Ardea Biosciences Inc. (RDEA) reported third quarter net loss of $2.47 million, or 13 cents per share, which was significantly lower than the Zacks Consensus Estimate of 47 cents. The company reported a net loss of $14.2 million or 95 cents in the year-ago period. The lower loss was attributable to the higher revenues coupled with lower operating expenses recorded in the quarter.
Revenues came in at $9.17 million as against none in the year-ago quarter. The revenues resulted from the recognition of a portion of the upfront payment of $35 million under the global agreement, with Bayer HealthCare focused on the development of MEK inhibitors for the treatment of cancer.
Operating expenses for the quarter decreased 21.4% to $11.4 million primarily due to reduced research and clinical development expenditures. Research and development expenses decreased to $9 million from $11.5 million in the third quarter of 2008. This is because the company is concentrating its resources on the further development of its gout candidate, RDEA594, which is in a mid-stage study. Furthermore, during the reported quarter, Ardea saved approximately $1.1 million following the restructuring which saw a 47% workforce reduction to conserve cash. The decrease in operating costs was partially offset by severance-related restructuring charges of approximately $0.1 million.
The company exited the quarter with $59.6 million in cash, cash equivalents and short-term investments compared to $57.7 million as of Dec 31, 2008. The increase was due to the $35.0 million non-refundable, upfront license fee from Bayer, partially offset by cash usage to fund clinical programs, personnel costs apart from costs for other general corporate purposes.
Ardea expects to end 2009 with a cash balance of $50−$55 million. Management expects the cash balance to be sufficient to fund operations till the first quarter of 2011, exclusive of any additional partnering revenues.
Currently we are Neutral on Ardea.
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