Bio-Technology General Corp. Reports 2002 Second Quarter and Six-month Earnings Results.Business Editors & Health/Medical Writers BIOWIRE2K ISELIN, N.J.--(BW HealthWire)--Aug. 2, 2002 Bio-Technology General Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BTGC BTGC Bio-Technology General (stock symbol) BTGC Bukit Tinggi Golf Club (Malaysia) ) today announced earnings results for the three and six months ended June June: see month. 30, 2002. As previously reported, on May 8, 2002, BTG BTG BIT (Built-In Test) Target Generator BTG Bridging the Gap BTG British Technology Group BtG Betreuungsgesetz (Germany) BTG Biomass Technology Group BV BTG Begbies Traynor Group appointed KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen LLP LLP - Lower Layer Protocol as its auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , replacing Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see . Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing LLP. In July July: see month. 2002, KPMG made the following observations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and compensation costs in prior periods through March 31, 2002. Beginning in 1999, with the approval of Arthur Andersen, its auditors at the time, BTG capitalized the costs associated with establishing alternate manufacturing sources for its approved drug In the United States, the FDA approves drugs. Before a drug can be prescribed, it must undergo an extensive FDA approval process. This process involves first testing the drug on animals or in medical labs. , Oxandrin(R) and for a new Oxandrin tablet See digitizer tablet and tablet computer. TABLET - A query language. ["Human Factor Comparison of a Procedural and a Non-procedural Query Language", C. Welty et al, ACM Trans Database Sys 6(4):626-649 (Dec 1981)]. formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation . These costs consist of third party process work, testing, and materials totaling $3,118,000 in the period 1999 through 2001. For 2002, these costs are reflected in expenses for the six months ended June 30, 2002. KPMG has taken the position that the capitalized costs should have been expensed when incurred rather than capitalized. Based on discussions with KPMG, the Company has also determined that, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, Opinion No. 25, and Statement of Financial Accounting Standards No. 123 and related interpretations, modifications of the period of vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: and exercisability of certain stock option awards to certain employees made in connection with the termination of their employment should have resulted in the recognition of compensation expense. In its previously filed financial statements, the Company did not recognize compensation expense for such items. The Company estimates that the expense to be recognized totals $2.9 million during the years 1999 through 2001. No such compensation expenses are anticipated in 2002. The Company has decided to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its financial statements for these matters for the years 1999 through 2001. The Company plans to engage KPMG to perform the re-audits. As of July 31, 2002, Arthur Andersen is no longer available to conduct audits. On a restated, fully 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. basis, the unaudited EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for 1999, 2000 and 2001, including the effect of savings of income taxes related to the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. , is presently estimated to be the following:
----------------------------------------------------------------------
1999 (a)2000 2001
----------------------------------------------------------------------
As reported $ 0.26 $ 0.28 $ (0.53)
----------------------------------------------------------------------
Restated $ 0.24 $ 0.23 $ (0.56)
----------------------------------------------------------------------
Amount capitalized(b) $ 462 $ 1,598 $ 1,058
----------------------------------------------------------------------
Compensation expense(b) $ 305 $ 1,693 $ 930
----------------------------------------------------------------------
Amount capitalized and comp expense
as a percentage of total expenses 1.1 4.9 1.5
----------------------------------------------------------------------
(a) before effect of change in accounting principle which reduced EPS
by $0.14
(b) in thousands
These estimates have not been audited or reviewed. Although the Company is not presently aware of any matters that could give rise to changes to these estimates, it is possible that the re-audits may result in additional changes to the financial statements for 1999, 2000 and 2001. Comparison of three and six months ended June 30, 2002 with the same periods in 2001 Results for both 2001 and 2002 periods are unaudited and have not been reviewed, and results for the 2001 periods are presented on a restated basis, based on Company estimates. All earnings-per-share amounts in the text of this news release represent diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of as defined under Statement of Financial Accounting Standards No. 128, "Earnings per Share." 