ORPH, great earnings:
Orphan Medical Reports Fourth Quarter and Full-Year 1999 Results
NDA for Xyrem(R) Proceeding on Schedule Toward Submission in Fall of 2000
MINNEAPOLIS, Feb. 29 /PRNewswire/ -- Orphan Medical, Inc. (Nasdaq: ORPH) today reported fourth quarter and full-year 1999 operating results, and announced that its New Drug Application (NDA) for Xyrem(R) (sodium oxybate) oral solution is proceeding as planned toward submission to the Food and Drug Administration (FDA) in the fall of 2000.
1999 Financial Review
Orphan Medical reported net sales of $2.1 million for the fourth quarter ended December 31, up 40% from $1.5 million in the prior year. The net loss applicable to common shareholders, which includes preferred stock dividends, was $1.2 million or $0.18 per share compared to a net loss of $2.1 million or $0.32 per share in the fourth quarter of 1998. The reduction in the loss is attributed to increased sales and lower development expenses.
For the full-year 1999, net sales rose 28%, to $6.5 million from $5.0 million in 1998. The net loss applicable to common shareholders was $5.9 million or $0.90 per share in 1999, compared to a net loss of $8.5 million or $1.36 per share in 1998. The percentage of total revenues represented by sales outside of the U.S. was approximately 10% in 1999, and is expected to increase in 2000.
As in the fourth quarter, the reduction in the Company's full year 1999 net loss resulted from improved sales and lower product development expenses. Development expenditures will increase in 2000 as the Company initiates clinical trials intended to support additional future Xyrem claims and executes the Xyrem New Drug Application (NDA) submission process.
Antizol(R) (fomepizole) Injection and Busulfex(R) (busulfan) Injection accounted for most of the 1999 sales. Since its late 1997 commercial introduction, Antizol has become a standard treatment for ethylene glycol poisoning. Busulfex is gaining acceptance in the United States as well as Canada where it is approved as part of a conditioning regimen prior to bone marrow or hematopoietic progenitor cell transplantation when used in combination with other chemotherapeutic agents and/or radiotherapy. In October, the Company established a strategic alliance with Pierre Fabre Medicament, granting the French company exclusive rights to market and distribute Busulfex in 21 European countries, following European regulatory approval.
John H. Bullion, chief executive officer, commented: "We are pleased by the established market presence of Antizol and growing market acceptance of Busulfex. Our success in developing and commercializing pharmaceuticals of high medical value for uncommon and inadequately treated diseases suggests our strategic focus is well placed and can be leveraged for greater success in the future."
Bullion added, "We are on schedule toward submission of the Xyrem NDA later this year." Given that the FDA has indicated Xyrem qualifies for a priority review, approval to market Xyrem could occur during the first half of 2001. Preparation and submission of an NDA for Xyrem will involve a tremendous amount of effort and coordination of clinical, regulatory, and marketing resources. During the second quarter of 2000, two additional clinical trials are planned to be initiated to substantiate long-term efficacy and to measure titration effects on electrical brain activity as measured by electroencephalograph (EEG). Independent of the NDA submission process, the Company intends to begin an 18-month Phase III(b) controlled trial in this year's second quarter to further validate Xyrem's efficacy for excessive daytime sleepiness (EDS). This study, which is not required for our NDA submission, will have reduction of excessive daytime sleepiness as its primary endpoint and use several validated measures of EDS."
Xyrem NDA Update
Several key developments support the positive outlook for submission of a Xyrem NDA in the fall:
-- On February 18, 2000, the President signed into law federal legislation (H.R. 2130) directing the U.S. Attorney General to use within 60 days her emergency scheduling authority to make gamma hydroxybutyrate (GHB, the primary active ingredient in Xyrem) a Schedule I controlled substance, while treating GHB products being studied under FDA-approved protocols as Schedule III substances. This legislation also mandates a Schedule III designation for any FDA-approved GHB products. By striking the proper balance between protecting the public from illicitly manufactured GHB and making FDA approved GHB available for people suffering from narcolepsy, the enactment of H.R. 2130 permits the continued clinical development and potential commercialization of Xyrem.
-- An $11.1 million private placement completed in February 2000 considerably strengthens the Company's financial position. In the transaction, Orbimed Advisors LLC and the DG Lux Lacuna Apo BioTech Fund managed by Medical Strategy of Germany purchased an aggregate 1.365 million shares of newly issued Orphan Medical common stock. Proceeds will be used to fund working capital requirements, the Xyrem NDA submission, and additional Xyrem clinical trials. The additional capital will also allow the Company to continue evaluation of opportunities to license promising new pharmaceuticals. This financing follows a private placement in the third quarter of 1999 in which UBS Capital committed an additional $5 million to its existing preferred stock ownership in Orphan Medical.
