Total Revenues Increase 202% to $77.8 million
Company Now Expects Sustainable Positive Cash Flow by Q4 '05
FREMONT, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Protein Design Labs,
Inc. (PDL) (Nasdaq: PDLI) today reported financial results for the second
quarter of 2005. Financial highlights included:
-- Product revenues of $35.3 million reflect the first full quarter of
product sales following PDL's acquisition of ESP Pharma, Inc. and Retavase(R),
both in March 2005.
-- Royalty revenues increase 52% to $37.5 million from $24.7 million in
the second quarter of 2004.
-- GAAP net loss of $3.4 million compared with a net loss of $12.5 million
in the second quarter of 2004; non-GAAP net income of $9.2 million compared
with a non-GAAP net loss of $11.1 million in the 2004 second quarter.
-- Cash, cash equivalents, marketable securities and restricted
investments totaled approximately $191.0 million as of June 30, 2005, compared
with $397.1 million as of December 31, 2004. The June 30, 2005 cash balances
did not include any payments from the Biogen Idec alliance, announced August
2, 2005, which includes an upfront payment of $40 million and equity
investment of $100 million. Closing of the Biogen Idec transaction is
contingent upon antitrust review and other standard closing conditions.
Mark McDade, Chief Executive Officer, PDL, said, "Second quarter and first
half 2005 results reflect our initial performance in having ESP Pharma become
part of PDL, with product sales in-line with our internal expectations for our
first full commercial quarter. Meanwhile, our partners' success with
breakthrough antibody products such as Avastin(TM), Herceptin(R) and
Synagis(R) are driving the growth of PDL's royalty revenues. As a result of
this improved top-line performance in the first half, we have increased our
revenue guidance for 2005. More significantly, this strong revenue growth
from both products and royalties, combined with the economic impact of our new
alliance with Biogen Idec, should enable PDL to become cash flow positive on a
sustainable basis beginning in the fourth quarter of 2005, and therefore on a
full-year basis for 2006. This is nearly a full year ahead of our plan
following the acquisition of ESP Pharma this past March."
Total Operating Revenues:
Total operating revenues increased 202% to $77.8 million in the second
quarter of 2005 from $25.8 million in the second quarter of 2004.
PDL recognized net product sales revenues of $35.3 million in the second
quarter of 2005. Product revenues reflected the first full quarter of net
sales of Cardene(R) IV for the short-term treatment of hypertension when oral
therapy is not feasible or desirable; Retavase, used to dissolve coronary
blood clots and improve blood flow in heart attack patients; IV Busulfex(R), a
conditioning agent used in connection with bone marrow transplants in chronic
myelogenous leukemia; and four off-patent branded products. These products
are marketed by PDL's wholly-owned subsidiary, ESP Pharma, Inc., which PDL
acquired March 23, 2005.
Royalty revenues increased 52% to $37.5 million, compared with royalty
revenues of $24.7 million in the second quarter of 2004. PDL receives
royalties based on worldwide net sales of seven antibody products licensed
under PDL's antibody humanization patents: Avastin(TM), Herceptin(R),
Xolair(R) and Raptiva(R) from Genentech, Inc.; Synagis(R) from MedImmune,
Inc.; Mylotarg(R) from Wyeth and Zenapax(R), marketed by Roche.
Total Costs and Expenses:
Total costs and expenses were $80.3 million in the second quarter of 2005,
compared with $39.5 million in the second quarter of 2004. On a non-GAAP
basis, total costs and expenses in the 2005 second quarter were $67.7 million
compared to non-GAAP expenses of $38.1 million in the second quarter of 2004.
The cost of product sales was $20.1 million in the second quarter of 2005,
compared with none in the comparable period of 2004, reflecting the addition
of ESP Pharma in March 2005. Excluding non-cash amortization of product costs
associated with the purchase of ESP Pharma and Retavase, cost of product sales
were $8.2 million. Selling, general and administrative expenses increased to
$19.8 million, compared to $7.5 million in the second quarter of 2004,
primarily due to sales expenses associated with PDL's newly acquired sales and
marketing team.
Research and development expenses increased to $40.3 million in the second
quarter of 2005, compared with $32.0 million in the same three months of 2004.
The increase in research and development expenses reflects additional
headcount and associated costs required to advance research and clinical
development programs, contract manufacturing and direct scale-up and
manufacturing expense, and increased facility and equipment-related costs.
