ITMN beats on earnings, but is light on revenues, officially ditches goal profitability in '06. I'm guessing ITMN is going to be a bit weak . . .
>>BRISBANE, Calif., July 29 /PRNewswire-FirstCall/ -- InterMune, Inc. (Nasdaq: ITMN - News) today announced results from operations for the second quarter and six months ended June 30, 2004.
"During the second quarter we made significant progress advancing our pipeline and achieved key development milestones with the initiation of our two hepatology clinical trials," said Dan Welch, InterMune's CEO and President. "In addition, we saw the favorable financial impact of our efforts to focus the Company in the areas of hepatology and pulmonology as we were able to reduce our second quarter year-over-year net loss by 36%."
The Company recorded a net loss for the second quarter of 2004 of $13.1 million, or $0.41 per share, a 36% reduction from a net loss of $20.3 million, or $0.64 per share, for the second quarter of 2003.
Total net product sales for the second quarter of 2004 were $35.9 million, compared to $35.7 million for the same quarter in 2003. Sales of Actimmune® (interferon gamma-1b) for the second quarter of 2004 were $31.3 million, compared to $33.1 million for the same quarter in 2003, a decrease of 5%. Infergen® (interferon alfacon-1) sales for the second quarter of 2004 were $3.9 million compared to $1.9 million for the same period in 2003, an increase of 106%.
Cost of goods sold for the second quarter of 2004 was $8.8 million, approximately 25% of net product sales, compared to $7.9 million, or approximately 22% of net product sales, in the same quarter of 2003. The increase in cost of goods sold for the 2004 period, when compared to the same period in 2003, was primarily due to the impact of foreign currency exchange rates and a reserve for excess Amphotec® (amphotericin B colloidal dispersion) inventory.
Research and development (R&D) expenses for the second quarter of 2004 were $20.4 million compared to $28.4 million for the same period in 2003. The decreased spending in 2004 was largely attributable to reduced expenses associated with the development of oritavancin, offset in part by increased spending in the Company's core therapeutic areas of hepatology and pulmonology.
Selling, general and administrative (SG&A) expenses for the second quarter of 2004 were $18.0 million compared to $17.5 million for the same period in 2003.
Net interest expense for the second quarter of 2004 was $1.0 million, compared to net interest expense of $1.4 million for the same quarter in 2003. The decrease in net interest expense for the second quarter of 2004 was largely due to lower interest expense on the Company's convertible notes as a result of the repurchase of $52.5 million of the Company's 5.75% convertible subordinated notes due 2006 during the first quarter of 2004.
InterMune also reported results of operations for the six months ended June 30, 2004. The net loss for the six months ended June 30, 2004 was $24.8 million, or $0.78 per share. This compares to a net loss for the same period last year of $39.3 million, or $1.24 per share. The net loss for the six months ended June 30, 2004 included a charge of $3.0 million, or $0.10 per share, related to the early retirement of $52.5 million of the Company's 5.75% convertible subordinated notes due 2006 which were repurchased during the first quarter of 2004. Excluding the charge for the early retirement of the debt, the non-GAAP net loss for the six months ended June 30, 2004 was $21.8 million or $0.68 per share. The net loss for the six months ended June 30, 2003 included one-time payments totaling $1.8 million, or $0.05 per share, to Amgen Inc. and Nektar Therapeutics related to performance milestones that InterMune achieved in its PEG-Alfacon program. Excluding the one-time payments in 2003 to Amgen and Nektar, the non-GAAP net loss for the six months ended June 30, 2003 was $37.5 million, or $1.19 per share.
The Company recorded net product sales of $74.0 million for the six months ended June 30, 2004, compared to $76.1 million for the first six months of 2003, a decrease of 3%. Actimmune sales for the first six months of 2004 were $64.3 million, compared to $71.0 million for the first six months of 2003, a decrease of 9%. Infergen revenues for the first six months of 2004 were $7.9 million compared to $3.6 million for the first half of 2003, an increase of 123%.
