Strategic Review Results in Special Charges
FREMONT, Calif., July 26 /PRNewswire-FirstCall/ -- Abgenix, Inc.
(Nasdaq: ABGX) today reported financial results for the second quarter ended
June 30, 2005. In light of the special charges resulting from the completion
of a strategic review and restructuring during the second quarter, the company
is presenting financial results under generally accepted accounting principles
(GAAP) and non-GAAP for the period. A reconciliation of the GAAP and non-GAAP
financial results is set forth at the end of this press release.
Financial Results
The company reported a net loss on a GAAP basis of $84.1 million, or $0.94
per share, for the second quarter of 2005, compared to $60.6 million, or $0.68
per share, for the same period in 2004. The financial results for the second
quarter of 2005 include restructuring charges of $14.7 million and a charge
for impairment of intangible assets of $25.0 million. For the second quarter
of 2004, financial results included a charge for impairment of intangible
assets of $17.2 million. Excluding charges for restructuring and impairments,
the loss on a non-GAAP basis for the second quarter of 2005 was $44.4 million,
or $0.49 per share, compared to $43.4 million, or $0.49 per share, for the
same period in 2004.
Net cash used in operating activities in the second quarter of 2005 was
$24.3 million, compared to $37.3 million in the same quarter of 2004. Cash,
cash equivalents and marketable securities totaled approximately $378.0
million as of June 30, 2005.
"During the second quarter, we concluded our strategic review of programs
and resources and now we are executing on the resulting strategy," said Bill
Ringo, president and chief executive officer of Abgenix. "Considerable
progress has been made, including the consolidation of our research activities
and commitment to retain and capitalize on our antibody manufacturing
capability. In addition, as we move forward with Amgen on the anticipated BLA
submission for panitumumab, our lead product candidate, we have decided to co-
promote panitumumab with an Abgenix sales organization in the U.S., data
timing and outcome dependent."
Revenues for the second quarter of 2005 were $3.4 million compared to $5.5
million for the same period in 2004. Revenues for the second quarter of 2005
included contract revenues, which primarily consisted of fees from technology
licensing agreements. Revenues for the second quarter of 2004 also included
manufacturing revenue for the production of an antibody candidate for an
Abgenix partner. The company's contract revenues generally vary from period
to period based on the success of research and development efforts by the
company's collaborators and licensees.
Operating expenses for the second quarter of 2005 were $86.8 million,
which include special charges related to restructuring and impairment of
intangible assets totaling $39.7 million. Operating expenses for the same
period in 2004 were $66.3 million, which included a special charge of $17.2
million for impairment of intangible assets. Restructuring charges of $14.7
million in the second quarter of 2005 relate to the recently announced
workforce reduction and consolidation of research facilities. Those charges
include $2.7 million in severance benefits and $12.0 million for the write-
down of lease obligations and leasehold improvements. The charge for
impairment of intangible assets of $25.0 million in the second quarter of 2005
consists primarily of technology and intellectual property associated with the
company's Selected Lymphocyte Antibody Method (SLAM) technology. Following
the strategic review of its technology portfolio during the second quarter of
2005 and the recent development of additional proprietary methods, the company
determined that the fair value of these intangible assets had fallen below
their carrying value. Excluding the special charges in both periods, overall
operating costs remained at approximately the same level in the second quarter
of 2005 compared to the second quarter of 2004.
Clinical Update
Abgenix is providing an update on a recently completed primary analysis of
a randomized Phase 2 study conducted by its partner, Amgen. That study
compared a combination of panitumumab and standard chemotherapy with standard
chemotherapy alone in the first line treatment of advanced non-small cell lung
cancer. When compared with chemotherapy alone, the panitumumab combination
did not improve time to disease progression, the study's primary efficacy
endpoint. The combination of panitumumab and standard chemotherapy appeared to
be generally well tolerated. Further analysis of the data is ongoing. Full
safety and efficacy results are expected to be presented at a medical meeting
later this year.
