Hollis-Eden's cash use increases by $1.3 million, ends quarter with $47.4 million

By Angela McDaniels

Seattle, Nov. 3 - Hollis-Eden Pharmaceuticals, Inc.'s cash and cash equivalents decreased to $47.4 million at Sept. 30 from $53.5 million at June 30.

Cash used in operations for the third quarter ended Sept. 30 totaled $6.0 million, compared with $4.7 million for the third quarter of 2005.

For the year to date, cash used in operations totaled $22.0 million, which included payment in the first quarter of $3.0 million in an arbitration settlement that was expensed during the fourth quarter of 2005. For the first nine months of 2005, cash used in operations was $20.0 million.

The company said its net loss increased to $7.3 million, or $0.29 per share, for the third quarter from $5.7 million, or $0.27 per share, for the third quarter of 2005.

For the nine months ended Sept. 30, Hollis-Eden reported a net loss of $22.3 million, or $0.91 per share, compared with a net loss of $19.0 million, or $0.95 per share, for the first nine months of 2005.

Included in the net loss for the third quarter and first nine months of 2006 are $1.1 million and $3.4 million, respectively, of stock-based compensation expense. Hollis-Eden said there were no such comparable expenses in 2005.

Results for the third quarter and first nine months of 2006 include $82,000 and $204,000, respectively, of revenue generated from the company's research and development collaboration agreement with the Cystic Fibrosis Foundation Therapeutics, Inc., compared with $5,000 in each of the comparable 2005 periods.

Research and development expenses increased to $6.0 million for the third quarter from $4.2 million for the third quarter of 2005 and to $17.3 million for the first nine months from $13.7 million for the first nine months of 2005, according to a company news release.

The company attributed the increase mainly to the growth in its laboratory operations, preclinical and clinical activities and personnel associated with advancing Neumune (HE2100), the company's lead drug candidate for the treatment of acute radiation syndrome and for health care-associated infections, through development.

"We remain confident in our acute radiation syndrome proposal to Health and Human Services and believe that procurement of an acute radiation syndrome countermeasure remains a top priority for our nation given the continuing global nuclear threat," chairman and chief executive officer Richard B. Hollis said in the release.

"At the same time, we continue to advance the longer-term development opportunities inherent in our Hormonal Signaling Technology Platform.... [W]e are increasingly confident that our proprietary class of compounds offer therapeutic benefit in a wide variety of diseases and disorders where immune dysregulation, unproductive inflammation, metabolic imbalance and myelosuppression are underlying conditions."

Hollis-Eden is a pharmaceutical company based in San Diego that is developing a proprietary new class of small molecule compounds that are metabolites or synthetic analogs of adrenal steroid hormones.

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