BioTransplant Reports Second Quarter 2002 Results.Business Editors CHARLESTOWN, Mass.--(BUSINESS WIRE)--Aug. 19, 2002 BioTransplant Incorporated (Nasdaq: BTRN) today reported financial results for the second quarter and six-month period ended June 30, 2002. For the quarter ended June 30, 2002, the Company reported a net loss of $24.08 million, or $1.08 per share, compared to a net loss of $25.56 million, or $1.76 per share, for the same period in 2001. Weighted average shares outstanding for the quarters ended June 30, 2002 and 2001 were approximately 22.21 million and 14.50 million, respectively. The net loss for the second quarter of 2002 includes a loss from impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of $17.96 million related to the goodwill and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. acquired by BioTransplant in its acquisition of Eligix, Inc. in 2001. Management has concluded that these non-cash assets incurred a decrease in value because sales of the Eligix(TM) HDM HDM - SPECIAL Cell Separation Systems have been significantly below expectations and because the Company has recently undergone two reductions in force. "This impairment charge represents an adjustment to the goodwill and intangible assets associated with the Eligix(TM) acquisition," commented Donald B. Hawthorne, President and Chief Executive Officer of BioTransplant. "We believe both cash expenses, as reduced on July 29, and these non-cash assets, as reduced by this charge, are now consistent with current product revenue expectations." Revenues for the second quarter of 2002 totaled $0.39 million, compared to $0 in revenue reported the same quarter last year. The increase in revenues was due to two factors. First, the Company recognized $0.18 million in product revenue from sales of the Eligix(TM) HDM Cell Separation Systems, which were launched in Europe during the fourth quarter of 2001 by the Company's distribution partner, Gambro BCT BCT Brigade Combat Team BCT Basic Combat Training BCT Best Conventional Pollutant Control Technology (EPA) BCT Business Cards Tomorrow BCT Banque Centrale de Tunisie (Central Bank of Tunisia) . Second, $0.22 million in license and milestone revenue was recognized in the second quarter 2002 as the $6.0 million of upfront fees and milestone payments received under the Gambro exclusive distribution agreement are being recognized as revenue ratably over the life of the agreement. Research and development expenses for the three months ended June 30, 2002 were $4.36 million, compared to $2.91 million for the comparable period of 2001. Sales, general and administrative expenses for the three months ended June 30, 2002 were $1.06 million, compared to $0.88 million for the comparable period of 2001. The Company had cash, cash equivalents and short-term investments of $13.24 million as of June 30, 2002, as compared to $9.79 million as of March 31, 2002. Financial Guidance The Company expects that total revenues for the fiscal year ending December 31, 2002 will be approximately $1.50-1.60 million, of which Eligix(TM) product revenues are expected to be between $0.70-0.80 million. Eligix(TM) product revenues of approximately $0.30 million are expected in the second half of 2002. The Company estimates that existing cash resources will last into the third quarter of 2003. The receipt of potential milestone payments could make cash resources last until fourth quarter 2003; however, there can be no assurance as to whether or when the Company will receive these potential milestone payments. Recent Highlights Appointment of New Chief Executive Officer. Donald B. Hawthorne was appointed by the Board of Directors to the position of President and Chief Executive Officer of the Company on July 19. Mr. Hawthorne brings 19 years of leadership experience in the healthcare industry to the Company. He succeeds Elliot Lebowitz, the Company's founding 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. , who will serve as Chairman of the Board until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 11 and remain as a Board member thereafter. New Strategic Focus and Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Plan. The Company announced a restructuring plan on July 29 intended to streamline the Company's operations around a new strategic focus. The plan includes the following initiatives: - Accelerating Eligix(TM) Product Sales: BioTransplant sales people, technical support, and clinical support personnel will spend a substantial amount of time working in Europe to enhance Gambro's sales effort. - Revamped AlloMune System Development Strategy: The Company revised its clinical development strategy for the AlloMune System and will now employ kits consisting of BioTransplant's proprietary antibody MEDI-507, also known as siplizumab, in combination with products that have already been approved in the United States. - Reduced Cash Burn Rate: The Company implemented a reduction in headcount of approximately 23%, which is expected to lower the cash burn rate by approximately 25%. The Company also announced that the restructuring would not affect its agreement with MedImmune or MedImmune's development efforts for MEDI-507. Common Stock Offering Yielding $9.7 Million in Net Proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to Company. In June, BioTransplant completed an offering of 4 million shares of its common stock at a price of $2.50 per share. Approval Granted to Market the Eligix(TM) CD8-SC Cell Separation System in Europe. BioTransplant announced on July 26 that it had received approval to market its third HDM Cell Separation System product in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . The Eligix(TM) CD8-SC Cell Separation System is intended for ex-vivo use for patients receiving allogeneic allogeneic /al·lo·ge·ne·ic/ (-je-ne´ik) 1. having cell types that are antigenically distinct. 