Raises Full-Year 2004 Revenue Guidance to $93-$95 Million From $88-$91 Million
FREMONT, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Protein Design Labs,
Inc. (PDL) (Nasdaq: PDLI) today reported a net loss of $13.6 million, or
$0.14 per basic and diluted share, for the three months ended September 30,
2004, compared with a net loss of $18.9 million, or $0.20 per basic and
diluted share, for the three months ended September 30, 2003. Excluding
certain non-cash charges, the non-GAAP net loss in the third quarter of 2004
would have been $12.6 million, or $0.13 per basic and diluted share, compared
with a non-GAAP net loss of $18.6 million, or $0.20 per basic and diluted
share in the 2003 third quarter.
As of September 30, 2004, PDL had cash, cash equivalents, marketable
securities and restricted investments totaling approximately $425.8 million,
compared with $505.0 million at December 31, 2003. The September 30, 2004
balances reflected approximately $80.7 million in capital expenditures made
during the first nine months of 2004, primarily related to budgeted, ongoing
construction of PDL's manufacturing plant at Brooklyn Park, Minnesota.
Total revenues in the 2004 third quarter were $19.8 million, an increase
of 112% over total revenues of $9.3 million in the same three months of 2003.
The increase included a 96% increase in royalties, which totaled $17.1 million
in the 2004 third quarter, compared with $8.8 million in the same three months
of 2003. License and other revenues of $2.7 million increased from
$0.6 million in the prior-year period as a result of entering into additional
collaboration agreements in the third quarter of 2004, including approximately
$1.2 million related to one month of revenue under the September 2004
agreement with Roche for the further development and commercialization of
Zenapax(R) (daclizumab) in asthma and related respiratory diseases, and
$1.0 million in revenue related to a patent rights agreement with Morphotek,
Inc.
Royalty revenues in the 2004 third 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 from Roche. Higher royalty revenues in the third quarter
of 2004 compared to the same period in 2003 primarily were due to significant
sales of Avastin and continued sales growth of Herceptin. Royalty revenues in
the 2003 third quarter did not include royalties on Avastin, Xolair and
RAPTIVA.
Total costs and expenses were $35.0 million in the 2004 third quarter,
compared with $28.8 million in the comparable three months of 2003. 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, restructuring
charges related to the closure of PDL's New Jersey facility in the second
quarter of 2004, as well as stock-based compensation charges, non-GAAP total
costs and expenses in the 2004 third quarter would have been $34.0 million
compared to $28.5 million for the comparable period in 2003.
Research and development expenses increased 25% to $27.3 million in the
2004 third quarter, compared with $21.8 million in the 2003 third quarter.
The increase in research and development expenses reflected additional
headcount and associated costs required to pursue research and clinical
development programs; contract manufacturing and direct scale-up and
manufacturing expense; increased research activities; and facility and
equipment-related costs. General and administrative expenses increased to
$7.7 million in the 2004 third quarter from $7.0 million in the 2003 third
quarter.
Total revenues during the first nine months of 2004 were $73.2 million,
compared with $53.1 million in the first nine months of 2003. Royalties in
the first nine months this year were $63.9 million, or 46% higher than the
$43.8 million of royalties reported in the first nine months of 2003.
Research and development expenses were $92.4 million in the first nine months
of 2004, compared with $58.3 million in the comparable nine months of 2003.
General and administrative expenses were $23.2 million and $19.5 million in
the first nine months of 2004 and 2003, respectively. PDL reported a net loss
of $38.7 million, or $0.41 per basic and diluted share, for the first nine
months of 2004, compared with a net loss of $57.0 million, or $0.62 per basic
and diluted share, in the first nine months of 2003, which included an
acquired in-process research and development charge of $37.8 million.
Excluding certain non-cash charges, the non-GAAP net loss in the first nine
months of 2004 would have been $35.7 million, or $0.38 per basic and diluted
share, compared with a non-GAAP net loss of $18.5 million, or $0.20 per basic
and diluted share in the comparable period of 2003.