-- The Company recently reported that patients receiving Xyrem at a 9-gram dose during a four-week controlled and blinded clinical trial experienced nearly 70% fewer cataplexy attacks when compared to a baseline period. During an open-label, follow-on trial in which patients received Xyrem for up to seven months, the incidence of cataplexy was further reduced with lower doses. Determining the efficacy of Xyrem in reducing excessive daytime sleepiness was a secondary endpoint of the controlled study. At the highest dosage level in the controlled trial, Xyrem significantly reduced EDS, as measured by the Epworth Sleepiness Scale, with some patients experiencing a return to normal measures. The follow-on trial indicated that efficacy at lower doses might be possible. Since patients in both the controlled and follow-on open label clinical trials were maintained on stimulants used to control their EDS, reductions in EDS attributed to Xyrem were incremental to the results provided by stimulants. In all the clinical trials sponsored by Orphan Medical, Xyrem was generally well tolerated at all dosage levels during both the four-week and follow-on trials. Most adverse events, or side effects, appeared to be dose related and often occurred early during the trials and abated over time. The most common adverse events were dizziness, nausea, headache, and enuresis (urinary incontinence during sleep).
-- The Company recently completed human pre-clinical and clinical drug interaction studies to determine if Xyrem might interact kinetically with three drugs commonly used by narcolepsy patients. No interaction was measured, however, analysis of the third study is not yet complete.
Xyrem Background
Orphan Medical has studied Xyrem for the treatment of narcolepsy, a serious neurological disorder affecting an estimated 100,000 to 125,000 Americans, whose main symptoms are excessive daytime sleepiness and cataplexy. Cataplexy is a debilitating condition characterized by loss of muscle control in response to strong emotional reactions such as laughter, anger, or surprise. In its most severe form, cataplexy can cause a person to collapse during waking hours. Various studies indicate that 60,000 to 75,000 narcolepsy patients suffer from cataplexy, and among these patients, up to 60% use prescribed pharmaceuticals in an attempt to control their cataplexy. Drugs currently used for treating cataplexy are selective serotonin re-uptake inhibitors and tricyclic antidepressants that are known to suppress the Rapid Eye Movement (REM) component of sleep. Long-term treatment with these compounds may be limited by the development of drug tolerance and such adverse side effects as dry mouth, weight gain, excessive heart palpitations, and loss of sense of self. Provigil(R) (modafinil), a stimulant approved early last year by the FDA for the treatment of EDS associated with narcolepsy, does not address cataplexy. Based on these and other assumptions, the U.S. cataplexy market is estimated to be in the range of $50 million to $110 million annually. The total narcolepsy market is estimated in the $100 to $200 million range annually.
Orphan Medical acquires, develops, and markets pharmaceuticals of high medical value for inadequately treated or uncommon diseases. The Company currently serves three strategic therapeutic market segments that are characterized by well-defined patient populations and served by physician specialists: oncology support, antidotes and sleep disorders. Orphan Medical's Internet Web site address is orphan.com
Orphan Medical Inc. Financial Results
(Unaudited) (Audited)
Three Months Ended Year Ended
December 31 December 31
1999 1998 1999 1998
Net Sales $2,103,459 $1,504,984 $6,457,406 $5,048,308
Cost of Sales 63,624 313,015 803,562 1,118,644
Gross Profit 2,039,835 1,191,045 5,653,844 3,929,664
Operating Expenses:
Research & Development 1,277,596 1,228,376 4,975,706 6,611,011
Sales & Marketing 1,033,175 847,017 3,430,539 2,739,299
General &
Administrative 761,040 1,106,791 2,756,827 2,994,342
Loss from Operations (1,031,976) (1,990,245) (5,509,228) (8,414,988)
Other Income:
Net Interest 64,526 63,795 287,989 177,886
Net Loss (967,450) (1,926,450) (5,221,239) (8,237,102)
Preferred Stock Dividend 208,663 141,781 682,872 249,658
Net Loss Applicable to
Common Shareholders $(1,176,113) $(2,068,231) $(5,904,111) $(8,486,760)
Net Loss per Share -
Basic and Diluted $(.18) $(.32) $(0.90) $(1.36)
Average Number of
Shares Outstanding 6,599,060 6,388,866 6,587,790 6,236,897
Selected Balance Sheet Data (Audited)
December 31, December 31,
1999 1998
Assets:
Cash, Cash Equivalents and Investments $4,032,914 $7,521,483
Other Assets 2,208,264 1,525,247
Total Assets $6,241,178 $9,046,730
Liabilities and shareholders' equity:
Current Liabilities $2,679,970 $3,471,153
Non-Current Liabilities -- --
Shareholders' Equity 3,561,208 5,575,577
Total liabilities and shareholders' equity $6,241,178 $9,046,730
The information in this press release may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. A number of factors could cause actual results to differ
materially from the Company's assumptions and expectations. These are set
forth in the cautionary statements included in Exhibit 99 to Orphan
Medical's most recent Form 10-Q or Form 10-K filed with the Securities and
Exchange Commission. Orphan Medical undertakes no obligation to update the
information contained in this press release. All forward-looking
statements are qualified by, and should be considered in conjunction with,
such cautionary statements.
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SOURCE: Orphan Medical, Inc.
CONTACT: John Howell Bullion, CEO or Tim McGrath, CFO of Orphan Medical, Inc., 612-513-6900 |
