ZIOPHARM second-quarter net loss from operations increases to $5.1 million

ZIOPHARM Oncology, Inc. (Nasdaq: ZIOP), a biopharmaceutical cancer company addressing unmet medical needs, today reported its financial results for the three months ended June 30, 2010 and provided an update on the Company's continued progress with its clinical programs.

For the second quarter of 2010, the Company's cash used in operations was $4.3 million, an increase of $2.1 million from $2.2 million for the same period for 2009. The spending increase is attributable to the deployment of additional resources leading up to the July 2010 initiation of the Company's Phase III trial of palifosfamide in metastatic soft tissue sarcoma. The Company ended the June 2010 quarter with cash of approximately $73.7 million. The Company expects its existing cash resources to support operations into mid-2012.

The Company reported net loss from operations for the second quarter of 2010 of $5.1 million, or $(0.12) per basic share, compared to a net loss from operations of $2.2 million, or $(0.10) per share in the second quarter of 2009. In the second quarter of 2010, the Company recognized a non-cash gain of $14.1 million attributable to the change in liability-classified warrants arising primarily from a decrease in the Company's stock price during the period, resulting in total net income for the second quarter of 2010 of $9.0 million or $0.21 per basic share ($0.19 per diluted share), compared with a net loss for the second quarter of 2009 of $2.4 million, or $(0.11) per share. The non-cash warrant income relates to fair value accounting which requires liability-classified warrants to be marked-to-market under U.S. generally accepted accounting principles.

During the second quarter of 2010, research and development expenses increased by $1.7 million and general and administrative expenses increased by $1.2 million over the second quarter of 2009. The increases are attributable to preliminary work related to the palifosfamide Phase III pivotal trial as well as to new clinical studies not yet initiated.

Clinical Programs Update

ZIOPHARM recently announced the initiation of its pivotal Phase III trial for palifosfamide (Zymafos^TM or ZIO-201) in patients with front-line metastatic soft tissue sarcoma. The study, called PICASSO 3, will enroll approximately 424 patients in up to 150 centers in North America, Europe, South America, Australia, Israel and Korea. The Company expects to initiate a Phase I trial of palifosfamide in a second indication, small cell lung cancer, with Lawrence Einhorn, M.D., Lance Armstrong Professor of Oncology at the Indiana University Simon Cancer Center, in the fourth quarter of 2010. This will be followed by a randomized Phase II study.

ZIOPHARM will also study palifosfamide in oral form in a Phase I trial that it expects to initiate in the fourth quarter of 2010.

With regard to darinaparsin (Zinapar^TM or ZIO-101), the Company re-initiated enrollment in a Phase I trial of its oral formulation during the quarter and expects to initiate a Phase I trial of IV darinaparsin used in combination with "CHOP," a therapeutic regimen commonly used in the treatment of lymphomas. The CHOP study is intended to establish safety and tolerability of the combination for subsequent use in a pivotal randomized trial for the front-line treatment of peripheral T-cell lymphoma.

With regard to indibulin (Zybulin^TM or ZIO-301), the Company continues to enroll patients in a Phase I/II study in metastatic breast cancer which is being conducted at Memorial Sloan-Kettering Cancer Center. The study employs a novel, mathematically-determined administration schedule for indibulin that was developed by Larry Norton, M.D. Deputy Physician-in-Chief for Breast Cancer Programs at Memorial Sloan-Kettering and Medical Director of the Evelyn H. Lauder Breast Center.