MGI PHARMA Reports First Quarter 2006 Financial Results; First Quarter Highlighted by Execution of Pipeline Initiatives.MINNEAPOLIS -- MGI MGI Mouse Genome Informatics MGI Modular Gateway Interface MGI McKinsey Global Institute MGI Military Geographic Information MGI Marine Geological Institute MGI Policy on the Management of Government Information (Canada) PHARMA, INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . (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 :MOGN), an oncology- and acute care-focused biopharmaceutical company, today reported total revenue for first quarter 2006 of $78.2 million. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for the first quarter 2006 was $2.8 million, or $0.04 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. 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 net loss for the first quarter of 2006 was $1.0 million, or $0.01 per diluted share, as is described below under "Reconciliation of GAAP to Pro Forma Net Income (Loss)." At March 31, 2006, MGI PHARMA's cash and marketable debt investments totaled $109.5 million. "We executed on several important initiatives during recent months that advance our portfolio of product candidates," said Lonnie Moulder moul·der v. Chiefly British Variant of molder. moulder or US molder Verb to crumble or cause to crumble, as through decay: , President 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. of MGI PHARMA. "The submission of the NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any for Saforis and initiation of the Aquavan pivotal program were key milestones for MGI PHARMA that move us forward toward our objective of executing one product launch per year for the next three to four years. With the May 15 PDUFA PDUFA Prescription Drug User Fee Act of 1992 (USA) date for Dacogen just weeks away, we are focused on our pre-launch activities in support of a potential product launch." First Quarter Results Total revenues for the first quarter of 2006 were $78.2 million compared to $63.2 million in the first quarter of 2005. Product sales increased to $77.5 million in the first quarter of 2006 from $62.4 million in the first quarter of 2005. During the first quarter of 2006, U.S. sales of Aloxi(R) (palonosetron hydrochloride palonosetron hydrochloride Aloxi Pharmacologic class: Selective serotonin subtype 3 (5-HT3) receptor antagonist Therapeutic class: Antiemetic Pregnancy risk category B ) Injection totaled $63.3 million compared to $57.2 million in the first quarter of 2005. Sales of Gliadel(R) Wafer (polifeprosan 20 with carmustine implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. ) totaled $9.7 million for the first quarter of 2006 compared to $7.3 million for the first quarter of 2005, when this product was being marketed by Guilford Pharmaceuticals Inc.Total costs and expenses were $82.8 million in the first quarter of 2006 compared to $51.0 million in the first quarter of 2005. Selling, general and administrative expenses totaled $31.5 million in the first quarter of 2006 compared to $18.8 million in the same period in 2005, primarily due to the deployment and expansion of the acute care field organization, investment in the Aloxi brand, and increased administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . Research and development expenses in the first quarter of 2006 were $23.0 million, compared to $10.3 million in the first quarter of 2005. The year-over-year increase in baseline R&D expenses is primarily due to expenses related to our late stage clinical development programs for Dacogen(TM) (decitabine) for Injection, Aquavan(R) (fospropofol disodium) Injection and amolimogene (HPV HPV human papillomavirus. HPV abbr. human papilloma virus Human papilloma virus (HPV) E6 E7 plasmid plasmid Genetic element not contained within a chromosome. It occurs in many bacterial strains. Plasmids are circular DNA molecules that replicate independently of the bacterial chromosome. They are not essential for the bacterium but may give it a selective advantage. ). The Company reported a GAAP net loss of $2.8 million, or $0.04 per diluted share, in the 2006 first quarter compared to net income of $11.6 million, or $0.15 per diluted share, in the 2005 first quarter. As described below under "Reconciliation of GAAP to Pro Forma Income (Loss)," pro forma net loss for the 2006 first quarter was $1.0 million, or $0.01 per diluted share, compared to pro forma net income of $12.1 million, or $0.16 per diluted share, in the 2005 first quarter. Reconciliation of GAAP to Pro Forma Net Income (Loss): GAAP refers to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the U.S. MGI PHARMA's pro forma net income (loss) and earnings (loss) per diluted share exclude amortization of product acquisition 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 in-process research and development expenses, and license initiation and product candidate development milestone payments. We are reporting pro forma results in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP. The Company provides these pro forma numbers to facilitate a comparison of our business from period to period and to allow investors to analyze our business results. We encourage investors to carefully consider our results under GAAP, as well as our pro forma disclosures and the reconciliation between these presentations to more fully understand our business. Reconciliations between GAAP results and pro forma results are presented at the end of this news release. Recent Highlights --The scale up of the acute care sales team to approximately 