Revenue Guidance Revised Upward;
Anticipate 2004 Revenues of $88 to $91 Million
FREMONT, Calif., Aug. 3 /PRNewswire-FirstCall/ -- Protein Design Labs,
Inc. (PDL) (Nasdaq: PDLI) today reported a net loss of $12.5 million, or $0.13
per basic and diluted share, for the three months ended June 30, 2004,
compared with a net loss of $42.1 million, or $0.45 per basic and diluted
share, for the three months ended June 30, 2003. Excluding certain non-cash
charges, the non-GAAP net loss in the second quarter of 2004 would have been
$11.1 million, or $0.12 per basic and diluted share.
As of June 30, 2004, PDL had cash, cash equivalents, marketable securities
and restricted investments totaling approximately $439.0 million, compared
with $505.0 million at December 31, 2003. The June 30, 2004 balances
reflected approximately $58.6 million in capital expenditures made during the
first six months of 2004, primarily related to budgeted ongoing construction
of PDL's manufacturing plant at Brooklyn Park, Minnesota.
PDL reported total revenues of $25.8 million in the second quarter of
2004, an increase of 23% over total revenues of $21.0 million in the same
three months of 2003. The increase included a 38% increase in royalties,
which totaled $24.7 million in the 2004 second quarter, compared with $17.9
million in the same three months of 2003. License and other revenues decreased
from the prior-year period as a result of entering into fewer collaboration
agreements in the current period.
Royalty revenues in the 2004 second quarter were based on sales of seven
marketed antibody products licensed under PDL's antibody humanization patents.
The licensed products are Synagis(R) from MedImmune, Inc.; Herceptin(R),
Xolair(R), RAPTIVA(TM) and Avastin(TM) from Genentech, Inc.; Mylotarg(R) from
Wyeth; and Zenapax(R) from Roche. Higher royalty revenues in the second
quarter of 2004 compared to the same period in 2003 primarily were due to
continued significant sales growth of both Herceptin and Synagis. Royalty
revenues in the 2003 second quarter did not include royalties on Avastin,
Xolair and RAPTIVA.
Total costs and expenses were $39.5 million in the 2004 second quarter,
compared with $65.6 million in the comparable three months of 2003, which
included an acquired in-process research and development charge of $37.8
million associated with the April 2003 acquisition of Eos Biotechnology, Inc.
Excluding certain non-cash charges, which consist of the amortization of
intangible assets associated with the Eos acquisition and the re-acquisition
of rights to manufacture and market Zenapax in the fourth quarter of 2003,
stock-based compensation charges, and charges related to the closure of our
New Jersey operations, non-GAAP total costs and expenses in the 2004 second
quarter would have been $38.1 million compared to $27.4 million for the
comparable period in 2003.
Research and development expenses increased 56% to $32.0 million in the
2004 second quarter, compared with $20.5 million in the 2003 second quarter.
The increase in research and development expenses reflected the growth in the
company's clinical development pipeline; additional headcount required to
pursue research and clinical development programs; expanded and larger-scale
clinical trial activity; increased research activities; direct scale-up and
manufacturing expenses; facility and equipment-related costs and contract
manufacturing expense. General and administrative expenses increased to $7.5
million in the 2004 second quarter from $7.2 million in the 2003 second
quarter.
Total revenues during the first six months of 2004 were $53.4 million,
compared with $43.7 million in the first six months of 2003. Royalties in the
first six months this year were $46.7 million, or 33% higher than the $35.0
million of royalties reported in the first half of 2003. Research and
development expenses were $65.0 million in the first six months of 2004,
compared with $36.5 million in the comparable six months of 2003. General and
administrative expenses were $15.5 million and $12.5 million in the first six
months of 2004 and 2003, respectively. PDL reported a net loss of $25.1
million, or $0.27 per basic and diluted share, for the first six months of
2004, compared to a net loss of $38.1 million, or $0.42 per basic and diluted
share, in the first half of 2003 which included an acquired in-process
research and development charge of $37.8 million and amortization of
capitalized workforce associated with the Eos acquisition. Excluding certain
non-cash charges, the non-GAAP net loss in the first six months of 2004 would
have been $23.0 million, or $0.24 per basic and diluted share, compared to
break-even results in the comparable period in 2003.
