HUGS Basic Info (2/15/2001):
ROCKVILLE, Maryland -- February 15, 2001 -- Human Genome Sciences, Inc. (Nasdaq: HGSI) today announced financial results for the fourth quarter and full year periods ended December 31, 2000. The pro forma net loss for the year was $50.7 million, or $0.46 per share, the same as the per share loss for the previous year.
These results exclude a one-time non-cash write-off of $134.1 million, or $1.21 per share, of purchased in-process research and development resulting from HGS' acquisition of Principia Pharmaceutical Corporation in September. It also excludes one-time expenses in the first quarter of $50.8 million, or $0.46 per share, associated with the conversion to equity of two issuances of convertible subordinated notes, totaling $318.3 million. The pro forma net loss compares to a net loss of $42.2 million, or $0.46 per share, for the year earlier period.
Actual net loss for the twelve months ended December 31, 2000, was $243.8 million, or $2.20 per share. This includes the one-time write-off of $134.1 million, or $1.21 per share, and additional one-time expenses of $50.8 million, or $0.46 per share, associated with the conversion to equity during the first quarter of two issuances of convertible subordinated notes totaling $318.3 million. This compares to a net loss of $42.2 million, or $0.46 per share, for the year earlier period.
Total revenues for the twelve months ended December 31, 2000 were $22.1 million, as compared to $24.5 million for the year earlier period.
Pro forma and actual net loss for the quarter ended December 31, 2000 were $6.0 million, or $0.05 per share. This compares to a net loss of $18.0 million, or $0.19 per share for the year earlier period. These results include the effects of implementing SAB 101.
Total revenues for the quarter ended December 31, 2000 were $5.3 million as compared to $862,000 in revenues for the year earlier period.
The increase in operating costs for both periods is attributable to increased investment in the development of preclinical and clinical drug candidates, operations at the Manufacturing and Process Development Facility, patent-related and transaction-related expenses and operations at Principia.
At December 31, 2000, cash and short-term investments totaled $1.8 billion, including $12.3 million of restricted cash. This compares to $466.2 million, including $11.6 million of restricted cash, at December 31, 1999. The increase in cash and short-term investments resulted from two convertible subordinated note offerings completed during the first quarter of 2000, totaling $525.0 million, and a public offering of common stock which closed in November, with gross proceeds of approximately $950.0 million.
At the end of December 2000, there were approximately 125.2 million shares of HGS' common stock outstanding.
"HGS ended 2000 with broader capabilities to discover and develop novel drugs than when the year began. We believe that the effect of some of our new alliances which add human antibody, peptide and fusion protein technologies, our strengthened financial position and our expanded management team has brought us closer to our goal of bringing new gene-based drugs to patients," said William A. Haseltine, Ph.D., Chairman and Chief Executive Officer of HGS.
HIGHLIGHTS OF 2000
As noted above, Human Genome Sciences made significant progress in a number of areas during 2000. Among the highlights are:
PRODUCTS:
Advances in HGS Product Portfolio: HGS has placed five drugs into clinical trials. The following is an update of their current status:
* Repifermin™, also known as Keratinocyte Growth Factor-2 or KGF-2, is the most advanced drug and the subject of three different clinical programs:
Data from the most advanced of these three programs were presented in September at the World Wound Healing Congress. These data showed that repifermin accelerates healing of chronic venous ulcers and its safety profile is excellent. Based on repifermin's strong potential as a wound-healing agent, HGS is advancing repifermin to a large-scale clinical trial in patients with chronic venous ulcers. This trial is expected to begin during the first quarter of 2001.
The second clinical program is evaluating repifermin's safety and ability to prevent mucositis when administered to patients undergoing chemotherapy with bone marrow transplantation.
The third program is evaluating repifermin's safety and activity when administered to patients with active ulcerative colitis, the most common form of inflammatory bowel disease.
Results from the mucositis and ulcerative colitis trials are expected this year.
* Mirostipen™, also known as Myeloid Progenitor Inhibitory Factor-1, or MPIF-1, is the subject of two on-going Phase II clinical programs. These trials are evaluating mirostipen's safety and ability to prevent myelosuppression in patients receiving doxorubicin/docetaxel and topotecan as part of their cancer treatment.
* B Lymphocyte Stimulator, also known as BLyS, is undergoing a Phase I human clinical trial in patients with Common Variable Immunodeficiency, a serious defect of the immune system.
* Later this quarter, HGS expects to enroll patients into a clinical trial for Albuferon™, or albumin interferon alpha. HGS submitted an Investigational New Drug (IND) application with the U.S. Food and Drug Administration in order to initiate Phase I human clinical trials. This is the first clinical trial for a drug based on HGS' proprietary fusion gene technology.
