CURIS Reports Fourth Quarter and Fiscal 2002 Results
Thursday February 20, 9:35 am ET
Significant Corporate Partnerships and Royalty Monetizations Achieved
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb. 20, 2003--CURIS, Inc. (NASDAQ:CRIS - News), the therapeutic drug development company, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2002.
For the fourth quarter of 2002, the Company reported net income applicable to common stockholders under accounting principles generally accepted in the United States (GAAP) of $12,070,000, or $0.35 per share, compared to a net loss of $16,434,000 or ($0.51) per share for the prior year period. Excluding stock-based compensation, amortization of intangible assets, and the accretion of a mandatory preferred stock dividend, the non-GAAP net income applicable to common stockholders for the three-month period ended December 31, 2002 was $13,025,000 or $0.37 per share, as compared to a net loss of $9,257,000 or ($0.29) per share for the prior year period.
Revenues for the fourth quarter of 2002 were $17,820,000 as compared to $347,000 for the fourth quarter of 2001. The increase in revenues for the fourth quarter of 2002 was primarily due to the completion of several business transactions in the quarter such as the monetization of future royalties owed to CURIS from Stryker Corporation for sales of the OP-1 bone regeneration product, and fees paid as part of licensing transactions with Ortho Biotech (a subsidiary of Johnson & Johnson) and Amylin Pharmaceuticals.
Operating expenses for the fourth quarter of 2002 were $4,709,000 as compared to $15,946,000 for the fourth quarter of 2001. Approximately $5,015,000 of the reduction can be attributed to lower personnel-related costs, reduced contract research, and lower outside service expenses resulting from the February 2002 realignment of the Company's development programs, with the remainder reflecting a decrease of $6,222,000 in non-cash expenses during the period.
The Company's equity in the loss from CURIS Newco, Ltd., a joint venture formed in July 2001 between the Company and affiliates of Elan Corporation plc, increased to $1,094,000 for the fourth quarter of 2002 as compared to $756,000 for the fourth quarter of 2001, representing CURIS' pro rata share of the joint venture's loss for the period.
"The fourth quarter saw the completion of a number of important business deals for CURIS that were both tactical and strategic in nature, improving the Company's cash position and allowing it to focus on its strengths in small molecule and protein-based therapies," said Christopher U. Missling, CURIS' Chief Financial Officer.
Net loss applicable to common stockholders for the year ended December 31, 2002 under GAAP was $83,038,000 or ($2.57) per share as compared to $82,190,000 or ($2.58) per share for the year ended December 31, 2001. Excluding stock-based compensation, amortization of intangible assets, impairment of property and equipment (2002 only), impairment of goodwill (2002 only) and accretion of a mandatory preferred stock dividend (items which do not impact CURIS' cash reserves), the non-GAAP net loss applicable to common stockholders for the year ended December 31, 2002 was $10,246,000 or ($0.32) per share, as compared to $48,167,000 or ($1.51) per share for the year ended December 31, 2001.
Revenues for fiscal year 2002 were $18,391,000 as compared to $1,087,000 for the prior year, primarily due to the completion of the Stryker royalty stream monetization and partnerships with Ortho Biotech and Amylin Pharmaceuticals.
Operating expenses for the year ended December 31, 2002 were $97,777,000 as compared to $73,261,000 for the prior year. The increase is primarily attributable charges of $69,435,000 from the impairment of goodwill and property and equipment (2002 only) and $3,490,000 for expenses incurred during the February 2002 realignment of the Company's development programs, which were partially offset by a decrease in amortization of intangible assets and stock-based compensation expense of $31,063,000 million and a decrease in research and development expenses of $15,014,000.
The Company's equity in the loss from CURIS Newco, Ltd., decreased to $4,311,000 for the year ended December 31, 2002 from $13,453,000 during 2001, representing CURIS' pro rata share of the joint venture's loss for the period.
As of December 31, 2002, CURIS' cash and investments were $40,976,000. As of December 31, 2002, there were 31,746,337 shares of common stock and 1,000 shares of Series A convertible exchangeable preferred stock outstanding.
"2002 was a significant year for CURIS - the Company more effectively focused on protein and small molecule based therapeutic drug development, and established several new strategically important corporate partnerships," said Daniel Passeri, CURIS' President and Chief Executive Officer. "CURIS has a number of promising drug candidates in development, both with partners and internally, which we'll continue to develop in 2003. Additionally, we are actively seeking at least one drug candidate for which CURIS will take sole development responsibility in 2003 - a significant step forward in CURIS' capabilities as a leading therapeutic development company."
