Abraxis BioScience Reports Record First Quarter 2006 Adjusted Earnings Per Share, Excluding Primarily Stock Option Expense, of $0.41, an Increase of 21 Percent; Net Sales Increase 19 Percent to $143.8 Million.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- ABRAXANE(R) Continues to Take Market Share in the Metastatic Metastatic The term used to describe a secondary cancer, or one that has spread from one area of the body to another. Mentioned in: Coagulation Disorders metastatic pertaining to or of the nature of a metastasis. Breast Cancer Segment and Achieves Highest Unit Share to Date with 9.8 Percent of the Taxane Market Abraxis BioScience bioscience /bio·sci·ence/ (-si´ens) the study of biology wherein all the applicable sciences (physics, chemistry, etc.) are applied. bi·o·sci·ence n. See life science. , Inc. (Nasdaq:ABBI Advanced Breast Biopsy Instrument (ABBI) Uses a rotating circular knife and thin heated electrical wire to remove a large cylinder of abnormal breast tissue. Mentioned in: Fibrocystic Condition of the Breast ), an integrated, global biopharmaceutical company, today reported the financial results of its predecessor company, American Pharmaceutical Partners (APP See application. app - application program ), for the first quarter ended March 31, 2006. On April 18, 2006 subsequent to the end of the first quarter, APP completed the merger with its parent company, American BioScience, to form Abraxis BioScience. Accordingly, the financial results presented in this news release are for APP on a stand-alone basis. Adjusted earnings in the first quarter of 2006 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, excluding the impact of non-cash stock compensation expense and cash merger-related costs net of applicable income taxes, were $0.41 versus $0.34 per share in the 2005 first quarter on the same basis. On a reported basis, net income in the 2006 first quarter increased 21 percent to $27.5 million, or $0.37 per diluted share, versus $22.7 million, or $0.31 per diluted share, in the prior year period. For the first quarter of 2006, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 19 percent to $143.8 million compared with net sales of $120.7 million in the 2005 first quarter. Net sales of ABRAXANE for the first quarter of 2006 were $30.1 million. ABRAXANE was launched in the first quarter of 2005. ABRAXANE continues to grow the market and according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. NDC NDC National Drug Code NDC NATO Defense College NDC National Documentation Centre (National Hellenic Research Foundation, Athens, Greece) NDC National Dairy Council NDC National Democratic Congress , has achieved its highest share to date with a 9.8 percent share of the taxane market. Net sales of the injectables business were $113.7 million, an increase of 32 percent versus $85.9 million as compared with the first quarter of 2005. Abraxis leads the multi-source injectables industry in ANDA ANDA abbr. abbreviated new drug application approvals over the last five years and has already received eight approvals in the U.S. in 2006. "This has been a transforming quarter for Abraxis BioScience, a quarter that reaffirms our commitment to establishing a company with a unique business model that is poised to be a leading player in this competitive marketplace," said Patrick Soon-Shiong, M.D., chairman and chief executive officer of Abraxis BioScience. "We've moved ahead on all facets of our business. We have completed our merger, announced significant agreements with AstraZeneca that not only double the number of sales representatives selling ABRAXANE and increases the promotional investment for ABRAXANE but also significantly increase our current injectables business, and added to our manufacturing capabilities with the purchase from Pfizer of a European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and US compliant manufacturing complex in Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . All of these events continue to support our strategic plan to build Abraxis BioScience into a global company focused on critically ill patients." Gross margin for the 2006 first quarter was 55.7 percent, which includes an ABRAXANE profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of expense of $5.7 million as calculated on the pre-merger basis. This compares with gross margin for the first quarter of 2005 of 61.7 percent, which did not include any ABRAXANE profit sharing expense. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. related to ABRAXANE totaled $13.9 million and $13.3 million in the 2006 and 2005 first quarter, respectively. The company presents adjusted financial information, which excludes stock compensation and merger related expenses to facilitate presentation of its first quarter operations. Refer to the enclosed en·close also in·close tr.v. en·closed, en·clos·ing, en·clos·es 1. To surround on all sides; close in. 2. To fence in so as to prevent common use: enclosed the pasture. table for a reconciliation of adjusted net income to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income. Cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled $150.0 million at March 31, 2006. 