75 associates is now complete. This team has been trained and is actively promoting Aloxi within the hospital market. The Company anticipates a three-fold increase in hospital-focused sales force activity in support of Aloxi and an impact on sales growth beginning in the second quarter of 2006. --A direct-to-consumer advertising direct-to-consumer advertising Drug industry The use of mass media–eg, TV, magazines, newspapers, to publicly promote drugs, medical devices or other products which, by law, require a prescription, which targets consumers, with the intent of having a Pt initiative for Aloxi remains on track to begin during the second quarter with a print ad and internet campaign. --Launch preparations continue for Dacogen, which has a Prescription Drug User Fee Act The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the new drug approval process. (PDUFA) goal date of May 15, 2006. MGI PHARMA expects to be prepared to commercialize this product within several weeks of receiving 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. approval. --A phase 3 pivotal trial of Dacogen in elderly patients with acute myeloid leukemia myeloid leukemia n. See myelogenous leukemia. (AML AML - A Manufacturing Language ) began during the first quarter of 2006. This trial is part of a broad clinical development program for Dacogen, which is also being evaluated in a phase 2 study of elderly patients with AML, a phase 2 trial of an alternate dosing regimen regimen /reg·i·men/ (rej´i-men) a strictly regulated scheme of diet, exercise, or other activity designed to achieve certain ends. reg·i·men n. 1. in patients with myelodysplastic syndromes Myelodysplastic Syndrome Definition Myelodysplastic syndrome (MDS) is a disease that is associated with decreased production of blood cells. Blood cells are produced in the bone marrow, and the blood cells of people with MDS do not mature normally. (MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there ), and a phase 3 EORTC-sponsored trial in patients with MDS. --Following analysis of data from a phase 2 dose-ranging study A dose-ranging study is a clinical trial where different doses of an agent (e.g. a drug) are tested against each other to establish which dose works best and/or is least harmful. Dose-ranging is usually a phase I or early phase II clinical trial. of Aquavan(R) Injection, a dose was selected to advance into a pivotal program, which includes two pivotal trials and one safety study. Both pivotal trials are now underway, and enrollment in this program is expected to be complete by the end of 2006. --The New Drug Application (NDA) for Saforis has been submitted to the U.S. FDA. Saforis is an investigational drug for the prevention and treatment of oral mucositis in patients receiving mucotoxic cancer therapy. One pivotal phase 3 trial and several supportive studies form the foundation of the Saforis NDA. 2006 Corporate Objectives & Milestones: This section and the "2006 Financial Outlook" section which follows it provide forward-looking information about MGI PHARMA's outlook for 2006 based upon our current operations. The disclosure notice paragraph regarding 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. at the end of this news release is especially applicable to these sections. In 2006, MGI PHARMA is focused on building upon the commercial and R&D progress made in 2005 by executing on key initiatives to advance our development pipeline and grow product sales. --May 15, 2006 Dacogen PDUFA date --Advance the Dacogen pivotal AML program --Complete enrollment in the Dacogen ADOPT phase 2 MDS trial 3Q06 --Complete enrollment in the Aquavan Injection pivotal program 4Q06 --Complete 1st amolimogene (ZYC ZYC Zürcher Yacht Club (Switzerland) 101a) pivotal trial 4Q06 --Complete Aloxi Injection PONV PONV Post-Operative Nausea and Vomiting pivotal program 4Q06 --Complete Aloxi Capsule capsule In botany, a dry fruit that opens when ripe. It splits from top to bottom into separate segments known as valves, as in the iris, or forms pores at the top (e.g., poppy), or splits around the circumference, with the top falling off (e.g., pigweed and plantain). pivotal program 4Q06 --Establish ex-U.S. commercialization paths for product candidates 2006 Pro Forma Financial Outlook For the year ending December 31, 2006, the Company continues to expect: --Total revenue to be in the range of $370 to $385 million, including: --Aloxi Injection sales of $285 to $300 million; --Gliadel Wafer sales of $40 million; and --Dacogen injection sales of $25 million, if approved by the FDA during the second quarter; --Gross profit to be in the range of $245 to $258 million, excluding $8 million of amortization of product acquisition intangible assets; --SG&A expenses of $140 million; --Net R&D expenses of $88 million, excluding product candidate development milestone payments of approximately $2 million and expenses incurred for Symphony Neuro Development Company, a non-majority owned consolidated entity acquired in connection with the Guilford acquisition, a majority of which are reversed as minority interest prior to computing computing - computer pre-tax income; and --Pro forma forma, adj/n minor elements between the members of a botanical species. operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from operations to be in the range of $17 to $30 million. This guidance excludes the impact of FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 123R, which is expected to be in the range of $8 to $10 million for the full year 2006. Conference Call & Webcast Information