InterMune Announces Fourth Quarter and Year End Financial Results
Wednesday February 19, 4:05 pm ET
Full Year Product Revenues of $112 Million, Up 180% over 2001
BRISBANE, Calif., Feb. 19 /PRNewswire-FirstCall/ -- InterMune, Inc. (Nasdaq: ITMN - News) today announced results from operations for the fourth quarter and year ended December 31, 2002.
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For the fourth quarter of 2002, InterMune recorded total product sales of $39.3 million, compared to $15.1 million for the same quarter in 2001, an increase of 161%. Sales of Actimmune® (interferon gamma-1b) for the fourth quarter of 2002 were $37.0 million, compared to $13.8 million in the same period in 2001, an increase of 168%.
The net loss for the fourth quarter of 2002 was $25.6 million, or $0.81 per share, compared to a net loss of $74.0 million, or $2.67 per share, in the fourth quarter of 2001. Excluding the one-time payment of $51.0 million in the fourth quarter of 2001 related to the purchase of oritavancin from Eli Lilly and Company, the non-GAAP net loss for 2001 was $23.0 million or $0.83 per share.
"We are very pleased with InterMune's financial performance in 2002, which continues our track record of revenue growth based on strong sales of our lead product, Actimmune, along with steadily increasing sales of Infergen®," said Scott Harkonen, President and CEO of InterMune. "With our marketed products and a portfolio of late-stage drug candidates for pulmonary disease, hepatitis C infection and serious bacterial infections, InterMune is well-positioned to build a strong and independent global business."
Research and development (R&D) expenses for the fourth quarter ended December 31, 2002 were $39.7 million, compared to $21.2 million for the same quarter in 2001. The higher spending in the fourth quarter of 2002 is largely attributed to expenses associated with Phase II and Phase III clinical programs for interferon gamma-1b and Phase III clinical and manufacturing technology transfer programs for oritavancin.
Selling, general and administrative (SG&A) expenses for the quarter ended December 31, 2002 were $15.6 million, compared to $11.2 million for the same quarter in 2001. The increase in spending is primarily due to the expansion of the Company's commercial organization for the re-launch of Infergen (interferon alfacon-1) in 2002.
Net interest expense for the fourth quarter of 2002 was $0.8 million, compared to net interest income of $0.1 million for the same quarter in 2001. Substantially lower market interest rates earned on the Company's portfolio in the fourth quarter of 2002 was the major contributing factor in this year over year change.
InterMune also reported results of operations for the year ended December 31, 2002. The Company recorded net product sales for the year ended December 31, 2002 of $112.0 million, compared to $40.0 million for the same period in 2001, an increase of 180%. Sales of Actimmune for the year ended December 31, 2002 were $105.8 million, compared to $36.3 million in the same period in 2001, an increase of 191%.
For the year ended December 31, 2002, InterMune reported a net loss of $144.3 million, or $4.72 per share, compared to a net loss $118.2 million, or $4.67 per share, for the year ended 2001. Excluding the one-time payments in 2002 to Eli Lilly of $15 million related to oritavancin and to Marnac, Inc. of $18.8 million related to the acquisition of pirfenidone, the non-GAAP net loss for the year was $110.6 million or $3.61 per share. This compares to a non-GAAP net loss for the year ended 2001 of $61.8 million, or $2.44 per share, which excludes one-time payments of $5.4 million to Amgen Inc. for the acquisition of rights to develop a PEGylated form of Infergen, and of $51 million related to the purchase of worldwide rights to oritavancin from Eli Lilly.
R&D expenses for the year ended December 31, 2002 were $129.6 million, compared to $52.0 million in the same period in 2001. The increase in spending in 2002 is largely attributable to expenses associated with the Phase II and Phase III clinical programs for interferon gamma-1b and Phase III clinical and manufacturing technology transfer programs for oritavancin.
SG&A expenses were $62.8 million and $35.9 million for the year ended December 31, 2002, and 2001, respectively. The increase in spending is largely due to the expansion of the Company's commercial organization and the move to its new corporate headquarters in July 2001.
