>>BRISBANE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- InterMune, Inc. (Nasdaq: ITMN - News) today announced results from operations for the third quarter and nine months ended September 30, 2004.
"During the quarter we continued to make progress advancing our late-stage pipeline; enrollment of our three key ongoing trials remains on track and we completed an agreement that will allow us to move forward with the development of our very exciting protease inhibitor program," said Dan Welch, InterMune's CEO and President. "Our total revenue reached levels comparable to the third quarter of last year and we maintained tight financial controls, enabling us to reduce the net loss by 63%. We are expecting total revenue to reach the upper end of our 2004 total revenue guidance of $135 to $145 million and are lowering our 2004 operating expense guidance."
The Company recorded a net loss for the third quarter of 2004 of $12.9 million, or $0.40 per share, a 63% reduction from a net loss of $34.5 million, or $1.09 per share, for the third quarter of 2003. The third quarter net loss this year included a charge of $4.1 million, or $0.13 per share, related to the early retirement of $97 million of the Company's 5.75% convertible subordinated notes repurchased during the quarter and a charge of $2.9 million, or $0.09 per share, taken for contractual purchase commitments for excess Actimmune inventory. Excluding these items, the non-GAAP net loss for the third quarter of 2004 was $5.9 million or $0.18 per share. The net loss for the third quarter of 2003 included an accrual for a milestone-based liability totaling $10.4 million, or $0.33 per share, associated with oritavancin and $4.8 million, or $0.15 per share, recognized as an impairment charge for Amphotec® / Amphocil® (amphotericin B cholesteryl sulfate complex for injection) (Amphotec). Excluding these items, the non-GAAP net loss for the third quarter of 2003 was $19.3 million, or $0.61 per share.
For the third quarter of 2004, InterMune recorded total revenue of $37.5 million, compared to $38.2 million for the same quarter in 2003, a decrease of 2%, and $35.9 million for the second quarter of 2004, an increase of 4%. Sales of Actimmune® (interferon gamma-1b) for the third quarter of 2004 were $30.1 million, compared to $35.0 million for the same quarter in 2003, a decline of 14%. Net sales of Infergen® (interferon alfacon-1) were $6.2 million for the third quarter of 2004 compared to $2.5 million in the same period of 2003, an increase of 148%.
Cost of goods sold for the third quarter of 2004 was $12.3 million, approximately 33% of total revenue, compared to $9.4 million, or approximately 25% of total revenue, in the same quarter of 2003. The increase in cost of goods sold reflects a charge of $2.9 million taken for contractual purchase commitments for excess Actimmune inventory. Excluding the $2.9 million inventory charge, cost of goods sold in the third quarter of 2004 was $9.4 million, or approximately 25% of total revenue.
Research and development (R&D) expenses for the third quarter of 2004 were $16.3 million compared to $28.8 million for the same period in 2003. The decrease in 2004 was largely attributable to the focusing of the Company's R&D investment in the areas of hepatology and pulmonology and discontinuing a number of programs outside of these two core areas.
Selling, general and administrative (SG&A) expenses for the third quarter of 2004 were $17.1 million compared to $16.8 million for the same period in 2003. The increase was primarily due to higher spending on Infergen marketing related activities.
Net interest income for the third quarter of 2004 was $0.2 million, compared to net interest expense of $1.5 million for the same quarter in 2003. The change for the third quarter of 2004 was primarily due to lower interest expense as a result of the repurchase of $97 million of the Company's 5.75% convertible subordinated notes due in July 2006, and the impact of the lower interest rate on the Company's $170 million 0.25% convertible subordinated notes due in March 2011.
Other expense of $4.1 million for the third quarter of 2004 included a charge of $2.8 million for the repurchase of the remaining $97 million of the 5.75% convertible subordinated notes due in July 2006, and the acceleration of the amortization of $1.3 million of deferred issuance costs associated with these notes.
Results for the nine months ended September 30, 2004
InterMune recorded a net loss for the nine months ended September 30, 2004 of $37.6 million, or $1.18 per share, compared to a net loss for the same period last year of $73.7 million, or $2.33 per share, a decrease of 49%. The net loss for the nine months ended September 30, 2004 included total charges of $7.1 million, or $0.22 per share, related to the early retirement of all of the Company's 5.75% convertible subordinated notes due in July 2006 and a charge of $2.9 million, or $0.09 per share, taken for contractual purchase commitments for excess Actimmune inventory. Excluding these items, the non-GAAP net loss for the nine months ended September 30, 2004 was $27.7 million, or $0.87 per share. The net loss for the nine months ended September 30, 2003 included an accrual for a milestone-based liability totaling $10.4 million, or $0.33 per share, associated with oritavancin and payments totaling $1.8 million, or $0.05 per share, due to Amgen Inc. and Nektar Therapeutics related to performance milestones the Company achieved in its PEG-Alfacon program. The net loss also included $4.8 million, or $0.15 per share, recognized as an impairment charge for Amphotec. Excluding these items, the non-GAAP net loss for the nine months ended September 30, 2003 was $56.8 million, or $1.80 per share.
