PhaseRx Reports Second Quarter 2016 Financial Results and Provides Corporate Update

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Aug 02, 2016, 04:05 ET

SEATTLE, Aug. 2, 2016 /PRNewswire/ -- PhaseRx, Inc. (NASDAQ: PZRX), a biopharmaceutical company developing treatments for life-threatening inherited liver diseases in children, today reported financial results for the quarter and six months ended June 30, 2016 and provided an update on its corporate activities.

"With the successful completion of our IPO, the naming of PRX-OTC as our lead product candidate, and the announcement of positive proof-of-concept data for PRX-ASL, our second disease program, 2016 is proving to be a transformational year for PhaseRx," said Robert W. Overell, Ph.D., president and chief executive officer. "With our improved financial position, a number of new key hires and clear focus on our clinical development goals, we believe we are well positioned to make further progress in the near and medium term."

Corporate Update

In May, the Company closed its initial public offering of 3,700,000 shares of common stock at a price of $5.00 per share for aggregate gross proceeds of $18.5 million.
On June 7, 2016, the Company entered into a loan and security agreement with Hercules Capital, Inc. to make a term loan available for working capital and general business purposes, in a principal amount of up to $8 million. As of June 30, 2016, $6 million has been funded.
In June, the Company announced product pipeline advancements including the selection of its lead product candidate, PRX-OTC, for treatment of Ornithine Transcarbamylase Deficiency (OTCD), and positive proof-of-concept data for a second product candidate, PRX-ASL, for treatment of Argininosuccinate Lyase Deficiency (ASLD).

Financial Results for the Three and Six Months Ended June 30, 2016

Total operating expenses for the second quarter of 2016 were $9.8 million which included non-recurring, non-cash financial advising fees of $7.5 million related to the Company's IPO, compared to $1.4 million of operating expenses in 2015. Total operating expenses for the six months ended June 30, 2016 were $11.9 million compared to $3.0 million for the same period in 2015.

The net loss for the quarter ended June 30, 2016 was $11.1 million, or $1.84 per share, compared to a net loss of $1.7 million, or $3.29 per share, for the quarter ended June 30, 2015. The net loss for the six months ended June 30, 2016 was $13.3 million, or $4.05 per share, compared to $3.2 million, or $6.27 per share for the six months ended June 30, 2015. As of June 30, 2016, the Company had cash, cash equivalents, and marketable securities of $21.2 million and 11.7 million shares of common stock outstanding. The Company believes it has sufficient cash to fund its operations for at least the next 12 months.

About PhaseRx

PhaseRx is a leading biopharmaceutical company dedicated to developing products for the treatment of children with inherited enzyme deficiencies in the liver using intracellular enzyme replacement therapy (i-ERT). PhaseRx's initial product development focus is on urea cycle disorders, a group of rare genetic diseases that generally present before the age of twelve and are characterized by the body's inability to remove ammonia from the blood with potentially devastating consequences for patients. The Company's i-ERT approach is enabled by its proprietary Hybrid mRNA Technology^TM platform. PhaseRx is headquartered in Seattle. For more information, please visit www.phaserx.com.

Safe Harbor Statement

This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the company's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the fact that the company has incurred significant losses since its inception and anticipates that it will continue to incur significant losses for the foreseeable future, (ii) the company being dependent on technologies it has licensed and that it may need to license in the future to develop its products, (iii) the fact that the company will need to raise substantial additional funding to bring its planned products through clinical trials, regulatory approval, manufacturing and marketing and to become profitable, (iv) the fact that the company's Hybrid mRNA Technology has not previously been tested beyond company preclinical studies, and that mRNA-based drug development is unproven and may never lead to marketable products, (v) the fact that all of the company's programs are in preclinical studies or early stage research, so the company cannot predict how these results will translate into results in humans, nor can it be certain that any company product candidates will receive regulatory approval or be commercialized, (vi) the fact that development of the company's product candidates will be expensive and time-consuming, and if the development of company product candidates does not produce favorable results or is delayed, the company may be unable to commercialize these products, (vii) the company expecting to continue to incur significant research and development expenses, which may make it difficult to attain profitability, (viii) the company becoming dependent on collaborative arrangements with third parties for a substantial portion of its revenue, and its development and commercialization activities being delayed or reduced if it fails to initiate, negotiate or maintain successful collaborative arrangements, (ix) the company's ability to adequately protect its proprietary technology from legal challenges, infringement or alternative technologies and (x) the biotechnology and pharmaceutical industries being intensely competitive, with competition from existing drugs, new treatment methods and new technologies that may prove to be more effective or marketable than the company's products. More detailed information about the company and the risk factors that may affect the realization of forward looking statements is set forth in the company's filings with the Securities and Exchange Commission (SEC), including the company's prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the SEC on May 23, 2016. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

PhaseRx, Inc.
Statements of Operations and Balance Sheet Data
(in thousands, except per share amounts)



		Three Months Ended June 30		Six Months Ended June 30
Statements of Operations		2016	2015	2016	2015
		(Unaudited)
Revenue		$ -	$ -	$ -	$ 375

Operating expenses
Research and development		1,416	1,160	2,850	2,442
General and administrative		880	283	1,559	567
Non-cash financial advising fees		7,515	-	7,515	-
	Total operating expenses	9,811	1,443	11,924	3,009
Loss from operations		(9,811)	(1,443)	(11,924)	(2,634)
Interest expense		(1,383)	(320)	(1,583)	(570)
Other income, net		110	16	190	37
	Total other income (expense)	(1,273)	(304)	(1,393)	(533)
	Net loss	$ (11,084)	$ (1,747)	$ (13,317)	$ (3,167)
	Basic and diluted net loss per share	$ (1.84)	$ (3.29)	$ (4.05)	$ (6.27)
	Shares used in computation of basic and diluted net loss per share	6,013	531	3,288	505

				June 30,	December 31,
Balance Sheet Data:				2016	2015
				(unaudited)
Cash and cash equivalents				$ 15,198	$ 3,290
Marketable securities				5,993	-
Total assets				21,997	3,914
Accrued interest				37	3,199
Convertible notes, net of debt discount				-	19,841
Preferred stock warrant liability				-	3,163
Term loan payable, net of debt discount				5,519	-
Redeemable convertible preferred stock				-	25,712
Total stockholders' equity (deficit)				15,357	(48,889)