Net interest expense for the year ended December 31, 2002 was $2.4 million, compared to net interest income of $6.5 million for the same period last year. The increase in net interest expense for 2002 is a result of substantially lower market interest rates earned on the Company's portfolio and a full year of interest expense associated with the issuance of subordinated convertible debentures in July 2001.
At December 31, 2002, the Company's cash, cash equivalents and available-for-sale securities totaled $316.4 million.
Financial Outlook for 2003
InterMune also announced its financial guidance for 2003. The Company projects total net product sales for 2003 to be in the range of $170 to $195 million, with Actimmune net product sales projected to be in the range of $160 to $180 million for the full year. Gross margins are expected to be in the range of 75% to 77%, fluctuating based upon product mix, but largely driven by gross margin of Actimmune. The Company's spending guidance for 2003 for R&D expenses, excluding any acquisitions of in-process R&D (IP R&D), is $140 to $150 million, and SG&A expenses are $80 to $85 million. In addition, during the year, the Company anticipates making success-based milestone payments of approximately $13.0 million that would be classified as IPR&D.
During 2003, the Company will update its financial guidance for both revenue and expenses, as needed, at each quarterly financial reporting period. InterMune is committed to building a strong and independent global business by successfully marketing our current products and advancing the development of our clinical pipeline. In addition, achieving profitability remains one of the company's primary strategic goals.
Fourth Quarter Product and Pipeline Highlights
Actimmune for IPF
In November 2002, InterMune reported on data from a randomized, controlled Phase III clinical trial evaluating interferon gamma-1b for the treatment of idiopathic pulmonary fibrosis (IPF), a fatal lung disease, at the 2002 annual meeting of the American College of Chest Physicians (ACCP) in San Diego. These data showed that interferon gamma-1b did not demonstrate statistically significant efficacy with respect to the primary or secondary endpoints. However, the overall analysis of survival, a secondary endpoint in this trial, suggested that interferon gamma-1b may provide a survival benefit for patients with mild to moderate impairment in lung function. Interferon gamma-1b was generally well tolerated with few discontinuations due to adverse events, though there were a greater number of non-fatal pneumonias in the treatment group versus placebo.
Recently, InterMune announced preliminary results from a follow-on observation period and from an analysis of compliant patients in its Phase III clinical trial. The Company believes that these data continue to support the suggestion of a potential mortality benefit in mild to moderate IPF patients receiving therapy with interferon gamma-1b. In addition, the majority of patients involved in the blinded phase III trial elected to rollover to the optional open-label extension study to be followed for at least 12 months.
Infergen and PEG-alfacon for Hepatitis C
In the fourth quarter of 2002, InterMune announced that positive preliminary results of an investigator initiated, prospective randomized Phase IV clinical trial comparing the use of Infergen plus ribavirin versus interferon alfa-2b plus ribavirin for the treatment of chronic hepatitis C virus (HCV) infections were presented at the 53rd Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in Boston. Patients treated with Infergen in combination with ribavirin achieved a higher sustained virologic response (SVR), the study's primary endpoint, compared to those patients treated with interferon alfa-2b plus ribavirin. Side effects were similar in both arms of the study and included flu-like symptoms, fatigue, headache, nausea, cough and mood disorders such as depression, anxiety, irritability and insomnia. InterMune currently markets Infergen, a bio-engineered type I interferon alpha, for the treatment of patients with chronic HCV infections.
Recently, InterMune initiated a Phase I clinical study to evaluate PEG-alfacon, the PEGylated version of Infergen, as a potential new treatment for chronic HCV infection. PEGylation is a technology designed to chemically modify drugs to decrease dosing frequency and possibly improve drug efficacy and safety.
Oritavancin
In the fourth quarter of 2002, InterMune announced that the company had completed patient enrollment in a second multi-center, global Phase III randomized double-blind controlled trial of oritavancin for the treatment of complicated skin and skin structure infections (CSSIs). Oritavancin is InterMune's second-generation glycopeptide antibiotic to treat Gram-positive bacterial infections.