2006 Financial Guidance The company's outlook for 2006 is as follows, including the positive impact of the recent AstraZeneca transaction: --Net sales and operating expenses of the core generic injectable in·ject·a·ble adj. Capable of being injected. Used of a drug. n. A drug or medicine that can be injected. business are expected to increase approximately 15 percent over 2005 levels; --The acquired AstraZeneca branded injectable business is expected to contribute an additional $75 million to the injectable business for the second half of 2006 with margins of approximately 60 percent; --Net sales of ABRAXANE are expected to be in excess of $200 million; --Overall gross margin is anticipated to be in the low 60 percent range relative to net sales; --Selling and marketing expenses related to ABRAXANE are expected to approximate $50 million for the full year 2006; --Operating expenses related to Abraxis Research division activities are expected to approximate $60 million; and --Incremental cash merger-related costs are expected to total $10 to 15 million. Additionally, as illustrated in the Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge provided in the Information Statement filed with the U.S. Securities and Exchange Commission on March 13, 2006, Abraxis BioScience 2006 operating results will be impacted by various merger-related accounting items. Conference Call Information and Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. On Friday, April 28, 2006, the company will host a conference call with interested parties beginning at 11:30 a.m. (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) to review the results of operations for the first quarter ended March 31, 2006. Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's revenues, margins, operating expenses, distribution arrangements and clinical or FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. developments, and any comments the company may make about its future in response to questions from participants on the conference call. The conference call may be heard by any interested party through a live audio Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the broadcast at www.abraxisbio.com and www.earnings.com. For those unable to listen to the live broadcast, a playback Playback could mean:
About ABRAXANE(R) The U.S. Food and Drug Administration approved ABRAXANE(R) for Injectable Suspension (paclitaxel paclitaxel /pac·li·tax·el/ (pak?li-tak´sel) an antineoplastic that promotes and stabilizes polymerization of microtubules, isolated from the Pacific yew tree (Taxus brevifolia); protein-bound particles <onlyinclude> This is a list of particles in particle physics, including currently known and hypothetical elementary particles, as well as the composite particles that can be built up from them. for injectable suspension) (albumin-bound) in January 2005 for the treatment of breast cancer after failure of combination chemotherapy chemotherapy (kē'mōthĕr`əpē), treatment of disease with chemicals or drugs. One chemotherapeutic approach is the development of selectively toxic substances, i.e. for metastatic disease or relapse within six months of adjuvant chemotherapy Adjuvant chemotherapy Treatment of the tumor with drugs after surgery to kill as many of the remaining cancer cells as possible. Mentioned in: Neuroblastoma . Prior therapy should have included an anthracycline unless clinically contraindicated. For the full prescribing information for ABRAXANE(R) please visit www.abraxane.com. About Abraxis BioScience, Inc. Abraxis BioScience, Inc. is an integrated global biopharmaceutical company dedicated to meeting the needs of critically ill patients. The company develops, manufactures and markets one of the broadest portfolios of injectable products and leverages revolutionary technology such as its nab(TM) platform to discover and deliver breakthrough therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. that transform the treatment of cancer and other life-threatening diseases. The first FDA approved product to use this nab platform, ABRAXANE(R), was launched in 2005 for the treatment of metastatic breast cancer. Abraxis trades on the Nasdaq National Market under the symbol ABBI. For more information about the company and its products, please visit www.abraxisbio.com. FORWARD-LOOKING STATEMENT The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . Forward-looking statements in this press release include statements regarding our expectations, beliefs, hopes, goals, intentions, initiatives or strategies, including statements regarding the benefits of the merger with American BioScience, the benefits of the co promotion and product acquisition agreements with AstraZeneca and guidance on operations in 2006. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward- looking statements. These factors include, without limitation, failure of the benefits of the merger to materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , difficulties in integrating the businesses and operations of the two companies, the adverse impact of production delays on the sales and marketing of the combined company's products, the costs associated with the ongoing launch of ABRAXANE and research and development associated with the nab(TM) technology platform, the continued market adoption and demand of ABRAXANE in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and its potential market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" outside of the U.S., difficulties or delays in developing, testing, obtaining regulatory approval of, and producing and marketing any other products, including those in Abraxis BioScience's pipeline, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, the ability to successfully manufacture products in a time-sensitive and cost effective manner, the acceptance and demand of new pharmaceutical products, the impact of patents and other proprietary rights held by competitors and other third parties. Additional relevant information concerning risks can be found in Abraxis BioScience's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005 and other documents it has filed with the Securities and Exchange Commission.
