Orphan Medical Reports Second Quarter Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 22, 2003 - Xyrem(R) Prescription Levels Strengthen - Orphan orphan: see adoption; foundling hospital; guardian and ward. See widow & orphan. Orphan See also Abandonment. Adverse, Anthony finally, at middle age, discovers origins. [Am. Lit. Medical, Inc. (Nasdaq:ORPH) today announced results for the second quarter ended June 30, 2003. The Company reported second quarter revenue of $4.3 million, an increase of over 20 percent from $3.5 million reported in the second quarter of 2002. Second quarter Xyrem revenue increased by over 30 percent as compared to the first quarter of 2003. Orphan Medical reported net income available to common shareholders of $26.0 million, or $2.11 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, compared to a net loss of $1.8 million, or $0.17 per diluted share, in the second quarter of 2002. The increase results from pre tax gains associated with the previously announced divestments 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 and Sucraid (R)(sacrosidase sacrosidase /sac·ro·sid·ase/ (sak-ro´si-das) an enzyme used as a substitute to replace the sucrase activity lacking in sucrase-isomaltase deficiency. ) oral solution. The net loss for the quarter ended June 30, 2003, excluding the product divestments, was $4.3 million or $0.41 per share. Development expenses for the second quarter increased to $1.9 million, compared to $1.3 million in the prior year reflecting increased spending related to two ongoing Phase IIIb clinical trials. Sales and marketing expenses increased to $3.6 million from $1.7 million in the second quarter of 2002 due to increased expenses related to the sales force hired for and the commercialization of Xyrem. General and administrative expenses increased to $1.9 million in the quarter, compared to $1.5 million for the same period in 2002 due to additional staffing and other infrastructure expenses supporting Xyrem. 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. will decrease slightly following the sale of Busulfex and related staff changes. For the six months ended June 30, 2003, revenues were $8.9 million, an increase of 25 percent from $7.2 million reported for the six months ended June 30, 2002. Net income available to common shareholders for the six months ended June 30, 2003, was $21.9 million or $1.80 per diluted share compared to a net loss of $2.9 million or $0.28 per diluted share for the first six months of 2002. The increase again is due to the previously announced product divestments. Net loss for the six months ended June 30 excluding the divestment divestment to strip one's investment from an entity. of products was $8.4 million or $0.80 per share. For the six months ended June 30, 2003, sales and marketing expenses increased to $7.8 million from $3.7 million in the prior year resulting from the hiring of the sales force for and the commercialization of Xyrem. Development expenses increased to $3.6 million from $2.4 million in the prior year resulting from the ongoing clinical trials and the required post approval trials for Xyrem. General and administrative expenses increased to $3.7 million for the six months ended June 30, 2003, from $2.5 million in the prior year. This increase is primarily the result of increases in staffing and other infrastructure expenses supporting Xyrem. Other income for the quarter and six months ended June 30, 2003 was $30.3 million and includes the gross proceeds from the product divestments less expenses associated with the divestment. The Company's results of operations include revenue and related expenses from divested products up to the date of divestment. As of June 30, the Company had cash availability exceeding $30 million including the Company's line of credit facility. The Company used approximately $3.8 million of cash during the quarter, compared to $4.5 million in the first quarter of 2003. 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 June 30, 2003, 716 physicians had written Xyrem prescriptions for 1,977 patients, a 30 percent increase over the level reported in mid-May. Of the 1,977 prescriptions, over 1,300 have been filled with 400 in process. Approximately 10 percent of patients do not fill their initial prescription. After initiating therapy, there has been an 8 percent discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance rate following use of Xyrem of which only 3 percent is due to side effects Side effects Effects of a proposed project on other parts of the firm. and 1.5 percent due to lack of efficacy. Cataplexy, a sudden loss of muscle tone, is usually triggered by strong emotions such as laughter, anger, or surprise. In its most severe form, cataplexy can cause a person to collapse. Sixty to ninety percent of the 140,000 Americans with 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. suffer from cataplexy. The potential size of the current treated U.S. cataplexy market for Xyrem is estimated to be in excess of $125 million annually, and the total available market based on the estimated prevalence of cataplexy could exceed $325 million. The total narcolepsy market for Xyrem based on prevalence estimates exceeds $600 million. "During the quarter, we achieved milestones that are important to building a strong presence in sleep disorders Sleep Disorders Definition Sleep disorders are a group of syndromes characterized by disturbance in the patient's amount of sleep, quality or timing of sleep, or in