Orphan Medical Reports 2005 First-Quarter Results; Product Revenues Reach Record Level.MINNEAPOLIS -- Orphan Medical, Inc. (Nasdaq:ORPH) today announced results for the first quarter ended March 31, 2005. Total revenue in the first quarter was $8.1 million, including $1.5 million of licensing and royalty revenue, a 51 percent increase over total revenue of $5.4 million in the first quarter of 2004. All products, Xyrem(R) (sodium oxybate sodium oxybate Gamma-hydroxybutyrate, Xyrem® Neurology A neuropharmacologic used to manage narcolepsy and cataplexy, which causes abrupt loss of muscle control. See Date rape drug. ) oral solution, Antizol(R) (fomepizole) Injection and Cystadane(R) (betaine betaine /be·ta·ine/ (be´tah-en) the carboxylic acid derived by oxidation of choline; it acts as a transmethylating metabolic intermediate and is used in the treatment of homocystinuria. anhydrous an·hy·drous adj. Without water, especially water of crystallization. anhydrous (anhī´drus), adj without water. anhydrous containing no water. for oral solution) contributed to the considerable increase in product revenue for the quarter. Xyrem revenue for the quarter was $3.9 million, an increase of $2.2 million, or 127 percent, compared to the first quarter of the prior year. Quarterly Antizol and Cystadane revenue was $2.8 million, a slight increase from $2.7 million for the same period in the prior year. Total revenue for the first quarter of 2005 included a $1 million milestone payment made by UCB UCB - University of California at Berkeley Pharma in accordance with its licensing agreement with the Company and $0.4 million of licensing revenue that resulted from the amortization of the upfront payment from UCB Pharma. Total 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 first quarter were $9.5 million, compared to $9.5 million in the first quarter of 2004. Product development expenses for the first quarter were $2.6 million, compared to $4.2 million in the prior year, primarily due to the completion of two Xyrem Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA (b) trials during fiscal 2004. Sales and marketing expenses increased to $4.3 million from $3.4 million in the first quarter of 2004 due to increased spending on Xyrem marketing programs. General and administrative expenses increased to $1.6 million, compared to $1.2 million for the same period in 2004, as a result of merger transaction expenses and higher audit fees. The net loss applicable to common shareholders was $1.5 million, or $0.13 per diluted share, in the first quarter of 2005, compared to the net loss applicable to common shareholders of $4.3 million, or $0.40 per diluted share, in the first quarter of 2004. As of March 31, 2005, the Company had approximately $9.5 million in cash and cash equivalents. The Company used approximately $3.2 million of cash during the quarter, compared to $2.1 million of cash during the fourth quarter of 2004. The Company announced on April 19, 2005, that it has entered into an agreement and plan of merger pursuant to which Jazz Pharmaceuticals, through a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , will acquire Orphan Medical. Under the agreement, which was unanimously approved by the Company's Board of Directors, Orphan Medical common stockholders will receive $10.75 per share in cash upon the close of the transaction. Following the merger, which will be consummated following the satisfaction or waiver of certain customary closing conditions, Orphan Medical will become a wholly owned subsidiary of Jazz Pharmaceuticals, a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. . Xyrem Commercial Update In the first quarter of 2005, the Company filled 9,800 prescriptions for Xyrem, representing a 10 percent increase over the 8,928 filled prescriptions in the fourth quarter of 2004 and an increase of 93 percent from the first quarter of the prior year. Through the end of the first quarter of 2005, over 2,350 physicians had written Xyrem prescriptions. Xyrem Development Programs The Company submitted a sNDA for Xyrem to 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. on January 18, 2005. The sNDA is expected to expand the Xyrem label to encompass the other primary symptoms of narcolepsy narcolepsy, a sleep disorder characterized by excessive daytime sleepiness and recurring unwanted episodes of sleep ("sleep attacks"). People with narcolepsy may abruptly fall asleep at almost any time, including while talking, eating, or even walking. , specifically the reduction of excessive daytime sleepiness excessive daytime sleepiness Sleep disorders A subjective difficulty in maintaining an awake state, and an increase ease of falling asleep when the person is sedentary; EDS may be quantified with subjective rating scales of sleepiness (EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. ) and the improvement in fragmented nighttime sleep, in addition to the established efficacy of Xyrem in treating cataplexy cataplexy /cat·a·plexy/ (kat´ah-plek?se) a condition marked by abrupt attacks of muscular weakness and hypotonia triggered by such emotional stimuli as mirth, anger, fear, etc., often associated with narcolepsy. . The Company still expects that data from the proof-of-principle trial assessing Xyrem in the treatment of symptoms of fibromyalgia syndrome fibromyalgia syndrome Fibrositis, tension myalgia Psychiatry A condition characterized by muscular pain, fatigue, sleep disorders, anxiety, depression, headaches, IBS–possibly linked to anxiety and panic disorders Management Exercise, benzodiazepines, SSRIs, will be available in the third quarter of 2005. About Narcolepsy Narcolepsy is a chronic, debilitating de·bil·i·tat·ing adj. Causing a loss of strength or energy. Debilitating Weakening, or reducing the strength of. Mentioned in: Stress Reduction neurological disease Noun 1. neurological disease - a disorder of the nervous system nervous disorder, neurological disorder disorder, upset - a physical condition in which there is a disturbance of normal functioning; "the doctor prescribed some medicine for the disorder"; . Cataplexy, a sudden loss of muscle tone, is usually triggered by strong emotions such as laughter, anger or surprise. As such, patients often selectively isolate themselves from interaction with others resulting in a worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension effect on a patient's quality of life. Narcolepsy