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 results for the three and six months ended June 30, 2001 exclude the effect of the amortization of negative goodwill resulting from the acquisition of Myelos, which reduced general and administrative expense by approximately $1.0 million. Pro forma results for the six months ended June 30, 2001 exclude the effect of the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of approximately $46.0 million of in-process research and development resulting from the acquisition of Myelos. Three months ended June 30, 2002 - The Company anticipates the introduction late this year of a new Oxandrin tablet that should reduce the number of tablets patients will need to take daily, thereby enhancing compliance and efficacy and positively impacting sales. - Results of an open label study of Oxandrin in involuntary weight loss in patients with chronic obstructive pulmonary disease have been accepted for publication by "Chest." - The Company continues to evaluate options and prepare for an anticipated launch of Oxandrin for cancer-related involuntary weight loss. - Initiation of a Phase II clinical safety and dose-ranging study of Prosaptide(TM) in HIV neuropathic pain is scheduled for later this year. Six months ended June 30, 2002 - The Company anticipates the introduction late this year of a new Oxandrin tablet that should reduce the number of tablets patients will need to take daily, thereby enhancing compliance and efficacy and positively impacting sales. - Results of an open label study of Oxandrin in involuntary weight loss in patients with chronic obstructive pulmonary disease have been accepted for publication by "Chest." - The Company continues to evaluate options and prepare for an anticipated launch of Oxandrin for cancer-related involuntary weight loss. - Initiation of a Phase II clinical safety and dose-ranging study of Prosaptide(TM) in HIV neuropathic pain is scheduled for later this year. Oxandrin In the three and six months ended June 30, 2002, Oxandrin prescriptions increased by 15% and 10%, respectively, over the comparable periods of 2001, reflecting success in BTG's sales efforts, supplemented by the Ross Ross , Sir Ronald 1857-1932. British physician. He won a 1902 Nobel Prize for proving that malaria is transmitted to humans by the bite of the mosquito. initiative in the long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. sector. Prescription growth from the first quarter to the second quarter of this year was 16%. BTG's Oxandrin prescriptions in April, May and June of this year each reached a new record high. The Ross long-term care prescriptions for the same months represented the three highest prescription months in their sector. Based on the latest available data, sales of Oxandrin from wholesalers to end users, a useful measure of demand for the product, increased 10% in the first five months of 2002 compared to the same period of 2001. In the three and six months ended June 30, 2002, sales of Oxandrin to Accredo (formerly Gentiva) were $12.6 million and $21.8 million, respectively. In the three and six months ended June 30, 2001, sales of Oxandrin to Accredo were $17.9 million and $34.6 million, respectively. However, in the three and six months ended June 30, 2001, Accredo's purchases of Oxandrin reflected the impact of wholesaler purchases from Accredo that were based on the wholesaler estimates of growth in end user demand for Oxandrin (following its launch by the Ross Products Division of Abbott Ab·bott , Berenice 1898-1991. American photographer known especially for her series of black-and-white portraits of New York City. Abbott, George 1887-1995. in the long-term-care setting), as well as purchases of Oxandrin early in 2001 by certain wholesalers in anticipation of a price increase. As a result, approximately 73% of BTG's Oxandrin sales for 2001 were realized in the first half of 2001, impacting sales, revenues and quarterly earnings throughout 2001, and resulting in a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. comparison between the three and six months ended June 30, 2002 and the corresponding 2001 periods. The Company believes that the encouraging growth in Oxandrin prescriptions in the past quarter and the growth in end user demand is a direct result of the initiatives implemented to stimulate Oxandrin prescription growth, which had flattened flat·ten v. flat·tened, flat·ten·ing, flat·tens v.tr. 1. To make flat or flatter. 2. To knock down; lay low: The boxer was flattened with one punch. in the latter part of 2001. These initiatives include a 20% increase in the size of the BTG field organization and stepping up call frequency. Additionally, Ross continued to implement measures to increase the call frequency of its field force. In commenting on the results, Sim (1) (Society for Information Management, Chicago, IL, www.simnet.org) Founded in 1968 as the Society for MIS, it is a membership organization made up of corporate and division heads of IT organizations. Fass, Chairman and Chief Executive Officer of the Company, stated: "Our previously noted objective to record quarter to quarter growth is being achieved. We are particularly encouraged by the 16% growth in Oxandrin prescriptions from the first to the second quarter of this year, which we believe is the result of our heightened investment in marketing and sales. We are also pleased with the 10% growth in end user sales of Oxandrin in the first five months of 2002 compared to the first five months of 2001. As we remain committed to doing whatever is necessary to more fully recognize the potential of Oxandrin and our other commercial products, we also continue to focus on advancing the development of our proprietary pipeline product opportunities." 2002 Earnings Guidance For the balance of 2002, the Company anticipates continued growth in product sales, revenues, and EPS by comparison with the first six months of this year. Growth in sales of Oxandrin is expected to be partially offset by a lower level of human growth hormone human growth hormone (HGH): see growth hormone. sales in 2002 as compared to 2001, despite an increasing market share in Japan, due in part to industry-wide pricing pressures in Japan by the Japanese Ministry of Health and Welfare The Ministry of Health and Welfare is a branch of the government of South Korea. External links