Third Quarter 2004 Clinical Development Highlights
Nuvion(R) Antibody Product (visilizumab, humanized anti-CD3). Interim
results from the Phase I dose-ranging portion of a Phase I / II clinical trial
of visilizumab in patients with severe ulcerative colitis who have not
responded to treatment with intravenous (I.V.) steroids were reported in late
September 2004. The ongoing 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. Following the Phase I portion of the study, PDL plans to
treat up to an additional 20 patients in the Phase II portion.
The interim Phase I data assessed a total of 50 patients for safety across
the 5, 7.5, 10 and 12.5 micrograms/kg doses. In the 5, 7.5 and 10
micrograms/kg doses, 30 patients were also evaluable for efficacy at study day
30.
PDL reported that visilizumab was generally well tolerated and that at the
5, 7.5 and 10 micrograms/kg doses, 63% of the patients evaluated at day 30 had
improved mucosal scores to normal, or only mildly abnormal, findings.
In a completed, 32-patient Phase I study of two dose cohorts that was
reported in May 2004, a strong signal of activity 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 microgramsg/kg dose level, 19 of
24 patients responded to treatment and of these, 13 achieved remission.
PDL additionally announced in late September that the FDA had granted Fast
Track status to the investigation of visilizumab in patients with intravenous
steroid-refractory ulcerative colitis. Designation as a Fast Track product
indicates that the FDA will facilitate the development and expedite the review
of a new drug that is intended to treat a serious or life-threatening
condition, and that demonstrates the potential to address an unmet medical
need.
PDL currently plans to conduct an end-of-Phase I meeting with the FDA in
the first quarter of 2005.
Daclizumab (Zenapax(R), anti-CD25). PDL and Roche in September announced
a worldwide agreement to co-develop and commercialize Zenapax(R) (daclizumab)
for asthma and related respiratory diseases, based on recent positive Phase II
data in patients with moderate to severe asthma. Under terms of the
agreement, PDL has received a $17.5 million upfront payment and may receive up
to $187.5 million in milestones for successful further development of
daclizumab. Roche and PDL will globally co-develop daclizumab in asthma,
share development expenses and co-promote the product in the United States.
Outside the United States, PDL will receive royalties on net sales of the
product in asthma and related respiratory diseases.
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. There were
statistically significant treatment differences (p=0.05) observed for the
primary endpoint, percent change in FEV1 from baseline to 12 weeks (day 84).
Secondary clinical endpoints also supported these findings. Treatment with
daclizumab was generally well tolerated. PDL currently expects that the next
trial of daclizumab in asthma will be a small Phase I clinical trial intended
to gather additional experience with the PDL-manufactured subcutaneous
formulation of daclizumab in healthy volunteers, and should begin in the
fourth quarter of this year. The company expects that a subsequent Phase IIb
clinical trial in moderate-to-severe persistent asthma should begin by the
third quarter of 2005.
Preparatory work for a PDL study of daclizumab in multiple sclerosis (MS)
continues, and the company currently plans to initiate a Phase II study in MS
in the first quarter of 2005.
M200 (anti-alpha5beta1 integrin antibody). PDL in September presented
interim clinical data from a Phase I dose-escalation study of M200 for the
treatment of refractory solid tumors. M200 is an anti-angiogenic antibody
that targets the endothelium of tumor neovasculature.
Sixteen men and women between the ages of 29 and 81 (mean 58 years) with
various solid tumor types refractory to standard therapy have been enrolled in
this study. Tumor types included colorectal, melanoma, hepatic, pancreatic
and non-small cell lung cancers. Patients were enrolled into dose cohorts as
follows: one patient at 0.5 mg/kg, 2 patients at 1 mg/kg, 3 patients at
2.5 mg/kg, 3 patients at 5.0 mg/kg and 6 patients at 10 mg/kg. Each patient
received 5 doses of M200 on study days 1, 15, 22, 29 and 36. The study data
showed that adverse events were generally mild to moderate in intensity and
included fatigue, nausea, constipation, headache and anorexia. There were no
severe or serious adverse events that were dose limiting or considered by
investigators to be related to M200.
