Orphan Medical Reports First-Quarter Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--April 30, 2003 -Lowers 2003 Guidance Based on Initial Xyrem Sales- -Sharpens Focus on Xyrem- Orphan Medical, Inc. (Nasdaq:ORPH) today announced results for the first quarter ended March 31, 2003. The Company reported first-quarter revenue of $4.6 million, a 24 percent increase from $3.7 million reported in the first quarter of 2002. Orphan Medical reported a net loss to common shareholders of $4.1 million, or $0.39 per share, compared to a net loss of $1.2 million, or $0.11 per share, in the first quarter of 2002. Development expenses increased to $1.7 million for the quarter ended March 31, 2003, compared to $1.1 million in the prior year. The increase reflects increased spending related to an ongoing clinical trial, post-approval trials, and the initiation of the EXCEEDS trial. Development expense decreased from $2.0 million in the fourth quarter of 2002 which included the purchase and packaging of clinical trial materials for the EXCEEDS trial. Sales and marketing expenses increased to $4.2 million from $2.0 million in first quarter of 2002 due to expenses associated with the commercialization of Xyrem. First-quarter sales and marketing spending decreased from $5.3 million in the fourth quarter of 2002 when commercial activities were initiated to support the Xyrem launch. General and administrative expenses increased to $1.8 million in the quarter ended March 31, 2003, compared to $1.1 million for the same period in 2002 due to additional staffing and other infrastructure expenses. General and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. declined from fourth quarter of 2002 due to non-recurring expenses associated with Xyrem. As of March 31, the Company had $4.2 million of available funds, including its line of credit. The Company used approximately $4.5 million of cash during the quarter, compared to $5.9 million in the fourth quarter of 2002. First quarter 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. declined following the fourth quarter 2002 launch of Xyrem. Xyrem for 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. As of March 31, 2003 more than 500 physicians had written Xyrem prescriptions for 1,250 patients. Overall patient and physician satisfaction with Xyrem continues to be very strong and third-party reimbursement has been high. "The breadth of prescribers trying Xyrem in patients is significant," said 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. , Orphan Medical Chief Executive Officer. "Our market research indicates that most physicians are prescribing Xyrem first for patients suffering from severe cataplexy and intend to treat patients with mild and moderate cataplexy once they have greater experience with Xyrem. Prescribers also indicate that they evaluate patients for Xyrem treatment when they come in for regularly scheduled appointments rather than asking patients to come in for a separate visit. These factors have delayed the anticipated uptake of Xyrem and we are therefore revising revenue guidance for Xyrem to be in the range of $4.5 - $6.0 million for 2003. Based on continued positive feedback from physicians and patients, we remain confident that Xyrem will become the first line treatment for cataplexy." Mark Perrin, Executive Vice President, Chief Commercial Officer added, "We expect the higher level of marketing and sales activities in the second quarter to drive increased prescribing breadth and depth in the second half of 2003 and into 2004. Three major medical meetings, supported by expanded local medical education programs, will occur in the second quarter. The Associated Professional Sleep Societies (APSS APSS Associated Professional Sleep Societies APSS Airline Passengers for Safer Skies APSS Aristo Parcel Shipping System APSS Automatic Protection Switching System APSS Austrian Payment System Services GmbH (Vienna, Austria) ) meeting, attended by most sleep specialists 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. , occurs in June." The Company reaffirmed its estimate of the total cataplexy market to be in excess of $125 million annually. Cataplexy is a 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 symptom 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. , affecting sixty to ninety percent of the 140,000 Americans with narcolepsy. It involves the sudden partial or total loss of muscle tone, usually triggered by strong emotions such as laughter, anger, or surprise. Xyrem for additional indications Bullion continued, "There is considerable physician interest in Xyrem as a treatment for the full range of narcolepsy symptoms including its effect on sleep architecture. We have two 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 trials underway to assess the use of Xyrem as a treatment for the most common symptom of narcolepsy, 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. ). Based on previous clinical data we anticipate that Xyrem will be effective in the treatment of EDS allowing Xyrem to be used as the foundation for the treatment of narcolepsy." Patient enrollment for the first of the EDS trials, SXB-15, is 65 percent complete and patient enrollment is expected to be completed by year-end. The second EDS trial, known as the EXCEEDS trial, has been initiated. Patient enrollment has begun and clinical trial supplies have been shipped to the first nine of fifty sites. This trial is scheduled for completion in the first quarter of 2004. Orphan Medical plans to include both of these trials in a supplemental 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 filing in mid-2004. The Company also intends to initiate a clinical trial to explore the effectiveness of Xyrem in the treatment of 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. during the second half of 2003. The Company is forming a Scientific Advisory Board to consult on protocol development and clinical endpoints. Other marketed products First-quarter revenues of Busulfex(R) (busulfan busulfan /bu·sul·fan/ (bu-sul´fan) an antineoplastic used in treating chronic granulocytic leukemia, polycythemia vera, myeloid metaplasia, and myeloproliferative syndrome; also used in lieu of whole body irradiation in bone marrow ) Injection