Anadys Pharmaceuticals Inc. (NASDAQ: $ANDS)

Anadys Pharmaceuticals Inc. (ANDS) is a biopharmaceutical company focused on developing medicines in the areas of hepatitis C and oncology. The Company is developing ANA598, a small-molecule, non-nucleoside inhibitor of the NS5B polymerase for the treatment of hepatitis C and ANA773, an oral Toll-like receptor 7 (TLR7) agonist prodrug for the treatment of hepatitis C and cancer. Both ANA598 and ANA773 were discovered at ANDS and are wholly owned assets of ANDS. With ANA598, the Company is focused on developing a direct antiviral, meaning a product candidate that acts by directly interacting with, and blocking the function of, a component of the virus. With ANA773, ANDS is stimulating the patient’s own immune system to block cells infected with the hepatitis C virus from further amplifying the infection by producing more virus particles.

Anadys Pharmaceuticals was founded in 1992 and is headquartered in San Diego, California.

Share Statistics (14-Apr-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	ANDS	Revenue, $Mn	24.12M	0.00M	100.0%	0.00M	0.00M	n/a
Current price	$2.70	Gross marg.	100.0%	n/a	n/a	n/a	n/a	n/a
52wk Range:	$6.45-1.44	Oper. margin	-52.9%	n/m	n/a	n/m	n/m	n/a
Avg Vol (3m):	507,839	Net margin	-38.2%	n/m	n/a	n/m	n/m	n/a
Market Cap.	100.82M
Dil. Shares Outst.	37.3M	EPS, $	-0.32	-1.13	253.1%	-0.30	-0.21	30.0%

Source: Reuters.com, SEC Filings.

Financial Summary

As of December 31, 2009, the Company’s cash, cash equivalents and securities available-for-sale totaled $20.5 million compared to $27.9 million as of December 31, 2008. The decrease in cash, cash equivalents and securities available-for-sale is the result of ANDS’ cash utilization to fund operations during 2009 partially offset by proceeds of approximately $16.0 million received from a “registered direct” offering of common stock and warrants in early June 2009.

Total operating expenses were $5.6 million for the fourth quarter of 2009, compared to $8.9 million for the fourth quarter of 2008. Included as a component of ANDS’ operating expenses were non-cash, share-based expenses of $0.4 million and $0.7 million for the fourth quarter of 2009 and 2008, respectively.

Research and development expenses were $4.0 million for the fourth quarter of 2009, compared to $6.9 million for the fourth quarter of 2008. The $2.9 million decrease was primarily attributable to cost savings associated with the Company’s strategic restructuring initiated in June 2009 that included a $1.5 million decrease in ANA773 development costs.

General and administrative expenses were $1.6 million for the fourth quarter of 2009, compared to $2.0 million for the fourth quarter of 2008. The $0.4 million decrease primarily resulted from cost savings associated with the Company’s strategic restructuring and the relocation of the Company’s corporate headquarters to a smaller facility during July 2009.

The net loss was $4.3 million for the fourth quarter of 2009, compared to a net loss of $8.5 million for the fourth quarter of 2008. Included in the net loss for the fourth quarter of 2009 is a $1.3 million gain resulting from a decrease in the liability associated with the Company’s common stock warrants from September 30, 2009, to December 31, 2009. The warrants were issued in connection with ANDS’ “registered direct” offering in early June 2009. Basic and diluted net loss per common share was $0.11 in the fourth quarter of 2009, compared to $0.30 in the fourth quarter of 2008. Non-cash share-based expense resulted in a $0.01 and $0.02 increase in basic and diluted net loss per share for the fourth quarter of 2009 and 2008, respectively.

For the 12 months ended December 31, 2009, ANDS reported a net loss of $27.3 million, compared to $32.4 million for the same period last year. Basic and diluted net loss per common share was $0.81 and $1.13 for the twelve months ended December 31, 2009, and 2008, respectively.