Pro Forma Results
CURIS reports pro forma Non-GAAP net income (loss) applicable to common stockholders which excludes certain non- operational, non-cash and specified other charges that management generally does not consider in evaluating the Company's ongoing operations. These results are provided as a complement to reported results determined in accordance with GAAP. Management believes this pro forma measure helps indicate underlying trends in the Company's business and uses this pro forma measure to establish budgets and operational goals, to manage the Company's business and to evaluate its performance. A reconciliation of pro forma to GAAP results is included as an exhibit to this press release.
CURIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Year ended
December 31, December 31,
2002 2001 2002 2001
--------------- ----------- ---------- ----------
Revenues $17,819,952 $346,785 $18,390,538 $1,086,503
------------ -------- ----------- ------------
Operating
expenses:
Research and
development 2,436,058 6,168,586 14,057,715 29,072,068
General and
adminis-
trative 1,498,900 2,781,355 8,160,012 10,492,525
Stock-based
compensation 480,848 1,132,661 2,159,594 10,358,302
Amortization
of intangible
assets 293,593 5,863,827 474,509 23,338,539
Impairment of
property and
equipment --- --- 5,336,786 ---
Impairment of
goodwill --- --- 64,098,344 ---
Realignment
expenses --- --- 3,490,000 ---
------------ ----------- ----------- ------------
Total
operating
expenses 4,709,399 15,946,429 97,776,960 73,261,434
------------ ----------- ----------- ------------
Income (loss)
from
operations 13,110,553 (15,599,644) (79,386,422) (72,174,931)
Equity in Loss
from CURIS
Newco, Ltd. (1,093,845) (755,734) (4,310,912) (13,453,140)
Total other
income, net 233,770 101,412 1,381,899 3,764,421
------------ ----------- ---------- ------------
Net income
(loss) 12,250,478 (16,253,966) (82,315,435) (81,863,650)
Accretion on
Series A
Convertible
Exchangeable
Preferred
Stock (180,225) (180,226) (722,903) (326,381)
------------- ----------- ------------ ------------
Net income
(loss)
applicable to
common
stockholders $12,070,253 $(16,434,192) $(83,038,338) $(82,190,031)
============ ============= ============ =============
Basic net
income (loss)
per common
share $0.38 $(0.51) $(2.57) $(2.58)
============ =========== ============ ============
Weighted
average common
shares for
basic net
income (loss)
computation 31,843,548 32,291,959 32,267,106 31,858,923
============ =========== ========== =============
Diluted net
income (loss)
per common
share(1) $0.35 $(0.51) $(2.57) $(2.58)
============ =========== =========== ============
Weighted
average common
shares for
diluted net
income (loss)
computation 35,528,208 32,291,959 32,267,106 31,858,923
============ =========== ========== ============
(1) See "Computation of Diluted Earnings Per Share" table attached
herewith.
CURIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, December 31,
2002 2001
-------------- ---------------
ASSETS
Cash, cash equivalents and marketable
securities $36,573,276 $51,216,978
Cash, cash equivalents and marketable
securities - restricted 4,403,188 890,350
Property and equipment, net 3,775,269 11,060,711
Intangible assets, net 9,234,273 73,807,125
Other assets 8,455,687 7,781,053
-------------- ---------------
Total assets $ 62,441,693 $ 144,756,217
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $6,266,068 $8,681,868
Debt and capital lease obligations,
excluding
convertible debt 5,529,471 8,060,937
Convertible debt 6,885,486 2,506,852
Deferred revenue 12,154,006 12,145,533
-------------- ---------------
Total liabilities 30,835,031 31,395,190
Series A Convertible Exchangeable
Preferred Stock 13,064,283 12,341,381
Total stockholders' equity 18,542,379 101,019,646
-------------- ---------------
Total liabilities and stockholders'
equity $62,441,693 $144,756,217
============== ===============
CURIS, INC.