• • , as well as the delay in Teva's launch of human growth hormone in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . BTG's revenues from Delatestryl sales in the first six months of 2002 equaled those of full year 2001 and are expected to exceed them in 2002. Royalty revenues may fall below their 2001 level due to generic competition for Mircette Mircette™ Gynecology An OC that contains desogestrel/ethinyl estradiol and ethinyl estradiol. See Oral contraceptive. (R). As previously announced, the Company projects increases in expenses in 2002 compared to 2001 due to incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. investment in marketing and sales and research and development activities. There will be no material impact on 2002 EPS related to the expensing of previously capitalized Oxandrin alternate manufacturing sources project or compensation costs. However, based on the accounting treatment of development costs associated with certain third-party manufacturing projects, which in the future will be expensed as incurred rather than capitalized, the Company anticipates additional development expense in 2002. As well, the delay in the introduction of Tev-Tropin due the injunction injunction, in law, order of a court directing a party to perform a certain act or to refrain from an act or acts. The injunction, which developed as the main remedy in equity, is used especially where money damages would not satisfy a plaintiff's claim, or to and the planned introduction of a new Oxandrin tablet later this year than previously anticipated, will have an impact on anticipated revenues in 2002. Based on these factors, and taking into account the two-cent effect of the recognition of losses on investments in the first six months of 2002, the Company's EPS for 2002 is currently projected to be in the range of fifteen to twenty cents. Second Quarter 2002 Events - The Company anticipates the introduction late this year of a new Oxandrin tablet that should reduce the number of tablets patients will need to take daily, thereby enhancing compliance and efficacy and positively impacting sales. - Results of an open label study of Oxandrin in involuntary weight loss in patients with chronic obstructive pulmonary disease have been accepted for publication by "Chest." - The Company continues to evaluate options and prepare for an anticipated launch of Oxandrin for cancer-related involuntary weight loss. - Initiation of a Phase II clinical safety and dose-ranging study of Prosaptide(TM) in HIV neuropathic pain is scheduled for later this year. Upcoming Events - The Company anticipates the introduction late this year of a new Oxandrin tablet that should reduce the number of tablets patients will need to take daily, thereby enhancing compliance and efficacy and positively impacting sales. - Results of an open label study of Oxandrin in involuntary weight loss in patients with chronic obstructive pulmonary disease have been accepted for publication by "Chest." - The Company continues to evaluate options and prepare for an anticipated launch of Oxandrin for cancer-related involuntary weight loss. - Initiation of a Phase II clinical safety and dose-ranging study of Prosaptide(TM) in HIV neuropathic pain is scheduled for later this year. Bio-Technology General Corp., a leading biopharmaceutical company, develops, manufactures and markets genetically engineered genetically engineered adjective Recombinant, see there and other products for human health care. BTG's products are marketed worldwide. Products sold in the United States are Oxandrin(R) (oxandrolone oxandrolone /ox·an·dro·lone/ (ok-san´dro-lon) an androgenic and anabolic steroid that is used in the treatment of catabolic or tissue-wasting diseases or states. , USP USP - unique sales point ), marketed by BTG and by the Ross Products Division of Abbott Laboratories Abbott Laboratories (NYSE: ABT) is a diversified pharmaceuticals and health care company. It has over 65,000 employees and operates in 130 countries. The corporate headquarters are in Abbott Park, Illinois, a neighborhood of North Chicago, Illinois. under a co-marketing agreement, Delatestryl(R) (testosterone enanthate testosterone enanthate Warning - Hazardous drug! Delatestryl Pharmacologic class: Hormone Therapeutic class: Androgenic and anabolic steroid, antineoplastic ), marketed by BTG, Mircette(R) (oral contraceptive oral contraceptive n. A pill, typically containing estrogen or progesterone, that prevents conception or pregnancy. Also called birth control pill. ), marketed by Organon or·ga·non or or·ga·num n. pl. or·ga·nons or or·ga·nums or or·ga·na 1. An organ. 2. A set of principles for use in scientific investigation. organon pl. organa [Gr.] organ. , Inc., and BioLon(TM) (sodium hyaluronate hyaluronate /hy·al·uro·nate/ (hi?ah-ldbobr´ro-nat) a salt, anion, or ester of hyaluronic acid. The sodium salt and a derivative of it are used as analgesics in the treatment of osteoarthritis of the knee. ), marketed by Akorn, Inc. Products sold internationally are Bio-Tropin(TM) (recombinant recombinant /re·com·bi·nant/ (re-kom´bi-nant) 1. the new entity (e.g., gene, protein, cell, individual) that results from genetic recombination. 