-- ERBITUX(R) Sales Growth Continues; Fourth Quarter Global Net
Sales of $371.0 Million and U.S. In-Market Sales of $185.0 Million;
Full Year Global Sales Exceed $1.3 Billion --
-- Fourth Quarter Diluted Loss Per Share of $0.23; Fourth Quarter
Non-GAAP Pro Forma Diluted Earnings Per Share of $0.41, Excluding
Patent Litigation Settlement Charge of $60.0 Million and Partial
Reinstatement of Valuation Allowance Against Deferred Tax Assets --
NEW YORK--(BUSINESS WIRE)--Jan. 31, 2008--ImClone Systems
Incorporated (NASDAQ: IMCL), a global leader in the development and
commercialization of novel cancer therapeutics, today announced its
financial results for the quarter and full year ended December 31,
2007.
Global net sales of ERBITUX(R) for the fourth quarter of 2007 were
$371.0 million, compared to $293.0 million in the fourth quarter of
2006, an increase of 27%. U.S. in-market net sales of ERBITUX for the
fourth quarter of 2007 were $185.0 million compared to $167.2 million
for the fourth quarter of 2006, an increase of 11%. Approximately $5.0
million of the increase in U.S. in-market sales was attributable to a
change in distribution model by ImClone's ERBITUX commercialization
partner Bristol-Myers Squibb (BMS) that resulted in wholesaler
inventory build-up during the quarter. International, or non-U.S., net
sales of ERBITUX were $186.0 million, compared to $125.8 million for
the fourth quarter of 2006, an increase of 48%. As compared to the
third quarter of 2007, worldwide ERBITUX in-market sales increased by
$19.6 million, or 6%. The quarter-over-quarter increases in sales are
due to increased demand for ERBITUX. U.S. in-market net sales of
ERBITUX for the full year of 2007 were $691.7 million, a 6% increase
over full year 2006 U.S. in-market net sales of $652.2 million.
Total revenues for the fourth quarter of 2007 were $151.4 million,
compared to $132.2 million in the fourth quarter of 2006. Fourth
quarter 2007 total revenues include the following:
-- Royalty revenue of $89.8 million, compared to $77.1 million
for the fourth quarter of 2006, an increase of 16%. Royalty
revenue for the quarter consists of 39% of BMS' U.S. in-market
ERBITUX net sales of $185.0 million and 9.5% of Merck KGaA's
international ERBITUX net sales of $186.0 million;
-- License fees and milestone revenue of $20.9 million, compared
to $19.5 million for the fourth quarter of 2006, an increase
of 7%;
-- Manufacturing revenue of $23.7 million, compared to $17.9
million for the fourth quarter of 2006. This increase is due
to higher demand for ERBITUX from the Company's corporate
partners, partially offset by efficiencies achieved in the
manufacturing process that resulted in a decrease in the price
the Company charges its corporate partners; and
-- Collaborative agreement reimbursement revenue of $16.9
million, compared to $17.7 million for the fourth quarter of
2006. This decrease is due to a reduction in the reimbursement
rate for royalty expenses from BMS for third-party royalties
from 4.5% to 2.5%, effective January 1, 2007, and reduced
purchases of ERBITUX by Merck KGaA for use in clinical
studies. This decrease was partially offset by increases in
purchases of ERBITUX by BMS for use in clinical studies,
reimbursements of clinical and regulatory expenses from BMS
and royalty reimbursement from Merck KGaA due to higher
commercial sales of U.S. manufactured product.