Second Quarter 2004 Clinical Development Highlights
Nuvion(R) Antibody Product (visilizumab, humanized anti-CD3). Results
from the Phase I clinical trial of visilizumab in patients with severe
ulcerative colitis who have not responded to treatment with intravenous (I.V.)
steroids were reported in May 2004. A strong signal of activity in the Phase
I trial was observed in the first dose cohort, given at 15 micrograms/kg on
days 1 and 2, in which all eight patients achieved remission. A continued
strong signal of activity subsequently was observed in the second dose cohort
given at 10 micrograms/kg administered I.V. on days 1 and 2. At the 10
micrograms/kg dose level, 19 of 24 patients responded to treatment and of
these, 13 achieved remission.
Accrual continues into all dose levels in the Phase I/II trial evaluating
visilizumab in patients with severe ulcerative colitis refractory to
intravenous steroids. This trial is designed to explore four dose levels from
5 micrograms/kg to 12.5 micrograms/kg given I.V. on days 1 and 2 as a bolus
injection. Currently, 50 patients have been treated in this study. Patients
with undetectable Epstein-Barr Virus (EBV) levels are randomized into
treatment in one of the four dose levels. Patients with detectable EBV, but
counts less than 5,000 copies/ml have been enrolled in successive cohorts,
beginning with the lowest dose level. Currently patients with detectable EBV
are being enrolled in the 10 micrograms/kg dose level. Following the Phase I
portion of the study, PDL plans to treat up to an additional 20 patients in
the Phase II portion.
An abstract of this study has been accepted for presentation during the
12th United European Gastroenterology Week (UEGW) meeting in Prague, Czech
Republic, on September 29, 2004. The presentation will describe the safety
and activity of visilizumab observed in the Phase I portion of the trial.
Currently, we anticipate that the completed Phase I trial and Phase I
portion of the Phase I/II trial may serve as the basis for discussions with
regulatory agencies in the second half of 2004 regarding the design of
possible registrational trials.
Daclizumab (Zenapax(R), anti-CD25). In March 2004, PDL reported positive
results from the initial clinical study of daclizumab in patients with
chronic, persistent asthma whose disease is not well controlled with high
doses of inhaled corticosteroids. The primary endpoint, percent change in
FEV1 from baseline to 12 weeks (day 84), met statistical significance
(p=0.05). Secondary clinical endpoints also supported these findings. The
Phase II randomized, double-blind, placebo-controlled clinical trial was
conducted at 24 centers in the United States and treated a total of 114
patients. In the assessment of the primary endpoint, patients receiving
daclizumab experienced a mean increase in FEV1 of 4.4% of baseline, compared
to placebo patients who experienced a mean decrease of 1.5% (p=0.05).
Treatment with daclizumab was generally well tolerated. The overall frequency
and severity of adverse events did not differ between daclizumab and placebo
groups. PDL is actively reviewing further development options and currently
expects that the next trial of daclizumab in asthma will involve subcutaneous
administration. An update on further clinical plans is planned around the
beginning of the fourth quarter of 2004.
In May 2004, PDL reported results from a Phase II clinical study of
daclizumab in patients with moderate-to-severe ulcerative colitis. Daclizumab
did not meet primary or secondary endpoints in the trial, and we do not intend
to develop it further for this indication. Preparatory work for a PDL study
of daclizumab in multiple sclerosis continues.
M200 (anti-alpha5beta1 integrin antibody). PDL continues to enroll
patients in a Phase I, dose-escalation study of M200, its anti-alpha5beta1
integrin antibody. This anti-angiogenic antibody targets the endothelium of
tumor neovasculature and is being developed as a treatment for solid tumors.
Phase II trials are expected to begin late in 2004 in pancreatic cancer, non-
small cell lung cancer and melanoma in combination with chemotherapy. An
abstract of the Phase I study has been accepted as a poster presentation on
September 29, 2004, at the 16th EORTC-NCI-AACR symposium on Molecular Targets
and Cancer Therapeutics in Geneva, Switzerland.