2. pertaining or relating to such an entity. See also under DNA. human growth hormone), BioLon(TM) (sodium hyaluronate), Bio-Hep-B(TM) (hepatitis B vaccine hepatitis B vaccine n. Abbr. HB A vaccine prepared from the inactivated surface antigen of the hepatitis B virus and used to immunize against hepatitis B. ), and Silkis(R) (vitamin D vitamin D Any of a group of fat-soluble alcohols important in calcium metabolism in animals to form strong bones and teeth and prevent rickets and osteoporosis. It is formed by ultraviolet radiation (sunlight) of sterols (see steroid) present in the skin. derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. ). BTG's news releases and other information are available on the Company's website at www.btgc.com. BTG will be offering a live webcast discussion of the earnings and the Company's business for the quarter, hosted by Sim Fass, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , on Friday, August 2, 2002, at 10:00 a.m. ET. The webcast can be accessed at www.btgc.com, and will be archived through August 9, 2002. An audio replay will also be available from August 2, 2002 after 12:00 p.m. ET through August 9, 2002 and can be accessed by dialing 800-428-6051 (in the U.S.) or 973-709-2089 (outside the U.S.); passcode number is 254492. Statements in this news release concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "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. " as that term is defined under the Federal Securities Laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, patents owned by the Company and its competitors, and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and not reviewed)
(in thousands except per share data)
Three Months Ended June 30,
2002 2001(a) 2001(a),(b)
Historical Pro forma
----------------------------------------------------------------------
Revenues:
Product sales $ 23,205 $ 25,303 $ 25,303
Contract fees 289 290 290
Royalties 1,145 850 850
Other 336 187 187
------------------------------------------
Total revenues 24,975 26,630 26,630
------------------------------------------
Expenses:
Research and development (1) 8,155 8,304 8,304
Cost of product sales 3,489 3,819 3,819
General and administrative 3,566 2,641 3,674
Marketing and sales 4,816 4,557 4,557
Other 854 265 265
------------------------------------------
Total expenses 20,880 19,586 20,619
------------------------------------------
4,095 7,044 6,011
Investment (loss)
income, net (570) 1,577 1,577
------------------------------------------
Income before income taxes 3,525 8,621 7,588
Income taxes (2) 1,331 2,479 2,479
------------------------------------------
Net income $ 2,194 $ 6,142 $ 5,109
==========================================
Earning per common share:
Basic $ 0.04 $ 0.11 $ 0.09
==========================================
Diluted (3) $ 0.04 $ 0.10 $ 0.09
==========================================
Weighted average number of
common and common
equivalent shares:
Basic: 58,403 57,388 57,388
==========================================
Diluted: 58,498 58,899 58,899
==========================================
(1) As reported $ 7,185 $ 7,185
Adjustments 744 744
375 375
----------------------------
$ 8,304 $ 8,304
============================
(2) As reported $ 2,747 $ 2,747
Adjustment (268) (268)
----------------------------
$ 2,479 $ 2,479
============================
(3) As reported $ 0.12 $ 0.10
Adjustment (0.02) (0.01)
----------------------------
$ 0.10 $ 0.09
============================
(a) Investment income (loss) has been reclassified from revenue to
conform to 2002 presentation.
(b) Excludes the effect of the amortization of negative goodwill
resulting from the Myelos acquisition.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and not reviewed)
(in thousands except per share data)
Six Months Ended June 30,
2002 2001(a) 2001(a),(b)
Historical Pro forma
----------------------------------------------------------------------
Revenues:
Product sales $ 42,143 $ 55,190 $ 55,190
Contract fees 728 576 576
Royalties 2,161 1,693 1,693
Other 666 411 411
-------------------------------------------
Total revenues 45,698 57,870 57,870
-------------------------------------------
Expenses:
Research and development (1) 17,037 14,700 14,700
Cost of product sales 6,660 8,958 8,958
General and administrative 6,791 5,918 6,951
Marketing and sales 9,265 9,298 9,298
Other 1,544 928 928
Write-off of purchased
in-process research and
development acquired - 45,600 -
-------------------------------------------
Total expenses 41,297 85,402 40,835
-------------------------------------------
4,401 (27,532) 17,035
Investment income, net 365 4,073 4,073
-------------------------------------------
Income (loss) before
income taxes 4,766 (23,459) 21,108
Income taxes (2) 1,746 6,966 6,966
-------------------------------------------
Net income (loss) $ 3,020 $ (30,425) $ 14,142
===========================================
Earning (loss)
per common share:
Basic $ 0.05 $ (0.54) $ 0.25
===========================================
Diluted (3) $ 0.05 $ (0.54) $ 0.25
===========================================
Weighted average number of
common and common
equivalent shares:
Basic: 58,354 56,250 56,250
===========================================
Diluted: 58,573 56,250 57,375
===========================================
(1) As reported $ 13,115 $ 13,115
Adjustment 821 821
764 764
----------------------------
$ 14,700 $ 14,700
============================
(2) As reported $ 7,262 $ 7,262
Adjustment (296) (296)
----------------------------
$ 6,966 $ 6,966
============================
(3) As reported $ (0.52) $ 0.27
Adjustment (0.02) (0.02)
----------------------------
$ (0.54) $ 0.25
============================
(a) Investment income has been reclassified from revenue to conform to
2002 presentation.
(b) Excludes the effect of the amortization of negative goodwill and
the write-off of in-process research and development acquired,
resulting from the acquisition of Myelos.
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