Attached files
| file | filename |
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| 8-K - FORM 8-K - NEUROGEN CORP | form8k.htm |
| EX-2.2 - AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER - NEUROGEN CORP | exhibit22.htm |
| EX-2.1 - AMENDMENT TO AGREEMENT AND PLAN OF MERGER - NEUROGEN CORP | exhibit21.htm |
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Neurogen
Corporation
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For
Immediate Release
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Contact:
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Tom
Pitler
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Neurogen
Corp.
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203-315-3046
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tpitler@nrgn.com
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NEUROGEN
CORPORATION ANNOUNCES THIRD QUARTER 2009 FINANCIAL RESULTS
AND
UPDATES OPERATIONS
--Announces
Agreement to Sell Real Estate and Aplindore RLS Study Top Line Interim
Results
Branford, CT, November 6, 2009 —
Neurogen Corporation (NASDAQ: NRGN), a drug development company
historically focused on drugs for psychiatric and neurological disorders, today
announced financial and operating results for the quarter ended September 30,
2009. The Company also announced its analysis of results from a
previously suspended Phase 2 study of aplindore in Restless Legs Syndrome (RLS)
and that it has entered into an agreement to sell all real estate owned by the
Company.
Stephen
R. Davis, President and CEO said, "While we saw indications of efficacy in the
RLS study of aplindore, our analysis of both efficacy and tolerability - when
considered in the context of observations from similar clinical studies with
drugs currently on the market - suggest the partial agonist profile of aplindore
would not be differentiated from the full agonists which either are or will be
generic by the time aplindore could be launched.”
Mr. Davis
continued, “We are pleased to have recently entered into an agreement to sell
our real estate at a price higher than we previously estimated and to have
concluded the third quarter with financial results in line with our
expectations.”
As
previously announced, the Company has signed a merger agreement with Ligand
Pharmaceuticals, Inc. (“Ligand”) pursuant to which the Company will become a
wholly-owned subsidiary of Ligand. The Company expects the merger to
close during the fourth quarter of 2009, subject to receipt of Company
shareholder approval and the satisfaction of other customary closing
conditions. In the merger, Company shareholders are entitled to
receive shares of Ligand common stock with an aggregate market value of up to
approximately $11.0 million, as adjusted for the Company’s net cash position
shortly before the shareholder special meeting and subject to a share cap of
4,200,000 shares, which, if not waived by Ligand, would cause Company
shareholders to receive less than $11.0 million in Ligand
stock. Company shareholders also will receive four Contingent Value
Rights (“CVRs”) in the merger under applicable CVR agreements, which would
entitle Company shareholders to the net proceeds from the sale or licensing of
certain Company assets, including its aplindore program and real estate
holdings, and the achievement of a specified clinical milestone. The
Company expects to send to Company shareholders a proxy statement/prospectus in
connection with the merger in the near future, which will contain additional
information regarding the merger.
Facilities
Sale
Neurogen
also announced today that it has entered into an agreement with a commercial
real estate developer to sell the Company’s real estate holdings, including all
laboratory and office facilities, for a gross selling price of $3.5
million. Neurogen expects to realize approximately $3.1 million in
net proceeds upon closing of the deal which, subject to the satisfaction of
customary closing conditions, is expected to occur in the first quarter of
2010. Net proceeds from the sale of Neurogen’s real estate will be
eligible for payment to Neurogen’s stockholders through a Contingent Value Right
to be issued upon the closing of Neurogen’s pending and previously announced
merger into Ligand.
Aplindore
This
Phase 2 RLS study was a randomized, placebo-controlled, double-blind,
multi-center, parallel-group study designed to assess the efficacy, safety and
tolerability of multiple doses of aplindore compared to placebo. The 5 treatment
groups in the study were aplindore 0.05 mg, 0.1 mg, 0.25 mg, 0.5 mg and placebo,
and subjects received a total of 4 weeks of treatment. The lowest
doses (0.05 mg and 0.1 mg) were not titrated, while the higher doses were
titrated over 4 days (0.25 mg) and 7 days (0.5 mg). The 0.5 mg
treatment group was discontinued after approximately 2 months of
enrollment. Enrollment of patients in the study was suspended after
randomization of 60% of the planned 195 subjects. The primary efficacy endpoint
was the mean change in the International Restless Legs Syndrome Rating Scale
(IRLS) from baseline. In this study, aplindore achieved statistically
significant results versus placebo overall and at the 0.05 mg and 0.25 mg doses,
but not at the 0.1 mg dose. In this study, aplindore was well tolerated at the
lower doses.
