Abraxis BioScience Reports an Increase in Third Quarter Revenue of 19 Percent to $241 Million versus $203 Million in Prior Year Period.
LOS ANGELES -- Abraxis BioScience, Inc. (NASDAQ:ABBI) today reported unaudited financial results for the third quarter ended September 30, 2007. Third quarter 2007 revenue increased 18.6 percent to $241.0 million, versus $203.1 million in the third quarter of 2006. Revenue for company-wide, hospital-based products in the third quarter of 2007 was $153.6 million, versus $150.1 million for the prior year quarter. For the third quarter of 2007, ABRAXANE([R]) (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) revenue increased 65.1 percent to $86.4 million versus $52.3 million in the prior year period. Company-wide gross profit for the third quarter of 2007 increased 22.6 percent to $144.4 million, or 59.9 percent of total revenue, as compared to $117.7 million, or 58.0 percent of total revenue, in the same quarter of 2006.
The company posted adjusted net income and adjusted net income per diluted share, which both exclude merger-related items, non-cash stock compensation expense, non-recurring and other items, as follows:
On a reported basis and calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the company reported a net loss of $8.4 million in the third quarter of 2007, or a loss of $0.05 per diluted share, versus net income of $13.6 million in the third quarter of 2006, or $0.08 per diluted share.
The attached table provides additional information regarding the basis for the adjusted net income per diluted share calculation, and the rationale for providing such information is included at the end of this release.
On July 2, 2007, the company announced that its board of directors had approved a plan to separate its proprietary business - Abraxis Oncology and Abraxis Research (the new Abraxis BioScience or "ABI") -- from its hospital-based business -- Abraxis Pharmaceutical Products (APP). The ABI segment focuses primarily on the company's internally developed proprietary product, ABRAXANE, and its proprietary pipeline. The APP segment, which will be known as APP Pharmaceuticals after the separation is complete, manufactures and markets one of the broadest portfolios of injectable drugs, including oncology, critical care and anti-infectives, and markets the company's anesthetic/analgesic products. The attached tables provide additional detail on the operating performance of the segments.
ABRAXANE revenue for the third quarter of 2007 increased 65.1 percent to $86.4 million, which included $77.3 million of net sales, versus revenue of $52.3 million, which included $43.2 million in net sales, in the same period of 2006.
Based upon September 2007 NDC and IMS data, ABRAXANE is still the fastest growing taxane in the market. According to IMS, ABRAXANE unit demand in the third quarter of 2007 reached its highest unit volume since launch with an increase of 57 percent versus the third quarter of 2006.
ABI segment gross margin for the third quarter of 2007 was 86.9 percent compared to 85.5 percent for the same period in 2006. For the third quarter of 2007, selling and marketing expenses were $35.7 million, or 40.6 percent of revenue, versus $30.0 million, or 56.1 percent of revenue, in the prior year period. Research and development expense totaled $27.1 million in the third quarter of 2007 compared with $12.3 million in the prior year period.
Additional ABI Segment Updates
After the close of the third quarter, Abraxis announced the positive opinion from the European Committee for Human Medicinal Products (CHMP) for the approval of ABRAXANE for the treatment of metastatic breast cancer in Europe. This was based on clinical trial data that demonstrated ABRAXANE had significant superiority in the clinical endpoints of response rate, progression free survival and survival when compared with Taxol([R]) in metastatic breast cancer.
Abraxis has begun the process of establishing the necessary infrastructure to commercialize ABRAXANE across Europe. The launch of ABRAXANE in Europe will initially focus on the United Kingdom, France, Spain, Italy and Germany. Abraxis will leverage its current commercial organization as well as its medical affairs and regulatory affairs teams and as a result, the estimated range of expenses in 2006 will be approximately $30-40 million.
Abraxis and its commercial partner in India, Biocon Limited, also announced the approval of ABRAXANE in India for the treatment of metastatic breast cancer by the country's Drug Controller General. Commercial introduction of ABRAXANE in the Indian market is expected in 2008 following the completion of the appropriate importation certifications.
ABRAXANE remains under active review in Australia, Russia, Korea and China by their respective regulatory agencies.
