(BUSINESS WIRE) — IDEC Pharmaceuticals Corporation (Nasdaq: IDPH) today announced its financial results for the second quarter ended June 30, 2003. Net income was $28.8 million, or $0.17 per share on a diluted basis, compared to $35.4 million, or $0.20 per share on a diluted basis, for the same period in 2002. Net income for the second quarter of 2003 includes a $20 million one-time signing payment ($12.4 million after tax) made to Genentech, Inc. in association with the new anti-CD20 antibody development collaboration between IDEC and Genentech announced on June 20, 2003. The signing payment to Genentech was recorded to research and development expense in the second quarter of 2003. Excluding the one-time signing payment to Genentech, net income for the second quarter of 2003 would have been $41.2 million, or $0.24 per share on a diluted basis, a 20% increase on a per share basis over the same period in 2002. (See accompanying table for a reconciliation of reported GAAP results to non-GAAP results.)
Total revenues for the second quarter ended June 30, 2003 were $123.6 million, compared to $97.1 million for the second quarter of 2002. Revenues for the second quarter of 2003 included $118.4 million recorded for IDEC’s joint business arrangement with Genentech for the commercialization of Rituxan(R) (Rituximab), which IDEC copromotes in the U.S. with Genentech, compared to $92.5 million for the second quarter of 2002. Revenues in the second quarter of 2003 also included $5.0 million in U.S. net sales of Zevalin(R) (ibritumomab tiuxetan), which IDEC markets alone in the U.S. and was launched in April 2002, compared to $3.3 million for the second quarter of 2002.
U.S. net sales of Rituxan in the second quarter of 2003, as recorded by Genentech, were $328 million compared to $257 million for the same period in 2002.
“We were very pleased with the performance of Rituxan in the second quarter,” said William R. Rohn, IDEC’s president and chief operating officer. “Net U.S. sales increased $71 million in the second quarter, representing a 28 percent increase from the same quarter last year.”
The net sales of Rituxan reported by Genentech in the second quarter included $35 million of ex-U.S. sales to its partners F. Hoffmann-La Roche Ltd. and Zenyaku Kogyo Co. Ltd. of Japan. IDEC’s royalty revenue on sales of Rituximab outside the U.S. is based on Roche’s and Zenyaku’s end-user sales and is recorded with a one-quarter lag. IDEC recognized, during the second quarter of 2003, $13.9 million in royalties from Roche’s and Zenyaku’s end-user sales during the first quarter of 2003.
Revenues from unconsolidated joint business reflect the financial results from the commercialization of Rituxan by IDEC and Genentech. Revenues from unconsolidated joint business includes various revenues associated with Rituxan commercialization such as IDEC’s share of pretax copromotion profits, reimbursements from Genentech for IDEC’s Rituxan-related sales force and development expenses, and royalty revenues on sales of Rituximab outside the United States by Roche and Zenyaku. Roche has marketing rights to Rituximab outside of the U.S., and copromotes Rituxan in Japan with Zenyaku.
Operating Costs and Expenses
Operating costs and expenses for the second quarter of 2003 increased to $80.4 million from $47.1 million for the second quarter of 2002. The higher 2003 operating expenses are primarily the result of the $20 million one-time signing payment made to Genentech, the write-off of $3.1 million of Zevalin commercial inventory that did not meet quality specifications, increased legal expenses to protect IDEC’s intellectual property rights, and increased sales and marketing expenses to support commercialization of Zevalin.
IDEC ended the second quarter of 2003 with cash, cash equivalents and securities available-for-sale totaling $1.5 billion.
IDEC Pharmaceuticals Corporation is a leader in the discovery, development, and commercialization of targeted immunotherapies for the treatment of cancer and autoimmune diseases. IDEC discovered and developed the first commercially available radioimmunotherapy product (Zevalin) approved in the United States, which is used to treat certain non-Hodgkin’s lymphomas. IDEC also discovered and, with co-promotion partner Genentech, Inc., developed the first monoclonal antibody product (Rituxan) approved in the United States for the treatment of cancer. Rituxan is approved in over 70 countries worldwide and is also used to treat various types of non-Hodgkin’s lymphomas. IDEC is a San Diego based, integrated biopharmaceutical company with multiple products in clinical stage development and strategic alliances in a variety of research platforms.
