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| Abraxis BioScience Reports Record Revenue of $765 Million in 2006 Versus $521 Million for 2005 |
Fourth Quarter 2006 Revenue Totals a Record $257 Million versus $146 Million in the Prior Year Period Fourth Quarter Adjusted Earnings Per Share Increases to $0.29 versus $0.09 in the Prior Year Period; GAAP Earnings Per Share for the Fourth Quarter Increases to $0.18 versus $0.02 in the Prior Year Period LOS ANGELES--(BUSINESS WIRE)--Feb. 26, 2007--Abraxis BioScience, Inc. (NASDAQ:ABBI), an integrated, global biopharmaceutical company, today reported financial results for the full year and fourth quarter ended December 31, 2006. Total revenue increased 47 percent in 2006 to a record $765.5 million from $520.8 in 2005. Revenue for company-wide, hospital-based products reached a record $584.4 million in 2006, a 52 percent increase from the prior year. Annual 2006 ABRAXANE(R) (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) revenue increased to $174.9 million versus $133.7 million in 2005. Fourth quarter total revenue increased to $257.1 million from $145.6 million in the same period of 2005. The company posted adjusted net income per diluted share, which excludes merger-related items and non-cash stock compensation expense, as follows:
Q4 2006 Q4 2005 Full Year 2006 Full Year 2005
--------------------- --------- -------- -------------- --------------
Adjusted Net Income
(millions) $46.7 $14.8 $121.7 $59.4
--------------------- --------- -------- -------------- --------------
Per diluted share $0.29 $0.09 $0.77 $0.37
--------------------- --------- -------- -------------- --------------
On a reported basis and calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the company reported net income as follows:
Q4 2006 Q4 2005 Full Year 2006 Full Year 2005
---------------------- -------- -------- -------------- --------------
Net Income / (Loss)
(millions) $28.4 $2.6 $(46.9) $17.7
---------------------- -------- -------- -------------- --------------
Per diluted share $0.18 $0.02 $(0.30) $0.11
---------------------- -------- -------- -------------- --------------
The attached table provides additional information regarding the basis for the adjusted net income per diluted share calculation and the rationale for providing such information may be found toward the end of this document. "Last year was a very important year for Abraxis," said Patrick Soon-Shiong, M.D., chairman and chief executive officer of Abraxis BioScience. "In addition to achieving our highest revenues to date, we made strategic acquisitions that enhanced our product offerings and manufacturing capabilities; defined our divisions enabling each to capitalize on strategic opportunities and operate more efficiently; and, continued to drive sales of ABRAXANE while advancing our clinical programs. As we explore additional partnerships and other strategic opportunities, we believe 2007 will prove to be another important year in the evolution of Abraxis." Segment Reporting Abraxis BioScience is comprised of Abraxis Pharmaceutical Products, Abraxis Oncology and Abraxis Research. Beginning in the fourth quarter of 2006, the company re-aligned its segment presentation to better reflect how the business is managed. Abraxis intends to continue to report its business in two segments: Abraxis BioScience (ABI), representing the combined operations of Abraxis Oncology and Abraxis Research; and Abraxis Pharmaceutical Products (APP), representing the hospital-based operations. ABI focuses primarily on the company's internally developed proprietary products including ABRAXANE and its proprietary pipeline. APP manufactures and markets one of the broadest portfolio of injectable drugs including oncology, critical care, and anti-infectives. The attached tables provide additional detail on segment reporting. ABI Segment ABRAXANE revenue for the full year increased 31 percent to $174.9 million, which includes $156.7 million of net sales, versus revenue of $133.7 million in 2005. Fourth quarter 2006 ABRAXANE revenue was $56.1 million, which includes $9.1 million in deferred revenue related to the AstraZeneca co-promotion agreement in the United States. ABRAXANE net sales in the fourth quarter of 2005 were $47.4 million. ABRAXANE continues to show a positive trend in market penetration for metastatic breast cancer. NDC data for January 2007 reports that ABRAXANE demand sales have increased 33 percent in units versus January 2006. According to IMS, ABRAXANE experienced a 52 percent unit volume increase for the period of February 2006 to December 2006 versus the same period in the prior year. This compares favorably to Taxotere(R) and Taxol(R) with growth rates for that same period of -2 percent and +9 percent, respectively. In the second line and second line plus metastatic breast cancer settings, market share for ABRAXANE was 28 percent and 43 percent, respectively. In these settings, ABRAXANE market share continues its positive trend and is taking market share from Taxotere(R) and Taxol. In January 2007, ABRAXANE received compendia listing for first-line use of ABRAXANE in metastatic breast cancer. Full-year selling and marketing expenses increased to $80.0 million, or 44 percent of revenue, versus $52.8 