Orphan Medical Reports Third Quarter Results.Business Editors/Health/Medical Writers MINNEAPOLIS--(BUSINESS WIRE)--Oct. 22, 2003 Xyrem Revenue Increases 38 percent Over Previous Quarter Orphan Medical, Inc. (Nasdaq:ORPH) today announced results for the third quarter ended September 30, 2003. Total revenues for the quarter were $3.0 million, a decrease of 28 percent from $4.2 million reported in the third quarter of 2002. This decrease was due to the divestment divestment to strip one's investment from an entity. of products which occurred in June of this year. Quarterly 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 revenue increased by approximately 38 percent to $1.1 million compared to the second quarter of 2003. The Company's net loss to common shareholders was $5.4 million, or $0.50 per diluted share, compared to a net loss of $4.3 million, or $0.42 per diluted share, in the third quarter of 2002. Development expenses for the third quarter increased to $2.5 million, compared to $2.3 million in the prior year. This increase reflects spending related to two ongoing 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 which are designed to support the indication 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 in 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. . Sales and marketing expenses decreased to $3.3 million from $3.5 million in the third quarter of 2002 and general and administrative expenses decreased to $1.5 million as compared to $1.9 million for the same period in 2002. Prior year spending in these categories was higher to support the launch of Xyrem. For the nine months ended September 30, 2003, revenues from product sales were $11.9 million, an increase of five percent from the $11.3 million reported for the nine months ended September 30, 2002. Net income available to common shareholders for the nine months ended September 30, 2003, was $16.5 million or $1.33 per diluted share compared to a net loss of $7.2 million or $0.70 per diluted share for the first nine months of 2002. The positive income is due to the previously announced net gain of $30.3 million from product divestments in the second quarter. Net loss for the nine months ended September 30 excluding the divestment of products was $13.2 million or $0.97 per diluted share. For the nine months ended September 30, 2003, sales and marketing expenses increased to $11.1 million from $7.3 million in the comparable period, reflecting spending relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Xyrem marketing programs and the Xyrem sales force. During the same period, development expenses increased to $6.1 million from $4.7 million in the prior year due to the ongoing Xyrem Phase III(b) and post approval trials. General and administrative expenses increased to $5.2 million for the nine months ended September 30, 2003, from $4.5 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 nine months ended September 30, 2003 was $30.3 million, which represents gross proceeds from product divestments less associated expenses. The Company's results of operations include revenue and related expenses from these products up to the date of their divestment. As of September 30, the Company had cash availability of $29.2 million including the Company's line of credit. The Company used approximately $3.0 million of cash during the quarter, compared to $3.8 million in the second quarter of 2003. Xyrem Update Through the end of the third quarter, 926 physicians had written Xyrem prescriptions for 2,934 patients. New prescriptions were 963 in the third quarter, an increase of 32 percent over the second quarter. Of the 2,934 new prescriptions, over 2,000 have been filled with approximately 400 in process. Approximately 16 percent of patients "disenroll" or do not fill their initial prescription. After initiating therapy, approximately 12 percent of patients discontinue use of Xyrem. Only four percent of discontinuations are due to side effects Side effects Effects of a proposed project on other parts of the firm. and only two percent due to lack of efficacy. "At the first year anniversary of its launch, Xyrem has achieved an important position in the sleep medicine community," stated 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. "We are pleased with the number of physicians who have prescribed the medication, and with the growth in the average number of prescriptions per physician, denoting an increasing satisfaction among prescribing physicians. We continue to see high compliance and satisfaction rates in patients after the eight to twelve week titration titration (tītrā`shən), gradual addition of an acidic solution to a basic solution or vice versa (see acids and bases); titrations are used to determine the concentration of acids or bases in solution. period, and many patients have reported meaningful improvements in their quality of life. Some patients who were disabled by 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. in narcolepsy now have near normal lives. Our safety profile to date is consistent with our experience in clinical trials. Over the past year we have implemented programs to enhance our marketing and sales strategies. We expect these and new programs to accelerate adoption of Xyrem in its second year on the market." The Company has introduced a major new program, CATALYST, targeted to physicians to support the diagnosis and treatment of cataplexy. Mark Perrin, Executive Vice President and Chief Commercial Officer stated, "The development of the CATALYST diagnostic screener was based on key findings from the validation study of the cataplexy portion of the Stanford Sleep Inventory and the clinical expertise and judgment of the CATALYST Steering Committee steer·ing committee n. A committee that sets agendas and schedules of business, as for a legislative body or other assemblage. steering committee Noun . The CATALYST Program contains a diagnostic screener, associated user guide in print and as a CD-ROM CD-ROM: see compact disc. CD-ROM in full compact disc read-only memory Type of computer storage medium that is read optically (e.g., by a laser). with video, and other supporting materials. All of these efforts are designed to enhance awareness of cataplexy and to increase the dialogue between physicians and patients regarding this disorder and achieve the ultimate goal of facilitating the early diagnosis and appropriate management of cataplexy in order to improve the lives of patients with narcolepsy." Xyrem is the first and only approved medication for the treatment of cataplexy, 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 and was commercially launched in October of 2002. 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. An estimated sixty to ninety percent of the 140,000 Americans with narcolepsy suffer from cataplexy. The estimated available size of the currently treated U.S. cataplexy market for Xyrem is in excess of $125 million annually. 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. Xyrem Development Programs Orphan Medical has two Phase III(b) trials underway to assess Xyrem in treating excessive daytime 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. A supplemental New Drug Application (sNDA) incorporating the results of these trials is planned to be submitted to the Food and Drug Administration (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 mid-2004. Dr. William Houghton William Houghton may refer to:
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 75 percent complete. Enrollment in EXCEEDS, our second EDS trial is progressing to plan. We expect to announce results of these trials in the second quarter of 2004. As previously announced, we also expect to file an IND application with the FDA to begin a proof-of-principle trial to assess Xyrem as a treatment 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, (FMS FMS - Flexible Manufacturing System (factory automation). ) later this year. A meeting has been scheduled in November with the FDA to discuss this important initial proof-of-principle trial." Fibromyalgia syndrome is characterized by widespread muscle pain and stiffness. Its incidence in women is three times that of 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. 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. is a chronic condition that is estimated to affect as many as six 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. . "The Company has also been contacted by physicians expressing interest in other Phase IV studies, several focusing on fibromyalgia," noted Houghton. "Others involve special conditions of insomnia insomnia, abnormal wakefulness or inability to sleep. The condition may result from illness or physical discomfort, or it may be caused by stimulants such as coffee or drugs. However, frequently some psychological factor, such as worry or tension, is the cause. or daytime sleepiness in disease states such as multiple sclerosis or Parkinson's disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. . Proposed Phase IV studies will be evaluated and selectively supported. Programs to develop an extended release Xyrem have been started and we expect to have a preliminary assessment of compounds late in 2004." Added Houghton, "We have scheduled a fourth quarter meeting with the FDA to discuss a proposed development plan for Butamben. Butamben is a unique long acting formulation of a local anesthetic local anesthetic n. An agent that, when applied directly to mucous membranes or when injected about the nerves, produces loss of sensation by inhibiting nerve excitation or conduction. that is highly selective for pain. We believe Butamben can be used in the management of pain in malignancy malignancy: see cancer. and may be an important new medication in the pain market. We expect to begin clinical trials with Butamben in 2004." Outlook "We expect total revenues for 2003 to be in the $15-16 million range and Xyrem to be in the $4.0 to $4.2 million range," stated Bullion. "We anticipate over 2,000 patients will be on continuing Xyrem therapy at the end of the year, generating base annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue of $8 to $9 million. Given that base, we believe Xyrem revenue next year will be in the $12 to $14 million range, and total revenues in the $18 to $20 million range. We believe that our current capital, along with the proceeds from the anticipated licensing of Xyrem to a pharmaceutical partner for European markets, will be sufficient to fund operations at least through the end of 2004." Conference Call The Orphan Medical 2003 Third Quarter Conference Call will be broadcast live over the Internet on October 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. A replay by phone will be available through 5:00 pm Eastern time on October 24. To access the phone replay, call 1-800-642-1687 and enter 3169909 when prompted.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited) (Unaudited)
For the Three For the Nine
(000's except for per share data) Months Ended Months Ended
September 30, September 30,
------------------ -----------------
2003 2002 2003 2002
------------------- -----------------
Revenues, net $2,982 $4,155 $11,898 $11,337
Cost of sales 501 609 1,965 1,661
------------------- -----------------
Gross Profit 2,481 3,546 9,933 9,676
Operating expenses:
Research and development 2,540 2,254 6,135 4,668
Sales and marketing 3,316 3,539 11,103 7,262
General and administrative 1,542 1,922 5,247 4,484
------------------ -----------------
Total operating expenses 7,398 7,715 22,485 16,414
------------------ -----------------
Loss from operations (4,917) (4,169) (12,552) (6,738)
Interest (expense) income, net 40 64 27 215
Other income - - 30,267 -
------------------ -----------------
Net income (loss) before taxes (4,877) (4,105) 17,742 (6,523)
Income tax expense (251) - (509) -
------------------ -----------------
Net income (5,128) (4,105) 17,233 (6,523)
Less: Preferred stock dividend 238 235 704 688
------------------ -----------------
Net income (loss) attributable to
common shareholders $(5,366) $(4,340) $16,529 $(7,211)
================== =================
Earnings (loss) per share
Basic $(0.50) $(0.42) $1.56 $(0.70)
Diluted $(0.50) $(0.42) $1.33 $(0.70)
Weighted average number of shares
used to calculate earnings per
common share
Basic 10,682 10,373 10,573 10,331
Diluted 10,682 10,373 12,912 10,331
SELECTED BALANCE SHEET DATA
Sept. 30, Dec. 31,
2003 2002
------------------
Assets
Cash and cash equivalent $26,680 $6,921
Other assets 3,931 6,218
------------------
Total assets $30,611 $13,139
==================
Liabilities and shareholders'
equity
Current liabilities $3,847 $5,311
Non-current liabilities 66 78
Shareholders' equity 26,698 7,750
------------------
Total liabilities and
shareholders' equity $30,611 $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) oral solution which is the first and only approved treatment for cataplexy associated with narcolepsy. Orphan Medical intends to build a strong presence in the sleep and central nervous system (CNS See Continuous net settlement. CNS See continuous net settlement (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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