F200 (anti-alpha5beta1 integrin antibody fragment). Our related
preclinical candidate antibody, F200, a single-chain antibody targeting
alpha5beta1 integrin, is progressing toward a late 2005 IND application, for
the potential treatment of age-related macular degeneration. In addition,
promising molecules continue to emerge from our antibody discovery efforts,
and we plan to present several of our newest programs as part of an overall
R&D discussion we expect to host in New York City in the fourth quarter of
2004.
Outlook
The following statements are based on expectations as of August 3, 2004.
These statements are forward-looking, and actual results may differ
materially. Except as expressly set forth below, these statements do not
include the potential impact of new collaborations, material licensing
arrangements or other strategic transactions.
Since our operating results are substantially dependent on royalty
revenues from our licensees and the timing of entry into new collaborative
arrangements, for 2004 we expect to provide guidance only for the year and not
on a quarterly basis as increases in our revenues will be dependent on the
continued success of licensed antibody products, including three recently
licensed Genentech antibody products, Xolair, RAPTIVA and Avastin.
We have updated our financial guidance for 2004 compared to 2003,
originally provided in February 2004, with expectations compared to December
31, 2003 non-GAAP performance as follows: (a) total revenues will increase by
approximately 32-37% (previously 17-22%) compared to total revenues in 2003,
inclusive of an approximate 30% annual increase in royalty revenues from 2003
levels; (b) interest income for the year to total approximately $9 million to
$11 million; (c) total costs and expenses increasing by approximately 37-42%
(previously 39-44%) in 2004 compared with total costs and expenses in 2003;
and capital expenditures in the range of approximately $100 million to $105
million in 2004 (previously $100 million to $110 million). Of these
anticipated capital expenditures, approximately $85 million to $90 million are
expected to be related to construction of our new manufacturing center at
Brooklyn Park, Minn. which will represent substantially all of the initially
contemplated capital investment in our new manufacturing center. As a result,
we expect a net loss in 2004 in the range of approximately $60 million to $65
million (previously $70 million to $75 million), or approximately $0.64 to
$0.69 (previously $0.74 to $0.79) per basic and diluted share. We continue to
expect total full-time employee headcount to be in the range of 650-675 at
year end.
Finally, we anticipate having available cash, cash equivalents, marketable
securities and restricted investments of approximately $360 million at the end
of 2004.
PDL will webcast a conference call live at 4:30 p.m. Eastern time today to
review its second quarter 2004 financial results. A link to the conference
call webcast will be available through the PDL website: http://www.pdl.com. Please
connect to this website at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be needed to hear the
webcast. The webcast will be archived at http://www.pdl.com starting at
approximately 6:30 p.m. Eastern time on August 3. A replay of the conference
call will also be available by telephone from approximately 6:30 p.m. Eastern
time on August 3 through 6:30 p.m. Eastern time on August 6, 2004. To access
the replay, dial 800-633-8284 from inside the United States and 402-977-9140
from outside the United States and enter conference ID number 21200376.
The foregoing contains forward-looking statements involving risks and
uncertainties and PDL's actual results may differ materially from those,
express or implied, in the forward-looking statements. Factors that may cause
differences between current expectations and actual results include, but are
not limited to, the following: Financial results for 2004 are unpredictable
and may fluctuate from quarter to quarter. PDL expenses, in principal part,
depend on the total headcount of the organization and the timing of expenses.
PDL revenues depend on the success and timing of sales of our licensees and
partners, including in particular the continued successful launch of Avastin
antibody product by Genentech as well as the seasonality of sales of Synagis
from MedImmune, Inc. In addition, quarterly revenues may be impacted by our
ability to maintain and increase our revenues from licensing, which revenues
depend on third parties entering into new patent licensing arrangements,
exercising rights under existing patent rights agreements, paying royalties
under existing patent licenses and the timing of the recognition of revenues
under any new and existing agreements. Our revenues and expenses would also
be affected by new collaborations, material patent licensing arrangements or
other strategic transactions.