behaviors or physiological conditions associated with sleep. , pain and other central nervous system (CNS See Continuous net settlement. CNS See continuous net settlement (CNS). ) diseases treated by specialty physicians," 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 commercial efforts have broadened awareness of Xyrem and resulted in increased prescribing by a greater number of specialty physicians. The capital obtained from product divestments will fund Xyrem commercial activities and assessment of Xyrem in other indications." Xyrem for additional indications Bullion continued, "We have two Phase IIIb trials underway to assess Xyrem in treating 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. ) in narcolepsy. We expect both will be completed in order to allow submission of a supplemental New Drug Application (sNDA) in mid- mid- pref. Middle: midbrain. 2004. Patient enrollment in SXB-15, a trial using Xyrem with other stimulants Stimulants A class of drugs, including Ritalin, used to treat people with autism. They may make children calmer and better able to concentrate, but they also may limit growth or have other side effects. Mentioned in: Autism in treating EDS, is 67% complete. Enrollment in EXCEEDS, the second EDS trial, has begun, and patient enrollment in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sites is about to commence. The Company remains on course 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." Outlook "We continue to forecast that 2003 revenue will be between $15 and $18 million. We expect that fourth quarter revenue will be approximately 10 to 15 percent higher than third quarter," said Bullion. Bullion continued, "We expect sales and marketing spending to be approximately $4.0 million per quarter in the second half. Development spending will also increase as the enrollment in the excessive daytime sleepiness trials are completed. This spending is expected to be in the range of $3.0 million in the third and fourth quarters. General and administrative spending is expected to decrease to the $1.5 million level in the third and fourth quarters. We believe that our current capital with proceeds from international licensing of Xyrem is sufficient to fund operations through the end of 2004." The Company is in various stages of discussions with parties seeking to license Xyrem for registration and marketing in international markets. The Company also expects to meet with 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. in the third quarter to discuss a clinical development plan for Butamben, a product that would be used in the management of pain in malignancy malignancy: see cancer. . Conference Call The Orphan Medical 2003 Second Quarter Conference Call will be broadcast live over the Internet on Tuesday July 22 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 STATEMENT OF OPERATIONS
(Unaudited) (Unaudited)
For the Three For the Six
Months Ended Months Ended
(000's except for per share data) June 30, June 30,
----------------- -----------------
2003 2002 2003 2002
-----------------------------------
Revenues, net $4,349 $3,506 $8,916 $7,160
Cost of sales 718 525 1,465 1,053
----------------- -----------------
Gross Profit 3,631 2,981 7,451 6,107
Operating expenses:
Research and development 1,898 1,331 3,595 2,414
Sales and marketing 3,624 1,709 7,786 3,724
General and administrative 1,886 1,465 3,705 2,538
----------------- -----------------
Total operating expenses 7,408 4,505 15,086 8,676
----------------- -----------------
Loss from operations (3,778) (1,524) (7,635) (2,569)
Interest (expense) income, net (21) 66 (13) 150
Other income 30,267 - 30,267 -
----------------- -----------------
Net income (loss) before taxes 26,469 (1,458) 22,619 (2,419)
Income tax expense 250 - 257 -
----------------- -----------------
Net income 26,219 (1,458) 22,362 (2,419)
Less: Preferred stock dividend 234 227 466 452
----------------- -----------------
Net loss attributable to common
shareholders $25,985 $(1,685) $21,896 $(2,871)
================= =================
Earnings (loss) per share
Basic $2.47 $(0.17) $2.08 $(0.28)
Diluted $2.11 $(0.17) $1.80 $(0.28)
Weighted average number of shares
used to calculate earnings per
common share
Basic 10,538 10,344 10,349 10,313
Diluted 12,396 10,344 12,412 10,313
SELECTED BALANCE SHEET DATA
June 30, December 31,
2003 2002
--------------------------
Assets
Cash and cash equivalent $29,972 $6,921
Other assets 5,273 6,218
--------------------------
Total assets $35,245 $13,139
==========================
Liabilities and shareholders'
equity
Current liabilities $4,397 $5,311
Non-current liabilities 70 78
Shareholders' equity 30,778 7,750
--------------------------
Total liabilities and shareholders'
equity $35,245 $13,139
==========================
Orphan Medical acquires, develops, and markets pharmaceuticals of high medical value for inadequately treated and uncommon diseases treated by specialist physicians. The lead product for the company is 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 which is the first and only approved treatment for cataplexy associated with narcolepsy. Driven by Xyrem, Orphan Medical intends to build a strong presence in the sleep and central nervous system (CNS) markets. Orphan Medical's Internet Web site address is www.orphan.com The information in this press release may contain 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. 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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