"In the second quarter, we have made significant regulatory progress in our key programs, Horizon and telavancin," said Rick E Winningham, Chief Executive Officer. "I am very pleased that GSK recently announced plans to progress Horizon into a Phase 3 program in COPD in October 2009. We expect a decision from the FDA on our telavancin NDA for complicated skin and skin structure infections by September 16, 2009. We look forward to the initiation of the Horizon Phase 3 program and we continue to work closely with the FDA on our two telavancin applications."

Key Program Highlights

Respiratory Programs

Horizon

GlaxoSmithKline (GSK) has engaged with European and U.S. regulatory agencies to discuss study designs for the Horizon Phase 3 programs to evaluate a combination of a long-acting beta agonist (LABA) and an inhaled corticosteroid (ICS) for the treatment of COPD and asthma. GSK currently expects to initiate the Phase 3 program in COPD in October 2009. This program will include active comparators to evaluate the potential for superiority. GSK is waiting for feedback from the U.S. Food and Drug Administration (FDA) on the development of LABAs in asthma before finalizing the asthma Phase 3 program.

Bacterial Infections

Telavancin

In late April 2009, the FDA accepted for review our response to the February 2009 Complete Response letter, which outlined requirements for approval of telavancin for the treatment of complicated skin and skin structure infections (cSSSI). The FDA assigned a Prescription Drug User Fee Act (PDUFA) goal date of September 16, 2009.

In early April 2009, the FDA accepted the filing of our New Drug Application (NDA) for telavancin for the treatment of nosocomial pneumonia (also known as hospital-acquired pneumonia, or HAP) caused by Gram-positive bacteria such as methicillin-resistant Staphylococcus aureus (MRSA). The FDA has established a standard 10-month review for this NDA, with a PDUFA goal date of November 26, 2009. In conjunction with the filing of our NDA, in April 2009 we received a milestone payment of $10.0 million from our partner, Astellas.

Financial Results

Revenue

Revenue was $5.5 million for the second quarters of 2009 and 2008. Milestone payments received to date under our agreements with GSK and Astellas are being amortized over the relevant performance periods.

Research and Development

Research and development expense was $20.0 million for the second quarters of 2009 and 2008. During the second quarter of 2009, salaries and facilities related costs were lower compared to the same period last year due to the reduction in force announced in April 2008 and were offset by higher stock compensation expense. Total external research and development expense for the second quarter of 2009 was $4.0 million compared with $4.9 million for the same period in 2008. Total research and development stock-based compensation expense for the second quarter of 2009 was $3.1 million compared with $1.9 million in the same period in 2008.

General and Administrative

General and administrative expense for the second quarter of 2009 decreased to $6.8 million from $7.3 million for the same period in 2008. The lower expense in the second quarter of 2009 was primarily due to reduced external expenses. Total general and administrative stock-based compensation expense for the second quarter of 2009 was $2.2 million compared with $1.9 million for the same period in 2008.

Restructuring Charges

The company incurred restructuring charges totaling $1.3 million for the six months ended June 30, 2009. The charges resulted primarily from a loss recognized on the sublease of excess space in one of the company's South San Francisco, CA buildings as well as employee severance and benefits resulting from the reduction in force announced in April 2008.

Cash and Cash Equivalents

Cash, cash equivalents and marketable securities totaled $175.7 million as of June 30, 2009, a decrease of $3.2 million during the quarter. The decrease was primarily due to cash used in operations that was partially offset by $13.6 million in milestone and reimbursement payments received from Astellas related to our telavancin license agreement.

Conference Call and Webcast Information

As previously announced, the company has scheduled a conference call to discuss this announcement beginning at 5:00 p.m. Eastern Daylight Time today.