-- TKT Exceeds Guidance on 2004 Revenue, Net Loss and Cash --
CAMBRIDGE, Mass., Feb. 23 /PRNewswire-FirstCall/ -- Transkaryotic
Therapies, Inc. (Nasdaq: TKTX) today announced its consolidated financial
results for the three and twelve months ended December 31, 2004.
2004 Financial Highlights at a Glance
* Replagal sales increased 35% compared to 2003
* Operating expenses increased 12% compared to 2003
* Net loss per share decreased 13% compared to 2003
* Cash and marketable securities amounted to $155 million at year-end
"In 2004 we achieved quarter-over-quarter sales growth with Replagal and
advanced our lead clinical programs at an impressive rate," said Michael
Astrue, President and CEO of TKT. "We expect 2005 will be another important
year to achieve this same level of execution as we aim to bring the first
approved therapy to Hunter syndrome patients, to expand our Replagal
franchise, and to partner Dynepo outside the United States."
Total revenues for the three and twelve months ended December 31, 2004
were approximately $23.0 million and approximately $78.1 million,
respectively. Sales of Replagal(TM) (agalsidase alfa), TKT's enzyme
replacement therapy for Fabry disease, were approximately $22.5 million for
the fourth quarter of 2004, which represents an increase of 45% over the same
period in 2003 and an increase of 15% over the $19.5 million recorded in the
third quarter of 2004. Compared to sales of approximately $57.2 million for
the twelve months ended December 31, 2003, Replagal sales totaled
approximately $77.4 million for the twelve months ended December 31, 2004,
exceeding TKT's forecasted range of $67 million to $77 million. A weaker
dollar compared with the Euro contributed about $2.4 million and $6.5 million
to the increase in revenues for the three months and year ended December 31,
2004, respectively.
Costs of goods sold in the fourth quarter of 2004 totaled approximately
$7.5 million, or 33% of product sales, compared to approximately $1.4 million,
or 9% of product sales, for the corresponding quarter in 2003. The increase
in cost of goods sold was attributed to increased unit sales as well as costs
incurred to improve the Replagal manufacturing process. For the twelve months
ended December 31, 2004, cost of goods sold was approximately $16.4 million,
or 21% of product sales, compared to approximately $12.5 million, or 22% of
product sales, for the twelve months ended December 31, 2003.
Research and development expenses totaled approximately $22.5 million in
the fourth quarter of 2004, compared to approximately $18.3 million for the
same period in 2003. For the year ended December 31, 2004, research and
development expenses totaled approximately $88.1 million, compared to
approximately $74.1 million for the same period in 2003. The increase in
research and development expenses was attributed primarily to clinical trial
and manufacturing costs associated with iduronate-2-sulfatase (I2S), enzyme
replacement therapy for Hunter syndrome, and Gene-Activated(R)
glucocerebrosidase (GA-GCB), enzyme replacement therapy for Gaucher disease,
as well as contract manufacturing development costs for Dynepo(TM) (epoeitin
delta), TKT's Gene-Activated(R) erythropoietin product for the treatment of
anemia associated with renal disease.
Selling, general and administrative (SG&A) expenses were approximately
$13.3 million in the fourth quarter of 2004, compared to approximately $10.7
million for the same period in 2003. For the year ended December 31, 2004,
SG&A was approximately $44.2 million, compared to approximately $36.6 million
for the year ended December 31, 2003. The increase in SG&A for the three and
twelve months ended December 31, 2004 was attributed primarily to higher sales
and marketing expenses associated with incentive compensation of the European
sales and marketing organization.
Net loss for the fourth quarter of 2004 was approximately $12.7 million,
or $0.36 per share, compared to a net loss of approximately $14.7 million, or
$0.43 per share, for the same period in 2003. For the twelve months ended
December 31, 2004, net loss was approximately $65.9 million, or $1.89 per
share, compared to a net loss of about $75.2 million, or $2.18 per share, for
the twelve months ended December 31, 2003. TKT expected its net loss for 2004
to be in the range of $70.0 million to $75.0 million. Included in the net
loss were foreign currency gains totaling approximately $7.7 million for the
three months and year ended December 31, 2004, associated with amounts due
from TKT Europe.
At year-end 2004, the company had cash, cash equivalents, and marketable
securities of approximately $155.0 million, exceeding TKT's guidance of $125.0
million to $140.0 million. Long-term debt totaled $94.0 million.
Selected 2004 Highlights and Upcoming Milestones
Replagal for Fabry Disease
* TKT received marketing authorization for Replagal in Canada in February
2004 and in Taiwan in April 2004, increasing to 34 the number of
countries where it is approved.
* TKT raised its estimate of the size of the worldwide Fabry market from
5,000 patients to 8,000 - 10,000 patients.
* TKT accelerated its Replagal sales targets and now expects to achieve
Replagal sales of $95 to $105 million in 2005 and sales of greater than
$100 million in 2006.
* Following the annual re-assessment of Replagal in Europe, the Committee
for Human Medicinal Products (CHMP) issued a positive opinion
reaffirming the favorable risk/benefit profile of Replagal.