NOTE: Non-GAAP results for the three- and six-month periods exclude
certain non-cash charges, which consisted primarily of an acquired in-process
research and development charge of $79.4 million in the first quarter of 2005
related to the ESP Pharma acquisition, as well as the amortization of
intangible assets associated with the Eos Biotechnology, Inc. and ESP Pharma
and Retavase acquisitions and the re-acquisition of rights to manufacture and
market Zenapax(R) (daclizumab) in 2003, and stock-based compensation charges.
Reconciliations of GAAP results to non-GAAP results are included in the tables
accompanying this release.
Recent Corporate Developments:
-- On August 2, PDL and Biogen Idec announced a broad collaboration for
the joint development, manufacture and commercialization of three phase 2
antibody products. The agreement provides for shared development and
commercialization of daclizumab in multiple sclerosis and certain other
diseases, and for shared development and commercialization of M200
(volociximab) and HuZAF(TM) (fontolizumab) in all indications. PDL will
receive an upfront payment of $40.0 million and Biogen Idec will purchase $100
million of PDL common stock. If multiple products were developed successfully
in multiple indications and all milestones were achieved, PDL could receive
certain development and commercialization milestone payments totaling up to
$660 million.
-- In July, PDL acquired worldwide development and commercial rights for
ularitide in all indications.
-- In early July, PDL began a phase 1 multiple-dose study of the PDL-
produced subcutaneous formulation of daclizumab in healthy volunteers, on
target to support the planned initiation of a phase 2b study of daclizumab in
asthma by the first quarter of 2006.
-- In June, PDL announced a sublicense to Genentech, Inc. of development
and commercialization rights for antibody-drug conjugates directed against the
PR1 antigen, which is frequently differentially expressed in prostate cancer.
-- In May, PDL initiated enrollment in a 270-patient phase 2 clinical
trial of daclizumab in multiple sclerosis.
-- In April, PDL reported positive top-line phase 2 results for ularitide
in acute decompensated congestive heart failure; full results are expected to
be presented in September.
-- In the first half of 2005, PDL initiated two separate studies of
Nuvion(R) (visilizumab) in two distinct types of severe Crohn's disease.
Upcoming Events:
PDL noted that upcoming clinical milestones and related events include the
following:
-- Ularitide: Presentation of phase 2 data in acute decompensated heart
failure (ADHF) at the European Society of Cardiology congress, September 4,
and at the meeting of the Heart Failure Society of America, September 19; PDL
also intends to file an IND in the U.S. and initiate clinical development in
the U.S. this year.
-- Nuvion(R) (visilizumab): Begin phase 2/3 study in IV steroid-
refractory ulcerative colitis in late 2005 or early 2006.
-- Host an R&D update for the financial community in early October in New
York City.
2005 Forward-looking Guidance:
The following statements are based on expectations as of August 4, 2005.
These statements are forward-looking and do not include the potential impact
of new collaborations, material licensing arrangements or other strategic
transactions.
-- PDL now anticipates that total operating revenues for 2005 will be in
the range of approximately $255 to $271 million:
-- Net product sales for Cardene(R) IV, Retavase(R) and IV Busulfex(R)
are expected to total approximately $100 to $105 million for the approximately
nine-month period of sales following the close of the acquisition of ESP
Pharma. PDL anticipates compound annual growth rates of approximately 25% for
net product sales of this group of products for each year from 2006 through
2008. PDL continues to anticipate gross margins on a non-GAAP basis of
approximately 80% for this group of products over the 2005 through 2008
period. The estimate for net product sales of off-patent products is in a
range of $15 to $18 million.
-- Royalty revenues are expected to be in the range of approximately
$120 to $125 million, and license and other revenues are reduced to a range of
approximately $20 to $23 million due to the timing of expenses subject to
reimbursement under collaborations. PDL continues to believe that royalty
revenues for each year from 2006 through 2008 should grow at least 25% per
year on a compounded basis.
-- Non-GAAP expenses are anticipated to be as follows: cost of product
sales are expected to total approximately $23 million, research and
development expenses are anticipated to be in a range of $163 to $168 million,
a reduction of roughly $20 million from prior guidance. Selling, general and
administrative expenses for the full year 2005 are expected to be in a range
of $73 to $76 million.
-- For the full year 2005, PDL anticipates a GAAP net loss in the range of
approximately $1.12 to $1.20 per basic and diluted share, and on a non-GAAP
basis, financial results in a range from a net loss of approximately $0.05,
based on a weighted average of approximately 103 million shares outstanding,
to net income of approximately $0.02 per basic and diluted share, based on a
weighted average of approximately 130 million shares outstanding for the year.
PDL expects to be cash flow positive on a sustainable basis beginning in the
fourth quarter of 2005, and therefore on a full-year basis for 2006.