The study
enrolled 118 subjects with moderate-to-severe RLS. The Modified Intent to Treat
(mITT) population was 116 subjects with 14 early terminations, of which 6 were
due to aplindore-related adverse events. Eighteen subjects received
the discontinued 0.5 mg dose. These subjects were not included in the
efficacy analysis, but were included in the safety population. The
primary outcome (IRLS) showed a statistically significant improvement overall
(ANCOVA p=0.0355) with statistically significant pairwise comparisons to placebo
for the 0.05 mg dose (-5.8; p=0.0168) and the 0.25 mg dose (-6.3;
p=0.0097). The 0.1 mg dose showed a lower numeric improvement over
placebo (-3.1; p=0.2025), which did not reach statistical significance,
resulting in a “V”-shaped dose-response curve. The most common adverse events
included nausea, somnolence, headache, and fatigue. The incidence of
these events in the non-titrated doses was considered comparable to or higher
than those reported with the dopamine full agonists currently on the
market. In a single subject there were two Serious Adverse Events
(“SAE’s”). Neither SAE was considered to be
drug-related.
Neurogen
also suspended, earlier this year, a Phase 2 study of aplindore in Parkinson’s
disease. Due to the fact that at the time of suspending enrollment in
that study only nine of an expected 169 Parkinson’s patients were enrolled, no
analysis of that partial study will be performed.
Financial
Results
On a GAAP
basis, including non-recurring matters, Neurogen recognized a net loss
attributable to common stockholders for the third quarter of 2009 of $1.9
million, or $0.03 per share as compared to a GAAP net loss attributable to
common stockholders for the third quarter of 2008 of $31.7 million, or $0.52 per
share. On a non-GAAP basis, excluding non-recurring credits relating
to restructuring of workforce and the adjustments to fair value of certain
assets, net loss for the third quarter of 2009 totaled $2.4 million, or $0.03
per share on 69.0 million weighted shares outstanding as compared to a non-GAAP
net loss during the third quarter of 2008 of $8.1 million, or $0.13 per share on
61.1 million weighted average shares outstanding.
Research
and development expenses for the third quarter of 2009 decreased to $1.0 million
from $6.3 million in the comparable period of 2008. The decrease in R&D
expenses for the quarter was due primarily to decreased spending in Neurogen’s
clinical and preclinical drug development programs as well as the 2008 and 2009
restructuring of the Company’s workforce.
General
and administrative expenses for the third quarter of 2009 decreased to $1.6
million from $2.0 million for the comparable period of 2008. The
decrease for the quarter was due primarily to the smaller employee base in 2009
versus 2008.
Neurogen’s
cash and marketable securities as of September 30, 2009 totaled $15.3
million. Total liabilities at September 30, 2009 were $6.2
million.
Non-recurring
matters
There was
a $0.4 million credit to asset impairment expense for the third quarter of 2009,
compared to a $3.2 million change for the third quarter of 2008. The
2009 credit was a result of the signing of the facilities agreement announced
above while the asset impairment charges in 2008 were associated with writing
down the book value of facilities and equipment associated with previous
research and development activities. Neurogen recorded an immaterial
credit to restructuring of workforce charges in the third quarters of 2009 and
2008. Restructuring of workforce credits in each period result from
actual expenses paid being lower than those estimated and expensed in prior
quarters.
Webcast
Neurogen
will host a conference call and webcast to discuss third quarter results at 8:30
a.m. EST today, November 6, 2009. The webcast will be available in
the Investor Relations section of www.neurogen.com and
will also be archived there. A replay of the call will be available
after 8:00 p.m. EDT on November 6, 2009 and accessible through the close of
business, November 13, 2009. To replay the conference call, dial 888-286-8010,
or for international callers, 617-801-6888, and use the pass code:
65972464.