I2S for Hunter Syndrome
* In March 2004, TKT completed enrollment of its ninety-six patient
pivotal trial evaluating I2S as a treatment for Hunter syndrome, making
it the largest trial ever conducted for a lysosomal storage disorder.
TKT expects to report top-line data in June 2005 and if the results are
positive, to file applications for regulatory approval in the second
half of 2005.
* In July 2004, the FDA granted Fast Track designation to TKT for I2S.
Fast Track regulations are designed to facilitate the development of
products to treat serious or life-threatening diseases where an unmet
medical need exists.
* In September 2004, the FDA's Office of Orphan Products Development
awarded TKT a $300,000 development grant for I2S, which will cover a
portion of the I2S pivotal trial costs.
* In 2004, TKT's second program for Hunter syndrome, designed to evaluate
direct infusion of enzyme into the central nervous system (CNS),
advanced into preclinical development. Research findings, presented at
the American Society of Human Genetics' 54th Annual Meeting, showed
that repeated injections of I2S in animal models resulted in the
accumulation of enzyme in various cells of the CNS. TKT intends to
file an IND for its I2S CNS program in the first half of 2006.
GA-GCB for Gaucher Disease
* In April 2004, TKT commenced an open-label Phase I/II clinical trial
evaluating GA-GCB for the treatment of Gaucher disease in twelve
patients. TKT expects the Phase I/II trial to conclude in the second
quarter of 2005 and TKT intends to report top-line data during the
second half of 2005.
* Preliminary safety data from the Phase I/II study indicates that
treatment was generally well-tolerated. These findings were presented
at the American Society of Human Genetics Annual Meeting in October
2004.
Dynepo for Anemia
* In March 2004, TKT regained exclusive rights to Dynepo outside the
United States. Subject to the establishment of manufacturing and
commercial capabilities in the European Union, TKT expects a commercial
partner to offer Dynepo for commercial sale in Europe during the first
half of 2006.
* In October 2004, TKT prevailed over Amgen in the U.K. Dynepo patent
litigation. The House of Lords upheld an earlier unanimous Court of
Appeal decision that activities relating to Dynepo do not infringe
Amgen's European patent and revoked the patent. TKT also appealed to
the Federal Circuit a U.S. District Court decision that activities
relating to Dynepo infringed certain claims of Amgen's U.S. patents.
Research Pipeline
* TKT initiated a new research program outside the lysosomal storage
disease area for familial hypercholesterolemia (FH). TKT expects to
complete research studies of TX-1501, its recombinant LDL receptor-
transferrin fusion protein (LDLR/TF), in 2006.
Business Activities
* In October 2004, TKT completed its acquisition of the 20% minority
interest in TKT Europe-5S for approximately $62.0 million in cash.
With this purchase, TKT now owns 100% of its European operations.
* In May 2004, TKT raised approximately $94.0 million through the sale of
senior convertible notes due in 2011.
* TKT expanded its management team across the organization with the
appointment and promotions of the following executives: Theresa
Heggie, General Manager, Europe; Tamara Joseph, Vice President and
General Counsel; Dr. Neil Kirby, Senior Vice President, Strategic
Product Development; Dr. Kip Martha, Senior Vice President and Chief
Medical Officer; Gregory D. Perry, Senior Vice President and Chief
Financial Officer; and Linda Pettingell, Senior Vice President, Human
Resources and Corporate Services.
Upcoming Presentations
* In the first quarter of 2005, TKT will present at the SG Cowen Health
Care Conference being held in Boston, Massachusetts, March 14-17, 2005
and the Lehman Brothers Healthcare Conference in Miami, Florida, March
30-April 1, 2005.
* In the second quarter of 2005, TKT will present at several health care
conferences including Deutsche Bank's 30th Annual Health Care
Conference in Baltimore, MD, May 2-4, 2005; The Rodman and Renshaw
Techvest 2nd Annual Global Health Care Conference in Paris, France, May
4-6, 2005; Banc of America's 2005 Health Care Conference in Las Vegas,
NV, May 17-19, 2005; and Pacific Growth's Life Sciences Growth
Conference in San Francisco, CA, June 6-8, 2005.
Conference Call and Webcast
TKT invites the public to participate on a conference call and live
webcast with investment analysts beginning today, February 23, 2005, at 10:00
a.m. Eastern Time to discuss its fourth quarter and full year 2004 financial
results and financial outlook for 2005 as well as an update on its Sarbanes
Oxley assessment of internal controls compliance efforts. To participate by
telephone, dial (913) 981-5533. A live audio webcast can be accessed on the
TKT web site at http://www.tktx.com within the Investor Information section.
A replay of the call will be available for two weeks beginning at 1:00 p.m.
Eastern Time on February 23, 2005, by dialing (719) 457-0820 and using the
access code: 6847230. A replay of the webcast will be archived on the TKT web
site under Events in the Investor Information section.