Further, there can be no assurance that results from completed and ongoing
clinical studies, described above, will be successful or completed or
initiated on the anticipated schedules. Other factors that may cause our
actual results to differ materially from those, express or implied, in the
forward-looking statements in this press release are discussed in our Annual
Report on Form 10-K for the year ended December 31, 2003, in our quarterly
report on Form 10-Q for the period ended March 31, 2004, and in other filings
with the Securities and Exchange Commission. PDL expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in our
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statements are based.
Protein Design Labs is a leader in the development of humanized antibodies
to prevent or treat various disease conditions. PDL currently has antibodies
under development for autoimmune and inflammatory conditions, asthma and
cancer. PDL holds fundamental patents for its antibody humanization
technology. Further information on PDL is available at http://www.pdl.com.
NOTE: Protein Design Labs, Humanizing Science and Nuvion are registered
U.S. trademarks and the PDL logo and HuZAF are considered trademarks of
Protein Design Labs, Inc. Zenapax is a registered trademark of Roche.
Synagis is a registered U.S. trademark of MedImmune, Inc. Herceptin and
RAPTIVA are registered U.S. trademarks and Avastin is a trademark of
Genentech, Inc. Xolair is a trademark of Novartis AG. Mylotarg is a
registered U.S. trademark of Wyeth.
PROTEIN DESIGN LABS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except
per share data )
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
Revenues:
Royalties $24,731 $17,905 $46,741 $35,050
License and other 1,052 3,096 6,670 8,698
Total revenues 25,783 21,001 53,411 43,748
Costs and expenses:
Research and
development 32,009 20,538 65,038 36,511
General and
administrative 7,450 7,193 15,518 12,502
Acquired in-process
research and
development -- 37,834 -- 37,834
Total costs and
expenses 39,459 65,565 80,556 86,847
Operating loss (13,676) (44,564) (27,145) (43,099)
Interest and other
income, net 2,583 4,188 4,867 8,861
Interest expense (1,351) (1,755) (2,736) (3,641)
Impairment loss
on investment -- -- -- (150)
Loss before income
taxes (12,444) (42,131) (25,014) (38,029)
Provision for
income taxes 8 18 56 49
Net loss $(12,452) $(42,149) $(25,070) $(38,078)
Net loss per basic
and diluted share: $(0.13) $(0.45) $(0.27) $(0.42)
Shares used in
computation of net
loss per basic and
diluted share: 94,587 93,301 94,294 91,242
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
June 30, December 31,
2004 2003*
(In thousands) (unaudited)
Cash, cash equivalents,
marketable securities
and restricted
investments $439,013 $504,993
Total assets 721,588 742,030
Total stockholders'
equity 433,454 448,331
* Derived from the December 31, 2003 audited consolidated financial
statements
PROTEIN DESIGN LABS, INC.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
We use non-GAAP amounts that exclude certain non-cash charges, including
amounts related to the amortization of intangible assets and stock-based
compensation. Management believes that these non-GAAP measures enhance an
investor's overall understanding of our financial performance and future
prospects by reconciling more closely to the actual cash expenses of the
Company in its operations. Our management uses these non-GAAP financial
measures in evaluating the Company's operating performance and for budgeting
and planning purposes.