Total operating expenses for the fourth quarter of 2007 were
$174.9 million, compared to $83.1 million in the fourth quarter of
2006. Fourth quarter 2007 operating expenses include the following:
-- Research and development expense of $51.6 million, compared to
$35.2 million for the fourth quarter of 2006. This expense
line now includes the Company's clinical and regulatory
expenses for both periods, which had previously been reported
separately. The increase is primarily attributable to the
transition of the Company's BB50 manufacturing facility from
the production of ERBITUX to certain of the Company's pipeline
products, effective July 1, 2007. In addition, there were
increases in clinical trial expenses associated with ERBITUX
and pipeline products, and professional services and other
costs associated with pre-clinical research activities. These
increases were partially offset by a decrease in the amount of
clinical trial development costs that the Company is
responsible to pay as a result of the Amendment to the
Commercial Agreement with BMS;
-- Selling, general and administrative expense of $22.9 million,
compared to $16.2 million for the fourth quarter of 2006. This
increase is primarily attributable to costs associated with
the expansion of the Company's field sales force and an
increase in legal expenses related to the patent litigation
settlement agreement executed with Yeda Research and
Development Company Ltd. ("Yeda") and Sanofi-Aventis in
December 2007;
-- Royalty expense of $16.4 million, compared to $17.4 million
for the fourth quarter of 2006. This decrease is due to the
partial reversal of royalties previously accrued but unpaid to
Sanofi-Aventis in conjunction with the patent litigation
settlement agreement. This decrease was partially offset by
the accrual of royalties to Yeda in accordance with the terms
of the patent litigation settlement agreement and increased
royalties due to higher ERBITUX sales. Approximately $8.4
million and $8.5 million in the fourth quarter of 2007 and
2006, respectively, were reimbursed as a component of
collaborative agreement reimbursement revenue, resulting in
net royalty expenses of $8.0 million for the fourth quarter of
2007, compared to $8.9 million for the fourth quarter of 2006;
-- Cost of manufacturing revenue was $23.9 million in the fourth
quarter of 2007, compared to $14.6 million for the fourth
quarter of 2006 primarily due to higher demand for ERBITUX
from the Company's corporate partners; and
-- Litigation settlement expense of $60.0 million was recorded in
the fourth quarter of 2007 resulting from the patent
litigation settlement agreement executed in December 2007 with
Yeda and Sanofi-Aventis.
Operating loss in the fourth quarter of 2007 was $23.5 million,
compared to operating income of $49.0 million in the fourth quarter of
2006.
Net loss for the fourth quarter of 2007 was $19.9 million, or
$(0.23) per diluted share, compared to net income of $46.6 million, or
$0.53 per diluted share, for the fourth quarter of 2006. Excluding the
effect of the patent litigation settlement expense and partial
reinstatement of valuation allowance against deferred tax assets,
non-GAAP pro forma net income for the fourth quarter of 2007 would
have been $36.4 million, or $0.41 per diluted share (please see
Non-GAAP Pro Forma Earnings Reconciliation below).
Total revenues for the year ended December 31, 2007 were $590.8
million, compared to $677.8 million for the comparable period in 2006.
Total revenues for the year ended December 31, 2006 include the impact
of a "catch-up" adjustment of approximately $112.7 million associated
with the $250 million milestone payment received from BMS in the first
quarter of 2006 as a result of obtaining FDA approval of ERBITUX for
use in the treatment of head and neck cancer.
The Company's annual effective tax rate for 2007 was approximately
58%, which includes the effect of discrete charges of approximately
$18.6 million, primarily related to the reinstatement of a portion of
our valuation allowance against our deferred tax assets, which had
been previously released in 2006. The recording of this valuation
allowance has no effect on our cash taxes. Total net cash tax payments
in 2007 were approximately $3.2 million.
Net income was $39.8 million, or $0.46 per diluted share, for the
year ended December 31, 2007, compared to $370.7 million, or $4.11 per
diluted share, for the comparable period in 2006. The comparable
period results include the "catch-up" effect related to the $250
million milestone payment received from BMS described above. In
addition, in 2006 the Company released a portion of its deferred tax
asset valuation allowance which resulted in a tax benefit of
approximately $111.3 million. Excluding the effect of total litigation
settlements during 2007 and partial reinstatement of valuation
allowance against deferred tax assets, non-GAAP pro forma net income
for the year would have been $125.9 million, or $1.43 per diluted
share (please see Non-GAAP Pro Forma Earnings Reconciliation below).
