential markets for our product candidates and our ability to serve those markets; regulatory developments in the U.S. and foreign countries; the rate and degree of market acceptance of any future products; the accuracy of our estimates regarding expenses, future revenues and capital requirements; our ability to obtain financing on terms acceptable to us; our ability to obtain and maintain intellectual property protection for our product candidates; the successful development of our sales and marketing capabilities; the success of competing drugs that become available; and the performance of third party collaborators and manufacturers.  These and additional risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission.

ADVANCED LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY

(A Development Stage Company)

December 31,

December 31,

CONSOLIDATED BALANCE SHEETS

2010

2009

ASSETS

CURRENT ASSETS:

 Cash and cash equivalents

$        159,596

$     2,841,801

 Grant receivable

-

530,219

 Prepaid insurance

33,576

111,761

 Other prepaid expenses

11,612

88,535

          Total current assets

204,784

3,572,316

PROPERTY AND EQUIPMENT:

 Furniture and fixtures

214,380

244,072

 Computer software and equipment

281,257

258,786

 Leasehold improvements

177,253

177,253

          Total property and equipment—at cost

672,890

680,111

 Less accumulated depreciation

(628,347)

(624,158)

          Property and equipment—net

44,543

55,953

OTHER ASSETS:

  Assets held for sale

250,000

2,760,936

  Deferred offering and financing costs

248,266

13,566

  Other long-term assets

25,000

25,000

          Total other assets

523,266

2,799,502

TOTAL ASSETS

$        772,593

$     6,427,771

LIABILITIES AND EQUITY (DEFICIT)

CURRENT LIABILITIES:

 Accounts payable

$     1,211,113

$        604,334

 Accrued payroll

34,803

664,436

 Other accrued expenses

548,725

661,504

 Accrued interest payable

99,134

73,194

 Short-term lease payable

4,829

4,350

 Current portion of the line of credit

8,080,000

-

 Short-term grant payable

500,000

-

          Total current liabilities

10,478,604

2,007,818

Long-term lease payable

16,011

-

Long-term grant payable

-

500,000

Long-term notes payable - related party

-

2,000,000

Line of credit

-

10,000,000

          Total liabilities

10,494,615

14,507,818

COMMITMENTS AND CONTINGENCIES

EQUITY (DEFICIT):

 Common stock, $0.01 par value—620,000,000 shares authorized and 259,303,325 issued and

   outstanding at December 31, 2010; 120,000,000 shares authorized and 84,925,010

   issued and outstanding at December 31, 2009

2,593,033

849,250

 Additional paid-in capital

128,557,628

122,621,392

 Deficit accumulated during the development stage

(140,872,683)

(131,550,689)

 Noncontrolling interest in subsidiary

-

-

          Total equity (deficit)

(9,722,022)

(8,080,047)

TOTAL LIABILITIES AND EQUITY (DEFICIT)

$        772,593

$     6,427,771

ADVANCED LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

Period From

Inception

(January 1, 1999)

Three months ended December 31,

Twelve months ended December 31,

Through

2010

2009

2010

2009

December 31, 2010

Revenue:

 Management fees

$                  -

$                 -

$                  -

$                 -

$          1,161,180

 Grants

-

1,057,952

752,853

2,793,191

4,822,445

 Royalty—related party

-

-

-

-

45,238

          Total revenue

-

1,057,952

752,853

2,793,191

6,028,863

Expenses:

 Research and development

219,018

1,302,221

2,499,488

4,462,281

97,542,170

 Contracted research and development—

   related party

-

-

-

-

7,980,299

 Selling, general and administrative

568,254

921,706

4,371,071

6,322,849

37,742,557

 Impairment charge

2,510,936

-

2,510,936

-

2,510,936

          Total expenses

3,298,208

2,223,927

9,381,495

10,785,130

145,775,962

Loss from operations

(3,298,208)

(1,165,975)

(8,628,642)

(7,991,939)

(139,747,099)

Net other (income) expense:

 Interest income

(224)

(2,225)

(8,360)

(11,561)

(2,968,783)

 Interest expense

252,376

262,561

946,191

1,036,762

5,131,806

 Other (income) expense, net

(244,479)

26,643

(244,479)

146,092

(98,387)

 Gain on sale of interest in Sarawak Medichem Pharmaceuticals joint venture

-

-

-

-

(939,052)

Net other (income) expense

7,673

286,979

693,352

1,171,293

1,125,584

Net loss

(3,305,881)

(1,452,954)

(9,321,994)

(9,163,232)

(140,872,683)

Less net loss attributable to the noncontrolling interest in subsidiary

-

-

-

-

-

Net loss attributable to Advanced Life Sciences Holdings, Inc.

(3,305,881)

(1,452,954)

(9,321,994)

(9,163,232)

(140,872,683)

Less accumulated preferred stock dividends of subsidiary for the period

43,750

43,750

175,000

175,000

2,019,792

Net loss available to common shareholders

$ (3,349,631)

$ (1,496,704)

$ (9,496,994)

$ (9,338,232)

$     (142,892,475)

Net loss per share available to common shareholders - basic and diluted

$          (0.01)

$          (0.02)

$          (0.06)

$          (0.16)

Weighted average shares outstanding - basic and diluted

236,557,801

79,087,262

153,372,740

57,781,126

SOURCE Advanced Life Sciences Holdings, Inc.



RELATED LINKS

http://www.advancedlifesciences.com