About
Neurogen
Neurogen
Corporation is a drug development company historically focusing on
small-molecule drugs to improve the lives of patients suffering from psychiatric
and neurological disorders with significant unmet medical need. Neurogen has
conducted its drug development independently and, when advantageous,
collaborated with world-class pharmaceutical companies to access additional
resources and expertise.
Statement
Regarding Adjusted (Non-GAAP) Financial Information
In
addition to disclosing financial results calculated in accordance with GAAP, the
Company has included certain adjusted financial
results. Reconciliations between GAAP and adjusted earnings for the
three and nine months ended September 30, 2009 and 2008 are provided in the
table below. The Company believes that the presentation of adjusted results
provides meaningful supplemental information regarding our financial results for
the three and nine months ended September 30, 2009 as compared to the three and
nine months ended September 30, 2008 because the adjustments between GAAP and
adjusted earnings provide information related to the ongoing operations of the
Company. The Company believes that this financial information is useful to
management and investors in assessing our historical performance and
results. The Company will use these adjusted financial measures when
evaluating its financial results, as well as for internal planning and
forecasting purposes. The adjusted financial measures disclosed by
the Company should not be considered a substitute for or superior to financial
measures calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. The adjusted financial measures used
by the Company may be calculated differently from and therefore may not be
comparable to similarly titled measures used by other companies.
Our
results under GAAP have been adjusted for the following events that occurred
during the three and nine months ended September 30, 2009 and 2008: (1)
restructuring of the Company’s workforce that resulted in small credits in each
three-month period and additional expense in each nine-month period, (2) asset
impairment credits and charges associated with adjusting the value of certain of
our facilities and certain related equipment associated with discontinued
research and development activities, and (3) the sale of certain non-core patent
estates. See the table below for a detailed reconciliation of GAAP and adjusted
earnings.
Reconciliations
between GAAP and Non-GAAP earnings for the three and nine months ended September
30, 2009 and 2008 are provided in the following table:
|
Three
Months Ended
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Three
Months Ended
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Nine
Months Ended
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Nine
Months Ended
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|||||||||||||
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September
30, 2009
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September
30, 2008
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September
30, 2009
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September
30, 2008
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[in
thousands except per share amounts] (unaudited)
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Net
loss attributable to common stockholders (GAAP)
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$ | (1,943 | ) | $ | (31,740 | ) | $ | (20,290 | ) | $ | (60,099 | ) | ||||
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Sale
of patent estate
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- | - | (2,650 | ) | - | |||||||||||
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Restructuring
of workforce
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(3 | ) | (20 | ) | 2,674 | 5,110 | ||||||||||
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Asset
impairment charges
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(410 | ) | 3,173 | 8,766 | 10,373 | |||||||||||
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Gain
on warrants to purchase common stock
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- | (4,746 | ) | - | (16,700 | ) | ||||||||||
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Deemed
preferred dividends
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- | 25,213 | - | 30,620 | ||||||||||||
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Adjusted
net loss (Non- GAAP)
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$ | (2,356 | ) | $ | (8,120 | ) | $ | (11,500 | ) | $ | (30,696 | ) | ||||
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Basic
and diluted loss per share attributable to common stockholders
(GAAP)
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$ | (0.03 | ) | $ | (0.52 | ) | $ | (0.30 | ) | $ | (1.24 | ) | ||||
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Basic
and diluted loss per share (Non-GAAP)
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$ | (0.03 | ) | $ | (0.13 | ) | $ | (0.17 | ) | $ | (0.63 | ) | ||||
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Shares
used in calc of loss per share: Basic and Diluted
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68,974 | 61,116 | 68,653 | 48,451 | ||||||||||||
Safe
Harbor Statement
This