AMERICAN PHARMACEUTICAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------------
(unaudited, in thousands, except per share amounts)
Three months ended March 31,
-----------------------------
2006 2005 % Change
--------- --------- ---------
Net sales $143,754 $120,681 19%
Cost of sales 63,655 46,219 38%
--------- ---------
Gross profit 80,099 74,462 8%
--------- ---------
Percent to sales 55.7% 61.7%
Operating expenses:
Research and development 6,890 5,926
Selling, general and administrative 32,589 32,828
Other (476) (539)
--------- ---------
Total operating expenses 39,003 38,215 2%
--------- ---------
Percent to sales 27.1% 31.7%
Income from operations 41,096 36,247 13%
Percent to sales 28.6% 30.0%
Other income, net 1,284 600
Income before income taxes 42,380 36,847 15%
Income tax expense 14,833 14,002
--------- ---------
Net income $27,547 $22,845 21%
========= =========
Net income per share:
Basic $0.38 $0.32
========= =========
Diluted $0.37 $0.31
========= =========
Weighted - average common
shares outstanding:
Basic 72,606 70,894
========= =========
Diluted 73,902 73,919
========= =========
The composition of stock-based compensation
included above is as follows:
Cost of sales $728 $829
Research and development 155 176
Selling, general and administrative 1,849 2,104
--------- ---------
$2,732 $3,109
========= =========
Effective Rate 35.0% 38.0%
AMERICAN PHARMACEUTICAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
March 31, December
2006 31, 2005
----------- ---------
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $49,711 $26,739
Short-term investments 100,292 54,455
Accounts receivable, net 19,594 61,701
Inventory, net 179,821 175,282
Prepaid expenses and other 14,766 12,286
Deferred income taxes 15,758 16,850
----------- ---------
Total current assets 379,942 347,313
----------- ---------
Property, plant and equipment, net 143,845 141,941
Other assets 27,048 26,193
----------- ---------
Total assets $550,835 $515,447
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $22,436 $29,280
Accrued expenses 44,824 42,399
----------- ---------
Total current liabilities 67,260 71,679
Long-term deferred income tax liability 1,629 1,629
----------- ---------
Total liabilities 68,889 73,308
Stockholders' Equity
Common stock 80 79
Additional paid-in capital 279,490 269,127
Amounts due from American BioScience, Inc. (19,669) (21,096)
Deferred stock-based compensation - -
Retained earnings 276,221 248,674
Accumulated other comprehensive income 2,098 1,629
Less treasury stock, at cost (56,274) (56,274)
----------- ---------
Total stockholders' equity 481,946 442,139
----------- ---------
Total liabilities and stockholders' equity $550,835 $515,447
=========== =========
AMERICAN PHARMACEUTICAL PARTNERS, INC.
GAAP TO PRO FORMA NET INCOME RECONCILIATION
---------------------------------------------------
(unaudited, in thousands, except per share amounts)
Three months EPS Impact (d)
ended March 31,
----------------- --------------
Q1 Q1
2006 2005 2006 2005
-------- -------- ------ ------
Reported net income $27,547 $22,845 $0.37 $0.31
Stock compensation (FAS 123(R)) (a) 2,732 3,109 0.03 0.03
ABI merger related expenses (b) 1,156 - 0.01 -
Income tax benefit (c) (1,361) (1,191) - -
-------- -------- ------ ------
Pro forma net income $30,074 $24,763 $0.41 $0.34
======== ======== ====== ======
Pro forma net income per
diluted share $0.41 $0.34
======== ========
Weighted - average common
shares outstanding diluted 73,902 73,919
======== ========
(a) To eliminate non-cash costs associated with stock compensation
(b) To eliminate costs associated with the ABI Merger
(c) To reverse the tax benefit related stock compensation and merger
costs.
(d) EPS impact is net of tax
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