million, or 39 percent of revenue in 2005. In the fourth quarter of 2006, selling and marketing expenses were $21.5 million versus $14.4 million in the prior-year period. The increase primarily reflects the ABRAXANE commission expense relating to the co-promotion agreement with AstraZeneca and the recent expansion and activities of Abraxis Oncology. ABI segment gross margin for the full year 2006 and fourth quarter was 85 percent and 86 percent, respectively, including the recognition of deferred revenue under the AstraZeneca co-promotion agreement. Research and Development (R&D) expense totaled $57.3 million for 2006 compared with $49.0 million in 2005. The increase was primarily due to the further development of ABRAXANE and other proprietary products in the pipeline. APP Segment Hospital-based product revenue for the APP segment increased 51 percent to $583.2 million, including $103.7 million from the acquired AstraZeneca products, versus $385.1 million in 2005. Fourth quarter revenue increased 105 percent to $199.7 million versus $97.4 million in the fourth quarter of 2005. Sales of the hospital-based business grew 33 percent in the fourth quarter 2006 versus the third quarter of 2006. Full-year selling and marketing expenses increased to $13.8 million, or 2 percent of revenue, versus $12.0 million, or 3 percent of revenue in 2005. In the fourth quarter of 2006, selling and marketing expenses were $3.9 million versus $3.5 million in the prior-year period. In the fourth quarter, the company received approval from the U.S. Food and Drug Administration for its Abbreviated New Drug Application (ANDA) for the combination drug Ampicillin and Sulbactam for Injection, 15g, USP, the generic equivalent of Pfizer Inc.'s Unasyn. Also in the fourth quarter, Abraxis launched Ondansetron Injection, USP, the generic equivalent of GlaxoSmithKline's Zofran(R) Injection. As announced in February, Abraxis closed on the acquisition of the Puerto Rico manufacturing facility from Pfizer and expects to begin commercial manufacturing from this site in the first half of 2007. The net purchase price for this facility was $32.5 million. APP remained a market leader with 10 ANDA approvals in 2006. From 2001 to 2006, APP led the market with 55 approvals. Including the 31 ANDAs pending with the FDA, representing over $2.0 billion in annual branded sales, APP currently has over 60 product candidates in various stages of development. Gross margin for the full year 2006 and fourth quarter was 56 percent and 58 percent, respectively, excluding product rights amortization associated with the AstraZeneca product purchase, reflecting strong margins on sales of new products. R&D expenses totaled $28.2 million for 2006 compared with $18.9 million in 2005. The increase was primarily due to expense associated with the transfer of products to the recently acquired Puerto Rico facility. General and Administrative Expenses Company-wide, full-year general and administrative (G&A) expenses, excluding selling and marketing expenses, increased to $93.0 million, or 12 percent of revenue, versus $66.4 million, or 13 percent of revenue in 2005. In the fourth quarter of 2006, G&A expenses were $34.6 million versus $21.6 million in the prior-year period. These increases are primarily due to increased compensation expense and professional fees related to the merger. Clinical Development Update Investigational New Drug (IND) applications were filed with the FDA for nab-docetaxel (ABI 008) and the mTOR inhibitor nab-rapamycin (ABI 009) in the fourth quarter of 2006. In December 2006, data was presented at the 29th Annual San Antonio Breast Cancer Symposium (SABCS) from an interim analysis of a randomized, head-to-head Phase II trial of ABRAXANE versus Taxotere(R) (docetaxel) Injection Concentrate, in the first-line treatment of metastatic breast cancer. The interim analysis showed that first-line treatment with weekly ABRAXANE (100 and 150 mg/m2) increased tumor response rate by greater than 60 percent with less toxicity versus Taxotere (100 mg/m2) given every three weeks in patients with metastatic breast cancer. Although the data are not fully mature, the interim analysis showed that the ABRAXANE regimens currently have longer progression-free survivals than Taxotere dosed every three weeks. The company currently plans to present the final analysis of the data to the American Society of Clinical Oncology (ASCO) in 2007. In January 2007, the Therapeutic Goods Administration (TGA) in Australia accepted for review the company's marketing application for ABRAXANE for the treatment of metastatic breast cancer. This represented the second global regulatory filing for ABRAXANE to be accepted for review in a four-month period. A marketing authorization application also is currently under review with the European Medicines Agency (EMEA) for use of ABRAXANE in the treatment of breast cancer. The company continues to study the use of ABRAXANE in a variety of oncology settings and currently intends to focus its Phase III trials in first-line metastatic breast cancer, first-line non-small cell lung cancer (NSCLC) and melanoma by developing three Phase III superiority trials using weekly dosing schedules of ABRAXANE. Abraxis plans to initiate the worldwide head-to-head Phase III registration trial in the first half of 2007 comparing weekly ABRAXANE to every three week Taxotere for the treatment of first-line metastatic breast cancer. Special Protocol Assessments (SPA) for the design of these Phase III trials were submitted to the FDA in the first quarter of 2007. Initiation of the Phase III trials for NSCLC and melanoma are planned for the second half of 2007. 2007 Financial Guidance For the full year of 2007, Abraxis is providing the following financial guidance estimates, which excludes effects of stock compensation:
On Monday, February 26, 2007, the company will host a conference call with interested parties beginning at 8:30 a.m. PST/11:30 a.m. EST to review its results of operations for the full year and fourth quarter of 2006. The conference call may be heard by interested parties through a live audio Internet broadcast at www.abraxisbio.com and www.earnings.com. For those unable to listen to the live broadcast, a playback of the webcast will be available at both websites for approximately six months beginning shortly after the conclusion of the call. Non-GAAP Financial Measures Adjusted net income per diluted share is a non-GAAP financial measure comprised of reported diluted earnings per share excluding the impact of merger-related purchase accounting, other direct merger and transaction-related costs, non-cash stock compensation expense, minority interests, non-cash amortization of acquired intangible assets. The company believes that its presentation of non-GAAP financial measures provides useful supplementary information to investors in understanding the underlying operating performance of the company and facilitates additional analysis by investors. The company also uses non-GAAP financial measures internally for operating, budgeting and financial planning purposes. The non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance calculated in accordance with GAAP. A reconciliation of GAAP net income to adjusted net income for each of the three- and twelve-month periods ending December 31, 2006 and December 31, 2005 is included with this press release. About ABRAXANE The U.S. Food and Drug Administration approved ABRAXANE(R) for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) in January 2005 for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. For the full prescribing information for ABRAXANE(R) please visit www.abraxane.com. About Abraxis BioScience, Inc. Abraxis BioScience, Inc. is an integrated global biopharmaceutical company dedicated to meeting the needs of critically ill patients. The company develops, manufactures and markets one of the broadest portfolios of injectable products and leverages revolutionary technology such as its nab(TM) platform to discover and deliver breakthrough therapeutics that transform the treatment of cancer and other life-threatening diseases. The first FDA approved product to use this nab platform, ABRAXANE(R), was launched in 2005 for the treatment of metastatic breast cancer. Abraxis trades on the NASDAQ Global Market under the symbol ABBI. For more information about the company and its products, please visit www.abraxisbio.com. FORWARD-LOOKING STATEMENTS The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this press release include statements regarding our expectations, beliefs, hopes, goals, intentions, initiatives or strategies, including statements regarding anticipated ABRAXANE revenue and sales, the clinical development plan for ABRAXANE and product candidates, financial guidance for 2007 and the timing of commercial manufacturing at the Puerto Rico facility. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, decision by regulatory authorities regarding whether and when to approve ABRAXANE or product candidates for various indications as well their decisions regarding labeling and other matters that could affect the availability or commercial potential of ABRAXANE and other products and product candidates, unexpected safety, efficacy or manufacturing issues with respect to ABRAXANE, other products or product candidates, the need for additional data or clinical studies for ABRAXANE or product candidates, regulatory developments (domestic or foreign) involving the company's manufacturing facilities, the market adoption and demand of ABRAXANE and other products, the costs associated with the ongoing launch of ABRAXANE, research and development associated with the nab technology platform, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, the ability to successfully manufacture products in a time-sensitive and cost effective manner, the acceptance and demand of new pharmaceutical products and the impact of patents and other proprietary rights held by competitors and other third parties. Additional relevant information concerning risks can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2005 and in other documents it has filed with the Securities and Exchange Commission. The information contained in this press release is as of the date of this release. Abraxis assumes no obligations to update any forward-looking statements contained in this press release as the result of new information or future events or developments. Taxol(R) is a registered trademark of Bristol-Myers Squibb Company.
