Investment Report for Advanced Life Sciences Inc. (ADLS)

Advanced Life Sciences Inc. (OTCBB: ADLS)

Advanced Life Sciences Inc. (ADLS) is an emerging pharmaceutical company focused on the development and commercialization of novel drugs for the treatment of infectious disease, oncology and respiratory disorders. Its lead drug candidate Cethromycin, which is developed for the treatment of acquired pneumonia, cleared phase III clinical trials. In addition, the Company maintains licensing agreements with Abbott Laboratories for worldwide commercialization and further development of Cethromycin. The Company also has a portfolio of drug therapies candidates under preclinical trials, including ALS-357 to treat melanoma, and ALS-886 to treat acute respiratory distress.

Founded in 1999, the Company is headquartered in Woodridge, Illinois.

Share Statistics

26-Jul-09)

2007

2008

%

Chg

Q1 2008

Q1 2009

% Chg

Symbol

ADLS

Revenue, $Mn

0

0.2

n/a

0

0.4

n/a

Current price

$0.65

Gross marg.

n/a

100%

n/a

n/a

100%

n/a

52wk Range:

$0.14-1.62

Oper. margin

n/a

-11k%

-30.7%

n/a

-500%

-44.4%

Avg Vol (3m):

1,519,750

Net margin

n/a

-11k%

-29.4%

n/a

-575%

-34.3%

Market Cap.

29.89M

Dil. Shares Outst.

41.78M

EPS, $

-1.124

-0.588

-47.7%

-0.093

-0.056

-39.8%

Source: Reuters.com, SEC Filings.

Financial Summary

ADLS is an emerging pharmaceutical company in infancy, with little to no revenue at its early stage of development.

Operating expenses for the first quarter of fiscal 2009 totaled $2.4 million, down from $3.6 million for the same quarter of fiscal 2008. The Company cites tighter cost controls and lowered research and development of its lead product, Cethromycin. The Company posted a loss for the most recent quarter of $2.3 million, or 5.6 cents per share, smaller than the loss of $3.5 million, or 9.3 cents per share, reported for the first quarter of fiscal 2008.

At the close of the quarter ended March 31, cash/cash equivalents totaled $0.5 million. Cash burned in the quarter totaled $1.6 million.

To fund ongoing operations through 2009, the Company anticipates raising additional capital through commercial partnerships and/or the sale of equity.

Top Iinstitutional Holders

Shares

% Out

Value

Reported

Angelo, Gordon & Company L.P.

1,528,662

3.02

$366,878

03/31/09

Harris (William) Investors Inc.

1,019,108

2.01

$244,585

03/31/09

Disciplined Growth Investors Inc.

987,268

1.95

$236,944

03/31/09

Mkm Longboat Capital Advisors LLP

764,331

1.51

$619,108

03/31/09

Dimensional Fund Advisors Inc.

361,012

0.71

$86,642

03/31/09

Renaissance Technologies LLC

295,900

0.58

$71,016

03/31/09

Calpers (calif.pub. Employees Ret. System)

207,400

0.41

$49,776

03/31/09

Bruce & Co Inc.

107,410

0.21

$25,778

03/31/09

Barclays Global Investors UK Holdings Ltd

46336

0.09

$11,120

03/31/09

Northern Trust Corp.

40100

0.08

$9,624

03/31/09

Source: Reuters.com

Analyst Consensus

The Company is not covered by any major equities research firm at this stage of development.

Investment Highlights

ADLS is an emerging pharmaceutical Company focused on development and commercialization of novel drugs for the treatment of infectious disease, oncology and respiratory disorders. Its lead drug candidate Cethromycin, which is developed for the treatment of acquired pneumonia, has cleared phase III clinical trials.

Following rapid growth rates from 2004 to 2008, drug sales of respiratory related conditions is expected to reach $23 billion by 2018, according to The Datamonitor Group, while the most recent statistics for the global market potential of the Company’s ALS-357 anti-cancer drug therapy could reach approximately $53 billion for 2009.

If approved by the U.S. Food and Drug Administration (FDA), the market for ADLS’ drug candidate Cethromycin could reach more than $1 billion at its market saturation. Cethromycin has cleared phase III clinical trials, with the prospects of reaching commercialization reaching approximately 90% following final approval from the FDA.

Pharmaceutical companies with revenue of more than $1 billion but less than $2 billion include Cephalon, Inc. (Nasdaq: CEPH), which trades at a market capitalization of $3.73 billion, and King Pharmaceuticals (Nasdaq: KG), which trades at a market capitalization of $2.25 billion. ADLS trades at a market capitalization of $29.9 million.

On June 23, 2009, the Company announced the results of a second study regarding its lead drug candidate Cethromycin, showing a 100% survival rate of non-humans that inhaled lethal dosages of anthrax. No animals receiving a placebo survived. The study was confirmed by the National Institute of Allergy and Infectious Diseases (NIAID), a branch within the Health and Human Services (HIS) Agency of the United States government.

On June 19, 2009, ADLS filed a Form 8-K with the Securities and Exchange Commission (SEC), which states that the Company has entered into an Equity Distribution Agreement (the “New SEDA”) with YA Global Master SPV Ltd. (“YA SPV”) for the sale of up to $15.0 million of shares of common stock over the next two years.

Technical Analysis

adls

Source: http://stockcharts.com/h-sc/ui

ADLS trades above its 13-day moving average. This bullish sign is more significant because the moving average is beginning to also trend higher.

The MACD for ADLS currently indicates a bullish signal. The MACD is above the signal line, a 9-day moving average; but the MACD is, however, below the critical level of 0, which implies that the underlying moving averages had been trending lower. Overall, the chart is slightly bullish.

Comparative Analysis

The Company is traded with premium to peer group P/S multiples, mainly due to its potential and speculation of FDA approval of its lead drug candidate Cethromycin. The Company is in development stage.

Company Name

Ticker

Price per

Mrkt. Cap.

P/E

P/S

Jul-26-2009

symbol

Share, $

$ Mn

2009

2010

2009

2010

GlaxoSmithKline plc.

GSK

38.28

97,020

13.02

10.07

2.24

n/a

Johnson & Johnson

JNJ

61.51

169,490

13.52

12.55

2.7

n/a

Pfizer Inc.

PFE

16.48

111,210

14.77

7.39

2.36

n/a

Genzyme Corp.

GENZ

52.78

14,250

24.86

12.36

2.99

n/a

Gilead Sciences Inc.

GILD

48.43

43,860

20.36

16.76

7.32

n/a

Life Technologies

LIFE

43.40

7,580

n/a

14.37

3.65

n/a

Industry Median

18.07

n/a

9.77

n/a

Advanced Life Sciences

ADLS

0.65

29.89

n/a

n/a

37.72

n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARE PURCHASE ACTIVITY

Insider Purchases – Last 6 Months

Shares

Trans

Purchases

n/a

0

Sales

n/a

0

Net Shares Purchased (Sold)

n/a

0

Total Insider Shares Held

12.73M

n/a

% Net Shares Purchased (Sold)

0.00%

n/a

Net Institutional Purchases – Prior Qtr to Latest Qtr

Shares

Net Shares Purchased (Sold)

(4,641,660)

% Change in Institutional Shares Held

1,1131.1%

Data provided by Thomson Financial

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