Financial Strength (15-Apr-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	2.89	5.90	2.63	0.80
Current Ratio (MRQ)	2.89	6.37	3.13	0.95
Long-Term Debt to Equity (MRQ)	0.00	22.27	25.69	146.21
Total Debt to Equity (MRQ)	0.00	26.31	33.02	210.95

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast amongst 13 polled investment analysts. Against the Anadys Pharmaceuticals Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	6	4	3	0	0	0
4 weeks ago	6	4	2	0	0	1
2 months ago	6	4	1	0	0	1
3 months ago	6	4	1	0	0	1
Last year	8	5	0	0	0	0

The nine analysts offering 12-month price targets for ANDS have a median target of 5.00, with a high estimate of 7.00 and a low estimate of 4.00. The median estimate represents a 91.57% increase from the last price of 2.61.

Source: www.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Jun-10	9	0.00	0.00	0.00	0.22
Quarter Ending Sep-10	8	0.59	2.50	0.00	0.22
Year Ending Dec-10	10	1.20	5.00	0.00	4.93
Year Ending Dec-11	8	9.09	31.25	0.00	16.81
EARNINGS (per share)
Quarter Ending Jun-10	12	-0.17	-0.11	-0.40	-0.31
Quarter Ending Sep-10	12	-0.15	-0.11	-0.39	-0.29
Year Ending Dec-10	12	-0.63	-0.46	-1.54	-1.27
Year Ending Dec-11	9	-0.69	-0.21	-1.74	-1.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=ANDS.W

Investment Highlights

ANDS announced recently that 72% of hepatitis C patients receiving ANA598 400 mg twice daily (bid) plus standard of care (SOC) achieved undetectable levels of virus at week eight in an ongoing Phase II study, compared to 38% of patients receiving placebo plus SOC. The preliminary analysis of results through eight weeks also showed that ANA598 400 mg bid plus SOC was well tolerated, with an adverse event profile comparable to SOC alone. As seen before at 200 mg bid, no patient experienced viral breakthrough on ANA598.

In previously released results for the group receiving ANA598 200 mg bid plus SOC in this study, the high percentage of patients who achieved undetectable levels of virus at week eight (69%) was maintained through week 12, when 73% of patients achieved a complete Early Virological Response, or cEVR, as undetectable level of virus is referred to at 12 weeks. Dosing through 12 weeks in the 400 mg bid group and the control group is currently concluding, and ANDS expects to release antiviral response and safety results through week 12 for these groups in the latter half of May.

Safety information is available as of a data snapshot that was taken once the last enrolled patient had received eight weeks of treatment. ANA598 400 mg bid demonstrated a favorable safety and tolerability profile through eight weeks, although conclusions regarding safety and tolerability cannot be made until results in more patients and potentially over longer duration are known. The incidence of all adverse events was similar between the active and control groups, with reported adverse events being typical for patients treated with interferon and ribavirin. The incidence of rash was comparable between the ANA598 dose groups and also consistent with historical reports of rash incidence due to interferon and ribavirin. Through eight weeks, 32% of patients (11/34) receiving ANA598 400 mg bid plus SOC developed rash, compared to 21% of patients at week four and 41% at week 12 for patients who received ANA598 200 mg bid plus SOC. At 400 mg bid, one patient discontinued ANA598 and SOC due to a grade 3 rash and one patient with a grade 1 rash discontinued ANA598. Safety laboratory values were comparable between the ANA598 and control arms.

Source: http://www.anadyspharma.com/

Technical Analysis

Source: http://stockcharts.com

ANDS is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

ANDS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for ANDS currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Apr-15-2010	symbol	Share, $	$ Mn	2009	2010	2009	2010
Achillion Pharmaceuticals Inc.	ACHN	2.90	111.71M	n/a	n/a	n/a	n/a
Dynavex Technologies Corp.	DVAX	1.55	84.26M	n/a	n/a	1.87	n/a
Idera Pharmaceuticals Inc.	IDRA	6.94	163.01M	21.98	n/a	4.22	n/a
Drug Manufacturers Median			119.48M	n/a	n/a	2.02	n/a
Anadys Pharmaceuticals Inc.	ANDS	2.70	100.82M	n/a	n/a	n/a	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	n/a	0
Net Shares Purchased (Sold)	n/a	0
Total Insider Shares Held	4.77M	n/a
% Net Shares Purchased (Sold)	0.0%	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(1,820,610)
% Change in Institutional Shares Held	(8.3%)

Source: Yahoo Finance

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