ZIOPHARM reports net loss of $39.0 million for first quarter 2011

ZIOPHARM Oncology, Inc. (Nasdaq: ZIOP), an oncology small molecule and synthetic biology drug development company, today reported its financial results for the three months ended March 31, 2011, and provided an update on the Company's activities in the first quarter.

For the first quarter of 2011, the Company's cash used in operations was $8.2 million, an increase of $4.4 million from $3.8 million for the same period of 2010. The increase in spending is attributable primarily to research and development activities for the "PICASSO 3" Phase III trial of palifosfamide in metastatic soft tissue sarcoma. The Company ended the March 2011 quarter with cash of approximately $124.0 million. The Company expects its existing cash resources to support operations into late 2012; however, this expectation is subject to change based on the scope and progress of the Company's research and development programs.

The net loss for the first quarter of 2011 was $39.0 million, or $(0.65) per share, compared to a net loss of $17.7 million, or $(0.44) per share for the first quarter of 2010. The increase in net loss of $21.3 million was primarily a result of a one-time, non-cash charge of $17.5 million in process research and development expense related to the Company's issuance of stock in conjunction with entering into the Company's Exclusive Channel Partnership with Intrexon Corporation. Increased clinical trial expenses also contributed to the increase in net loss. The Company expects its clinical trial expenses to continue increasing as the pivotal palifosfamide trial further enrolls and as additional trials for palifosfamide, darinaparsin, indibulin and DNA-based therapeutics are initiated or expanded.

First Quarter Highlights

• The Company executed a global Exclusive Channel Partnership in oncology with Intrexon Corporation, a next-generation synthetic biology company. Under the partnership, ZIOPHARM has rights to Intrexon's entire human in vivo effector platform within the field of oncology from which the Company will develop and commercialize DNA-based therapeutics. The lead clinical candidate is in advanced phase I study and a second will be the subject of an IND (Investigational New Drug) filing expected in the first half of this year. In conjunction with entry into the Intrexon Exclusive Channel Partnership, Intrexon purchased $11.6 million of ZIOPHARM common stock in a private placement. Under the Exclusive Channel Partnership agreement, and subject to certain conditions and limitations, Intrexon further committed to purchase up to $50.0 million of equity in conjunction with future qualifying Company securities offerings. Subsequently, ZIOPHARM also welcomed Intrexon's Chairman and CEO, RJ Kirk, to its Board of Directors.
• The Company announced that it had raised $63.5 MM in gross proceeds from a public offering of common stock. Intrexon's $11.0 million participation in the public offering was applied against its aggregate purchase commitment.
• The Company completed a license and collaboration agreement with Solasia Pharma K.K., a developer of Western oncology pharmaceuticals in-licensed for commercialization in Asian markets, to develop and commercialize ZIOPHARM's darinaparsin product (Zinapar™ or ZIO-101) and related organic arsenic molecules in specified Pan-Asian/Pacific territories. Under terms of the agreement, ZIOPHARM received an up-front payment of $5 million to be used exclusively for further clinical development of darinaparsin outside of the pan-Asian/Pacific territory, and is entitled to receive additional payments of up to $32.5 million in development-based milestones and up to $53.5 million in sales-based milestones. ZIOPHARM is also entitled to receive double-digit royalty payments from Solasia on net sales of licensed products in the applicable territories, once commercialized, and a percentage of any sublicense revenues generated by Solasia.
• The Company obtained from The Committee for Orphan Medicinal Products (COMP), within the European Medicines Agency (EMA), orphan medicinal product status for darinaparsin (Zinapar™ or ZIO-101) for the treatment of peripheral T-cell lymphoma (PTCL).

Subsequent to Quarter End

The Company received approximately $12 million subsequent to March 31, 2011 upon the exercise of investor warrants issued in connection with a 2006 private securities offering which had an expiration date of May 3, 2011.