Second Quarter 2005 and Recent Company Highlights
* Data presentations at 41st Annual Meeting of the American Society of
Clinical Oncology (ASCO)
-- Results from an ongoing Phase 2 study demonstrated antitumor activity
of panitumumab as a single-agent treatment in patients with
metastatic colorectal cancer who have failed standard chemotherapy
-- Data from a Phase 1 open-label dose escalation trial of panitumumab
supporting the antibody's safety profile and possible flexibility of
dosing schedule
* Panitumumab development progress
-- Successful production of conformance lots of panitumumab in
preparation for a possible BLA submission
-- Achieved data cut-off in panitumumab pivotal trial measuring
progression free survival in the treatment of colorectal cancer
patients who have failed standard chemotherapy regimens
-- Initiated the Panitumumab Advanced Colorectal Cancer Evaluation
(PACCE) study evaluating panitumumab as a first line treatment of
metastatic colorectal cancer in combination with chemotherapy and
bevacizumab versus chemotherapy and bevacizumab alone
* Proprietary and partner pipeline activities
-- Initiation of patient screening in a multiple dose Phase 1 study of
ABX-PTH, Abgenix's proprietary fully human antibody for the potential
treatment of secondary hyperparathyroidism (SHPT)
-- Submission of an Investigational New Drug Application by Agensys,
Inc. for AGS-PSCA, a fully human monoclonal antibody developed with
XenoMouse(R) technology through a licensing arrangement with Abgenix
* Completion of strategic review
-- Optimization of research and pre-clinical programs, including
reduction of workforce and facility consolidation
-- Commitment to retain and support antibody manufacturing for
production of panitumumab and other products
-- Decision to pursue panitumumab co-promotion arrangement with Amgen,
contingent on pivotal data outcome
-- Enhanced leadership team, including the appointments of Michael
Gallo, Ph.D., vice president of research; Gregory Yedinak, vice
president of manufacturing and facilities; and Larry Green, Ph.D.,
senior research fellow
Conference call information
Abgenix will hold a conference call today at 4:30 pm ET, 1:30 pm PT to
discuss financial results. To participate in the teleconference, please dial
800-798-2884 fifteen minutes before the conference begins. International
callers should dial 617-614-6207. The pass code is 58063402. The call also
will be webcast live at http://www.abgenix.com. A replay of the call will be
available until August 9, 2005, on the company's website or by dialing 888-
286-8010. International callers should dial 617-801-6888. The replay
participant code is 30198294.
About Abgenix
Abgenix is a biopharmaceutical company focused on the discovery,
development and manufacturing of human therapeutic antibodies. The company's
antibody development platform includes a leading technology and state-of-the-
art manufacturing capabilities that enable the rapid generation, selection and
production of high affinity, fully human antibody product candidates to a
variety of disease targets. Abgenix leverages its leadership position in human
antibody technology to build a diversified product portfolio through its own
development efforts and the establishment of collaborations with multiple
pharmaceutical and biotechnology companies. For more information on Abgenix,
visit the company's website at http://www.abgenix.com.
Certain statements in this press release are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These include forward-looking
statements about Abgenix's technologies, product development activities,
clinical trials and clinical trial results, the potential submission of a
biologic license application for panitumumab, collaborative arrangements,
process sciences and manufacturing activities, projected financial and
operating results, and achievement of milestone or similar payments or other
revenues. All such statements are subject to a number of uncertainties that
could cause actual results to differ materially from the statements made,
including risks associated with conducting clinical trials, regulatory
approval processes and meeting requirements for regulatory approval, the
progress of research and product development programs, product manufacturing,
competitive products and services, capital requirements, the extent and
breadth of Abgenix's patent portfolio, and other factors set forth in
Abgenix's public filings with the Securities and Exchange Commission,
including the risks described in Abgenix's annual report on Form 10-K for the
year ended December 31, 2004. Abgenix is providing this information as of the
date of this press release and does not undertake any obligation to update any
forward-looking statements.