RECONCILIATION OF PRO FORMA RESULTS AND GAAP RESULTS
(UNAUDITED)
Three months ended Year ended
December 31, December 31,
2002 2001 2002 2001
-------------------------------------------------------
Net income
(loss)
applicable to
common
stockholders,
excluding
stock-based
compensation,
amortization
of intangible
assets,
accretion of a
mandatory
preferred
stock
dividend, and
other non-cash
items $13,024,919 $(9,257,478) $(10,246,202) $(48,166,809)
Adjustments to
reconcile to
GAAP net
income (loss)
applicable to
common
stockholders:
Stock-based
compensation (480,848) (1,132,661) (2,159,594) (10,358,302)
Amortization
of intangible
assets (293,593) (5,863,827) (474,509) (23,338,539)
Impairment
of property
and
equipment --- --- (5,336,786) ---
Impairment
of goodwill --- --- (64,098,344) ---
Accretion on
Series A
Convertible
Exchangeable
Preferred
Stock (180,225) (180,226) (722,903) (326,381)
-------------------------------------------------------
Net income
(loss)
applicable to
common
stockholders,
GAAP Basis $12,070,253 $(16,434,192) $(83,038,338) $(82,190,031)
=======================================================
Diluted net income (loss) per
common share, excluding stock-
based compensation,
amortization of intangible
assets, accretion of a
mandatory preferred stock
dividend, and other non-cash
items $0.37 $(0.29) $(0.32) $(1.51)
Adjustments to reconcile to
GAAP diluted net income (loss)
per common share:
Stock-based compensation (0.01) (0.04) (0.07) (0.33)
Amortization of intangible
assets (0.01) (0.17) (0.01) (0.73)
Impairment of property and
equipment --- --- (0.17) ---
Impairment of goodwill --- --- (1.98) ---
Accretion on Series A
Convertible
Exchangeable Preferred Stock --- (0.01) (0.02) (0.01)
-------- --------- --------- ---------
Diluted net income (loss) per
common share, GAAP Basis $ 0.35 $ (0.51) $ (2.57) $ (2.58)
======== ========= ========= =========
CURIS, INC.
COMPUTATION OF DILUTED EARNINGS PER SHARE
(UNAUDITED)(2)
Three months
ended
December 31,
2002
--------------
Net income applicable to common stockholders, GAAP
Basis $12,070,253
Adjustments to reconcile to GAAP net income applicable
to common stockholders to net income for use in
diluted net income per common share calculation:
Interest expense on convertible notes 128,382
Accretion on Series A Convertible
Exchangeable Preferred Stock 180,225
--------------
Net income applicable to common stockholders after
assumed conversion of convertible notes and Series A
Convertible Exchangeable Preferred Stock $ 12,378,860
==============
Net income per common share - diluted $0.35
==============
Weighted average common shares for diluted net income
computation 35,528,208
==============
(2) This table only covers the Company's operating results for the
three months ended December 31, 2002 because the Company has
incurred net losses applicable to common stockholders for all
other periods presented.
About CURIS, Inc.
CURIS, Inc. is a therapeutic drug development company. The Company's technology focus is on regulatory pathways that control repair and regeneration. CURIS' product development involves using proteins or small molecules to modulate these pathways. CURIS has successfully used this technology and product development strategy to produce several promising drug product candidates in the fields of kidney disease, neurological disorders, cancer, and alopecia (hair loss). For more information, please visit the CURIS web site at www.CURIS.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about CURIS' future operating results, the future success of its current corporate partnerships, other potential future partnerships and its drug discovery and development programs. Such statements may contain the words "believes", "expects", "anticipates", "plans", "seeks", "estimates" or similar expressions. These forward looking statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that may cause CURIS' actual results to be materially different from those indicated by such forward-looking statements. Actual results can be affected by a number of important factors including, among other things, adverse results in CURIS' and its strategic partners' product development programs, difficulties or delays in obtaining or maintaining required regulatory approvals, CURIS' ability to obtain or maintain patent or other proprietary intellectual property protection, changes in or an inability to execute CURIS' realigned business strategy, CURIS' need for additional funding to conduct research and development of its product candidates, CURIS' ability to enter into and maintain important strategic partnerships and other risk factors identified in CURIS' most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. CURIS disclaims any intention or obligation to update any of the forward-looking statements after the date of this press release whether as a result of new information, future events or otherwise.
--------------------------------------------------------------------------------
Contact:
For CURIS, Inc.
Christopher U. Missling, Ph.D., 617/503-6587
or
Marc F. Charette, Ph.D., 617/503-6629
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Source: CURIS, Inc. |
