Tetraphase Reports Third-Quarter 2013 Financial Results

Tetraphase Reports Third-Quarter 2013 Financial Results

November 14, 2013

WATERTOWN, Mass.--(BUSINESS WIRE)-- Tetraphase Pharmaceuticals, Inc. (NASDAQ:TTPH) today reported financial results for the quarter ended September 30, 2013.

"The third quarter of 2013 was a productive one for us," said Guy Macdonald, Tetraphase President and Chief Executive Officer. "We not only advanced our lead antibiotic candidate eravacycline into pivotal clinical trial development, with the start of a Phase 3 clinical trial for the treatment of complicated intra-abdominal infections, but also confirmed details of our second Phase 3 trial, which will involve IV-to-oral step-down of eravacycline in the treatment of complicated urinary tract infections. We believe the ability of eravacycline to be used in both IV and oral formulations for the treatment of multidrug-resistant Gram-negative infections would be a key competitive advantage versus existing and late-stage development therapies, if it is ultimately approved."

"In addition," Mr. Macdonald continued, "we believe that the completion of our recent equity offering will provide us with enough funding to complete both eravacycline Phase 3 trials and, if the trials are successful, to submit a New Drug Application to the FDA. We are also delighted to welcome a number of new, high-quality investors to our existing shareholder group."

Third-Quarter Financial Results

As of September 30, 2013, Tetraphase had cash and cash equivalents of $67.8 million. In addition to this, the Company subsequently raised net proceeds of approximately $42 million from a common stock offering in November 2013.

For the third quarter of 2013, Tetraphase reported a net loss of $10.1 million, or $0.49 per share, compared to a net loss of $3.1 million, or $9.63 per share, for the comparable period in 2012. Revenue for the third quarter of 2013 was $2.2 million compared to $2.5 million for the same period in 2012.

Revenue for each period consisted of contract and grant revenue under three U.S. government awards for the development of Tetraphase compounds as potential countermeasures for the treatment of diseases caused by bacterial biothreat pathogens. These funds are received through subcontracts and a subaward from CUBRC Inc., an independent, not-for-profit research corporation that specializes in U.S. government-based contracts. These U.S. government awards consist of an award from Biomedical Advanced Research and Development Authority (BARDA) for eravacycline and two awards from the National Institute of Allergy and Infectious Diseases (NIAID) for the Company's preclinical compound TP-271. The decrease in revenue during the quarter ended September 30, 2013 compared to the quarter ended September 30, 2012 was primarily due to timing and scope of preclinical activities conducted during the period under the NIAID contract.

Research and development expenses for the third quarter of 2013 were $10.0 million, compared to $4.4 million for the same period in 2012. The increase was primarily due to an increase in expenses related to clinical and drug manufacturing costs associated with the Phase 3 program for eravacycline, as well as a $2.0 million milestone fee under the Company's license agreement with Harvard University in connection with the dosing of the first patient in the Phase 3 clinical trial program.

General and administrative expenses for the third quarter of 2013 were $1.9 million, compared to $1.0 million for the same period in 2012. This increase was primarily due to an increase in various general costs due to operating as a public company, as well as an increase in personnel-related costs.

Recent Highlights

  • Eravacycline Receives QIDP Designation from FDA. In July, Tetraphase received notice that the FDA had designated eravacycline as a Qualified Infectious Disease Product (QIDP) for both the complicated intra-abdominal infection (cIAI) and complicated urinary tract infection (cUTI) indications. This will make eravacycline eligible to benefit from certain incentives for the development of new antibiotics including priority review, eligibility for fast-track status and an additional five-year extension of U.S. market exclusivity.
  • Added to Russell Indexes. In July, Tetraphase was added to the Russell 3000®, Russell 2000® and Russell Global Indexes when the Russell Investment Group reconstituted its family of U.S. indexes.
  • First Patient Dosed in Phase 3 cIAI Clinical Trial. In early September, Tetraphase dosed the first patient in its Phase 3 clinical trial of eravacycline for the treatment of cIAI. The Phase 3 global, multi-center, randomized, double-blind, double-dummy trial is designed to assess the efficacy, safety and pharmacokinetics of eravacycline compared with ertapenem in the treatment of cIAI.
  • Eravacycline and Early Stage Candidate Data Presented at ICAAC. In mid-September, Tetraphase participated in the Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC). Presentations included pharmacokinetic results on the dosing of eravacycline in the Company's Phase 2 clinical trial in cIAI, as well as its activity in preclinical studies against Neisseria gonorrhoeae, a common but increasingly resistant cause of gonococcal disease.
  • Phase 3 cUTI Trial Design Clarified, Highlighting Eravacycline's Potential as IV-to-Oral Step-Down Therapy. In late September, Tetraphase provided clarity on the design of its planned Phase 3 clinical trial examining the safety and efficacy of eravacycline in both IV and oral formulations for the treatment of cUTI. The planned two-part, multi-center, randomized, double-blind Phase 3 trial is designed to assess the efficacy and safety of eravacycline compared with levofloxacin in the treatment of cUTI.