ABGENIX, INC.
CONSOLIDATED STATEMENT OF Three Months Ended Six Months Ended
OPERATIONS DATA June 30, June 30,
(in thousands except per 2005 2004 2005 2004
share data) (unaudited) (unaudited)
Revenues:
Contract revenue $3,403 $4,189 $6,061 $7,079
Contract manufacturing revenue -- 1,325 -- 1,325
Total revenues 3,403 5,514 6,061 8,404
Operating expenses:
Cost of goods manufactured -- 1,857 -- 1,857
Research and development 35,545 36,148 71,329 64,605
Manufacturing start-up costs 4,807 2,790 6,784 10,136
General and administrative 5,264 6,477 10,967 13,365
Amortization of intangible
assets 1,441 1,791 2,882 3,583
Impairment of intangible
assets 25,000 17,241 25,000 17,241
Restructuring and other 14,740 -- 14,740 --
Total operating expenses 86,797 66,304 131,702 110,787
Loss from operations (83,394) (60,790) (125,641) (102,383)
Other income (expenses):
Interest and other income 3,002 1,814 5,958 3,484
Interest expense (3,725) (1,647) (7,067) (3,290)
Total other income
(expenses) (723) 167 (1,109) 194
Net loss $(84,117) $(60,623)$(126,750)$(102,189)
Basic and diluted net loss
per share $(0.94) $(0.68) $(1.42) $(1.15)
Shares used in computing basic
and diluted net loss per share 89,658 88,673 89,456 88,490
ABGENIX, INC.
RECONCILIATION OF GAAP
NET LOSS Three Months Ended Six Months Ended
TO NON-GAAP NET LOSS (1) June 30, June 30,
(in thousands except 2005 2004 2005 2004
per share data) (unaudited) (unaudited)
GAAP net loss $(84,117) $(60,623)$(126,750)$(102,189)
Add: Impairment of intangible
assets 25,000 17,241 25,000 17,241
Restructuring and other 14,740 -- 14,740 --
Non-GAAP net loss $(44,377) $(43,382) $(87,010) $(84,948)
Basic and diluted non-GAAP
net loss per share $(0.49) $(0.49) $(0.97) $(0.96)
Shares used in computing basic
and diluted non-GAAP net
loss per share 89,658 88,673 89,456 88,490
(1) Non-GAAP amounts are intended to illustrate the Company's results of
operations excluding impairment of intangible assets and restructuring
charges. The non-GAAP results are not in accordance with, or an alternative
for, generally accepted accounting principles and may be different from non-
GAAP measures used by other companies.
ABGENIX, INC. June 30, Dec. 31,
CONSOLIDATED BALANCE SHEET DATA 2005 2004
(in thousands) (unaudited) *
Cash, cash equivalents and marketable securities $378,003 $416,329
Other current assets 12,176 19,187
Total current assets 390,179 435,516
Property and equipment, net 204,535 223,004
Long-term investments 16,287 23,300
Intangible assets, net 66,908 94,790
Deposits and other assets 35,073 36,108
Total assets $712,982 $812,718
Deferred revenue $8,900 $11,692
Accrued restructuring charges 3,637 --
Other current liabilities 19,701 23,257
Total current liabilities 32,238 34,949
Convertible notes 463,636 463,630
Deferred rent 7,354 7,519
Non-current portion of accrued restructuring charges 5,576 --
Other long-term liabilities 52,813 25,626
Redeemable convertible preferred stock 49,869 49,869
Stockholders' equity 101,496 231,125
Total liabilities and stockholders' equity $712,982 $812,718
* Derived from the December 31, 2004 audited financial statements.
SOURCE Abgenix, Inc.
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Related links:
http://www.abgenix.com
CONTACT:
Greg Mann, Director, Corporate Communications
& Investor Relations of Abgenix, Inc., +1-510-284-6566
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