Taxotere(R) is a registered trademark of Sanofi-Aventis.
Abraxis BioScience, Inc.
Consolidated Statements of Operation
(unaudited, in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
---------------------------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Hospital-based products
Anti-infective $56,199 $40,681 $213,489 $169,818
Critical care 123,859 44,481 303,485 163,581
Oncology 17,051 12,212 57,983 51,084
Contract manufacturing 3,061 1 9,485 599
--------- -------- --------- ---------
Total hospital-based products 200,170 97,375 584,442 385,082
Abraxane revenue 56,143 47,454 174,906 133,731
Research revenue and other 764 774 6,140 1,944
--------- -------- --------- ---------
Net revenue 257,077 145,603 765,488 520,757
Cost of sales 96,342 60,068 307,512 227,235
--------- -------- --------- ---------
Gross profit 160,735 85,535 457,976 293,522
--------- -------- --------- ---------
Percent to total revenue 62.5% 58.7% 59.8% 56.4%
Operating Expenses
Research and development 24,593 18,711 96,891 68,896
Selling, general and
administrative 60,044 39,440 186,789 131,237
Amortization of merger
related intangibles 13,509 - 38,275 -
Merger-related in-process
research and development
charge - - 105,777 -
Other merger related costs 2,960 1,919 29,335 7,863
Equity (income) loss in Drug
Source Company (822) 6 (2,847) (1,802)
--------- -------- --------- ---------
Total operating expenses 100,284 60,076 454,220 206,194
--------- -------- --------- ---------
Percent to total revenue 39.0% 41.3% 59.3% 39.6%
Income from operations 60,451 25,459 3,756 87,328
Percent to total revenue 23.5% 17.5% 0.5% 16.8%
Interest expense (4,101) (3,218) (13,927) (6,563)
Interest income and other 484 51 3,956 756
Minority interests - (7,083) (11,383) (25,875)
--------- -------- --------- ---------
Income (loss) before income
taxes 56,834 15,209 (17,598) 55,646
Income tax expense 28,385 12,568 29,299 37,989
--------- -------- --------- ---------
Net income (loss) $28,449 $2,641 $(46,897) $17,657
========= ======== ========= =========
Net income (loss) per common
share:
Basic $0.18 $0.02 $(0.30) $0.11
========= ======== ========= =========
Diluted $0.18 $0.02 $(0.30) $0.11
========= ======== ========= =========
Weighted - average common
shares outstanding:
Basic 159,198 158,269 158,937 157,694
========= ======== ========= =========
Diluted 160,169 159,845 158,937 159,742
========= ======== ========= =========
.
The composition of stock-based
compensation included above
is as follows:
Cost of sales $168 $1,575 $2,668 $4,376
Research and development 2,438 335 5,767 930
Selling, general and
administrative 6,322 3,998 15,473 11,103
Other merger related stock
compensation 2,116 - 11,115 -
--------- -------- --------- ---------
Total stock based compensation $11,044 $5,908 $35,023 $16,409
========= ======== ========= =========
Abraxis BioScience, Inc.
GAAP to Adjusted Net Income Reconciliation
(unaudited, in thousands, except per share amounts)
Adjusted Net Income and Adjusted Net Income per Diluted Share are
defined as reported net income and reported diluted earnings per
share excluding the impact of merger-related purchase accounting,
other direct merger and transaction-related costs, non-cash stock
compensation expense, minority interests, non-cash amortization of
acquired intangible assets and other significant non-operating items.