The company continues to move forward with the development of ABRAXANE. As previously announced, Abraxis has reached a definitive agreement with the FDA under the Special Protocol Assessment process on the Phase III trial design of the company's pivotal study with for the treatment of non-small cell lung cancer in the first-line setting in patients with stage IIIb and IV disease. The primary endpoint of the study is overall response rate, and enrollment will begin in the fourth quarter of 2007. Special Protocol Assessments have also been submitted to the FDA for the worldwide head-to-head Phase III registration trial comparing weekly ABRAXANE to every three week Taxotere([R]) (docetaxel) for the treatment of first-line metastatic breast cancer and the Phase III melanoma trial.
Hospital-based product revenue for the APP segment in the third quarter of 2007 increased 2.3 percent to $153.2 million versus $149.8 million in the same quarter of 2006. The increased revenues in the third quarter of 2007 included sales of $44.2 million from the anesthetic/analgesic products, which are grouped under critical care. APP revenue for 2007 is now expected to be in the lower end of the range of guidance previously provided, which would be an increase of approximately 9 percent over revenues in 2006.
Gross margin for the third quarter of 2007 was 47.6 percent, excluding amortization associated with the purchase of the anesthetic/analgesic products, compared to 54.7 percent in the same quarter of 2006. The decrease in gross margin was primarily a result of higher costs associated with extended plant maintenance at the Melrose Park facility, product mix and higher distribution-related costs. In the third quarter of 2007, selling and marketing expenses were $4.3 million, or 2.8 percent of revenue, versus $3.5 million, or 2.3 percent of revenue, in the prior year period.
Research and development expense totaled $10.6 million for the third quarter of 2007 compared to $7.9 million in the prior year period. The increase was primarily due to launch expenses associated with the Puerto Rico manufacturing facility. Commercial operations of the Puerto Rico facility in Barceloneta began in the fourth quarter of 2007 with the release of doxycycline subsequent to the positive conclusion of the FDA inspection of the facility. Two additional approvals are anticipated by the end of the year at this facility.
The FDA has concluded its inspection of the Melrose Park facility which resulted in a positive evaluation. The issues previously raised have been addressed to the satisfaction of the FDA, and the facility is now within compliance.
In the third quarter, APP launched Cefotetan Disodium for Injection. Cefotetan, which is the generic equivalent of AstraZeneca's Cefotetan([R]), has the longest half-life of any first or second generation cephalosporin and offers surgeons a convenient single-dose option for surgical prophylaxis and secondary infections. APP is the only supplier of this drug in the United States since AstraZeneca discontinued manufacturing.
APP also launched Doxorubicin Hydrochloride Injection, the generic equivalent of Adriamycin([R]), which is owned by Bedford Laboratories GmbH. Doxorubicin is commonly used in the treatment of a wide range of cancers.
In October 2007, the Company received tentative approval for Irinotecan Hydrochloride Injection and approvals for Epirubicin Hydrochloride Injection (in four dosage forms), liquid and lyophilized Fludarabine Phosphate. The combined branded market sales in 2006 for these drugs are in excess $750 million.
Irinotecan Hydrochloride Injection is the generic equivalent of Camptosar([R]) Injection manufactured by Pfizer Inc. As one of the only companies to receive a tentative approval, APP is securing contracts and expects to commence marketing of this product upon patent expiry in February 2008.
The lyophilized version of Fludarabine Phosphate is the generic equivalent of Fludara([R]), which is distributed by Bayer HealthCare Pharmaceuticals Inc., and the liquid version of fludarabine, is the equivalent of Fludarabine Phosphate for Injection, which is marketed by Teva Parenteral Medicines, Inc. APP expects to launch in the fourth quarter of 2007.
Four dosage forms of Epirubicin Hydrochloride Injection were approved by the FDA, two of which are unique codes and not currently available on the market. The remaining two codes are marketed by Pfizer Inc. as Ellence([R]) and one additional company as a generic. Epirubicin belongs to a class of drugs called anthracyclines and is the foundation of many chemotherapy regimens. APP expects to launch in the fourth quarter of 2007.