In addition, 10 of 15 evaluable patients had stable disease as their best
response, and five of six patients treated at the highest dose level,
10 mg/kg, achieved stable disease. Four patients with stable disease after
5 doses of M200 in the Phase I study continued treatment with M200 in a Phase
I extension study. Three of these patients maintained stable disease for
greater than 16 weeks over the two studies.
PDL plans to initiate over the next few quarters a series of open-label,
Phase II trials in renal, melanoma, pancreatic and non-small cell lung cancers
in both combination studies with chemotherapy as well as single-agent use.
F200 (anti-alpha5beta1 integrin antibody fragment). PDL in early October
reported preclinical data which demonstrated that F200 can inhibit retinal
neovascularization induced by multiple growth factors, such as VEGF and bFGF,
and supports previous data which demonstrated that F200 can block
neovascularization in an experimental CNV animal model. PDL currently expects
to enter F200 into clinical trials by year-end 2005 for the potential
treatment of age-related macular degeneration (AMD).
Outlook
The following statements are based on expectations as of November 1, 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.
As we previously indicated, the signing of our corporate collaboration
involving Zenapax in asthma with Hoffmann-La Roche (Roche) in the quarter as
well as the continued strong initial sales of Genentech's Avastin antibody
product will result in a significant favorable increase in financial guidance
for the year. As we noted on our September 16, 2004 conference call
describing in more detail the Roche collaboration, the upfront $17.5 million
payment received from Roche in September will be amortized over a period of
six years, and reimbursement of half of the research expenses related to the
U.S. asthma development program and manufacturing is being recognized as
revenue in the License and Other Income line of our Consolidated Statements of
Operations, effective September 1, 2004.
We are updating our financial guidance for 2004 compared to 2003 with
expectations compared to December 31, 2003 non-GAAP performance as follows:
(a) total revenues are expected to be in the range of $93 to $95 million, an
increase of approximately 39-42% compared to total revenues in 2003; (b)
interest income for the year to total approximately $10 million and interest
expense of approximately $5 million; (c) total costs and expenses of
approximately $149 to $154 million, an increase of approximately 35-40% in
2004 compared with total costs and expenses in 2003; and (d) capital
expenditures in the range of approximately $88 million to $93 million in 2004.
Approximately $20 million of capital expenditures related to completion and
validation of our Brooklyn Park facility are now anticipated to be delayed in
2004 and are therefore expected to be incurred in 2005. As a result, we
expect a net loss in 2004 in the range of approximately $52.0 million to
$57.0 million, or approximately $0.55 to $0.60 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 2004.
Finally, we anticipate having available cash, cash equivalents, marketable
securities and restricted investments of approximately $400 million at the end
of 2004. The change from previous end-of-year cash guidance is attributable
to the Roche transaction, to improved overall royalty revenues and to
significant cash arising from the Employee Stock Purchase Plan and stock
option exercises.
PDL will webcast a conference call live at 4:30 p.m. Eastern time today to
review its third 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 November 1. A replay of the
conference call will also be available by telephone from approximately
6:30 p.m. Eastern time on November 1 through 6:30 p.m. Eastern time on
November 4, 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 21212418.
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 the continuation of our asthma collaboration with Roche, 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 June 30, 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, the PDL logo and Nuvion are registered U.S.