grew approximately 32 percent in the United States and Canada compared to 2002. Busulfex, which is used in preparative pre·par·a·tive adj. Serving or tending to prepare or make ready; preliminary. n. Something that prepares for or acts as a preliminary to something following. regimens for bone marrow transplantation Bone Marrow Transplantation Definition The bone marrow—the sponge-like tissue found in the center of certain bones—contains stem cells that are the precursors of white blood cells, red blood cells, and platelets. , increased its market share to 55 percent in transplants where busulfan-based regimens are used. The number of institutions using Antizol(R) (fomepizole) Injection continued to grow and unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. increased by nearly ten percent over the prior year. As of March 31, over one-third of all U.S. hospitals with emergency departments have purchased Antizol, an antidote for suspected or confirmed ethylene glycol ethylene glycol: see glycol. ethylene glycol Simplest member of the glycol family, also called 1,2-ethanediol (HOCH2CH2OH). It is a colourless, oily liquid with a mild odour and sweet taste. or methanol poisoning. New product opportunities Formulation development is continuing for Butamben, a product with demonstrated efficacy in the management of pain in malignancy malignancy: see cancer. . The Company will present existing data and its clinical development plan to the Food and Drug Administration at a meeting to be scheduled in the third quarter. The Company is also investigating the potential of two new chemical entities that are GHB GHB abbr. gamma-hydroxybutyrate GHB 1 Gamma-hydroxybutyrate, γ-hydroxy-butyrate See GABA 2 Glycosylated hemoglobin, see there GHb Glycosylated hemoglobin, see there analogues in early pre-clinical studies. Outlook "Given the adjusted Xyrem forecast, we are revising our 2003 revenue guidance to between $20 and $23 million," said Bullion. "We remain committed to building a specialty pharmaceutical company with an expanded presence in the sleep and CNS See Continuous net settlement. CNS See continuous net settlement (CNS). areas. We plan to obtain the capital necessary to realize the full potential of Xyrem in a manner that involves little or no dilution. As first steps in this process, we are divesting Sucraid and continuing Xyrem licensing negotiations for markets outside the U.S." The sale of Sucraid(R)(sacrosidase) oral solution will provide a $1.5 million upfront payment and royalties based on future revenues. The purchaser will continue to serve patients who use Sucraid to treat sucrase-isomaltase deficiency sucrase-isomaltase deficiency /suc·rase-iso·mal·tase de·fi·cien·cy/ (-i-so-mawl´tas) a disaccharidase deficiency in which deficiency of the sucrase-isomaltase enzyme complex causes malabsorption of sucrose and starch dextrins, with , a rare metabolic disorder Noun 1. metabolic disorder - a disorder or defect of metabolism disorder, upset - a physical condition in which there is a disturbance of normal functioning; "the doctor prescribed some medicine for the disorder"; "everyone gets stomach upsets from time to time" . The Company also announced that it will sell Elliotts B(R) Solution. Proceeds from this sale will not be significant. The Company stated discussions are ongoing with companies interested in licensing Xyrem for registration and marketing in Europe, Japan and other Asian markets. The Company believes an agreement with a European partner could occur in mid-2003. Such an agreement is expected to involve upfront and milestone payments as well as revenue sharing revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. . Conference Call The Orphan Medical 2003 First Quarter Conference Call will be broadcast live over the Internet on Wednesday, April 30 at 10:00 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ). The call will be hosted by John H. Bullion, 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 STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
2003 2002
----------- -----------
(000s, except per share and share data)
Net sales $4,568 $3,682
Cost of sales 747 534
Gross profit 3,821 3,148
Operating expenses:
Development 1,697 1,077
Sales & marketing 4,160 2,020
General & administrative 1,826 1,068
----------- -----------
Total operating expenses 7,683 4,165
Loss from operations (3,862) (1,017)
Other income: net interest income 8 84
Net loss (3,854) (933)
----------- -----------
Less: Preferred stock dividend (234) (225)
----------- -----------
Net loss applicable to common shareholders $(4,088) $(1,158)
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Net loss per share (a) $(0.39) $(0.11)
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Average number of shares outstanding 10,472,263 10,282,223
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(a) Basic and diluted loss per share amounts are identical
SELECTED BALANCE SHEET DATA
(Unaudited)
March 31, December 31,
2003 2002
------------- ------------
Assets
Cash, Cash Equivalents and Investments $2,413 $6,921
------------- ------------
Other assets 6,885 6,218
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Total assets $9,298 $13,139
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Liabilities and shareholders' equity:
Current Liabilities $5,153 $5,311
Non-Current Liabilities 74 78
------------- ------------
Shareholders' Equity 4,071 7,750
------------- ------------
Total liabilities and shareholders' equity $9,298 $13,139
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Orphan Medical acquires, develops, and markets pharmaceuticals of high medical value for inadequately treated and uncommon diseases treated by specialist physicians. Orphan Medical's Internet Web site address is http://www.orphan.com The information in this press release may contain 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. A number of factors could cause actual results to differ materially from the Company's assumptions and expectations. These are set forth in the cautionary statements included 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 Securities and Exchange Commission. (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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