SAN FRANCISCO, Nov. 13 /PRNewswire-FirstCall/ -- Sirna
Therapeutics, Inc. (NASDAQ:RNAI) reported financial results today
for the quarter ended September 30, 2006. Sirna reported a net loss
of $9.6 million, or $0.13 per share, in the third quarter of 2006
compared to a net loss of $4.2 million, or $0.08 per share, for the
same period in 2005. Revenues for the third quarter of 2006 were
$2.0 million compared to $1.9 million in the third quarter of 2005.
Deferred revenues from collaboration partners, included on the
balance sheet at September 30, 2006, were $9.7 million. Operating
expenses were $12.7 million for the three months ended September
30, 2006 compared to $6.3 million for the same period in 2005.
Operating expenses for the third quarter of 2006 included $0.6
million of share-based employee compensation expense related to
Sirna's adoption of Statement of Financial Accounting Standards No.
123R as of January 1, 2006. Excluding the share-based employee
compensation expense, non-GAAP operating expenses for the third
quarter of 2006 were $12.1 million and the non-GAAP net loss was
$9.0 million, or $0.12 per share. Research and development expenses
were $7.7 million for the quarter ended September 30, 2006 compared
to $4.6 million in the same period in 2005. R&D expenses for
the period increased year over year primarily as a result of
increased spending on Sirna-034, our RNAi-based therapeutic for
hepatitis C which is advancing toward the clinic, and due to the
continued relocation of core scientific teams to the new research
center in San Francisco. Share-based employee compensation expense
related to Sirna's adoption of Statement of Financial Accounting
Standards No. 123R was $0.3 million in the third quarter of 2006.
General and administrative expenses were $4.0 million for the
quarter, compared to $1.7 million in the third quarter of 2005.
This increase in G&A expenses is primarily due to spending
related to the Company's alliance management and new business
development activities, the expansion of our intellectual property
estate, employee relocation expense, and Sarbanes-Oxley compliance.
Share-based employee compensation expense related to Sirna's
adoption of Statement of Financial Accounting Standards No. 123R
was $0.3 million in the third quarter of 2006. The Company ended
the third quarter of 2006 with $82.8 million in cash, cash
equivalents and securities available for sale. The Company
continues to forecast its 2006 operating use of cash in the range
of $30-$33 million. "We made great strides advancing our RNAi
technology platform and feel that Merck's recent decision to
acquire Sirna is a testament to the quality of our science and our
people," said Sirna President and CEO Howard W. Robin. "The
combination of Merck and Sirna will return substantial value to our
shareholders and ensure that RNAi therapeutics will be developed to
their full potential. We look forward to completing this
transaction with Merck, subject to shareholder approval, by the
first quarter of 2007." Merger Agreement * On October 30, 2006,
Merck & Co., Inc. and Sirna entered into a definitive agreement
under which Merck will acquire 100 percent of the equity of Sirna
at a price of $13 per share in cash, making Sirna a wholly owned
subsidiary of Merck & Co., Inc. The transaction has a cash
value of approximately $1.1 billion. * The acquisition is subject
to clearance under the Hart-Scott-Rodino Antitrust Improvements
Act. * The transaction is subject to the approval of Sirna
stockholders and other customary closing conditions. * The two
companies expect to close the acquisition transaction in late
December 2006 or in the first quarter of 2007. About Sirna
Therapeutics Sirna Therapeutics is a clinical-stage biotechnology
company developing RNAi-based therapies for serious diseases and
conditions, including age-related macular degeneration (AMD),
hepatitis C, dermatology, asthma, respiratory syncytial virus (RSV)
and Huntington's disease. Sirna Therapeutics completed its Phase 1
clinical trial for Sirna-027 in AMD in 2005 and with its strategic
partner, Allergan, Inc., is moving Sirna-027 forward into Phase 2
clinical trials. Sirna has selected a clinical candidate for
hepatitis C virus, Sirna-034. Sirna has established an exclusive
multi-year strategic alliance with GlaxoSmithKline for the
development of siRNA compounds for the treatment of respiratory
diseases. Sirna has a leading intellectual property portfolio in
RNAi covering over 250 mammalian gene and viral targets and over
200 issued or pending patents covering other major aspects of RNAi
technology, including the microRNA technology. On October 30, 2006,
Merck & Co., Inc. and Sirna entered into a merger agreement
under which Merck will acquire 100 percent of the equity of Sirna
at a price of $13 per share in cash, making Sirna a wholly owned
subsidiary of Merck & Co., Inc. The acquisition is subject to
customary closing conditions, including the approval of Sirna
shareholders, clearance under the Hart-Scott-Rodino Antitrust
Improvements Act, and the absence of a material adverse effect on
Sirna since the signing of the merger agreement. The two companies
expect to close the acquisition in late December 2006 or in the
first quarter of 2007. More information on Sirna Therapeutics is
available on the Company's web site at http://www.sirna.com/. Safe
Harbor Statement Statements in this press release which are not
strictly historical are "forward-looking" statements which should
be considered as subject to many risks and uncertainties. These
include the failure to satisfy the closing conditions set forth in
the merger agreement between Sirna and Merck, the termination of
the merger agreement, the failure of the proposed acquisition to
close or a significant delay in the closing for any reason, and
business uncertainty and contractual restrictions before closing.