2. in transplantation biology, denoting individuals (or tissues) that are of the same species but antigenically bone marrow bone marrow, soft tissue filling the spongy interiors of animal bones. Red marrow is the principal organ that forms blood cells in mammals, including humans (see blood). In children, the bones contain only red marrow. and peripheral stem cell transplantation peripheral stem cell transplantation Peripheral stem cell support Oncology A method of replacing hematopoietic cells–HCs destroyed by chemotherapy; stem cells in circulating blood are removed before treatment, then readministered treatment to help BM recovery for hematological hematological, hematologic pertaining to or emanating from blood cells. hematological tests total and differential white cell counts, hematocrit estimation, erythrocyte count. disorders. Conference Call BioTransplant management will host a conference call at 8:30 AM Eastern Time on Tuesday, August 20, 2002 to discuss these results. Senior management will host the call. The conference call may be accessed by dialing (800) 388-8975 for domestic callers and (973) 694-2225 for international callers. A replay of the conference call will be available from 10:00 AM Eastern Time on August 20, 2002 through August 23, 2002, and may be accessed by dialing (800) 428-6051 for domestic callers and (973) 709-2089 for international callers. The passcode is 256865. About BioTransplant BioTransplant Incorporated, headquartered in Charlestown, Massachusetts Charlestown is a part of the city of Boston, Massachusetts located on a peninsula north of Boston proper. , is developing a portfolio of products for application in a range of medical conditions See carpal tunnel syndrome, computer vision syndrome, dry eyes and deep vein thrombosis. , including treatment of cancer and autoimmune diseases Autoimmune diseases A group of diseases, like rheumatoid arthritis and systemic lupus erythematosus, in which immune cells turn on the body, attacking various tissues and organs. Mentioned in: Complement Deficiencies, Premature Menopause , organ and tissue transplantation transplantation /trans·plan·ta·tion/ (trans?plan-ta´shun) the grafting of tissues taken from the patient's own body or from another. , for which current therapies are inadequate. Siplizumab (MEDI-507), a lead product the Company exclusively licensed to MedImmune, is in Phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II for the treatment of psoriasis psoriasis (sôrī`əsĭs), occasionally acute but usually chronic and recurrent inflammation of the skin. The exact cause is unknown, but the disease appears to be an inherited, possibly autoimmune disorder that causes the . In addition, the Company is developing the AlloMune System, which is designed to treat a variety of hematologic malignancies hematologic malignancy Hematologic cancer Hematology Any CA of blood-forming tissues, BM, or lymph nodes–eg, leukemia and lymphoma , and its distribution partner Gambro BCT markets the Eligix(TM) family of cell separation products in Europe for use in bone marrow, stem cell stem cell In living organisms, an undifferentiated cell that can produce other cells that eventually make up specialized tissues and organs. There are two major types of stem cells, embryonic and adult. and donor leukocyte leukocyte (l  `kəsīt'): see blood. leukocyte or white blood cell or white corpuscle transplants Transplants are an American punk rock/rap rock supergroup. They formed in 1999 when Tim Armstrong of the band Rancid played his friend and roadie Rob Aston some beats he had made using Pro Tools and asked Rob if he would consider contributing lyrics. . This news release contains 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. about BioTransplant that involve risks and uncertainties, including, without limitation, statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's expected revenues (including product revenue) for 2002, the implementation of the Company's restructuring plan, the Company's receipt of certain milestone payments, the ability of the Company to accelerate Eligix(TM) product sales, the ability of the Company to revise its clinical development strategy for its AlloMune System, and the availability of cash. Such statements reflect management's current views and are based on certain assumptions. Actual results could differ materially from those currently anticipated as a result of a number of factors. Important factors that could cause future results to differ materially from such forward-looking statements include, but are not limited to: BioTransplant's ability to secure the additional funding required for its operations and research and development programs; BioTransplant's and its third party collaborators' ability to successfully discover, develop and commercialize its products, obtain and maintain required regulatory approvals in a timely fashion, and overcome other difficulties inherent in developing and commercializing 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. , therapeutic devices and therapeutic regimens; market acceptance and penetration of BioTransplant's Eligix(TM) HDM Cell Separation Systems in the European Union; BioTransplant's ability to obtain and enforce the patent protection required for its products; and BioTransplant's ability to maintain collaborations and distribution arrangements with third parties. For a detailed discussion of these and other factors, see the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Business -- Factors That May Affect Results" in BioTransplant's annual report on 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, 2001, as filed with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date of this news release. BioTransplant does not intend to update any of these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that occur after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
June 30,
-------------------------------
2002 2001
---- ----
Revenues $ 393 $ -
------------ ----------------
Expenses:
Cost of revenues 127 0
Research and development 4,359 2,906
Selling general and administrative 1,059 882
Amortization of intangibles 393 503
Stock compensation 592 1,350
In-process research and
development (IPRD) - 20,000
Loss from impairment 17,957 -
------------ ----------------
Total operating expenses 24,487 25,641
------------ ----------------
Interest income 41 112
Interest expense (30) (27)
------------ ----------------
Net Loss ($24,083) ($25,556)
=========== ================
Basic net loss
per common share ($1.08) ($1.76)
============ ================
Shares used in computing basic
net loss per common share 22,210 14,501
============ ===============
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Six Months Ended
June 30,
-----------------------------------
2002 2001
---- ----
Revenues $ 869 $ -
------------- ----------------
Expenses:
Cost of revenues 285 -
Research and development 8,559 4,891
Selling, general and administrative 2,230 1,364
Amortization of intangibles 786 503
Stock compensation 1,747 1,350
In-process research and
development (IPRD) - 20,000
Loss from impairment 17,957 -
-------------- ----------------
Total operating expenses 31,564 28,108
-------------- ----------------
Interest income 75 281
Interest expense (82) (42)
-------------- ----------------
Net Loss ($30,701) ($27,869)
============== ================
Basic net loss
per common share ($1.41) ($2.12)
============== ================
Shares used in computing basic
net loss per common share 21,751 13,154
============== ===============
SELECTED BALANCE SHEET INFORMATION
June 30, December 31,
2002 2001
------------- -------------
Cash, cash equivalents and investments $13,239 $14,245
Total assets 28,617 49,739
Stockholders' equity 19,530 38,879
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