Arrowhead Research Corp. (ARWR)
F4Q09 Earnings Call
December 22, 2009 4:30 pm ET
Brandi Floberg - The Piacente Group
Dr. Christopher Anzalone - President & Chief Executive Officer
Joseph T. Kingsley – Interim Chief Financial Officer
Previous Statements by ARWR
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Thank you, operator. Good afternoon everyone, and thank you for joining us today to discuss Arrowhead’s financial results for fiscal 2009 fourth quarter and full year ended September 30, 2009. With us today from management are President and CEO, Dr. Christopher Anzalone and Interim Chief Financial Officer, Ted Kingsley.
The management will provide a brief overview of the quarter and will then open the call up to your questions. Also on the call for participation in the Q&A session is John Currie R. Miller Adams from Unidym and Dr. Thomas Schluep, from Calando.
Before we begin, I would like to remind you that comments made during today’s call may contain certain forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact including without limitation those with respect to Arrowhead’s goals, plans, and strategies are forward-looking statements. Without limiting the generality of the foregoing words such as may, will, expect, believe, anticipate, intend, could, estimate, or continue or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements.
In addition, any statements that refer to projections of Arrowhead’s future financial performance, trends in businesses, or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements represent managements’ current expectations and are inherently uncertain.
You should also refer to the discussions under Risk Factors in Arrowhead’s annual report on Form 10-K and the Company’s quarterly reports on Form 10-Q for additional matters to be considered in this regard. Thus, actual results may differ materially. Arrowhead undertakes no duty to update any of the forward-looking statements discussed on today’s call.
With that said, I would like to turn over the call to Dr. Chris Anzalone, President and CEO of the company. Chris?
Dr. Christopher Anzalone
Thanks Brandi. Good afternoon everyone, and thank you for joining us on our call today. I believe we have accomplished a great deal during fiscal 2009 and recent months and I will address some of these accomplishments in the following categories: One, we secured additional capital to enable us to continue moving forward with our subsidiaries. Two, we made material advances in our subsidiaries and three, we completed streamlining our business model and cost reduction programs.
Based on these achievements I believe Arrowhead as reached an important inflection point as it positions us well to drive significant shareholder value. During fiscal 2009 we secured over $3.7 million in license fees, product sales and grants. During that same period we raised $4.1 million in equity financing directly into Calando and Unidym. Only $2.76 million was raised in over-subscribed equity financing transactions directly into Arrowhead. Together this capital provided funds for our operations and enabled important progress from our lead subsidiary throughout the year.
Last week after the end of fiscal 2009 we secured over $3.2 million of additional capital through a private placement in which we sold units consisting of shares and warrants at nearly $0.13 higher than our stock price was trading on the day the financing closed. I personally participated in this offering and have now invested a total of $500,000 into the company over the last two years. The current financing puts us on more solid footing to advance our strategic initiatives as we move through fiscal 2010. With our restructured operations and significantly lower cost structure we expect this financing to provide sufficient capital to cover operations through fiscal 2010.
That said, we are pursuing exits, partnerships and spin outs as sources of additional capital to accelerate our development and enabled us to move into new opportunities. We believe the current financing enables us to significantly decrease the likelihood of such liquidity events. In addition, as our technical and market progress become increasingly evident in the coming months it may make sense to strengthen our negotiating position with potential partners by further shoring up our balance sheet via the capital markets at terms that are attractive.
I believe we are in a reasonably strong position now of not having to raise any new capital in the near term but rather are only doing so if it clearly promotes and near-term value creation or liquidity event opportunities.
Let us now turn to the performance of our subsidiaries. Our primary focus has been on our two most mature subsidiaries, Calando Pharmaceuticals and Unidym. Looking back at fiscal 2009 Calando made great progress cutting its costs while attaining upside potential. We executed a partnership with Cerulean Pharma for the non-RNAI side of the business. This included a Cyclosert delivery system and drug candidate IT101.
We received $2.4 million in upfront payments with potential future revenues up to $2.75 million in addition to milestone payments as IT101 progresses through the clinic and up to $30 million in sales in milestone payments should IT101 be approved by the FDA plus royalty on net sales.
As a delivery platform, the Cyclosert has the potential to generate a large number of new drugs in addition to IT101. The agreement provides Calando with payments for each new compound that Cerulean brings to market with the Cyclosert platform. These payments include $3 million in development milestones, up to $15 million sales milestones plus royalties on net sales for each new drug candidate.