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 Nine months ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
Royalties $17,131 $8,758 $63,872 $43,808
License and other 2,653 567 9,323 9,265
Total revenues 19,784 9,325 73,195 53,073
Costs and expenses:
Research and development 27,326 21,812 92,364 58,323
General and administrative 7,664 6,963 23,182 19,465
Acquired in-process research and
development -- -- -- 37,834
Total costs and expenses 34,990 28,775 115,546 115,622
Operating loss (15,206) (19,450) (42,351) (62,549)
Interest and other income, net 2,822 4,291 7,689 13,151
Interest expense (1,193) (3,705) (3,929) (7,346)
Impairment loss on investment -- -- -- (150)
Loss before income taxes (13,577) (18,864) (38,591) (56,894)
Provision for income taxes 12 11 68 60
Net loss $(13,589) $(18,875) $(38,659) $(56,954)
Net loss per basic and diluted
share: $(0.14) $(0.20) $(0.41) $(0.62)
Shares used in computation of net
loss per basic and diluted share: 95,196 93,665 94,771 92,049
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
September 30, December 31,
2004 2003*
(In thousands) (unaudited)
Cash, cash equivalents, marketable
securities and restricted investments $425,797 $504,993
Total assets 727,780 742,030
Total stockholders' equity 423,717 448,331
* 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 September 30,
2004
GAAP Adjustment Non-GAAP
Revenues:
Royalties $17,131 $17,131
License and other 2,653 2,653
Total revenues 19,784 19,784
Costs and expenses:
Research and development 27,326 (958)(1) 26,368
General and administrative 7,664 (14)(1) 7,650
Acquired in-process research and
development -- --
Total costs and expenses 34,990 (972) 34,018
Operating loss (15,206) 972 (14,234)
Interest and other income, net 2,822 2,822
Interest expense (1,193) (1,193)
Impairment loss on investment -- --
Loss before income taxes (13,577) 972 (12,605)
Provision for income taxes 12 12
Net loss $(13,589) $972 $(12,617)
Net loss per basic and diluted share: $(0.14) $(0.13)
Shares used in computation of net
loss per basic and diluted share: 95,196 95,196
(In thousands, except per share data )
Three months ended September 30,
2003
GAAP Adjustment Non-GAAP
Revenues:
Royalties $8,758 $8,758
License and other 567 567
Total revenues 9,325 9,325
Costs and expenses:
Research and development 21,812 (217)(2) 21,595
General and administrative 6,963 (14)(2) 6,949
Acquired in-process research and
development -- --
Total costs and expenses 28,775 (231) 28,544
Operating loss (19,450) 231 (19,219)
Interest and other income, net 4,291 4,291
Interest expense (3,705) (3,705)
Impairment loss on investment -- --
Loss before income taxes (18,864) 231 (18,633)
Provision for income taxes 11 11
Net loss $(18,875) $231 $(18,644)
Net loss per basic and diluted share: $(0.20) $(0.20)
Shares used in computation of net
loss per basic and diluted share: 93,665 93,665
(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.
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 )
Nine months ended September 30,
2004
GAAP Adjustment Non-GAAP
Revenues:
Royalties $63,872 $63,872
License and other 9,323 9,323
Total revenues 73,195 73,195
Costs and expenses:
Research and development 92,364 (2,954)(1) 89,410
General and administrative 23,182 (42)(1) 23,140
Acquired in-process research and
development -- --
Total costs and expenses 115,546 (2,996) 112,550
Operating loss (42,351) 2,996 (39,355)
Interest and other income, net 7,689 7,689
Interest expense (3,929) (3,929)
Impairment loss on investment -- --
Income (loss) before income taxes (38,591) 2,996 (35,595)
Provision for income taxes 68 68
Net loss $(38,659) $2,996 $(35,663)
Net loss per basic and diluted share: $(0.41) $(0.38)
Shares used in computation of net
loss per basic and diluted share: 94,771 94,771
(In thousands, except per share data )
Nine months ended September 30,
2003
GAAP Adjustment Non-GAAP
Revenues:
Royalties $43,808 $43,808
License and other 9,265 9,265
Total revenues 53,073 53,073
Costs and expenses:
Research and development 58,323 (579)(2) 57,744
General and administrative 19,465 (28)(2) 19,437
Acquired in-process research and
development 37,834 (37,834)(3) --
Total costs and expenses 115,622 (38,441) 77,181
Operating loss (62,549) 38,441 (24,108)
Interest and other income, net 13,151 8,861
Interest expense (7,346) (7,346)
Impairment loss on investment (150) (150)
Income (loss) before income taxes (56,894) 38,441 (18,453)
Provision for income taxes 60 60
Net loss $(56,954) $38,441 $(18,513)
Net loss per basic and diluted share: $(0.62) $(0.20)
Shares used in computation of net
loss per basic and diluted share: 92,049 92,049
(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.
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Related links:
http://www.pdl.com
CONTACT:
James R. Goff, Senior Director, Corporate
Communications, or Protein Design Labs, Inc., +1-510-574-1421, or
jgoff@pdl.com
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