release contains forward-looking statements that involve risks and
uncertainties. Neurogen cautions readers that any forward-looking information is
not a guarantee of future performance and actual results could differ materially
from those contained in the forward-looking information. Words such as "expect,"
"estimate," "project," "potential," and similar expressions are intended to
identify such forward-looking statements. Such forward-looking statements
include, but are not limited to, the expected timing of closing the merger,
statements about the benefits of the transaction between Ligand and Neurogen,
including future financial and operating results, expected cash balance of the
combined entity as of the closing, the 2010 pro forma operating cash burn rate,
the possibility of payments being made under the CVR agreements, the combined
entity’s plans, objectives, expectations and intentions and other statements
that are not historical facts. Among the important factors that could cause
actual results to differ materially from those in any forward-looking statements
are the risks that Merck may not advance the VR1 program successfully; the risk
that Neurogen’s real estate or the Aplindore program may not be sold and that
the conditions of the H3 and Merck CVR’s may not be met in order to produce
proceeds for the CVR holders; the anticipated synergies and benefits from the
transaction may not be fully realized or may take longer to realize than
expected; failure of Neurogen’s shareholders to approve the merger; Ligand’s or
Neurogen’s inability to satisfy the conditions of the merger, or that the merger
is otherwise delayed or ultimately not consummated; Neurogen product candidates
may have unexpected adverse side effects or inadequate therapeutic efficacy; and
positive results in clinical trials may not be sufficient to obtain FDA
approval. There can be no assurance that any product in Ligand’s, Neurogen’s or
the projected combined company’s product pipeline will be successfully developed
or manufactured, that final results of clinical studies will be supportive of
regulatory approvals required to market licensed products, or that any of the
forward-looking information provided herein will be proven accurate. Additional
important factors that may affect future results are detailed in Ligand’s and
Neurogen’s filings with the Securities and Exchange Commission (the "SEC"),
including each company’s recent filings on Forms 10-K and 10-Q, or in
information disclosed in public conference calls, the date and time of which are
released beforehand. In addition, such forward-looking statements include, but
are not limited to, statements that are not historical facts relating to the
timing and occurrence of anticipated clinical trials, and potential
collaborations or extensions of existing collaborations. Actual results may
differ materially from such forward-looking statements as a result of various
factors, including, but not limited to, risks associated with the inherent
uncertainty of drug development, difficulties or delays in development, testing,
regulatory approval, production and marketing of any of Neurogen’s drug
candidates, adverse side effects or inadequate therapeutic efficacy or
pharmacokinetic properties of Neurogen's drug candidates or other properties of
drug candidates which could make them unattractive for commercialization,
advancement of competitive products, dependence on corporate partners,
Neurogen’s ability to retain key employees for the plans described above,
sufficiency of cash to complete the plans described above, Neurogen’s ability to
continue as a going concern, and patent, product liability and third party
reimbursement risks associated with the pharmaceutical industry. For such
statements, Neurogen claims the protection of applicable laws. Future results
may also differ from previously reported results. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. Neurogen disclaims any intent and does not assume any
obligation to update these forward-looking statements, other than as may be
required under applicable law.
Additional
Information and Where to Find it
Ligand
has filed with the SEC a Registration Statement on Form S-4, which included a
proxy statement of Neurogen and other relevant materials in connection with the
proposed merger. The proxy statement, which also constitutes a Ligand
prospectus, will be mailed to Neurogen shareholders. Neurogen shareholders are
urged to read the proxy statement and the other relevant materials because they
will contain important information about Ligand, Neurogen and the proposed
merger. The proxy statement and other relevant materials, and any other
documents filed by Ligand or Neurogen with the SEC, may be obtained free of
charge at the SEC's web site at www.sec.gov. In
addition, Neurogen shareholders may obtain free copies of the documents filed
with the SEC by Ligand by going to the Investor Relations page on Ligand’s
corporate website at www.ligand.com, and
free copies of the documents filed with the SEC by Neurogen by going to the
Investor Relations page on Neurogen’s corporate website at www.neurogen.com.
Neurogen shareholders are urged to read the proxy statement and the other
relevant materials before making any voting or investment decision with respect
to the proposed merger.