afflicts approximately 100,000 to 140,000 Americans with about 50,000 to 75,000 patients receiving some form of treatment for their symptoms. An estimated 60 to 90 percent of those with narcolepsy suffer from cataplexy. All patients with narcolepsy suffer from EDS. About Fibromyalgia fibromyalgia Chronic syndrome that is characterized by musculoskeletal pain, often at multiple sites. The cause is unknown. A significant number of persons with fibromyalgia also have mental disorders, especially depression. Fibromyalgia is a chronic condition that is estimated to affect over four million individuals 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. and represents a market opportunity in excess of $1 billion dollars per year. The disease is characterized by widespread muscle pain and stiffness and affects women three times more often than men. Other symptoms include persistent fatigue, headaches, cognitive or memory 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. , morning stiffness and non-restorative sleep. Conference Call The Orphan Medical 2005 First-Quarter Conference Call will be broadcast live over the Internet on April 26 at 10:00 a.m. Eastern Time. The call will be hosted by John H. Bullion BULLION. In its usual acceptation, is uncoined gold or silver, in bars, plates, or other masses. 1 East, P. C. 188. 2. In the acts of Congress, the term is also applied to copper properly manufactured for the purpose of being coined into money. , Chief Executive Officer and Chairman of Orphan Medical. To access the Webcast, go to the investor section of the Orphan Medical Web site at http://www.orphan.com and click on the Webcast icon. A replay of the Webcast will be available at the same address for two weeks.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended
(000's except for per share data) March 31,
----------------------------
2005 2004
----------------------------
Product revenues, net $6,692 $4,403
Licensing and royalty revenue 1,453 1,000
----------------------------
Total revenue 8,145 5,403
Operating expenses:
Cost of product revenues 985 631
Product development 2,564 4,222
Sales and marketing 4,297 3,398
General and administrative 1,627 1,207
----------------------------
Total operating expenses 9,473 9,458
----------------------------
Loss from operations (1,328) (4,055)
Interest income 60 51
Interest expense (7) (21)
----------------------------
Net (loss) before taxes (1,275) (4,025)
Income tax expense - -
----------------------------
Net (loss) (1,275) (4,025)
Less: Preferred stock dividend 242 239
----------------------------
Net (loss) applicable to common
shareholders $(1,517) $(4,264)
============================
(Loss) per common share applicable to
common shareholders
Basic $(0.13) $(0.40)
Diluted $(0.13) $(0.40)
Weighted average number of shares
outstanding
Basic 11,458 10,775
Diluted 11,458 10,775
SELECTED BALANCE SHEET DATA
March 31, December 31,
2005 2004
----------------------------
Assets
Cash and cash equivalents $9,542 $12,709
Other assets 8,044 5,923
----------------------------
Total assets $17,586 $18,632
============================
Liabilities and shareholders' equity
Current liabilities $7,918 $7,799
Non-current liabilities 38 43
Shareholders' equity 9,630 10,790
----------------------------
Total liabilities and shareholders'
equity $17,586 $18,632
============================
About Orphan Medical Orphan Medical acquires, develops, and markets pharmaceuticals of high medical value for inadequately treated and uncommon central nervous system diseases treated by specialist physicians. The lead product for the company is Xyrem, which is the first and only approved treatment for cataplexy associated with narcolepsy. Xyrem is being assessed as a treatment for the full range of narcolepsy symptoms including excessive daytime sleepiness. The Company is also conducting a trial to evaluate Xyrem as a treatment for symptoms of fibromyalgia syndrome. Orphan Medical's Internet Web site address is www.orphan.com Notice to Investors The pending merger with Jazz Pharmaceuticals has not been consummated. Orphan Medical will file a proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. with the Securities and Exchange Commission (SEC), and distribute the proxy statement to investors when approved by the SEC. The proxy statement will contain important information that should be read carefully before any decision is made with respect to the merger. Those materials will be made available to Orphan Medical's security holders prior to the stockholders' meeting that will be called to vote on the merger. In addition, all of those materials (and all other offer documents filed with the SEC) will be available on the SEC's web site (www.sec.gov) and on Orphan Medical's website (www.orphan.com). The information in this press 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. 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. In some cases, you can identify forward-looking statements by terminology such as "expects," "anticipates," "intends," "may," "should," "plans," "believes," "seeks," "estimates," "could," "would" or the negative of such terms or other comparable terminology. Such forward-looking statements are based upon current expectations and beliefs and involve numerous risks and uncertainties, both known and unknown, that could cause actual events or results to differ materially from these forward-looking statements. The following factors, among others, could cause actual results to differ materially from these assumptions and expectations: the ability to obtain Orphan Medical stockholders' approval of the transaction; the ability of Jazz Pharmaceuticals to obtain senior debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay ; the ability to satisfy other closing conditions; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; and the risk of new and changing regulation in the U.S. and internationally. Additional factors that could cause Orphan Medical's results to differ materially from those described in the forward-looking statements can be found in Orphan Medical's most recent Form 10-Q Form 10-Q See 10-Q. or 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. filed with the SEC. (These documents can be accessed through the Orphan Medical Web site at http://www.orphan.com). All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. |
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