About TKT
Transkaryotic Therapies, Inc. is a biopharmaceutical company primarily
focused on researching, developing and commercializing treatments for rare
diseases caused by protein deficiencies. Within this focus, the company
markets Replagal(TM), an enzyme replacement therapy for Fabry disease, and is
developing treatments for Hunter syndrome and Gaucher disease. Outside its
focus on rare diseases, TKT intends to commercialize Dynepo(TM), its Gene-
Activated(R) erythropoietin product for anemia related to kidney disease, in
the European Union. TKT was founded in 1988 and is headquartered in
Cambridge, Massachusetts, with additional operations in Europe, Canada and
South America. Additional information about TKT is available on the company's
website at http://www.tktx.com.
Forward-looking Statements
This press release contains forward-looking statements including
statements regarding TKT's development of certain products, including
Replagal, I2S, GA-GCB and Dynepo, as well as statements containing the words
"believes," "anticipates," "plans," "expects," "estimates," "intends,"
"should," "could," "will," "may," and similar expressions. There are a number
of important factors that could cause the company's actual results to differ
materially from those indicated by such forward-looking statements, including:
whether any of the company's products will achieve the commercial success
anticipated by the company; the timing of submissions to and decisions by
regulatory authorities regarding clinical trials and marketing and other
applications; whether the FDA, the EMEA and equivalent regulatory authorities
will grant marketing approval for the company's products on a timeline
consistent with TKT's expectations, or at all; whether TKT will be able to
complete clinical trials of its products on a timely basis; whether the
results of clinical trials will be consistent with the results of earlier
clinical trials of the company's products and warrant submission of
applications for regulatory approval for such products to the FDA and
equivalent regulatory authorities; whether TKT and its third party
manufacturers will be able to complete the manufacturing development necessary
to satisfy regulatory requirements on a timeline consistent with TKT's
expectations or at all and to manufacture sufficient quantities of TKT's
products to satisfy both clinical trial requirements and commercial demand, or
to manufacture material at all, if approved; the availability and extent of
coverage from third party payors and the timing and receipt of reimbursement
approvals for the company's products; whether competing products will reduce
any market opportunity that may exist; whether TKT will be able to enter into
a collaboration agreement for Dynepo in Europe and whether such collaboration
will be successful; results of ongoing litigation and the risks of future
litigation; whether competitors will be able to limit access to markets in
which TKT is attempting to sell Dynepo, through legal maneuvering or
otherwise; the need for cash; and other factors set forth under the caption
"Certain Factors That May Affect Future Results" in the company's quarterly
report on Form 10-Q for the quarter ending September 30, 2004, which is on
file with the Securities and Exchange Commission and which factors are
incorporated herein by reference. While the company may elect to update
forward-looking statements at some point in the future, the company
specifically disclaims any obligation to do so, even if its expectations
change.
Gene-Activated(R) is a registered trademark and Replagal(TM) is a
trademark of Transkaryotic Therapies, Inc. Dynepo(TM) is a trademark of
Sanofi-Aventis SA.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Product sales $22,452 $15,487 $77,372 $57,225
License and research revenues 515 87 754 1,664
22,967 15,574 78,126 58,889
Operating expenses:
Cost of goods sold 7,460 1,439 16,367 12,484
Research and development 22,474 18,332 88,148 74,062
Selling, general and
administrative 13,299 10,694 44,192 36,557
Restructuring charges 940 1,137 3,970 12,461
Amortization of intangible
assets 509 - 509 -
Intellectual property license
expense - - - 1,350
44,682 31,602 153,186 136,914
Loss from operations before
minority interest (21,715) (16,028) (75,060) (78,025)
Minority interest in net
(income)/loss of consolidated
subsidiary - (108) 55 (413)
Loss from operations after
minority interest (21,715) (16,136) (75,005) (78,438)
Foreign currency exchange gain 7,702 - 7,685 -
Net interest income 1,308 876 1,877 2,704
Gain/(loss) on disposal of fixed
assets 2 44 (431) -
Other income - 500 - 500
Net loss $(12,703) $(14,716) $(65,874) $(75,234)
Basic and diluted net loss per
share $(0.36) $(0.43) $(1.89) $(2.18)
Shares used to compute basic and
diluted net loss per share 34,811 34,585 34,796 34,559
Condensed Consolidated Balance Sheets (unaudited)
December 31, December 31,
(In thousands) 2004 2003
Cash and marketable securities $155,214 $180,947
Other current assets 51,276 44,392
Property and equipment, net 60,992 61,908
Goodwill 39,038 -
Intangible assets, net 21,931 -
Other assets 4,899 1,922
Total assets $333,350 $289,169
Total current liabilities $36,735 $21,149
Long term liabilities 8,304 9,285
Long term debt 94,000 -
Minority interest - 413
Total stockholders' equity 194,311 258,322
Total liabilities and
stockholders' equity $333,350 $289,169
For More Information Contact:
Justine E. Koenigsberg
Senior Director, Corporate Communications
(617) 349-0271
Daniella M. Lutz
Corporate Communications Manager
(617) 349-0205
SOURCE Transkaryotic Therapies, Inc.
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CONTACT:
Justine E. Koenigsberg, Senior Director,
Corporate Communications, +1-617-349-0271, or Daniella M. Lutz,
Corporate Communications Manager, +1-617-349-0205 both of
Transkaryotic Therapies, Inc.
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