Pirfenidone
In the fourth quarter of 2002, InterMune made progress with the clinical development of pirfenidone, a small molecule, orally available agent currently being evaluated in six clinical trials for fibrotic diseases of the lung, liver, kidney and heart. The Company is in the process of completing, ahead of schedule, a 55-patient proof-of-concept Phase II clinical trial of pirfenidone in IPF, to collect preliminary safety and efficacy data. Based on these data the Company would plan to accelerate the design and implementation of a larger-scale registrational program.
Organization
"During the past year, InterMune significantly increased the depth and breadth of its management team by adding accomplished board members and seasoned executives from industry leading biotechnology and pharmaceutical companies to head our finance, regulatory, medical affairs and applied research organizations," Dr. Harkonen said. "With these key advisory and management team members in place, we are well positioned to continue our success in 2003 and to build the company's long term value."
The following senior executives joined InterMune in 2002:
-- Marianne Armstrong, Ph.D., Senior Vice President of Global Regulatory
Operations and Corporate Compliance, from Genentech, Inc.;
-- Sharon Surrey-Barbari, Chief Financial Officer and Senior Vice
President of Finance and Administration, from Gilead Sciences, Inc.;
-- Larry Blatt, Ph.D., Vice President of Biopharmacology Research, from
Ribozyme Pharmaceuticals, Inc. and Amgen, Inc.;
-- Keith Katkin, Vice President of Pulmonary Marketing, from Amgen, Inc.;
-- Randall Kaye, M.D., Vice President of Medical Affairs from Pfizer,
Inc.; and
-- Brian Murphy, M.D., Vice President of Marketing and Commercial
Strategy, Hepatology, from Roche Pharmaceuticals.
The following individuals with business, medical and government expertise joined InterMune's Board of Directors or Scientific Advisory Board:
-- William A. Halter, Director, former Acting Commissioner and Deputy
Commissioner of Social Security
-- William R. Ringo, Jr., Director, former President, Oncology and
Critical Care Products at Eli Lilly and Company
-- Thomas R. Hodgson, Director, former President and Chief Operating
Officer of Abbott Laboratories (appointed in January 2003)
-- Edgar C. Engleman, M.D., Chairman of Scientific Advisory Board, current
Professor of Pathology and Medicine at Stanford University Medical
School
Conference Call Details:
The Company's management will host a conference call today at 4:30 p.m. (EST) to discuss the fourth quarter and year end financial results. Interested investors and others may participate in the conference call by dialing 888-799-0528 (domestic) or 706-634-0154 (international). A telephone replay of the conference call will be available through Friday, February 21, 2003. To access the replay, please dial 800-642-1687 (domestic) or 706-645-9291 (international) and reference pass code 7533138.
About InterMune
InterMune is a commercially driven biopharmaceutical company focused on the marketing, development and applied research of life-saving therapies for pulmonary disease, infectious disease and hepatology. For additional information about InterMune, please visit www.intermune.com.