The Company recorded total revenue of $111.5 million for the nine months ended September 30, 2004, compared to $114.3 million for the nine months ended September 30, 2003, a decrease of 2%. Actimmune sales for the first nine months of 2004 were $94.3 million, compared to $106.0 million for the same period in 2003, a decrease of 11%. Infergen sales for the first nine months of 2004 were $14.2 million compared to $6.0 million for the first nine months of 2003, an increase of 137%.
Cost of goods sold for the nine months ended September 30, 2004 was $30.8 million, approximately 28% of total revenue, compared to $27.1 million, or approximately 24% of total revenue, 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 a $2.9 million charge for contractual purchase commitments for excess Actimmune inventory. Excluding the $2.9 million inventory charge, cost of good sold for the nine months ended September 30, 2004 was $27.9 million, or approximately 25% of total revenue.
R&D expenses for the nine months ended September 30, 2004 were $54.9 million compared to $89.1 million for the same period ended September 30, 2003. The decrease in 2004 was largely attributable to the focusing of the Company's R&D investment in the areas of hepatology and pulmonology and discontinuing a number of programs outside of these two core areas.
SG&A expenses were $51.8 million and $48.0 million for the nine-month periods ended September 30, 2004 and 2003, respectively. The increase in 2004, when compared to the same period in 2003, was primarily associated with Infergen marketing related activities and increased compensation, recruiting, and consulting expenses associated with the reorganization.
Net interest expense for the nine months ended September 30, 2004 was $2.2 million, compared to net interest expense of $4.1 million for the same period last year. The decrease in net interest expense for 2004 was primarily due to the repurchase of all of the Company's $150 million 5.75% convertible subordinated notes due in July 2006, and the impact of the lower interest rate on the Company's $170 million 0.25% convertible subordinated notes due in March 2011.
The Company recorded other expenses for the nine months ended September 30, 2004 of $7.1 million. These expenses include a charge of $5.0 million for the repurchase of the notes, and the acceleration of the amortization of $2.1 million of deferred issuance costs associated with these notes.
As of September 30, 2004, the Company's cash, cash equivalents and available-for-sale securities totaled $202.0 million.
2004 Guidance
The Company announced favorable updates to its 2004 financial forecast.
Total revenue is now expected to be at the upper end of the Company's guided range of $135 million to $145 million. The Company continues to anticipate 2004 cost of goods sold of 25% to 27% of total sales.
R&D expenses for the year ended December 31, 2004 are expected to be between $75 million to $85 million. This is a decrease from previous guidance of $85 million to $95 million and is the result of fiscal discipline exercised throughout 2004 rather than delays in the Company's clinical programs, all of which are on track. The Company continues to project 2004 SG&A expenses within a range of $75 million to $80 million and no longer expects to make any acquired research and development and milestone payments during the remainder of 2004.
Third Quarter and Upcoming Business Highlights
Hepatology
-- Continued enrolling patients in two key trials evaluating treatment
options for patients with chronic hepatitis C virus (HCV) who have not
responded to pegylated interferon alpha-2 plus ribavirin combination
therapy (PEG nonresponders). The first of these trials is the DIRECT
Trial, a Phase III study of daily Infergen plus ribavirin, and the
second is a Phase IIb trial of daily Infergen plus Actimmune, with and
without ribavirin.
-- Entered into a non-exclusive agreement with Chiron Corporation granting
InterMune access to the hepatitis C genome. This license supports the
drug discovery program the Company began in 2002 with Array BioPharma
and will allow InterMune to continue to develop its protease inhibitor
program.
-- At the 55th Annual Meeting of the American Association for the Study of
Liver Diseases (i.e., AASLD or The Liver Meeting) in Boston later this
week, five separate abstracts will be highlighted showing various
researchers' experience treating HCV patients with the Company's
products, Infergen and Actimmune. In addition, the Company will
present the first data on its novel protease inhibitor program for HCV.
-- In connection with AASLD, on Monday, November 1 at 9:00 a.m. ET, the
Company will host and webcast an investor meeting to provide an
overview of current treatment options for PEG nonresponders, review
relevant data presented at AASLD, and update the investor community on
InterMune's hepatology research and development programs.
Pulmonology
-- Continued enrolling patients in the INSPIRE Trial, a Phase III study
evaluating the survival benefit of Actimmune in patients with mild to
moderate idiopathic pulmonary fibrosis (IPF).
-- Researchers presented several abstracts related to the Company's
pulmonology program at this year's annual meeting of the American
College of Chest Physicians, which took place this week in Seattle.
These presentations highlighted important data regarding the radiologic
diagnosis of IPF, the safety of Actimmune in patients with this fatal
disease and the effect of Actimmune on cellular models of lung
fibrosis.
Corporate
-- Announced recent appointments to the executive management team
including Norman Halleen, SVP and Chief Financial Officer;
Tom Kassberg, SVP of Business Development and Corporate Strategy;
Robin Steele, SVP, General Counsel and Corporate Secretary; and
Howard Simon, SVP of Human Resources and Associate General Counsel.
-- Strengthened the balance sheet by completing the repurchase of the
remaining $97 million of the 5.75% convertible notes due in July 2006
and replacing this debt with $170 million of 0.25% convertible notes
due in March 2011.
Conference Call and Webcast Details
The Company's management will host a conference call today at 4:30 p.m. ET to discuss third quarter and first nine months 2004 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# 1595370.
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 |