The Company had $1.0 billion in cash, cash equivalents and
securities available for sale at December 31, 2007.
"ImClone made tremendous progress in 2007 in its transformation
from a one-product company facing challenges on many fronts to a
fully-integrated, multi-product biotechnology company well positioned
to be a global leader in antibody-based therapeutics," said John H.
Johnson, Chief Executive Officer of ImClone. "Through the many key
clinical, commercial, regulatory and legal achievements we have made
over the last several quarters, we have entered 2008 with
significantly enhanced strategic and operational flexibility and
tighter control over how we grow the company in the future."
Mr. Johnson continued, "We remain focused on maximizing our
ERBITUX franchise and are planning for key regulatory submissions this
year. We are aggressively developing our robust pipeline of novel
antibodies and look forward to initiating the first two Phase III
studies of one of those product candidates, IMC-1121B, this year.
ImClone has established one of the largest antibody manufacturing
capacities in the world and we will soon begin building out the second
suite of our FDA-approved 'BB50' manufacturing facility to accommodate
additional production of antibodies for ERBITUX and our pipeline."
Non-GAAP Pro Forma Earnings Reconciliation
To provide investors with a clearer picture of the Company's
earnings versus last year, a reconciliation of diluted earnings (loss)
per share prepared in accordance with GAAP to non-GAAP pro forma
diluted earnings per share is set forth below. For 2007, non-GAAP pro
forma diluted earnings per share for the fourth quarter and full year
exclude the net of tax effect of litigation settlements paid and the
partial reinstatement of valuation allowance against deferred tax
assets. For 2006, non-GAAP pro forma diluted earnings per share for
the quarter excludes the effect of the tax benefit associated with the
release of a portion of the Company's deferred tax asset valuation
allowance and for the full year excludes the effect of the deferred
tax asset valuation allowance release and the net of tax effect of the
milestone revenue "catch-up" recorded in the first quarter of 2006.
Three Months Year Ended
Ended
----------------- -----------------
December December December December
31, 31, 31, 31,
2007 2006 2007 2006
-------- -------- -------- --------
GAAP diluted earnings (loss) per
share $(0.23) $0.53 $0.46 $4.11
Partial reinstatement (release) of
deferred tax valuation allowance 0.15 (0.14) 0.20 (1.21)
Milestone revenue "catch-up" -- -- -- (0.99)
Litigation settlements 0.45 -- 0.72 --
Effect of dilution 0.04 -- 0.05 --
----------------- -----------------
Non-GAAP pro forma diluted
earnings per share $0.41 $0.39 $1.43 $1.91
================= =================
The Company believes that it is useful to present non-GAAP pro
forma diluted earnings per share financial measures because it
provides investors with a more complete understanding of the Company's
underlying operational results and trends. You should not consider
non-GAAP pro forma diluted earnings per share financial measures in
isolation or as a substitute for such measures determined in
accordance with U.S. GAAP, as set forth above. Our definition of
non-GAAP pro forma earnings may differ from other such measures.
ERBITUX and Pipeline Clinical Development Update
ERBITUX
-- In October 2007, the FDA approved an update to the ERBITUX
product labeling to include overall survival data as a single
agent in EGFR-expressing metastatic colorectal cancer (mCRC)
patients after failure of both irinotecan- and
oxaliplatin-based regimens. With this approval, ERBITUX is the
only approved biologic therapy to demonstrate improved overall
survival as a single agent in patients with mCRC.
-- In October 2007, ImClone, BMS and Merck KGaA established an
agreement for the co-development and co-commercialization of
ERBITUX in Japan. The companies submitted an application in
Japan in early 2007 for the use of ERBITUX in treating
patients with EGFR-expressing mCRC and expect to receive a
response from Japanese authorities during 2008. ERBITUX is the
first and only monoclonal antibody that inhibits the EGFR to
be submitted for marketing authorization in Japan.
