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INHALE REPORTS INCREASE IN REVENUES FOR 4TH QTR/YEAR END.

Inhale Therapeutic Systems, Inc., San Carlos, Calif., (Nasdaq:INHL) has announced its financial results for the fourth quarter and the year ended December 31, 2001. The company reported revenue of $24.2 million for the three months ended December 31, 2001, compared to $13.1 million in the same period in 2000. For the year ended December 31, 2001, revenue was $77.5 million, compared to $51.6 million in 2000. The year's increase in revenue reported is due primarily to expanded activities under the company's existing collaborative agreements and the inclusion of Shearwater Corporation product sales during the last two quarters as a result of completing the previously announced acquisition.

For the three months ended December 31, 2001, the company reported a net loss of $36.3 million or $(0.66) per share, compared to a net loss of $39.6 million or $(0.87) per share during the three months ended December 31, 2000. On an adjusted basis, the company reported a net loss of $20.2 million or $(0.37) per share for the fourth quarter ended December 31, 2001. The adjusted net loss excludes a loss on investments of $3.9 million associated with Alliance Pharmaceutical Corp.; expenses related to their recent strategic alliance with Enzon, Inc. of $3.0 million; non-cash charges for the amortization of goodwill and other intangible assets of $9.0 million; and non-cash compensation of $0.1 million. The adjusted net loss during the corresponding period of 2000 was $13.7 million or $(0.30) per share, which excludes charges of $0.2 million for amortization of goodwill and other intangible assets; $0.2 million for non-cash compensation; and $25.5 million of payments to holders of the company's convertible debt to exchange approximately $168.6 million of the company's February 2007 convertible notes into 4.4 million shares of common stock.

For the twelve months ended December 31, 2001 the company reported a net loss of $250.0 million or $(4.71) per share, compared to a reported net loss of $97.4 million or $(2.32) per share in the prior year. On an adjusted basis, the net loss was $70.7 million or $(1.33) per share for the year ended December 31, 2001. The twelve-month adjusted net loss excludes purchased in-process research and development of $146.3 million associated with the acquisitions of Shearwater Corporation and Bradford Particle Design Ltd, non-cash charges relating to the amortization of goodwill and other intangibles of $25.5 million, non-cash compensation charges of $0.6 million, an investment loss of $3.9 million and Enzon related expenses of $3.0 million. The company's adjusted net loss for the year ended December 31, 2000 was $48.3 million or $(1.15) per share. The company's adjusted net loss for the twelve months ended December 31, 2000 excludes purchased in-process research and development of $2.3 million, non-cash compensation charges of $5.4 million, amortization of goodwill and intangibles of $0.8 million, and a charge of $40.7 million of payments to holders of the company's convertible debt for conversion premiums to exchange approximately $269.3 million aggregate principal amount of outstanding notes into approximately 10.7 million shares of common stock.

The increase in expenses and net operating loss in 2001 as compared to the prior year is primarily attributed to increased spending related to the development effort for both partner and internally funded programs, the scale-up of technologies and the continuing development of global manufacturing capabilities for both inhalation devices and drug powders in order to support inhaleable insulin clinical trials and commercial production as well as the addition of Shearwater and Bradford to their operations through acquisitions during 2001.

As of December 31, 2001 the company reported cash and investments totaling approximately $344.4 million.

Review of 2001 and Recent Events

"Inhale made outstanding progress in 2001 toward transforming ourselves from a company focused solely on pulmonary delivery of macromolecules to a broad based drug delivery company," said Ajit Gill, president and CEO of Inhale. "We are ideally positioned to take advantage of a new wave of drug delivery opportunities." During 2001, Inhale added additional leading drug delivery platforms through the acquisition of Shearwater Corporation and Bradford Particle Design that, combined with the company's internal work, has positioned Inhale with leading technology for inhaleable, PEGylated, and supercritical fluid processing applications.

Strategic Alliance with Enzon

In January 2002, Enzon, Inc. and Inhale announced a broad strategic alliance that includes a collaboration to develop three products using Inhale's Inhance(TM) pulmonary delivery platform or SEDS(TM) supercritical fluids platform; an agreement making Inhale solely responsible for licensing Enzon's PEG patents, which includes over 40 US patents; an option for Enzon to license Inhale's PEGylation patents; and an agreement to explore the development of non-invasive delivery of single-chain antibody products via the pulmonary route. Further Enzon purchased $40 million of newly issued Inhale convertible preferred stock, and the two companies agreed to settlement of the patent infringement litigation filed by Enzon against Inhale's Shearwater subsidiary.

"This alliance significantly expands our ability to offer a wider range of PEGylation technology -- a technology that we believe can benefit almost every protein, peptide, and antibody fragment and many small molecules. In addition, it strengthens our pipeline significantly with several new product collaborations, including the opportunity to explore inhaleabale applications of Enzon's new single chain antibody technology," continued Gill.

Pipeline and Partner Relationships

During the past year, with the addition of Shearwater and Bradford Particle Design Ltd as well as the signing of new collaborations, Inhale expanded its announced collaborations with pharmaceutical and biotechnology companies from four to 19 announced collaborations and now has relationships with 14 of the 15 largest companies. This includes five collaborations announced or disclosed in the past four months with: Johnson & Johnson and Chiron Corporation each for multiple inhalation products; Confluent for a PEGylated hydrogel used in its SprayGel(TM) device to prevent surgical adhesions; Serono International S.A. for PEGylated interferon beta (Rebif(TM)); and Enzon in a broad strategic alliance.

Inhale disclosed that one of its partners, Biogen, Inc., does not plan to further develop inhaled AVONEX(R) for multiple sclerosis at this time, but is working with Inhale to evaluate other potential indications for the inhaled formulation or other opportunities for collaboration.

In total in the past year, Inhale expanded its pipeline from four products in clinical testing using its technology to 20 using its PEGylation, inhaleable, or supercritical fluid technology that are in or have completed human clinical trials. Seven of these products are either approved for marketing in the US or Europe, filed for approval, or in Phase III trials. The company has an additional 50 products in various stages of feasibility, research, and pre-clinical development.

About Inhale

Inhale Therapeutic Systems, Inc. develops advanced drug delivery solutions for the biopharmaceutical industry. Inhale offers the Inhance(TM) pulmonary delivery platform for the inhaleable delivery of macromolecules and small molecules for systemic and local lung delivery; supercritical fluid processing for powder particle engineering; and advanced PEGylation for enhanced delivery performance of most major drug classes. The company is collaborating with major pharmaceutical and biotechnology companies, including Amgen, AstraZeneca, Aventis Behring, Biogen, Bristol-Myers Squibb, Celltech, Chiron, Enzon, GlaxoSmithKline, Johnson & Johnson subsidiaries' R.W. Johnson Pharmaceutical Research Institute (RWJPRI) and the Janssen Research Foundation (JRF), Lilly, Pfizer, Pharmacia, Roche, Schering-Plough, and Serono.

For more information, call 650/631-3138.
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Comment:INHALE REPORTS INCREASE IN REVENUES FOR 4TH QTR/YEAR END.
Publication:Biotech Financial Reports
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 1, 2002
Words:1238
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