We believe that our presentation of non-GAAP measures provides
useful supplementary information to investors in understanding our
underlying operating performance and facilitates additional analysis
by investors. We also use non-GAAP financial measures internally for
operating, budgeting and financial planning purposes. The non-GAAP
financial measures are in addition to, and not a substitute for or
superior to, measures of financial performance calculated in
accordance with GAAP. A reconciliation of GAAP net income to
adjusted net income for each of the three month periods ending
December 31, 2006 and 2005 and for the years ended December 31, 2006
and 2005 are as follows:
Three months ended Year ended
December 31, December 31,
--------------------------------------
2006 2005 2006 2005
--------- -------- --------- --------
Reported net income (loss) $28,449 $2,641 $(46,897) $17,657
Merger related items
In-process research and
development charge - - 105,777 -
Sale of inventory written up
to fair-market value - - 7,706 -
Intangible amortization 8,342 - 23,635 -
Stock compensation charge 1,307 - 6,864 -
Merger and transaction
expense 521 1,258 11,251 5,156
--------- -------- --------- --------
Total merger related costs 10,170 1,258 155,233 5,156
Stock compensation (SFAS 123R) 5,513 3,841 14,763 10,666
Minority interests - 7,083 11,383 25,875
Amortization of purchased
product rights 2,537 - 5,075 -
Merger related income tax
benefit - - (17,884) -
--------- -------- --------- --------
Adjusted net income $46,669 $14,823 $121,672 $59,354
========= ======== ========= ========
Adjusted net income per diluted
share $0.29 $0.09 $0.77 $0.37
========= ======== ========= ========
Weighted - average common
shares outstanding diluted 160,169 159,845 158,937 159,742
========= ======== ========= ========
Reported net income (loss) $0.18 $0.02 $(0.30) $0.11
Merger related items
In-process research and
development charge - - 0.67 -
Sale of inventory written up
to fair-market value - - 0.05 -
Intangible amortization 0.05 - 0.15 -
Stock compensation charge 0.01 - 0.04 -
Merger and transaction
expense 0.00 0.01 0.07 0.03
--------- -------- --------- --------
Total merger related costs 0.06 0.01 0.98 0.03
Stock compensation (SFAS 123R) 0.03 0.02 0.09 0.07
Minority interests - 0.04 0.07 0.16
Amortization of purchased
product rights 0.02 - 0.03 -
Merger related income tax
benefit - - (0.11) -
--------- -------- --------- --------
Adjusted net income $0.29 $0.09 $0.77 $0.37
========= ======== ========= ========
Abraxis BioScience, Inc.
GAAP to Adjusted Pre-tax Income Reconciliation
(unaudited, in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Reported pretax income (loss) $56,834 $15,209 $(17,598) $55,646
Merger related items --
pretax
In-process research and
development charge - - 105,777 -
Sale of inventory written up
to fair-market value - - 12,480 -
Intangible amortization 13,509 - 38,275 -
Stock compensation charge 2,116 - 11,115 -
Merger and transaction
expense 844 1,919 18,220 7,863
--------- -------- --------- ---------
Total merger related costs --
pretax 16,469 1,919 185,867 7,863
Stock compensation (SFAS
123R) 8,928 5,909 23,908 16,409
Minority interests - 7,083 11,383 25,875
Amortization of purchased
product rights 4,109 - 8,218 -
--------- -------- --------- ---------
Adjusted pretax income $86,340 $30,120 $211,778 $105,793
========= ======== ========= =========
Abraxis BioScience, Inc.
Consolidated Statements of Operating Highlights By Segment
Three months ended December 31, 2006 and 2005
(unaudited, in thousands)
Abraxis BioScience is comprised of Abraxis Pharmaceutical Products,
Abraxis Oncology and Abraxis Research. Beginning in the fourth
quarter of 2006, the Company re-aligned its segment presentation to
better reflect how the business is managed. Abraxis intends to
continue to report its business in two segments: Abraxis BioScience
(ABI) representing the combined operations of Abraxis Oncology and
Abraxis Research; and Abraxis Pharmaceutical Products (APP),
representing the hospital-based operations. ABI focuses primarily on
the Company's internally developed proprietary products including
Abraxane. APP manufactures and markets one of the broadest portfolio
of injectable drugs including oncology, critical care, and anti-
infectives. Prior year's segment information are recalssified to
conform with the current year presentation. Information regarding
these two segments is summarized below.