Pipeline Clinical Development
-- In the fourth quarter, progress was made in advancing each of
ImClone's five earlier-stage pipeline candidates, all
fully-human IgG1 monoclonal antibodies, through clinical
development. In December 2007, patient enrollment commenced
for a Phase II study of IMC-1121B, which targets the vascular
growth factor receptor-2, for advanced malignant melanoma.
Patient accrual was also strong into ongoing Phase II clinical
trials of IMC-1121B, IMC-A12, which targets the insulin growth
factor-like receptor, and IMC-11F8, which targets the
epidermal growth factor receptor. Phase I studies of IMC-18F1,
which targets vascular growth factor receptor-1, and IMC-3G3,
which targets the platelet-derived growth factor-alpha,
continued to progress towards completion. ImClone plans to
initiate additional Phase II and Phase III studies of these
clinical pipeline candidates over the next several quarters.
Other Company Highlights
-- In December 2007, ImClone signed a settlement agreement with
Yeda and Sanofi-Aventis to end worldwide litigation related to
U.S. Patent No. 6,217,866 (the "866 Patent") and its foreign
counterparts. ImClone paid Yeda $60.0 million in cash for full
and final settlement of the claims and counterclaims in the
matter.
Conference Call
ImClone will host a conference call with the financial community
to discuss its fourth quarter and full year 2007 financial results on
Thursday, January 31, 2008 at 11:00 a.m. EST.
The conference call will be webcast live and may be accessed by
visiting ImClone Systems' website at www.imclone.com. A replay of the
audio webcast will be available under "Earnings Webcast" in the
"Investor Relations" section of the Company's website starting shortly
after the call on January 31, 2008.
Those parties interested in participating via telephone may join
by dialing (888) 819-8018 domestically, or (913) 312-0826 for calls
outside of Canada and the U.S., and referencing conference
identification number 3023264. A telephone replay of the conference
call will be available shortly after the call until February 7, 2008
at midnight EST. To access the telephone replay, dial (888) 203-1112
domestically, or (719) 457-0820 for calls outside of Canada and the
U.S., and enter the conference identification number 3023264.
About ERBITUX(R)
ERBITUX is a monoclonal antibody (IgG1 Mab) designed to inhibit
the function of a molecular structure expressed on the surface of
normal and tumor cells called the epidermal growth factor receptor
(EGFR, HER1, c-ErbB-1). In vitro assays and in vivo animal studies
have shown that binding of ERBITUX to the EGFR blocks phosphorylation
and activation of receptor-associated kinases, resulting in inhibition
of cell growth, induction of apoptosis, and decreased matrix
metalloproteinase and vascular endothelial growth factor production.
In vitro, ERBITUX can mediate antibody-dependent cellular cytotoxicity
(ADCC) against certain human tumor types. No anti-tumor effects of
ERBITUX were observed in human tumor xenografts lacking EGFR
expression. EGFR is part of a signaling pathway that is linked to the
growth and development of many human cancers, including those of the
head and neck, colon and rectum.
ERBITUX, as a single agent, is indicated for the treatment of
EGFR- expressing mCRC after failure of both irinotecan-and
oxaliplatin-based regimens. ERBITUX, as a single agent, is also
indicated for the treatment of EGFR-expressing mCRC in patients who
are intolerant to irinotecan-based regimens.
For full prescribing information, including boxed WARNINGS
regarding infusion reactions and cardiopulmonary arrest, visit
http://www.erbitux.com/.
Important Safety Information
Grade 3/4 infusion reactions occurred in approximately 3% of
patients receiving ERBITUX (Cetuximab) in clinical trials with fatal
outcome reported in less than 1 in 1000. Reactions characterized by
rapid onset of airway obstruction (bronchospasm, stridor, hoarseness),
urticaria, hypotension, loss of consciousness, and/or cardiac arrest.
Severe infusion reactions require immediate and permanent
discontinuation of ERBITUX therapy.
Most reactions (90%) were associated with the first infusion of
ERBITUX despite premedication with antihistamines. Caution must be
exercised with every ERBITUX infusion as there were patients who
experienced their first severe infusion reaction during later
infusions. Monitor patients for 1-hour following ERBITUX infusions in
a setting with resuscitation equipment and other agents necessary to
treat anaphylaxis (e.g., epinephrine, corticosteroids, intravenous
antihistamines, bronchodilators, and oxygen). Longer observation
periods may be required in patients who require treatment for infusion
reactions.
Severe cases of interstitial lung disease (ILD), which was fatal
in one case, occurred in 4 of 1570 (less than 0.5%) of patients
receiving ERBITUX in clinical trials. Permanently discontinue ERBITUX
where ILD is confirmed.
In clinical studies of ERBITUX, dermatologic toxicities, including
acneform rash, skin drying and fissuring, paronychial inflammation,
infectious sequelae (eg, S. aureus sepsis, abscess formation,
cellulitis, blepharitis, cheilitis), and hypertrichosis occurred in
patients receiving ERBITUX therapy. Acneform rash occurred in 76-88%
of 1373 patients receiving ERBITUX in clinical trials with severe
acneform rash occurring in 1-17% of patients. Acneform rash usually
developed within the first two weeks of therapy and resolved in a
majority of the patients after cessation of treatment, although in
nearly half, the event continued beyond 28 days. Monitor patients
receiving ERBITUX for dermatologic toxicities and infectious sequelae.
Sun exposure may exacerbate these effects.
In women of childbearing potential, appropriate contraceptive
measures must be used during treatment with ERBITUX and for 6 months
following the last dose of ERBITUX. If ERBITUX is used during
pregnancy or if patients become pregnant while receiving ERBITUX,
patients should be apprised of the potential risk for loss of
pregnancy or potential hazard to the fetus.
Hypomagnesemia occurred in 55% (199/365) of patients receiving
ERBITUX and was severe (NCI CTC grades 3 & 4) in 6-17%. The onset of
hypomagnesemia and accompanying electrolyte abnormalities occurred
days to months after initiation of ERBITUX. Monitor patients
periodically for hypomagnesemia, hypocalcemia and hypokalemia, during
and for at least 8 weeks following the completion of ERBITUX. Replete
electrolytes as necessary.
The most serious adverse reactions associated with ERBITUX in mCRC
patients are infusion reactions, dermatologic toxicity, sepsis, renal
failure, interstitial lung disease, and pulmonary embolus.
The most common adverse reactions with ERBITUX (incidence greater
than or equal to 25% in the ERBITUX + plus best supportive care arm
(BSC)) (n=288) vs. BSC (n=274), respectively, were fatigue (89%, 76%),
rash/desquamation (89%, 16%), abdominal pain (59%, 52%), pain-other
(51%, 34%), dry skin (49%, 11%), dyspnea (48%, 43%), constipation
(46%, 38%), pruritus (40%, 8%), diarrhea (39%, 20%), vomiting (37%,
29%), infection without neutropenia (35%, 17%), headache (33%, 11%),
fever (30%, 18%), insomnia (30%, 15%), cough (29%, 19%),
dermatology-other (27%, 6%), and stomatitis (25%, 10%).
About ImClone Systems Incorporated
ImClone Systems Incorporated is a fully integrated
biopharmaceutical company committed to advancing oncology care by
developing and commercializing a portfolio of targeted biologic
treatments designed to address the medical needs of patients with a
variety of cancers. The Company's research and development programs
include growth factor blockers and angiogenesis inhibitors. ImClone
Systems' headquarters and research operations are located in New York
City, with additional administration and manufacturing facilities in
Branchburg, New Jersey. For more information about ImClone Systems,
please visit the Company's web site at http://www.imclone.com.
ERBITUX(R) is a registered trademark of ImClone Systems
Incorporated.