Advances in Partners' Product Portfolios:
HGS has agreements with a number of partners. In 2000, some of these partners made commitments to develop and commercialize drugs derived from HGS technology, including:
* Glaxo SmithKline In October, HGS announced that Glaxo SmithKline exercised its first option to jointly co-develop and co-commercialize repifermin for all indications. HGS and Glaxo SmithKline will share equally in clinical development costs at Phase III and beyond.
* Schering-Plough Also in October, HGS announced that Schering-Plough Corporation had exercised one of its product option rights to develop and commercialize a novel type of interferon discovered by HGS. This novel protein has potential therapeutic applications in autoimmune and infectious diseases and cancer.
*Transgene -- In July, Transgene, of Strasbourg, France, selected two novel genes from HGS' gene database for development as gene therapy drugs for severe cardiovascular conditions.
PIPELINE:
In 2000, HGS announced discoveries that may lead to drugs that address the medical needs of large patient populations:
* In January, a team of scientists working at HGS and the CRC Beatson Institute for Cancer Research, in Glasgow, Scotland, announced the discovery of a new protein that blocks a key receptor on a type of cell than induces allergic reactions. The protein is called Met-Chemokine Beta Seven, or Met-Ckb 7 and was described in a paper published in the February 1, 2000 issue of the Journal of Immunology. HGS scientists believe that this is a significant advance in understanding how the body naturally controls asthma and allergic reactions.
* In October, scientists from HGS and two groups of academic collaborators presented findings at the American College of Rheumatology meeting that higher than normal blood levels of BLyS may play a crucial role in systemic lupus erythematosus (SLE) and rheumatoid arthritis (RA). The findings suggest that reducing these higher than normal BLyS levels may be an effective way to treat these serious autoimmune diseases. HGS and its partner, Cambridge Antibody Technology (CAT) have developed a fully human antibody to BLyS. HGS hopes to begin human clinical trials of an anti-BLyS antibody during 2001.
PARTNERSHIPS:
During 2000, HGS formed several new partnerships in order to secure access to technologies that may lead to novel gene-based drugs. These include agreements with Vical Incorporated, Aventis Behring and Dow Chemical. While each of our partnerships is important to HGS, two new agreements have unusually broad scope.
* In February, HGS and Cambridge Antibody Technology (CAT), announced an agreement that provides HGS with the rights to use CAT technology to develop and sell an unlimited number of fully human antibodies for therapeutic and diagnostic purposes as well as for research tools.
* In March, HGS and Dyax Corp., signed an agreement that provides HGS with the rights to use Dyax' technology to develop an unlimited number of therapeutic products that HGS may choose to sell itself or to outlicense. Dyax' phage display technology may be used by HGS to create peptide drugs, human monoclonal antibody drugs, in vitro diagnostic products and research tools.
ACQUISITION:
In September, HGS acquired Principia Pharmaceutical Corporation, a privately held development stage biopharmaceutical company. The acquisition provided HGS with Principia's protein fusion technology which may solve three of the long-standing problems affecting production and commercial optimization of biological products: the length of time that the protein lasts within the body, delivery of the product and product stability. Principia's technology also may enhance HGS' manufacturing efficiency. HGS' acquisition of Principia enhances the Company's position in drug development and is a logical complement to HGS' expanding technology base.
PEOPLE:
HGS' senior management recognizes that 2000's achievements are due to the efforts of each of its highly skilled and motivated team members and makes many efforts to identify and retain valuable members.
*In December, HGS announced the addition of three Directors to its Clinical Development Group, significantly strengthening and expanding the leadership of this group. Earlier in 2000, HGS filled the position of Vice President, Regulatory Affairs. HGS' team now encompasses the skills needed to discover, research, develop, manufacture and register a drug.
* In April, HGS was the proud recipient of the High Technology Firm of the Year award by the High Technology Council of Maryland.
* Currently, the HGS team numbers approximately 700.
PATENT PORTFOLIO:
During 2000, HGS continued to increase its intellectual property estate.
* HGS received 47 patents from the U.S. Patent & Trademark Office during 2000.
* HGS has filed patent applications on a large number of human gene-based inventions. Patent applications describing a significant number of these inventions have been published, placing their contents into the public domain.
* HGS currently holds 162 U.S. patents on human gene-based inventions.