Today, interested parties can access a live webcast of management’s discussion of second quarter of 2003 results at IDEC’s website (http://idecpharm.cdmail.biz) at 1:30 p.m. Pacific Standard Time. The webcast will be archived on the IDEC website. For a menu of IDEC’s current news releases and quarterly reports or to retrieve a specific release, call (888) 329-2309.
The statements made in this press release contain certain forward-looking statements that involve a number of risks and uncertainties. Actual events or results may differ from IDEC’s expectations. For example, the risk factors listed from time to time in IDEC’s SEC filings including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2002 and its Quarterly Report on Form 10-Q for the three months ended March 31, 2003, may affect the actual results achieved by IDEC. These forward-looking statements represent the company’s judgment as of the date of this release. The company disclaims, however, any intent or obligation to update these forward-looking statements.
IDEC Pharmaceuticals, Rituxan and Zevalin are registered U.S. trademarks of the company. The company’s headquarters are located at 3030 Callan Road, San Diego, CA 92121.
IDEC PHARMACEUTICALS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three months Six months ended June 30, ended June 30, 2003 2002 2003 2002 Revenues: Product sales $ 4,980 $ 3,300 $ 10,642 $ 3,300 Revenues from unconsolidated joint business 118,365 92,455 229,276 170,637 Corporate partner revenues 217 1,376 890 2,935 Total revenues 123,562 97,131 240,808 176,872 Operating costs and expenses: Cost of sales 3,791 889 4,643 889 Research and development 47,440 22,980 76,827 42,229 Selling, general and administrative 29,187 23,224 53,052 42,067 Total operating costs and expenses 80,418 47,093 134,522 85,185 Income from operations 43,144 50,038 106,286 91,687 Interest income, net 3,253 4,397 6,563 8,399 Income before income taxes 46,397 54,435 112,849 100,086 Income taxes 17,631 19,052 42,883 35,030 Net income $ 28,766 $ 35,383 $ 69,966 $ 65,056 Earnings per share: Basic $ 0.19 $ 0.23 $ 0.45 $ 0.42 Diluted $ 0.17 $ 0.20 $ 0.41 $ 0.37 Shares used in calculation of earnings per share: Basic 155,171 152,827 154,924 153,128 Diluted 178,308 179,515 178,066 180,965 CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (In thousands) (Unaudited) June December 30, 31, 2003 2002 ---------- ---------- Assets Cash, cash equivalents and securities available- for-sale $1,450,693 $1,447,865 Due from related parties 103,729 100,288 Property and equipment, net 368,503 264,537 Other 235,652 246,999 Total assets $2,158,577 $2,059,689 Liabilities and Stockholders' Equity Current liabilities $ 52,246 $ 56,225 Non-current liabilities 906,200 893,774 Stockholders' equity 1,200,131 1,109,690 Total liabilities and stockholders' equity $2,158,577 $2,059,689 This earnings release includes financial information presented on a non-GAAP basis within the meaning of SEC Regulation G. IDEC believes that this presentation of non-GAAP results provides useful information to both management and investors by providing a better comparison of ongoing operating results and trends. The reconciliation set forth below is provided in accordance with Regulation G and reconciles the non-GAAP financial measure with the most directly comparable GAAP-based financial measure. IDEC PHARMACEUTICALS CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except per share data) (Unaudited) Three months ended June 30, 2003 2002 Net income - GAAP basis $ 28,766 $ 35,383 Adjustment: One-time signing payment made to Genentech, net of related tax effect 12,400 -- Net income - non-GAAP basis $ 41,166 $ 35,383 Diluted earnings per share - GAAP basis $ 0.17 $ 0.20 Adjustment: One-time signing payment made to Genentech, net of related tax effect 0.07 -- Diluted earnings per share - non-GAAP basis $ 0.24 $ 0.20
CONTACT: IDEC Pharmaceuticals Corporation, San Diego Vince Reardon, Director, Corporate Communications 858-431-8656
SOURCE: IDEC Pharmaceuticals Corporation