Ardea Biosciences, Inc. Reports Recent Accomplishments and Announces Fourth Quarter and Full-Year 2010 Financial Results

SAN DIEGO, March 11, 2011 /PRNewswire/ -- Ardea Biosciences, Inc. (Nasdaq: RDEA), a biotechnology company focused on the development of small-molecule therapeutics for the treatment of serious diseases, today reported recent accomplishments and announced fourth quarter and full-year 2010 financial results.

“With approximately $160 million in cash as of the end of February, we are in an excellent financial position,” commented Barry D. Quart, PharmD, Ardea’s president and chief executive officer. “In addition, we recently reported positive, topline results from our Phase 2b study of lesinurad, previously called RDEA594, in gout patients not responding adequately to allopurinol alone. These results support our view that lesinurad has the potential to significantly improve the lives of millions of gout patients who are untreated or inadequately treated due to the limitations of current therapies. In the months to come, we expect to meet with the FDA to finalize the design of our Phase 3 program for lesinurad.”

Recent Accomplishments and Important Upcoming Events

• In December 2010, the United States Adopted Names Counsel (USAN) adopted lesinurad, pronounced “le sin’ ure ad”, as the USAN name for RDEA594.
• In January 2011, we announced positive, topline results from a Phase 2b study (Study 203) adding lesinurad to allopurinol in 208 allopurinol-refractory patients. At the highest lesinurad dose tested in this study, the number of patients taking the combination who achieved the medically recommended target of below 6 mg/dL was more than three times the number of patients who achieved the target on allopurinol alone. This translated into an overall response rate of 89 percent using a “last observation carried forward”, or LOCF, analysis. The combination of lesinurad and allopurinol was also well tolerated.
• In February 2011, we completed an underwritten public offering of approximately 3.2 million shares of our common stock, including the full exercise of an overallotment option granted to the underwriters. Net proceeds from the sale of the shares, before expenses and after deducting underwriting discounts and commissions, were approximately $78 million.
• In January 2011, we received a $15 million milestone payment from Bayer Healthcare AG (Bayer) triggered by the initiation of a Phase 2 clinical study of BAY-86-9766 (RDEA119) in combination with sorafenib (Nexavar®; Bayer, Onyx Pharmaceuticals) in patients with hepatocellular carcinoma, or primary liver cancer. BAY 86-9766 (RDEA119) is a potent, non-ATP competitive, highly selective inhibitor of mitogen-activated ERK kinase (MEK).

Fourth Quarter and Year-End 2010 Financial Results

As of December 31, 2010, we had $80.6 million in cash, cash equivalents and short-term investments and $17.0 million in receivables, compared to $50.9 million in cash, cash equivalents and short-term investments and $1.4 million in receivables as of December 31, 2009.

The net increase in cash, cash equivalents and short-term investments for 2010 was due primarily to our April 2010 public offering of common stock, partially offset by the use of cash to fund our clinical-stage programs, personnel costs and for other general corporate purposes. The increase in receivables for 2010 was due to revenue recognized in the fourth quarter of 2010 for the first milestone achieved under the license agreement with Bayer, as well as increased reimbursements of third-party development costs and sponsored research also associated with this agreement.

Revenues totaled $17.3 million and $27.4 million for the three and twelve months ended December 31, 2010, respectively. Revenues totaled $8.3 million and $22.9 million for the three and twelve months ended December 31, 2009, respectively. The revenues earned in 2009 and 2010 resulted from the recognition of a portion of the $35 million, upfront, non-refundable license fee under the Bayer agreement and the related reimbursement by Bayer of third-party development costs. In addition, in 2010, the Company recognized $15.0 million in revenue for the achievement of the first milestone, as well as approximately $0.4 million in sponsored research revenue, under the license agreement with Bayer.

For the three and twelve months ended December 31, 2010, total operating expenses increased to $17.8 million and $68.6 million, respectively, from $14.4 million and $52.9 million for the same periods in 2009. Total operating expenses for the three and twelve months ended December 31, 2010 included non-cash stock-based compensation charges of $1.8 million and $10.8 million, or $0.08 per share and $0.49 per share, respectively, as compared to charges of $1.4 million and $5.8 million, or $0.08 per share and $0.32 per share, respectively, for the same periods in 2009. These increased charges were primarily in connection with the departure of certain employees during the third quarter of 2010. The increase in total operating expenses between the 2009 and 2010 periods was primarily a result of an increase in research and development expense due mainly to the continued development and progression of our clinical and preclinical programs, as well as the above-described increase in non-cash, stock-based compensation expense.

Net loss for the three and twelve months ended December 31, 2010 was $0.6 million and $41.6 million, or $0.03 per share and $1.91 per share, respectively, compared to a net loss for the same periods in 2009 of $6.3 million and $30.9 million, or $0.34 per share and $1.70 per share, respectively. The decrease in net loss between the three-month periods and the increase in net loss between the twelve-month periods were due primarily to the revenue and operating expense fluctuations described above. The decrease in net loss per share for the three months ended December 31, 2010 compared to the same period in 2009 was a result of the decrease in net loss. The increase in net loss per share for the twelve months ended December 31, 2010 compared to the same period in 2009 was partially offset by an increase in weighted-average shares outstanding in 2010 as a result of our April 2010 public offering of common stock.