(In thousands, except per share data)
Three months ended June 30,
2004 2003
GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP
Revenues:
Royalties $24,731 $24,731 $17,905 $17,905
License and
other 1,052 1,052 3,096 3,096
Total revenues 25,783 25,783 21,001 21,001
Costs and expenses:
Research and
development 32,009 (1,377)(1) 30,632 20,538 (361)(2) 20,177
General and
administrative 7,450 (14)(1) 7,436 7,193 (14)(2) 7,179
Acquired
in-process
research and
development -- -- 37,834 (37,834)(3) --
Total costs and
expenses 39,459 (1,391) 38,068 65,565 (38,209) 27,356
Operating loss (13,676) 1,391 (12,285) (44,564) 38,209 (6,355)
Interest and
other income,
net 2,583 2,583 4,188 4,188
Interest
expense (1,351) (1,351) (1,755) (1,755)
Impairment loss
on investment -- -- -- --
Loss before
income taxes (12,444) 1,391 (11,053) (42,131) 38,209 (3,922)
Provision for
income taxes 8 8 18 18
Net loss $(12,452) $1,391 $(11,061) $(42,149) $38,209 $(3,940)
Net loss per
basic and
diluted share: $(0.13) $(0.12) $(0.45) $(0.04)
Shares used in
computation of
net loss per
basic and
diluted
share: 94,587 94,587 93,301 93,301
(1) To exclude (i) the ongoing, non-cash amortization of acquired net
intangible assets, including workforce, related to the Eos
acquisition, and core technology, related to the purchase of certain
patent rights from Roche, (ii) the restructuring charges related to
the closure of our New Jersey facility and (iii) stock-based
compensation charges related to stock options issued to non-
employees and modifications to certain employee stock options.
(2) To exclude (i) the ongoing, non-cash amortization of acquired net
intangible assets, including workforce, related to the Eos
acquisition, and (ii) stock-based compensation charges related to
stock options issued to non-employees.
(3) To exclude the non-cash charge of acquired in-process research and
development, related to the Eos acquisition.
PROTEIN DESIGN LABS, INC.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Uuaudited)
We use non-GAAP amounts that exclude certain non-cash charges, including
amounts related to the amortization of intangible assets and stock-based
compensation. Management believes that these non-GAAP measures enhance an
investor's overall understanding of our financial performance and future
prospects by reconciling more closely to the actual cash expenses of the
Company in its operations. Our management uses these non-GAAP financial
measures in evaluating the Company's operating performance and for budgeting
and planning purposes.
(In thousands, except per share data)
Six months ended June 30,
2004 2003
GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP
Revenues:
Royalties $46,741 $46,741 $35,050 $35,050
License and
other 6,670 6,670 8,698 8,698
Total revenues 53,411 53,411 43,748 43,748
Costs and expenses:
Research and
development 65,038 (1,995)(1) 63,043 36,511 (361)(2) 36,150
General and
administrative 15,518 (28)(1) 15,490 12,502 (14)(2) 12,488
Acquired
in-process
research and
development -- -- 37,834 (37,834)(3) --
Total costs
and expenses 80,556 (2,023) 78,533 86,847 (38,209) 48,638
Operating loss (27,145) 2,023 (25,122) (43,099) 38,209 (4,890)
Interest and
other income,
net 4,867 4,867 8,861 8,861
Interest
expense (2,736) (2,736) (3,641) (3,641)
Impairment loss
on investment -- -- (150) (150)
Income (loss)
before income
taxes (25,014) 2,023 (22,991) (38,029) 38,209 180
Provision for
income taxes 56 56 49 49
Net income
(loss) $(25,070) $2,023 $(23,047) $(38,078) $38,209 $131
Net income (loss)
per share:
Basic $(0.27) $(0.24) $(0.42) $0.00
Diluted $(0.27) $(0.24) $(0.42) $0.00
Shares used in
computation of
net income
(loss) per
share:
Basic 94,294 94,294 91,242 91,242
Diluted 94,294 94,294 91,242 92,605
(1) To exclude (i) the ongoing, non-cash amortization of acquired net
intangible assets, including workforce, related to the Eos
acquisition, and core technology, related to the purchase of certain
patent rights from Roche, (ii) the restructuring charges related to
the closure of our New Jersey facility and (iii) stock-based
compensation charges related to stock options issued to non-
employees and modifications to certain employee stock options.
(2) To exclude (i) the ongoing, non-cash amortization of acquired net
intangible assets, including workforce, related to the Eos
acquisition, and (ii) stock-based compensation charges related to
stock options issued to non-employees.
(3) To exclude the non-cash charge of acquired in-process research and
development, related to the Eos acquisition.
SOURCE Protein Design Labs, Inc.
 back to top
Related links:
http://www.pdl.com
CONTACT:
James R. Goff, Senior Director, Corporate
Communications of Protein Design Labs, Inc., +1-510-574-1421, or
jgoff@pdl.com
|