Segment
------------------
APP ABI Unallocated Total
Costs(1)
--------- -------- ---------------------
Three months ended December
31, 2006
Hospital-based products $199,706 $464 $- $200,170
Abraxane revenue - 56,143 - 56,143
Research revenue and other - 764 - 764
--------- -------- ----------- ---------
Net revenue 199,706 57,371 - 257,077
Cost of sales 83,973 8,091 4,278 96,342
--------- -------- ----------- ---------
Gross profit 115,733 49,280 (4,278) 160,735
Percent to total revenue 58.0% 85.9% 62.5%
Operating Expenses:
Research and development 10,075 12,080 2,438 24,593
Selling and marketing (2) 3,895 21,524 - 25,419
Equity (income) in Drug
Source Company - (822) - (822)
--------- -------- ----------- ---------
Total operating expenses 13,970 32,782 2,438 49,190
--------- -------- ----------- ---------
Pre-tax segment operating
income (3) $101,763 $16,498 $(6,716) $111,545
========= ======== =========== =========
Percent to total revenue 51.0% 28.8% 43.4%
Depreciation and
amortization 8,267 593 1,141 10,001
Capital expenditures 9,863 1,302 - 11,165
Three months ended December
31, 2005
Hospital-based products $97,375 $- $- $97,375
Abraxane revenue - 47,454 - 47,454
Research revenue - 774 - 774
--------- -------- ----------- ---------
Net revenue 97,375 48,228 - 145,603
Cost of sales 50,832 7,661 1,575 60,068
--------- -------- ----------- ---------
Gross profit 46,543 40,567 (1,575) 85,535
Percent to total revenue 47.8% 84.1% 58.7%
Operating Expenses:
Research and development 4,901 13,475 335 18,711
Selling and marketing 3,463 14,427 - 17,890
Equity (income) loss in
Drug Source Company - 6 - 6
--------- -------- ----------- ---------
Total operating expenses 8,364 27,908 335 36,607
--------- -------- ----------- ---------
Pre-tax segment operating
income (3) $38,179 $12,659 $(1,910) $48,928
========= ======== =========== =========
Percent to total revenue 39.2% 26.2% 33.6%
Depreciation and
amortization 3,336 425 171 3,932
Capital expenditures 9,275 - - 9,275
Abraxis BioScience, Inc.
Consolidated Statements of Operating Highlights By Segment (continued)
Year ended December 31, 2006 and 2005
(unaudited, in thousands)
Segment
------------------
APP ABI Unallocated Total
Costs(1)
--------- -------- ---------------------
Year ended December 31, 2006
Hospital-based products $583,201 $1,241 $- $584,442
Abraxane revenue - 174,906 - 174,906
Research revenue and other - 6,140 - 6,140
--------- -------- ----------- ---------
Net revenue 583,201 182,287 - 765,488
Cost of sales 257,159 26,984 23,369 307,512
--------- -------- ----------- ---------
Gross profit 326,042 155,303 (23,369) 457,976
Percent to total revenue 55.9% 85.2% 59.8%
Operating Expenses:
Research and development 28,233 57,316 11,342 96,891
Selling and marketing (2) 13,769 80,015 - 93,784
Equity (income) in Drug
Source Company - (2,847) - (2,847)
--------- -------- ----------- ---------
Total operating expenses 42,002 134,484 11,342 187,828
--------- -------- ----------- ---------
Pre-tax segment operating
income (3) $284,040 $20,819 $(34,711) $270,148
========= ======== =========== =========
Percent to total revenue 48.7% 11.4% 35.3%
Depreciation and
amortization 23,451 2,129 3,256 28,836
Capital expenditures 29,922 67,895 - 97,817
Year ended December 31, 2005
Hospital-based products $385,082 $- $- $385,082
Abraxane revenue - 133,731 - 133,731
Research revenue and other - 1,944 - 1,944
--------- -------- ----------- ---------
Net revenue 385,082 135,675 - 520,757
Cost of sales 201,026 21,833 4,376 227,235
--------- -------- ----------- ---------
Gross profit 184,056 113,842 (4,376) 293,522
Percent to total revenue 47.8% 83.9% 56.4%
Operating Expenses:
Research and development 18,925 49,041 930 68,896
Selling and marketing 12,033 52,766 - 64,799
Equity (income) in Drug
Source Company - (1,802) - (1,802)
--------- -------- ----------- ---------
Total operating expenses 30,958 100,005 930 131,893
--------- -------- ----------- ---------
Pre-tax segment operating
income (3) $153,098 $13,837 $(5,306) $161,629
========= ======== =========== =========
Percent to total revenue 39.8% 10.2% 31.0%
Depreciation and
amortization 12,777 1,447 1,149 15,373
Capital expenditures 47,647 1,085 - 48,732
(1) Segment costs not allocated for the three months ended December
31, 2006 includes $4.1 million for the amortization of APP
AstraZeneca purchase price and $0.2 million stock compensaton, both
included in cost of sales and $2.4 million stock compensation
included in research and development. For the three months ended
December 31, 2005, $1.6 million in stock compensation was not
allocated in cost of sales. Segment costs not allocated for the year
ended December 31, 2006 includes $12.5 million merger costs, $8.2
million APP AstraZeneca purchase price amortization and $2.7 million
stock compensation included in cost of sales and $5.3 million merger
costs and $5.8 million stock compensation included in research and
development. For the year ended December 31, 2005, $4.4 million stock
compensation was not allocated in cost of sales and $0.9 million
stock compensation was not allocated to research and development.