Certain matters discussed in this news release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and the Federal securities
laws. Although the company believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions
it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and
uncertainties that could cause actual results to differ materially
from those currently expected. Many of these factors are beyond the
company's ability to control or predict. Important factors that may
cause actual results to differ materially and could impact the company
and the statements contained in this news release can be found in the
company's filings with the Securities and Exchange Commission,
particularly those factors identified as "risk factors" in the
Company's most recent annual report of Form 10-K and in its quarterly
reports on Form 10-Q and current reports on Form 8-K. For
forward-looking statements in this news release, the company claims
the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. The
company assumes no obligation to update or supplement any
forward-looking statements whether as a result of new information,
future events or otherwise.
IMCLONE SYSTEMS INCORPORATED
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- ------------------
2007 2006 2007 2006
--------- --------- -------- ---------
Revenues:
Royalties $ 89,822 $ 77,116 $332,182 $290,599
License fees and milestones 20,945 19,462 102,910 232,269
Manufacturing 23,653 17,887 85,109 86,476
Collaborative agreement
reimbursements 16,934 17,698 70,632 68,503
--------- --------- -------- ---------
Total revenues 151,354 132,163 590,833 677,847
--------- --------- -------- ---------
Operating expenses:
Research and development 51,629 35,190 194,118 162,764
Selling, general and
administrative 22,883 16,184 80,681 76,101
Royalties 16,446 17,427 71,544 73,958
Cost of manufacturing revenue 23,928 14,597 83,038 76,063
Litigation settlements 60,000 - 110,000 -
Withholding tax recovery - (264) - (264)
--------- --------- -------- ---------
Total operating expenses 174,886 83,134 539,381 388,622
--------- --------- -------- ---------
Operating income (loss) (23,532) 49,029 51,452 289,225
--------- --------- -------- ---------
Other income, net 9,923 9,001 43,839 31,095
--------- --------- -------- ---------
Income (loss) before
income taxes (13,609) 58,030 95,291 320,320
Income tax provision
(benefit) 6,336 11,472 55,492 (50,354)
--------- --------- -------- ---------
Net income (loss) $(19,945) $ 46,558 $ 39,799 $370,674
========= ========= ======== =========
Earnings (loss) per common
share:
Basic $ (0.23) $ 0.55 $ 0.46 $ 4.40
========= ========= ======== =========
Diluted $ (0.23) $ 0.53 0.46 $ 4.11
========= ========= ======== =========
Shares used in calculation of
earnings (loss) per common
share:
Basic 86,263 84,894 85,804 84,235
========= ========= ======== =========
Diluted 86,263 92,119 86,812 92,012
========= ========= ======== =========
IMCLONE SYSTEMS INCORPORATED
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
December 31, December 31,
Assets 2007 2006
------------ ------------
Current assets:
Cash and cash equivalents $ 602,227 $ 20,568
Securities available for sale 304,534 1,023,609
Inventories 116,153 102,215
Other current assets 125,748 123,840
------------ ------------
Total current assets 1,148,662 1,270,232
Property, plant and equipment, net 397,682 423,000
Securities available for sale 109,061 -
Other assets 113,854 146,604
------------ ------------
Total assets $ 1,769,259 $ 1,839,836
============ ============
Liabilities and Stockholders' Equity
Current liabilities $ 196,657 $ 238,932
Deferred revenue, long term 176,605 237,864
Long-term obligations 612,208 603,391
------------ ------------
Total liabilities 985,470 1,080,187
Stockholders' equity 783,789 759,649
------------ ------------
Total liabilities and stockholders'
equity $ 1,769,259 $ 1,839,836
============ ============
CONTACT: ImClone Systems Incorporated
Tracy Henrikson, 908-243-9945
Corporate Communications
tracy.henrikson@imclone.com
or
Rebecca Gregory, 646-638-5058
Corporate Communications
rebecca.gregory@imclone.com
SOURCE: ImClone Systems Incorporated