Neurogen
and its respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from Neurogen shareholders in favor
of the proposed merger. Information about Neurogen’s executive officers and
directors and their ownership of Neurogen common stock is set forth in
Neurogen’s amended annual report on Form 10-K filed with the SEC on April 30,
2009. Neurogen shareholders may obtain more detailed information regarding the
direct and indirect interests of Neurogen and its executive officers and
directors in the merger by reading the proxy statement regarding the merger,
which has been filed with the SEC and will be mailed to Neurogen
shareholders.
(Financial
Tables Follow)
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NEUROGEN
CORPORATION
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
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(Amounts
in thousands, except per share data)
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|||||||
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(unaudited)
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|||||||
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Three
Months ended
September
30, 2009
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Three
Months ended
September
30, 2008
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Nine
Months
ended
September
30, 2009
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Nine
Months
ended
September
30, 2008
|
||||
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Operating
revenues:
|
|||||||
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Sale
of patent estate
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$-
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$-
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$2,650
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$-
|
|||
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Total
operating revenues
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-
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-
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2,650
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-
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Operating
expenses:
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|||||||
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Research
and development
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959
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6,277
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7,010
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26,326
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|||
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General
and administrative
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1,567
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1,987
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4,881
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4,906
|
|||
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Restructuring of workforce
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(3)
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(20)
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2,674
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5,110
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|||
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Asset
impairment charges
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(410)
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3,173
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8,766
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10,373
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|||
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Total
operating expenses
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2,113
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11,417
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23,331
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46,715
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|||
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Operating
loss
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(2,113)
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(11,417)
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(20,681)
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(46,715)
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|||
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Gain
on warrants to purchase common stock
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-
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4,746
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-
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16,700
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|||
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Other
income, net
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165
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121
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341
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467
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|||
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Total
other income, net
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165
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4,867
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341
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17,167
|
|||
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Tax
benefit
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5
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23
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50
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69
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|||
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Net
loss
|
(1,943)
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(6,527)
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(20,290)
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(29,479)
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|||
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Deemed
preferred dividends
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-
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(25,213)
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-
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(30,620)
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|||
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Net
loss attributable to common stockholders
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$(1,943)
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$(31,740)
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$(20,290)
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$(60,099)
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|||
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Basic
and diluted loss per share attributable to common
stockholders
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$(0.03)
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$(0.52)
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$(0.30)
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$(1.24)
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|||
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Shares
used in calculation of loss per share attributable to common
stockholders:
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|||||||
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Basic
and diluted
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68,974
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61,116
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68,653
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48,451
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|||
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NEUROGEN
CORPORATION
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||||||||
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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(Amounts
in thousands)
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||||||||
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(unaudited)
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||||||||
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September
30, 2009
|
December
31,
2008
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|||||||
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Assets
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||||||||
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Current
Assets:
|
||||||||
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Cash
and cash equivalents
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$ | 15,312 | $ | 24,106 | ||||
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Marketable
securities
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- | 6,967 | ||||||
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Total
cash and marketable securities
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15,312 | 31,073 | ||||||
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Receivables
from corporate partners
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- | 61 | ||||||
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Assets
held for sale
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3,170 | 5,108 | ||||||
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Other
current assets, net
|
773 | 1,394 | ||||||
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Total
current assets
|
19,255 | 37,636 | ||||||
|
Restricted
cash
|
121 | - | ||||||
|
Net
property, plant and equipment
|
5 | 7,102 | ||||||
|
Other
assets, net
|
- | 30 | ||||||
|
Total
assets
|
$ | 19,381 | $ | 44,768 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 3,216 | $ | 4,555 | ||||
|
Current
portion of loans payable
|
353 | 4,692 | ||||||
|
Total
current liabilities
|
3,569 | 9,247 | ||||||
|
Long
term liabilities:
|
||||||||
|
Tenant
Security Deposit
|
121 | |||||||
|
Loans
payable, net of current portion
|
2,540 | 2,807 | ||||||
|
Total
liabilities
|
6,230 | 12,054 | ||||||
|
Total
stockholders’ equity
|
13,151 | 32,714 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 19,381 | $ | 44,768 | ||||
--end--