Additionally, depreciation and amortization expense related to
corporate activities are not allocated to the segments.
(2) ABI segment selling and marketing expense in the fourth quarter of
2006 benefited from the reversal of accruals established in the
second and third quarters for $3.0 million and $0.8 million,
respectively. These reversals should have occurred in the third
quarter.
(3) General and administrative expense, merger related costs and
amortization, interest income, interest expense and other, minority
interest and income tax expense are not allocated to segments. See
"Reconciliation of Operating Income By Segment to Condensed
Consolidated Statements of Operation" included herein.
Abraxis BioScience, Inc.
Reconciliation of Operating Income by Segment to Consolidated
Statements of Operations
(unaudited, in thousands)
Three months ended Year ended
December 31, December 31,
---------------------------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Segment operating income from
above:
APP Segment $101,763 $38,179 $284,040 $153,098
ABI Segment 16,498 12,659 20,819 13,837
Segment costs not allocated (6,716) (1,910) (34,711) (5,306)
--------- -------- --------- ---------
111,545 48,928 270,148 161,629
General and administrative
expense (34,625) (21,550) (93,005) (66,438)
Amortization of merger related
intangibles (13,509) - (38,275) -
Merger related in-process
research and development
charge - - (105,777) -
Other merger related costs (2,960) (1,919) (29,335) (7,863)
--------- -------- --------- ---------
Income from operations 60,451 25,459 3,756 87,328
Interest expense (4,101) (3,218) (13,927) (6,563)
Interest income and other 484 51 3,956 756
Minority interests - (7,083) (11,383) (25,875)
Income tax expense (28,385) (12,568) (29,299) (37,989)
--------- -------- --------- ---------
Net Income (loss) $28,449 $2,641 $(46,897) $17,657
========= ======== ========= =========
Abraxis BioScience, Inc.
Consolidated Condensed Balance Sheets
(Unaudited, in thousands)
December 31,
2006 2005
----------- ---------
Assets
Current assets:
Cash and cash equivalents $38,797 $28,818
Short-term investments 500 54,455
Accounts receivable, net of allowances for
doubtful accounts 84,684 61,868
Inventories 218,280 175,282
Prepaid expenses and other current assets 15,570 13,553
Deferred income taxes 78,955 16,936
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Total current assets 436,786 350,912
Property, plant and equipment, net 217,819 152,630
Investment in Drug Source Company, LLC 5,504 2,728
Intangible assets, net of accumulated
amortization 738,440 892
Goodwill 401,600 -
Deferred income taxes, non-current - 5,993
Non-current receivables from related parties 39 649
Other non-current assets, net of accumulated
amortization 25,320 10,425
----------- ---------
Total assets $1,825,508 $524,229
=========== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $65,471 $35,593
Accrued liabilities 61,428 39,364
Income tax payable 80,054 6,992
Deferred revenue 39,225 18,404
Minimum royalties payable 1,017 1,020
Amounts due to officer/stockholder - 1,255
Notes payable 72,248 -
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Total current liabilities 319,443 102,628
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Deferred income taxes, non-current 142,563 -
Long-term debt 165,000 190,000
Long-term portion of deferred revenue 158,135 -
Other non-current liabilities 7,006 1,400
----------- ---------
Total liabilities 792,147 294,028
Minority interests - 162,061
Stockholders' equity:
Common stock 166 165
Additional paid-in capital 1,085,196 71,240
Retained earnings 4,483 51,380
Accumulated other comprehensive income 1,257 1,629
Less treasury stock (57,741) (56,274)
----------- ---------
Total stockholders' equity 1,033,361 68,140
----------- ---------
Total liabilities and stockholders' equity $1,825,508 $524,229
=========== =========
CONTACT: Abraxis BioScience, Inc. |
| "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding APP Pharmaceuticals, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |