MGI PHARMA Reports Fourth Quarter and Full Year 2005 Financial Results.MINNEAPOLIS -- Please replace the release dated Feb. 8, 2006 with the following corrected version due to multiple revisions. This version reflects corrected allocations among 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. for the fourth quarter and full year 2005. Please note that the total operating expenses for these periods have not changed. There are no other changes to these reported financials. The corrected release reads: 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 REPORTS FOURTH QUARTER AND FULL YEAR 2005 FINANCIAL RESULTS -- 2005 Revenue Increases 43% Year-Over-Year to $279.4 Million-- -- 2005 Aloxi(R) Injection Sales Total $248.5 Million-- -- 2006 Total Revenue Projected to Increase to $370-$385 Million-- -- Five Pivotal Programs Supported By 2006 R&D Investment-- MGI 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 announced that total revenue for 2005 increased 43% to $279.4 million, including 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 sales of $248.5 million. GAAP GAAPSee: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for 2005 was $132.4 million, or $1.81 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. As described below under "Reconciliation of GAAP to Pro Forma Earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. ," pro-forma net income for 2005, which excludes amortization of acquired product 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. and acquired in-process research and development expenses, was $28.1 million, or $0.37 per diluted share. At December 31, 2005, MGI PHARMA's cash and marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. debt investments totaled $104.2 million. "We significantly expanded our commercial and R&D opportunities and accelerated our expansion into acute care in 2005 while achieving our target for 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 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. . With five pivotal programs ongoing and two currently marketed products, we believe we have assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. a portfolio capable of generating significant revenue and earnings growth," 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. "In 2006, our growth plans for Aloxi injection include deploying an expanded acute care sales team to increase our focus on the hospital segment of the market and a targeted 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 campaign. We will be ready to launch Dacogen(TM) injection upon approval for the treatment of MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there , and are on track to submit 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(TM) oral suspension early in the second quarter." Fourth Quarter Results Total revenues for the fourth quarter of 2005 were $81.1 million compared to $65.3 million in the fourth quarter of 2004. Product sales increased to $79.8 million in the fourth quarter of 2005 from $64.5 million in the fourth quarter of 2004. During the fourth quarter of 2005, U.S. sales of Aloxi injection totaled $67.0 million compared to $56.0 million in the fourth quarter of 2004. Sales of Gliadel(R) Wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. (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. ) were $8.5 million for the fourth quarter of 2005. Total costs and expenses increased to $254.1 million in the fourth quarter of 2005 from $66.9 million in the fourth quarter of 2004. Fourth quarter 2005 acquired in-process research and development expense related to the acquisition of Guilford Pharmaceuticals totaled $156.9 million. Selling, general and administrative expenses increased to $36.6 million for the fourth quarter of 2005 from $19.4 million for the same period in 2004, primarily due to higher headcount following the acquisition, investment in the Aloxi brand, and pre-launch expenses related to Dacogen (decitabine) injection. Research and development expenses in the fourth quarter of 2005 were $31.4 million, compared to $26.6 million in the fourth quarter of 2004, which included milestone payments for the filing of regulatory applications for Dacogen injection totaling $12.5 million. 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 injection. The Company reported a GAAP net loss of $169.6 million, or $2.19 per diluted share, in the 2005 fourth quarter compared to a net loss of $1.8 million, or $0.03 per share, in the 2004 fourth quarter. As described below under "Reconciliation of GAAP to Pro Forma Earnings," pro-forma net loss for the 2005 fourth quarter was $10.8 million, or $0.14 per diluted share, compared to a pro forma net income of $11.2 million, or $0.15 per diluted share, in the 2004 fourth quarter. Annual 2005 Results Total revenues increased to $279.4 million for 2005 compared to $195.7 million in 2004. Aloxi injection sales increased 56% year over year to $248.5 million. Selling, general and administrative expenses of $89.0 million for 2005 increased from $73.8 million in 2004 primarily due to higher headcount following the acquisition of Guilford Pharmaceuticals, pre-launch expenses related to Dacogen injection, and investment in the Aloxi brand. Research and development expenses in 2005 increased to $70.9 million from $62.6 million in 2004. Research and development expenses for 2004 included $16.7 million in initial Dacogen injection license expense, in addition to milestone payments for the filing of regulatory applications for Dacogen injection totaling $12.5 million, and a $2.5 million milestone payment for successful achievement of an end of phase 2 milestone for Aloxi injection in PONV PONV Post-Operative Nausea and Vomiting . 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 injection. For the year ended December 31, 2005, MGI PHARMA's GAAP net loss, including $156.9 million of acquired in-process research and development expense related to the Guilford transaction, was $132.4 million, or $1.81 per diluted share, compared to a net loss of $85.7 million, or $1.23 per diluted share, for the year ended December 31, 2004. Pro-forma net income and 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 2005 were $28.1 million and $0.37 per diluted share, respectively, compared to a 2004 pro forma net income of $31.3 million, or $0.42 per share. Reconciliation of GAAP to Pro Forma Earnings: 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 earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. per diluted share and pro-forma net income exclude amortization of product acquisition intangible assets, acquired in-process research and development expenses, and license initiation and product candidate development milestone payments, and reflects a tax rate that we believe would approximate our actual tax rate for the period. Prior pro forma 2005 financial results assumed a tax rate of 35% without any adjustments. We are reporting pro forma results in addition to, and not as a substitute for, financial measures calculated 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 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 Aloxi(R) Injection: The former Guilford acute care sales team has been trained and is now actively promoting Aloxi injection to hospital-based oncologists. A scale-up of this team is expected to be completed in the first quarter. The Company anticipates a three-fold increase in hospital-focused sales force activity in support of Aloxi injection and an impact on sales growth beginning in the second quarter of 2006. Preparations are also underway for a targeted direct-to-consumer advertising campaign, which is planned to roll out during the second quarter. Dacogen(TM) Injection: MGI PHARMA responded to the Dacogen injection Approvable Letter during the fourth quarter of 2005, and the 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. accepted this response with 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 PDUFA Prescription Drug User Fee Act of 1992 (USA) ) goal date of May 15, 2006. MGI PHARMA expects to be prepared to commercialize this product within several weeks of FDA approval. Dacogen injection is being evaluated in a broad clinical development program consisting of more than 20 clinical trials, including phase 2 and 3 studies in elderly patients with acute myeloid leukemia myeloid leukemia n. See myelogenous leukemia. (AML AML - A Manufacturing Language ), 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), and a phase 3 EORTC-sponsored trial in patients with MDS. Saforis(TM) Oral Suspension: A meeting was held with the FDA to discuss the Saforis(TM) oral suspension NDA submission during the fourth quarter of 2005. Following this meeting, MGI PHARMA remains on track to submit this NDA early in the second quarter of 2006. Aquavan(R) Injection: 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) (fospropofol disodium) Injection, a dose was selected to advance into a pivotal program. This program, which will consist of two pivotal phase 3 trials and one safety study, will begin during the first quarter of 2006. 2006 Corporate Objectives: 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. --Advance the Dacogen injection pivotal AML program --Initiate the Aquavan Injection pivotal program in 1Q06 --Submit the Saforis oral suspension NDA in early 2Q06 --Dacogen injection 2Q06 PDUFA goal date --Complete 1st ZYC ZYC Zürcher Yacht Club (Switzerland) 101a pivotal trial 4Q06 --Complete Aloxi injection PONV pivotal program 4Q06 --Complete Aloxi oral 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 Proforma Financial Outlook For the year ending December 31, 2006, the Company expects: --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 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the to be in the range of $17 to $30 million. Based on the market reaction to reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. program changes in early 2005, MGI PHARMA anticipates that similar dynamics may impact the first quarter of 2006, thereby reducing the likelihood of a sequential increase in Aloxi injection sales from the fourth quarter of 2005 to the first quarter of 2006. The Company expects strong sequential growth in sales of Aloxi injection for the second through fourth quarters of 2006. 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, February 8, 2006 at 5:00 p.m. Eastern Time. The Company's executive management team will review 2005 fourth 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 un·met adj. Not satisfied or fulfilled: unmet demands. 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's product candidates to be proven safe and effective in humans, to receive marketing authorization The right or permission to use a system resource; the process of granting access. See access control. from regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , and to ultimately compete successfully with other therapies; continued sales of MGI PHARMA's marketed products; development or acquisition of additional products; reliance on contract manufacturing; changes in strategic alliances; continued access to capital; ability of MGI PHARMA to successfully complete the integration of Guilford with its existing operations; the risk that the perceived advantages of the Guilford transaction may not be achieved; 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-Q Form 10-Q See 10-Q. or 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 Year Ended