APP currently has over 60 product candidates in various stages of development, including 29 ANDAs (including tentative approvals) pending with the FDA.
General and Administrative Expenses
Company-wide, general and administrative expenses for the third quarter of 2007, excluding selling and marketing expenses, were $55.7 million, or 23.1 percent of revenue, versus $22.9 million, or 11.3 percent of revenue, for the same period in 2006. The increase was due primarily to non-recurring legal expenses, separation-related costs and the hiring of additional personnel in preparation for the separation.
Conference Call Information
On Thursday, November 8, 2007, the company will host a conference call with interested parties beginning at 8:30 a.m. PST/11:30 a.m. EST to review its results of operations for the third quarter of 2007 and the upcoming separation. The conference call may be heard by interested parties through a live audio Internet broadcast at www.abraxisbio.com and www.earnings.com. For those unable to listen to the live broadcast, a playback of the webcast will be available at both websites for approximately six months beginning shortly after the conclusion of the call.
Non-GAAP Financial Measures
Adjusted net income per diluted share is a non-GAAP financial measure comprised of reported diluted earnings per share excluding the impact of merger-related non-cash amortization of intangible assets, direct merger and transaction-related costs, non-cash stock compensation expense, minority interests, non-cash amortization of acquired intangible assets, and separation-related costs. The company believes that its presentation of non-GAAP financial measures provides useful supplementary information to investors in understanding the underlying operating performance of the company and facilitates additional analysis by investors. The company also uses non-GAAP financial measures internally for operating, budgeting and financial planning purposes. The non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance calculated in accordance with GAAP. A reconciliation of GAAP net income to adjusted net income for the three and nine months ending September 30, 2007 and September 30, 2006 is included with this press release.
The U.S. Food and Drug Administration approved ABRAXANE([R]) for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) in January 2005 for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. 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 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 Global Market under the symbol ABBI. For more information about the company and its products, please visit www.abraxisbio.com.
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. Forward-looking statements in this press release include statements regarding our expectations, beliefs, hopes, goals, intentions, initiatives or strategies, including statements regarding the proposed separation of the proprietary product business from the hospital-based business, the clinical development plan, and the timing and scope of clinical studies and trials, for ABRAXANE and the approval and launch of ABRAXANE in Europe. 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, risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention; the inability to recognize the benefits of the transactions contemplated by the separation of the businesses; the fact that results from pre-clinical studies may not be predictive of results to be obtained in other pre-clinical studies or future clinical trials; delays in commencement and completion of clinical studies or trials, including slower than anticipated patient enrollment and adverse events occurring during the clinical trials; decisions by regulatory authorities regarding whether and when to approve ABRAXANE or product candidates for various indications as well as their decisions regarding labeling and other matters that could affect the availability or commercial potential of ABRAXANE and other products and product candidates; unexpected safety, efficacy or manufacturing issues with respect to ABRAXANE or product candidates; the need for additional data or clinical studies for ABRAXANE or product candidates; regulatory developments (domestic or foreign) involving the company's manufacturing facilities; the market adoption and demand of ABRAXANE and other products, the costs associated with the ongoing launch of ABRAXANE; research and development associated with the nab technology platform; 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; and the impact of patents and other proprietary rights held by competitors and other third parties. Additional relevant information concerning risks can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2006 and in other documents it has filed with the Securities and Exchange Commission.
The information contained in this press release is as of the date of this release. Abraxis assumes no obligations to update any forward-looking statements contained in this press release as the result of new information or future events or developments.
Taxol([R]) is a registered trademark of Bristol Myers-Squibb Company.
Taxotere([R]) is a registered trademark of Sanofi Aventis.
Camptosar([R]) and Ellence are registered trademarks of Pfizer Inc.
Cefotan([R]) is a registered trademark of AstraZeneca, LLC.
Adriamycin([R]) is a registered trademark of Bedford Laboratories GmbH.
Fludara([R]) is a registered trademark of Bayer HealthCare Pharmaceuticals, Inc.
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|Article Type:||Financial report|
|Date:||Nov 8, 2007|
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