FINANCES:
During 2000, HGS conducted a number of financial transactions that strengthened the balance sheet and preserved the Company's cash assets for drug development activities. These include:
* Public Offering of Common Shares. In October, HGS sold 12.7 million shares of its common stock in a public offering. Through that offering, HGS received gross proceeds of approximately $950 million. The offering was led by Credit Suisse First Boston and co-managed by Goldman, Sachs & Co., Lehman Brothers, CIBC World Markets, J.P. Morgan & Co. and Dain Rauscher Wessels.
* Convertible Debt Offerings -- Earlier in the year, HGS placed two issuances of Convertible Subordinated Notes and raised a total of $525.0 million.
* Completion of Tender Offer -- In January, holders of 95 percent of HGS' 5 1/2% Convertible Subordinated Notes Due 2006 chose to convert their Notes into HGS Common Stock.
* Conversion of Convertible Securities into Equity -- In March, HGS announced that all of the holders of its $200 million aggregate principal amount of 5% Convertible Subordinated Notes Due 2006 converted their Notes into HGS Common Stock. These Notes were issued in December 1999.
* Completion of Financing for Expansion of Process Development and Manufacturing Facility In January, HGS announced the completion of financing for an expansion to the Process Development and Manufacturing Facility. This expansion was constructed by the Maryland Economic Development Corporation (MEDCO) which will lease the Facility to HGS under a long-term arrangement. Financing was provided by Allfirst Bank and First Union National Bank, with continued support from the State of Maryland. Construction of the expansion space, totaling 43,000 square feet of additional space was completed during the Fall of 2000.
* Stock Splits. During 2000, HGS' Board of Directors approved two stock splits. These two-for-one splits were effective on January 28, 2000 and October 5, 2000.
Financial Guidance for 2001: HGS provides the following guidance regarding financial results during 2001.
The Company anticipates that research and development expense will increase approximately 50 to 70 percent from 2000 levels as it continues to expand the number of clinical trials for its drugs now in clinical trials, increase the number of its drugs in the clinic, expand the operations of its manufacturing facilities and increase investment in fusion protein technology. HGS expects general and administrative expense to increase by 40 to 50 percent from prior year levels as it continues to expand its patent portfolio, form new partnership agreements and increase its employee base by approximately 50 percent. HGS expects to earn interest income of approximately $75.0 million on its cash balances during 2001, net of interest expense. Overall, we anticipate a net loss of $70.0 to $90.0 million, or $0.56 to $0.72 per share, based on 125.7 million shares outstanding.
Actual results may vary significantly depending upon various factors, including particularly changes in the Company's revenues and additional expenses or charges as well as changes in shares outstanding associated with future alliances, acquisitions, financing transactions or note conversions.
*Implementation of SAB 101 HGS' financial results for the fourth quarter and year-to-date reflect the Company's implementation of SAB 101, retroactive to January 1, 2000. SAB 101 requires revenues to be recognized ratably over the life of a contract period. Previously, HGS generally recognized revenue as non-refundable cash payments were due. In accordance with SAB 101, HGS has recorded a charge of $8.3 million, or $0.08 per share, as a cumulative effect of a change in accounting principle. This amount represents that portion of revenue initially recognized in 1996 for which the contract periods extended into 2001.
Because this accounting change is retroactive to January 1, 2000, the charge of $8.3 million is reflected in HGS' year-to-date results and not in the fourth quarter results. In addition, under SAB 101, HGS' revenues for the first, second and third quarters of 2000 have been adjusted from $642,000, $12.7 million, and $8.1 million to $5.3 million, $5.3 million and $6.2 million, respectively. Under SAB 101, HGS' revenues for the fourth quarter of 2000 were adjusted from $642,000 to $5.3 million. For the year 2000, under SAB 101, HGS' revenues remain $22.1 million.
As a result of SAB 101, HGS now has additional deferred revenue as of December 31, 2000 in the amount of $8.3 million. HGS will record this amount as revenue ratably over the first two quarters of 2001.
Human Genome Sciences is a company with the mission to treat and cure disease by bringing new gene-based drugs to patients.
Individuals interested in repifermin, Albuferon or clinical trials for venous ulcers, ulcerative colitis, mucositis, or hepatitis C are encouraged to contact Human Genome Sciences at 301/309-8504, extension 3550, or via the Internet at www.hgsi.com.
HGS, Human Genome Sciences, repifermin, mirostipen and Albuferon are registered trademarks of Human Genome Sciences, Inc. For additional information on Human Genome Sciences, Inc., visit the company’s web site at www.hgsi.com. Copies of HGS press releases are also available by fax 24 hours a day at no charge by calling 800/758-5804, ext. 121115. |