Additionally, all of Sirna's programs are still at a relatively
early stage of development and are subject to significant risks and
unknowns. In addition, patent applications may not result in issued
patents, and issued patents may not be enforceable or could be
invalidated. Risk factors are identified in Sirna's Securities and
Exchange Commission filings, including Forms 10-K and 10-Q and in
other SEC filings. Sirna undertakes no obligation to revise or
update any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this release.
Participants in the Solicitation and Additional Information This
communication may be deemed to be solicitation material regarding
the proposed acquisition of Sirna by Merck. In connection with the
proposed acquisition, Sirna intends to file relevant documents with
the SEC, including Sirna's proxy statement on Schedule 14A.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING SIRNA'S PROXY STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SIRNA AND THE
PROPOSED ACQUISITION. Investors and security holders may obtain
free copies of these documents and other documents filed with the
SEC at the SEC's website at http://www.sec.gov/ or at Sirna's
website at http://www.sirna.com/. Such information is currently not
available. Sirna and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from
Sirna's stockholders in connection with the proposed acquisition.
Such individuals have interests in the proposed acquisition,
including as a result of holding options to purchase or shares of
Sirna stock or affiliation with large stockholders of Sirna.
Certain information regarding Sirna's directors and executive
officers and their interests in the solicitation is set forth in
the proxy statement for Sirna's 2006 annual meeting of stockholders
filed with the SEC on May 25, 2006, and will be included in the
proxy statement relating to the proposed acquisition when it
becomes available. SIRNA THERAPEUTICS, INC. CONDENSED BALANCE
SHEETS (In thousands) September 30, December 31, 2006 2005
(Unaudited) (Note 1) ASSETS Cash, cash equivalents and securities
available-for-sale $82,826 $45,692 Property and equipment, net
3,516 1,906 Other assets, net 2,928 1,919 $89,270 $49,517
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $10,529
$6,699 Deferred revenue, long term 6,013 2,917 Other long-term
liabilities 264 275 Stockholders' equity 72,464 39,626 $89,270
$49,517 Note 1. Derived from audited financial statements. SIRNA
THERAPEUTICS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited,
in thousands, except for per share amounts) Three Months Ended Nine
Months Ended September 30, September 30, 2006 2005 2006 2005
Revenues: Contract revenue $887 $1,853 $2,165 $1,947 Contract
manufacturing revenue 1,068 (2) 1,068 1,940 Total revenues 1,955
1,851 3,233 3,887 Operating expenses: Cost of contract
manufacturing 1,039 5 1,039 1,663 Research and development 7,660
4,618 20,486 15,502 General and administrative 3,980 1,682 11,854
5,402 Total operating expenses 12,679 6,305 33,379 22,567 Loss from
operations (10,724) (4,454) (30,146) (18,680) Interest and other
income 1,168 272 2,538 563 Interest expense -- -- -- (25) Net loss
$(9,556) $(4,182) $(27,608) $(18,142) Net loss per common share,
basic and diluted $(0.13) $(0.08) $(0.42) $(0.40) Weighted average
common shares outstanding, basic and diluted 72,897 53,535 66,421
45,573 GAAP and non-GAAP earnings per share A reconciliation
between non-GAAP and GAAP earnings per share for the third quarters
of 2006 and 2005 is provided in the following table. The company
adopted Statement of Financial Accounting Standards No. 123R (or
FAS 123R) on a modified prospective basis beginning January 1,
2006. No FAS 123R expense has been recognized in GAAP-reported
amounts in any prior period. Period Non-GAAP EPS FAS 123R Expense
Reported GAAP EPS Q3 2006 ($0.12) ($0.01) ($0.13) Q3 2005 ($0.08)
-- ($0.08) Contacts: Stephan Herrera Executive Director, Investor
Relations Sirna Therapeutics, Inc. +1 415 512 7200 Stephanie
Carrington The Ruth Group +1 646 536 7017 DATASOURCE: Sirna
Therapeutics, Inc. CONTACT: Stephan Herrera, Executive Director,
Investor Relations of Sirna Therapeutics, Inc., +1-415-512-7200, ;
or Stephanie Carrington of The Ruth Group, +1-646-536-7017, , for
Sirna Therapeutics, Inc. Web site: http://www.sirna.com/
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