ARYx Therapeutics, Inc. (NASDAQ:ARYX) today reported results of operations and provided an update on its business activities for the first quarter ended March 31, 2010.
“Both of these achievements further clarify the road to the potential approval and commercialization of these two assets and enhance our work with Cowen and Company (Cowen), the investment bank retained just over two months ago to advise ARYx on our best strategic alternatives”
"ARYx made substantial progress on two fronts in this quarter towards optimizing the value of our assets for our stockholders. First, we held an End of Phase 2 meeting with the Food and Drug Administration (FDA) regarding our gastrointestinal therapy, ATI-7505, and are very pleased with the outcome. The FDA has given us clear guidance on the path forward into Phase 3 and ultimately to the filing of a New Drug Application (NDA). Second, we have submitted to the FDA the Phase 3 protocol for the real-world trial of our anticoagulant therapy, tecarfarin, under the Special Protocol Assessment (SPA) procedure," said Dr. Paul Goddard, chairman and chief executive officer of ARYx. "Both of these achievements further clarify the road to the potential approval and commercialization of these two assets and enhance our work with Cowen and Company (Cowen), the investment bank retained just over two months ago to advise ARYx on our best strategic alternatives," added Dr. Goddard.
- In February 2010, ARYx retained Cowen, an investment bank, to explore and recommend strategic alternatives for the company going forward. Concurrently, ARYx restructured its operations in order to conserve resources and support the process of reviewing strategic alternatives, reducing its workforce to 17 employees. The company believes that the work with Cowen has progressed well in the last 10 weeks and has generated interest which could result in partnerships on one or more of the three lead product candidates, the sale of ARYx's assets, in whole or in part, or some similar arrangement through which the value of ARYx's assets to stockholders could be optimized.
- ARYx held an End of Phase 2 meeting with the FDA regarding the company's gastrointestinal product candidate, ATI-7505, in early April 2010. Over 1000 patients and subjects have now been treated with the compound and based on its safety profile to date, the FDA indicated that ICH guidelines should be acceptable for the safety database at the time of filing of an NDA. In addition, following a review of the results from the Thorough QT trial and the database from comprehensive cardiovascular monitoring of all subjects treated to date, the FDA also confirmed that there would be no special monitoring requirements in Phase 3. The FDA provided clear guidance on the outline for the Phase 3 clinical trials for ATI-7505 in the treatment of Chronic Idiopathic Constipation (CIC), including the requirements for efficacy that must be demonstrated at the primary endpoint in those clinical trials.
- ARYx announced earlier this year that it had received guidance from the FDA that only one additional clinical trial is required for the filing of an NDA for its anticoagulant agent tecarfarin, should the safety and efficacy data from that trial support tecarfarin's approval. Based upon the FDA guidance received, ARYx has now submitted a proposed protocol for this remaining trial for consideration under a SPA, detailing the clinical trial that will compare the safety and efficacy of tecarfarin to the leading oral anticoagulant agent, warfarin, in a real-world clinical setting. The submitted protocol design is intended to allow tecarfarin to demonstrate superiority to warfarin in appropriately controlling the patient's level of anticoagulation. ARYx believes that should the FDA agree to a SPA on tecarfarin, the value of tecarfarin in the current Cowen process could be enhanced.
- ARYx announced in October 2009 that it arranged for a committed equity financing facility under which the company could sell shares of its common stock to Commerce Court Small Cap Value Fund, Ltd. over a 24-month period. Subsequently, ARYx filed a Registration Statement on Form S-1 with the Securities and Exchange Commission covering the resale of the up to 5,494,290 shares of common stock issuable under this facility. As of the end of the first quarter of 2010, ARYx has completed raising funds under this equity line financing facility and has issued substantially all of the shares that could be sold under its terms, and has raised a total of approximately $7.2 million in net proceeds of which $6.4 million was raised in 2010. ARYx currently estimates that the approximate $6.3 million in cash and cash equivalents balance as of March 31, 2010 will allow the company to operate at its current burn rate, including servicing its scheduled debt payments, into September 2010, by which time the company expects to have indications about the results of the current strategic process with Cowen. ARYx is also actively pursuing other options for continued funding beyond September 2010, if required.
Results of Operations
ARYx ended the first quarter of 2010 with approximately $6.3 million in cash and cash equivalents. The net loss for the first quarter of 2010 was $6.4 million, or $0.22 per share, compared to a net loss of $9.4 million, or $0.36 per share, in the same quarter of 2009. The first quarter 2010 net loss includes a charge of $1.1 million related to the February restructuring of operations. Of this amount, approximately $900,000 was paid in cash and $200,000 was paid in ARYx common stock. ARYx had no revenue during the first quarter of 2010 or 2009.
Research and development expenses for the first quarter of 2010 were $2.2 million compared to $6.8 million in the first quarter of last year. Included in research and development expenses in the first quarter of 2010 were costs related to the close-out of the 600 patient EmbraceAC trial of tecarfarin that was completed in the second half of 2009. Costs in the first quarter of 2009 were higher than in 2010 due to both the EmbraceAC trial and the close-out of the Phase 2b trial of budiodarone, the company's product candidate for the treatment of atrial fibrillation. External research and development expenses were already substantially reduced going into the first quarter of 2010 due to the restructuring of operations that occurred in the fourth quarter of 2009. The additional February restructuring, which reduced ARYx's workforce to 17 employees, also significantly reduced internal research and development spend. These savings began to take full effect in March of this year. The company's second quarter 2010 research and development expenses are expected to be lower than the first quarter 2010 due to the continued impact of the reduction in research and development activities.
General and administrative expenses were $3.8 million during the first quarter of 2010 and $2.6 million during the first quarter of 2009. The increase in expense for 2010 is primarily due to severance pay and other costs related to the February restructuring, partially offset by savings realized due to these restructuring activities.
In the fourth quarter of 2009, ARYx announced a committed equity line of financing with Commerce Court Small Cap Value Fund. As of March 31, 2010, the equity line facility had been fully utilized by the issuance of the maximum number of shares available under the agreement, providing ARYx with net proceeds of $7.2 million.