Except for the historical information contained herein, this press release contains certain forward-looking statements that involve risks and uncertainties, including without limitation the statements indicating that: (A) InterMune projects for 2003: (i) total net product sales to be in the range of $170 to $195 million, with Actimmune net product sales projected to be in the range of $160 to $180 million for the full year and gross margins expected to be in the range of 75% to 77%; and (ii) spending guidance for R&D expenses, excluding in-process R&D, will be $140 to $150 million; SG&A expenses will be $80 to $85 million; and success-based milestone payments will be approximately $13.0 million; and (B) InterMune believes that: (i) data from a randomized, controlled Phase III clinical trial evaluating interferon gamma-1b for the treatment of idiopathic pulmonary fibrosis (IPF) suggests that the overall analysis of survival, a secondary endpoint in this trial, may provide a survival benefit for patients with mild to moderate impairment in lung function; and (ii) the analysis of data from a follow-on observation period and an analysis of compliant patients suggests a potential mortality benefit in mild to moderate IPF patients receiving therapy with interferon gamma-1b. Factors that could cause or contribute to such differences include, but are not limited to those discussed in detail under the heading "Risk Factors" and the other risks and factors discussed in InterMune's 10-Q report filed with the SEC on November 14, 2002, and other periodic reports (i.e., 10-Q and 8-K) filed with the SEC, which are incorporated herein by reference. The risks and other factors that follow, concerning the forward-looking statements in this press release, should be considered only in connection with the fully discussed risks and other factors discussed in detail in the 10-Q report and InterMune's other periodic reports filed with the SEC. The forward-looking statements concerning (A) above are subject to the risks and uncertainties that include, without limitation, those associated with: (i) a continuing increase in sales of Actimmune for IPF, an indication for which Actimmune has not been approved by the FDA; (ii) regulation by the FDA with respect to InterMune's communications with physicians; (iii) the successful marketing of Infergen for chronic hepatitis C infections; (iv) whether InterMune is able to obtain, maintain and enforce patents and other intellectual property; (v) significant regulatory, supply, intellectual property and competitive barriers to entry; (vi) an increase in Amphotec/Amphocil sales; (vii) significant competition; (viii) changes in budget constraints; and/or (ix) the risks and other factors discussed in detail in the 10-Q report filed with the SEC. InterMune's forward-looking statements concerning (B) above are subject to the risks and uncertainties that include, without limitation, those associated with: (a) drawing any clinical, medical or other meaning or conclusion from the suggested relationship between compliance and survival; (b) obtaining additional data concerning: (i) other survival data and (ii) other exploratory analyses of the safety and efficacy of interferon gamma-1b for the treatment of IPF; (c) obtaining data from other clinical trials, if any, of interferon gamma-1b for the treatment of IPF; (d) the uncertain and risky drug development and regulatory process; and/or (e) the risks and other factors discussed in detail in the 10-Q report filed with the SEC.
InterMune, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Product sales
Actimmune, net $36,961 $13,807 $105,802 $36,320
Other, net 2,357 1,258 6,163 3,631
Total net sales 39,318 15,065 111,965 39,951
Costs and expenses:
Cost of goods sold 7,921 4,960 24,161 15,474
Amortization of product
rights 939 815 3,593 4,805
Research and development 39,747 21,176 129,590 52,049
Acquired in-process
research and
development -- 51,000 33,750 56,400
Selling, general and
administrative 15,557 11,204 62,752 35,895
Total costs and
expenses 64,164 89,155 253,846 164,623
Loss from operations (24,846) (74,090) (141,881) (124,672)
Interest income 1,686 2,562 7,375 11,253
Interest expense (2,444) (2,426) (9,803) (4,772)
Net loss $(25,604) $(73,954) $(144,309) $(118,191)
Basic and diluted net loss
per share $(0.81) $(2.67) $(4.72) $(4.67)
Shares used in calculating
basic and
diluted net loss per
share 31,450 27,726 30,589 25,322
Comparative amounts excluding Acquired in-process research and development
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Net loss $(25,604) $(73,954) $(144,309) $(118,191)
less: Acquired in-
process research
and development -- (51,000) (33,750) (56,400)
Non-GAAP net loss
excluding acquired
in-process research and
development $(25,604) $(22,954) $(110,559) $(61,791)
Non-GAAP net loss per
share $(0.81) $(0.83) $(3.61) $(2.44)
Shares used in calculating
Non-GAAP
basic and diluted net
loss per share 31,450 27,726 30,589 25,322
InterMune, Inc.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(unaudited, in thousands)
December 31, December 31,
2002 2001
Cash, cash equivalents and
available-for-sale
securities $316,411 $332,067
Other assets 68,470 55,179
Total assets $384,881 $387,246
Total liabilities $52,663 $22,687
Convertible subordinated
notes 149,500 149,500
Stockholders' equity 182,718 215,059
Total liabilities and
stockholders' equity $384,881 $387,246
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