Cost of goods sold for the six months ended June 30, 2004 was $18.5 million, approximately 25% of net product sales, compared to $17.7 million, or approximately 23% of net product sales, for the same period in 2003. The increase in cost of goods sold for the 2004 period, when compared to the same period in 2003, was primarily due to the impact of foreign currency exchange rates and a reserve for excess Amphotec inventory. R&D expenses for the six months ended June 30, 2004 were $38.6 million compared to $60.3 million for the same period ended June 30, 2003. The decreased spending in 2004, when compared to 2003, was largely attributable to reduced expenses associated with the development of oritavancin and the results of refocusing investment in the Company's core development programs of hepatology and pulmonology.
SG&A expenses were $34.7 million and $31.1 million for the six-month periods ended June 30, 2004 and 2003, respectively. The increase in spending in 2004, when compared to the first half of 2003, was primarily due to higher spending associated with marketing related activities and increased compensation, recruiting and consulting expenses.
Net interest expense for the six months ended June 30, 2004 was $2.4 million, compared to net interest expense of $2.7 million for the same period last year. The decrease in net interest expense for the 2004 period was primarily due to lower interest expense on the Company's convertible subordinated notes as a result of the repurchase of $52.5 million of the Company's 5.75% convertible subordinated notes due 2006 during the period. The Company recorded other expenses for the six months ended June 30, 2004 of $3.0 million attributable to the repurchase of these notes. These expenses include a charge of $2.2 million for the repurchase of the notes, and the acceleration of $0.8 million of the deferred issuance costs associated with these notes.
As of June 30, 2004, the Company's cash, cash equivalents and available-for-sale securities totaled $307.1 million.
Second Quarter Business Highlights
Hepatology
-- Initiated Phase III DIRECT Trial of daily Infergen plus ribavirin in
patients with chronic hepatitis C who have not responded to pegylated
interferon alpha-2 plus ribavirin combination therapy (HCV
nonresponders).
-- Initiated Phase II trial of daily Infergen plus Actimmune with and
without ribavirin in HCV nonresponders.
-- Abstracts were presented regarding the clinical experience with daily
Infergen plus ribavirin and daily Infergen plus Actimmune for the
treatment of HCV nonresponders at the Digestive Disease Week
Conference in New Orleans, May 15 - 20, 2004.
-- Continued progress towards selection of a clinical candidate in the
HCV protease inhibitor collaboration with Array Biopharma.
Pulmonology
-- Launched Aralast(R) (alpha1-proteinase inhibitor (human)) to
pulmonologists in the United States for the treatment of hereditary
emphysema.
-- Continued enrolling patients in the Phase III INSPIRE Trial,
evaluating Actimmune for the treatment of idiopathic pulmonary
fibrosis.
2004 Guidance
InterMune anticipates total revenues for the year ended December 31, 2004 to be approximately $135 million to $145 million. For the remainder of 2004 and for the foreseeable future, InterMune will provide revenue guidance in the form of total revenues and will no longer provide product-by-product revenue guidance. The Company expects to continue to report individual product revenues in its quarterly earnings releases.
The Company continues to project cost of goods sold to be in the range of 25% to 27% of sales, largely driven by Actimmune. The Company's guidance for R&D expenses, excluding any costs for acquired research and development and milestone payments, remains $85 million to $95 million. The Company continues to project SG&A expenses to be between $75 million and $80 million. The Company projects acquired research and development and milestone payments will be approximately $1 million.
"Our revised revenue outlook prompted us to review the appropriateness of our goal to be financially self-sufficient in 2006. Though we remain committed to financial discipline, we believe that this goal is not in the best interests of shareholders because it would require us to compromise the value creating potential of our pipeline," said Dan Welch, InterMune's CEO and President. "We believe that the best approach to creating meaningful and sustainable value for our shareholders is the rapid development of our late-stage pipeline."
Conference Call and Webcast
The Company's management will host a conference call today at 1:30 p.m. PDT to discuss the second quarter financial results. Interested investors and others may participate in the conference call by dialing 888-799-0528 (U.S.) or 706-634-0154 (international). A replay of the webcast and teleconference will be available approximately three hours after the call for five business days. To access the replay, please call 800-642-1687 (U.S.) or 706-645-9291 (international), and enter the conference ID# 8915509.
To access the webcast, please log on to the Company's website at www.intermune.com at least 15 minutes prior to the start of the call to ensure adequate time for any software downloads that may be required.<<
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Cheers, Tuck |