Quarterly results will vary due to some seasonality in the sales of royalty-
bearing products.
-- PDL now estimates that its year-end 2005 cash balances will be in
excess of approximately $350 million. This ending balance assumes the impact
of the Biogen Idec transaction, representing roughly $150 million in
additional year-end cash compared to prior guidance of May 2, 2005, $140
million of which is from the upfront payment and the equity purchase
components, with the remaining $10 million due to increased revenues and
operational efficiencies.
-- PDL expects that headcount at year-end 2005 will be in the range of 950
to 975. This figure includes the effect of increasing the original ESP Pharma
sales force from 66 representatives at the time of acquisition to the targeted
100 to 105 range at year-end. To date, PDL has added more than 30 sales
representatives and maintained a high level of retention.
Webcast:
PDL will webcast a conference call live at 4:30 p.m. Eastern time today to
review its financial results for the second quarter ended June 30, 2005, the
status of its clinical development programs and its forward-looking
information and guidance with respect to future results. Financial and
statistical information to be discussed in the call will be available on the
PDL website immediately prior to the commencement of the call. 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 approximately one hour after completion of the webcast. A replay of
the conference call will also be available by telephone from approximately
6:30 p.m. Eastern time on August 4, 2005 through 6:30 p.m. Eastern time on
August 12, 2005. 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 21254918.
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. The forward-looking
statements include our expectations regarding financial results, our
expectations that our agreement with Biogen Idec will close, and the timing of
clinical developments as well as other statements regarding our expectations.
Factors that may cause differences between current expectations and actual
results include, but are not limited to, the following: The successful
integration of ESP Pharma and Retavase as part of PDL; changes in our
development plans as we and Biogen Idec consider development plans and
alternatives; fluctuations in sales that may result from our integration of
newly acquired operations; from changes in the market due to alternative
treatments or other actions by competitors; and variability in expenses
particularly on a quarterly basis, due, in principal part, to total headcount
of the organization and the timing of expenses. In addition, PDL revenues
depend on the success and timing of sales of our licensees, including in
particular the continued success of Avastin(TM) antibody product by Genentech
as well as the seasonality of sales of Synagis(R) from MedImmune, Inc. In
addition, quarterly revenues may be impacted by our ability to maintain and
increase our revenues from collaborative arrangements such as our co-
development agreements with Biogen Idec and Roche. 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 that ongoing or
planned clinical studies will be 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 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.
About PDL:
PDL is a biopharmaceutical company focused on the research, development
and commercialization of novel therapies for inflammation and autoimmune
diseases, acute cardiac conditions and cancer. PDL markets several
biopharmaceutical products in the United States through its hospital sales
force and wholly-owned subsidiary, ESP Pharma, Inc. As a leader in the
development of humanized antibodies, PDL has licensed its patents to numerous
pharmaceutical and biotechnology companies, some of which are now paying
royalties on net sales of licensed products. Further information on PDL is
available at http://www.pdl.com.
NOTE: Protein Design Labs, the PDL logo and Nuvion are registered U.S.
trademarks and HuZAF is a trademark of Protein Design Labs, Inc. Zenapax is a
registered trademark of Roche. Cardene is a registered trademark of Roche
Palo Alto. Retavase and Busulfex are registered trademarks of ESP Pharma,
Inc., a wholly-owned subsidiary of PDL. Herceptin and Raptiva are registered
trademarks and Avastin is a trademark of Genentech, Inc. Xolair is a
trademark of Novartis AG. Synagis is a registered U.S. trademark of
MedImmune, Inc. 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,
2005 2004 2005 2004
Revenues:
Product sales,
net $35,345 $-- $36,293 $--
Royalties 37,528 24,731 70,692 46,741
License and other 4,888 1,052 9,591 6,670
Total revenues 77,761 25,783 116,576 53,411
Costs and expenses:
Costs of product
sales 20,135 -- 21,272 --
Research and
development 40,339 32,009 75,600 65,038
Selling, general
and
administrative 19,806 7,450 27,472 15,518
Acquired in-
process research
and development -- -- 79,417 --
Total costs and
expenses 80,280 39,459 203,761 80,556
Operating loss (2,519) (13,676) (87,185) (27,145)
Interest and
other income,
net 1,873 2,583 4,808 4,867
Interest expense (2,709) (1,351) (4,851) (2,736)
Loss before
income taxes (3,355) (12,444) (87,228) (25,014)
Provision for
income taxes 65 8 87 56
Net loss $(3,420) $(12,452) $(87,315) $(25,070)
Basic and diluted
net loss per share $(0.03) $(0.13) $(0.87) $(0.27)
Shares used in
computation of
basic and diluted
net loss per share 103,705 94,587 100,230 94,294
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
June 30, December 31,
2005 2004*
(In thousands) (unaudited)
Cash, cash equivalents, marketable
securities and restricted
investments $190,978 $397,080
Total assets 1,054,896 713,732
Total stockholders' equity 477,593 412,510
*Derived from the December 31, 2004 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,
2005
GAAP Adjustment Non-GAAP
Revenues:
Product Sales $35,345 $35,345
Royalties 37,528 37,528
License and other 4,888 4,888
Total revenues 77,761 77,761
Costs and expenses:
Cost of Product Sales 20,135 (11,905) 8,230
Research and development 40,339 (496) 39,843
Selling, general and administrative 19,806 (170) 19,636
Acquired in-process research and
development --
Total costs and expenses 80,280 (12,571) 67,709
Operating loss (2,519) 12,571 10,052
Interest and other income, net 1,873 1,873
Interest expense (2,709) (2,709)
Loss before income taxes (3,355) 12,571 9,216
Provision for income taxes 65 65
Net income (loss) $(3,420) $12,571 $9,151
Net income (loss) per share:
Basic $(0.03) $0.09
Diluted $(0.03) $0.09
Shares used in computation of net
income (loss) per share:
Basic 103,705 106,151
Diluted 103,705 103,705
2004
GAAP Adjustment Non-GAAP
Revenues:
Product Sales $-- $--
Royalties 24,731 24,731
License and other 1,052 1,052
Total revenues 25,783 25,783
Costs and expenses:
Cost of Product Sales -- --
Research and development 32,009 (1,377) 30,632
Selling, general and administrative 7,450 (14) 7,436
Acquired in-process research and
development --
Total costs and expenses 39,459 (1,391) 38,068
Operating loss (13,676) 1,391 (12,285)
Interest and other income, net 2,583 2,583
Interest expense (1,351) (1,351)
Loss before income taxes (12,444) 1,391 (11,053)
Provision for income taxes 8 8
Net income (loss) $(12,452) $1,391 $(11,061)
Net income (loss) per share:
Basic $(0.13) $(0.12)
Diluted $(0.13) $(0.12)
Shares used in computation of net
income (loss) per share:
Basic 94,587 94,587
Diluted 94,587 94,587
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 )
Six months ended June 30,
2005
GAAP Adjustment Non-GAAP
Revenues:
Product Sales $36,293 $36,293
Royalties 70,692 70,692
License and other 9,591 9,591
Total revenues 116,576 116,576
Costs and expenses:
Costs of product sales 21,272 (12,964) 8,308
Research and development 75,600 (1,167) 74,433
Selling, general and administrative 27,472 (310) 27,162
Acquired in-process research and
development 79,417 (79,417) --
Total costs and expenses 203,761 (93,858) 109,903
Operating loss (87,185) 93,858 6,673
Interest and other income, net 4,808 4,808
Interest expense (4,851) (4,851)
Income (loss) before income taxes (87,228) 93,858 6,630
Provision for income taxes 87 87
Net income (loss) $(87,315) $93,858 $6,543
Net income (loss) per share:
Basic $(0.87) $0.06
Diluted $(0.87) $0.07
Shares used in computation of net
income (loss) per share:
Basic 100,230 102,665
Diluted 100,230 100,230
2004
GAAP Adjustment Non-GAAP
Revenues:
Product Sales $-- $--
Royalties 46,741 46,741
License and other 6,670 6,670
Total revenues 53,411 53,411
Costs and expenses:
Costs of product sales -- --
Research and development 65,038 (1,995) 63,043
Selling, general and administrative 15,518 (28) 15,490
Acquired in-process research and
development -- --
Total costs and expenses 80,556 (2,023) 78,533
Operating loss (27,145) 2,023 (25,122)
Interest and other income, net 4,867 4,867
Interest expense (2,736) (2,736)
Income (loss) before income taxes (25,014) 2,023 (22,991)
Provision for income taxes 56 56
Net income (loss) $(25,070) $2,023 $(23,047)
Net income (loss) per share:
Basic $(0.27) $(0.24)
Diluted $(0.27) $(0.24)
Shares used in computation of net
income (loss) per share:
Basic 94,294 94,294
Diluted 94,294 94,294
SOURCE Protein Design Labs, Inc.
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Related links:
http://www.pdl.com
CONTACT:
Ami Knoefler, Senior Director, Corporate
Communications
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