December 31, December 31,
------------------- --------------------
2005 2004 2005 2004
--------- ------- --------- --------
Revenues:
Sales $ 79,841 $64,488 $ 273,992 $192,089
Licensing & Other 1,267 821 5,370 3,578
--------- ------- --------- --------
81,108 65,309 279,362 195,667
--------- ------- --------- --------
Costs and Expenses:
Cost of sales 29,103 20,870 97,370 60,847
Selling, general and
administrative 36,637 19,378 88,953 73,802
Research and development 31,434 26,624 70,891 62,625
Acquired in-process
research and development 156,900 23 156,900 83,117
--------- ------- --------- --------
254,074 66,895 414,114 280,391
--------- ------- --------- --------
Operating loss (172,966) (1,586) (134,752) (84,724)
Interest income 1,028 1,391 6,095 5,330
Interest expense (2,001) (1,769) (7,264) (5,989)
Other income 1,148 - 1,148 -
--------- ------- --------- --------
Loss before minority interest
and income tax (172,791) (1,964) (134,773) (85,383)
Minority interest 2,786 - 2,786 -
--------- ------- --------- --------
Loss before income tax (170,005) (1,964) (131,987) (85,383)
Provision (benefit) for
income tax (429) (120) 423 340
--------- ------- --------- --------
Net loss $(169,576) $(1,844) $(132,410) $(85,723)
========= ======= ========= ========
Net loss per common share
Basic $ (2.19) $ (0.03) $ (1.81) $ (1.23)
Diluted $ (2.19) $ (0.03) $ (1.81) $ (1.23)
Weighted average number of
common shares outstanding
Basic 77,319 70,939 73,123 69,897
Diluted 77,319 70,939 73,123 69,897
------------------------------
Consolidated Balance Sheets
Data
(unaudited)
(In thousands)
As of As of
December 31, December 31,
------------ --------------
2005 2004
------------ --------------
Cash and marketable debt securities,
unrestricted $ 104,203 $ 238,857
Total assets $ 471,127 $ 435,876
Total stockholders' equity $ 109,026 $ 114,510
MGI PHARMA, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET (LOSS) TO PRO FORMA NET INCOME
(LOSS) - UNAUDITED
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- --------------------
2005 2004 2005 2004
--------- ------- --------- --------
GAAP net loss $(169,576) $(1,844) $(132,410) $(85,723)
Adjustments:
Amortization of intangibles 1,917 341 3,540 1,366
Acquired in-process
research and development (A) 156,900 23 156,900 83,117
License payments (B) - 12,706 50 32,504
--------- ------- --------- --------
Subtotal of Adjustments 158,817 13,070 160,490 116,987
Pro forma net income/(loss)
before income tax (10,759) 11,226 28,080 31,264
Adjustment for income tax (C) - - - -
--------- ------- --------- --------
Pro forma net income/(loss) $ (10,759) $11,226 $ 28,080 $ 31,264
========= ======= ========= ========
(A) Represents in-process research and development for the acquisition
of Guilford for the year ended December 31, 2005 and for the
acquistions of Aesgen and Zycos for the year ended December 31,
2004.
(B) Reflects license initiation and product development candidate
milestones.
(C) No adjustment from GAAP for income tax provision or benefit. Prior
presentations of pro forma financial results assumed an effective
tax rate of 35%.
MGI PHARMA, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET LOSS PER COMMON SHARE TO PRO FORMA NET
INCOME (LOSS) PER COMMON SHARE - UNAUDITED
(In thousands, except per share data)
Three Months Year Ended
Ended December 31, December 31,
----------------- -----------------
2005 2004 2005 2004
------- ------- ------- -------
EPS (diluted) - GAAP $ (2.19) $ (0.03) $ (1.81) $ (1.23)
Adjustments:
Amortization of intangibles 0.02 0.01 0.04 0.02
Acquired in-process research
and development (A) 2.03 0.00 2.14 1.19
License payments (B) - 0.17 - 0.47
------- ------- ------- -------
Subtotal of Adjustments 2.05 0.18 2.18 1.67
Pro forma net income per common
share, diluted before income taxes (0.14) 0.15 0.37 0.42
Provision (benefit) for income
taxes (C) - - - -
------- ------- ------- -------
EPS (diluted) - Pro Forma $ (0.14) $ 0.15 $ 0.37 $ 0.42
======= ======= ======= =======
Weighted average number of
common shares outstanding
Basic 77,319 70,939 73,123 69,897
Diluted 77,319 75,691 76,852 74,879
(A) Represents in-process research and development for the acquisition
of Guilford for the year ended December 31, 2005 and for the
acquistions of Aesgen and Zycos for the year ended December 31,
2004.
(B) Reflects license initiation and product development candidate
milestones.
(C) No adjustment from GAAP for income tax provision or benefit. Prior
presentations of pro forma financial results assumed an effective
tax rate of 35%.
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