AVI BioPharma Announces First Quarter 2012 Financial Results and Recent Corporate Developments

BOTHELL, WA -- (Marketwire) -- 05/10/12 -- AVI BioPharma, Inc. (NASDAQ: AVII)

• Duchenne Muscular Dystrophy (DMD) and Infectious Disease Programs Continue to Advance in Clinical Development
  
  
• Strong Dataset Presented on AVI's Lead Drug Candidate Eteplirsen, Demonstrating Restoration of Dystrophin
  
  
• Long-Term Treatment Study with Eteplirsen Ongoing with 48-Week Dataset Expected Later This Year
  
  

AVI BioPharma, Inc. (NASDAQ: AVII), a developer of RNA-based therapeutics, today reported financial results for the three months ended March 31, 2012, and provided an update of recent corporate developments.

"We have achieved a major milestone with our technology by demonstrating eteplirsen's ability to produce the essential protein, dystrophin, in DMD patients at levels that we believe should translate to clinically meaningful benefits," said Chris Garabedian, President and CEO of AVI. "This drug effect is further underscored by the strong safety profile we observed with eteplirsen at the highest doses and longest duration of treatment that have ever been conducted with our unique RNA-based drug chemistry."

Financial Results

For the first quarter of 2012, AVI reported an operating loss of $6.9 million, compared with an operating loss of $5.5 million in the first quarter of 2011. The increase in the operating loss is primarily due to a decrease of $3.1 million in government research contract revenues, partially offset by a $1.7 million decrease in general and administrative costs.

Revenue for the first quarter of 2012 decreased to $11.2 million from $14.3 million in the first quarter of 2011, a change of $3.1 million. The lower revenue was attributable to a $2.4 million decrease in revenue on the H1N1 contract due to its completion in June 2011 and a $0.7 million decrease in revenue on the ongoing Ebola and Marburg U.S. government contract due to the variability of subcontracting activities.

Research and development expenses were $14.8 million for both the first quarter of 2012 and the first quarter of 2011. During the current quarter as compared to the first quarter of the prior year, spending on DMD increased by $1.8 million primarily due to the Phase IIb trials for eteplirsen and a $0.4 million increase in spending on other proprietary research. These increases were offset by a $1.2 million reduction in spending on the H1N1 U.S. government contract which was completed in June 2011, a $0.6 million reduction in spending on the ongoing Ebola and Marburg U.S. government contract and a $0.4 million reduction in personnel related costs.

General and administrative expenses were $3.3 million in the first quarter of 2012 compared to $5.0 million in the first quarter of the prior year. The $1.7 million decrease is primarily due to a $1.1 million decrease in personnel costs related to the December 2011 reorganization and an executive severance package recorded in the first quarter of 2011. Legal and professional services also decreased $0.5 million compared to the first quarter of the prior year.

Net loss for the first quarter of 2012 was $17.7 million, or $0.13 per share, compared to net income for the first quarter of 2011 of $1.8 million, or $0.02 per share. The $19.5 million change in net loss was primarily due to $18.2 million in other expense associated with the change in the valuation of the Company's outstanding warrants as described below, and a $1.3 million increase in operating losses.

In connection with equity financings in 2007 and 2009, the Company issued warrants that are classified as liabilities and are adjusted to fair value on a quarterly basis through other income (loss).