Ardea Biosciences Inc.’s (RDEA) third quarter 2010 net loss of $18.2 million or 79 cents per share was higher than the year-ago loss of $2.5 million or 13 cents per share and the Zacks Consensus Estimate of a loss of 52 cents per share. The wider loss was attributable to the increased amount spent by the company on developing its pipeline coupled with lower revenues in the quarter.

Revenue in the reported quarter plummeted 64.1% to $3.3 million. The company extended the amortization period of the upfront license fee received under its collaboration with Bayer (BAYRY). The extension of this time-period resulted in the decline in revenues. The Zacks Consensus Estimate was $4 million for revenues. Ardea, which does not have any marketed product, earns its entire revenue from license fees and reimbursable research and development (R&D) costs. License fees in the reported quarter declined 73% to $2.2 million.

Operating expenses in the reported quarter climbed 88% to $21.4 million. The increase was primarily attributable to the higher amount spent on research and development. Research & development expenses jumped approximately 63% to $14.7 million as Ardea focused on developing its pipeline candidates especially its gout candidate RDEA594. General and administrative expenses (G&A) jumped 177% to $6.7 million in the quarter.

Apart from disclosing third quarter results, Ardea also announced an update on its pipeline. The company recently announced positive data from a study evaluating its gout candidate RDEA594 in combination with Takeda’s febuxostat. The company also presented encouraging data from a study which evaluated RDEA594 as a combination therapy with allopurinol (the current standard of care) in gout patients. Moreover, Ardea has completed enrollment in a mid-stage study which will evaluate the addition of RDEA594 to allopurinol in more than 200 patients suffering from gout. The patients have not responded favorably to allopurinol treatment as a monotherapy. The company intends to complete dosing by the end of this year with results expected in January 2011.

We remain Neutral on Ardea in the long-run, which is supported by a Zacks #3 Rank (short-term Hold recommendation) currently carried by the company.

 
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