Subsequent to the end of the third quarter of 2013, Tetraphase achieved the following:

  • Eravacycline Data Presented at IDWeek. In early October, Tetraphase participated in IDWeek, a joint meeting of The Infectious Disease Society of America (IDSA), the Society for Healthcare Epidemiology of America (SHEA), HIV Medicine Association (HIVMA), and the Pediatric Infectious Diseases Society (PIDS), presenting data that included study results supporting the potential of eravacycline to treat pneumonia.
  • Tetraphase Raises $45 Million in Gross Proceeds from Common Stock Offering. On November 13, 2013, Tetraphase completed the sale of 4,500,000 shares of common stock in a follow-on public offering at a price to the public of $10.00 per share, resulting in gross proceeds to the Company of $45 million. The Company has granted the underwriters a 30-day option to purchase 675,000 additional shares of common stock on the same terms and conditions.

About Tetraphase Pharmaceuticals, Inc.

Tetraphase is a clinical-stage biopharmaceutical company using its proprietary chemistry technology to create novel antibiotics for serious and life-threatening multidrug-resistant (MDR) bacterial infections. Tetraphase's lead product candidate, eravacycline, is a fully synthetic tetracycline derivative being developed as a broad-spectrum intravenous and oral antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including MDR Gram-negative infections.

Any statements in this press release about our future expectations, plans and prospects, including statements regarding our ability to complete the two Phase 3 clinical trials of eravacycline referred to in this press release, statements with respect to our strategy, future operations, prospects, plans and objectives, and other statements containing the words "believes," "anticipates," "plans," "expects," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: whether our cash resources will be sufficient to fund our continuing operations through the end of 2015; whether results obtained in preclinical studies and early clinical trials of eravacycline will be indicative of results obtained in future clinical trials, including the Phase 3 clinical trials referred to in this press release; whether we are able to develop an oral formulation of eravacycline on a timely basis or at all; whether eravacycline will advance through the clinical trial process on a timely basis and receive approval from the United States Food and Drug Administration or equivalent foreign regulatory agencies; whether, if eravacycline obtains approval, it will be successfully distributed and marketed; and other factors discussed in the "Risk Factors" section of our most recent quarterly report on Form 10-Q. In addition, the forward-looking statements included in this press release represent our views as of November 14, 2013. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.


Tetraphase Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2013   2012   2013   2012
Revenues   $ 2,166     $ 2,537     $ 8,588     $ 4,360  
Operating expenses                
Research and development     9,992       4,419       21,014       12,681  
General and administrative     1,860       1,017       4,841       2,980  
Total operating expenses     11,852       5,436       25,855       15,661  
Loss from operations     (9,686 )     (2,899 )     (17,267 )     (11,301 )
Other income (expense)                
Interest income     3             5        
Interest expense     (433 )     (202 )     (1,334 )     (652 )
Other income (expense)     -       23       263       (82 )
Other expense, net     (430 )     (179 )     (1,066 )     (734 )
Net loss   $ (10,116 )   $ (3,078 )   $ (18,333 )   $ (12,035 )

Net loss per share applicable to common
stockholders-basic and diluted

  $ (0.49 )   $ (9.63 )   $ (1.27 )   $ (38.16 )

Weighted-average number of common shares
used in net loss per share applicable to common
stockholders-basic and diluted



      320       14,435       315  
Tetraphase Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
    September 30,   December 31,
    2013   2012
Cash and cash equivalents   $ 67,832   $ 9,079  
Accounts receivable     2,134     2,452  
Prepaid expenses and other current assets     2,182     850  
Property and equipment, net     174     235  
Other assets, noncurrent     491     1,456  
Total assets   $ 72,813   $ 14,072  
Liabilities and stockholders' equity (deficit)        
Accounts payable and accrued expenses   $ 7,393   $ 4,321  
Total term loan     12,208     11,650  
Total deferred revenue     242     699  
Warrant liability     -     610  
Convertible preferred stock     -     79,841  
Stockholder's equity (deficit)     52,970     (83,049 )
Total liabilities and stockholders' equity (deficit)   $ 72,813   $ 14,072