MGI PHARMA will broadcast its quarterly investor conference call live over the Internet today, Wednesday, April 19, 2006 at 5:00 p.m. Eastern Time. The Company's executive management team will review 2006 first quarter financial results, discuss operations and provide guidance on MGI PHARMA's business outlook. All interested parties are welcome to access the webcast via the Company's Web site at www.mgipharma.com. The audio webcast will be archived on the Company's Web site for one week. About MGI PHARMA MGI PHARMA, INC. is an oncology- and acute care-focused biopharmaceutical company that acquires, researches, develops and commercializes proprietary products that address the unmet needs of patients. MGI PHARMA markets Aloxi(R) (palonosetron hydrochloride) Injection and Gliadel(R) Wafer (polifeprosan 20 with carmustine implant) 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. . The Company directly markets its products in the U.S. and collaborates with partners to reach international markets. For more information about MGI PHARMA, please visit www.mgipharma.com. This news release contains certain "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are typically preceded by words such as "believes," "expects," "anticipates," "intends," "will," "may," "should," or similar expressions. These forward-looking statements are not guarantees of MGI PHARMA's future performance and involve a number of risks and uncertainties that may cause actual results to differ materially from the results discussed in these statements. Factors that might cause MGI PHARMA's results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the ability of MGI PHARMA to continue to increase sales of its marketed products, the approval of the FDA for MGI PHARMA to commercialize Dacogen for Injection and Saforis, the successful completion of clinical trials for the Company's other product candidate, and other risks and uncertainties detailed from time to time in MGI PHARMA's filings with the Securities and Exchange Commission including its most recently filed 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. . MGI PHARMA undertakes no duty to update any of these forward-looking statements.
MGI PHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended March 31,
-------------------------------------
2006 2005
------------------ ------------------
Revenues:
Sales $77,525 $62,385
Licensing and other 678 850
------------------ ------------------
78,203 63,235
------------------ ------------------
Costs and Expenses:
Cost of sales 28,342 21,915
Selling, general and
administrative 31,519 18,755
Research and development 22,967 10,317
------------------ ------------------
82,828 50,987
------------------ ------------------
Operating income (loss) (4,625) 12,248
Interest income 1,156 1,357
Interest expense (1,997) (1,755)
Other income 181 -
------------------ ------------------
Income (loss) before minority
interest and income tax (5,285) 11,850
Minority interest 2,431 -
------------------ ------------------
Income (loss) before income tax (2,854) 11,850
Provision (benefit) for income
tax (47) 250
------------------ ------------------
Net income (loss) $(2,807) $11,600
================== ==================
Net income (loss) per common
share
Basic $(0.04) $0.16
Diluted $(0.04) $0.15
Weighted average number of
common shares outstanding
Basic 77,788 71,345
Diluted 77,788 75,615
--------------------------------
Consolidated Balance Sheets Data
(unaudited)
(In thousands)
As of March 31, As of December 31,
------------------ ------------------
2006 2005
------------------ ------------------
Cash and marketable debt
securities, unrestricted $109,463 $104,203
Total assets $460,074 $471,585
Total stockholders' equity $119,126 $109,025
MGI PHARMA, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) TO
PRO FORMA NET INCOME (LOSS) - UNAUDITED
(In thousands, except per share data)
Three Months Ended March 31,
-------------------------------------
2006 2005
------------------ ------------------
GAAP net income (loss) $(2,807) $11,600
Amortization of intangibles 1,792 541
------------------ ------------------
Pro forma net income (loss)
before income tax (1,015) 12,141
Adjustment for income tax (A) - -
------------------ ------------------
Pro forma net income (loss) $(1,015) $12,141
================== ==================
(A) No adjustment from GAAP for income tax provision or benefit.
Presentations of pro forma financial results prior to Q4 2005
assumed an effective tax rate of 35%.
----------------------------------------------------------------------
MGI PHARMA, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) PER COMMON SHARE TO
PRO FORMA NET INCOME (LOSS) PER COMMON SHARE - UNAUDITED
(In thousands, except per share data)
Three Months Ended March 31,
-------------------------------------
2006 2005
------------------ ------------------
Income (loss) per share
(diluted) - GAAP $(0.04) $0.15
Amortization of intangibles 0.03 0.01
------------------ ------------------
Pro forma net income (loss) per
common share, diluted before
income taxes (0.01) 0.16
Provision (benefit) for income
taxes (A) - -
------------------ ------------------
Income (loss) per share
(diluted) - Pro Forma $(0.01) $0.16
================== ==================
Weighted average number of
common shares outstanding
Basic 77,788 71,345
Diluted 77,788 75,615
(A) No adjustment from GAAP for income tax provision or benefit.
Presentations of pro forma financial results prior to Q4 2005
assumed an effective tax rate of 35%.
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