NEW YORK, Oct 25, 2006 (BUSINESS WIRE) -- ImClone Systems Incorporated (NASDAQ:IMCL) announced today its financial results for the quarter and nine monthsended September 30, 2006.
Total revenues for the third quarter of 2006 were $150.7 million as comparedwith $106.5 million for the third quarter of 2005, an increase of 42%.
-- Royalty revenue of $78.6 million in the third quarter of 2006 compared with$46.6 million in the third quarter of 2005, an increase of 69%. Royalty revenuefor the third quarter of 2006 includes 39% of Bristol-Myers Squibb's in-marketERBITUX net sales of $174.6 million, compared with third quarter 2005 in-marketnet sales of $107.0 million, an increase of 63%. These in-market sales,reflecting a drop-ship distribution methodology, represent ERBITUX shipments toend-user accounts only, with no wholesaler stocking;
-- License fees and milestone revenue of $34.9 million in the third quarter of2006 compared with $27.1 million in the third quarter of 2005;
-- Manufacturing revenue of $20.9 million in the third quarter of 2006 comparedwith $10.7 million in the third quarter of 2005. The increase of $10.1 millionprincipally reflects an increase in volume purchases by Bristol-Myers Squibb.Purchases by Bristol-Myers Squibb are timed at their discretion to accommodateforecasts and safety stock needs, and are not necessarily indicative ofhistorical in-market sales or future sales expectations; and
-- Collaborative agreement revenue of $16.3 million in the third quarter of 2006compared with $22.0 million in the third quarter of 2005. The decrease of $5.7million principally reflects a reduction in clinical materials shipped to MerckKGaA versus the comparable quarter in 2005.
Total operating expenses for the third quarter of 2006 were $93.2 million,compared with $80.3 million in the third quarter of 2005. Operating expensesincluded:
-- Research and development expenses for the third quarter of 2006 were $26.4million (or $26.0 million in the third quarter of 2006 excluding stock optionexpense of $.4 million), compared with $29.0 million in the third quarter of2005. The decrease in the quarter is principally due to a reduction in clinicalmaterials sold to Merck KGaA;
-- Clinical and regulatory expenses in the third quarter of 2006 were $13.5million (or $13.2 million excluding stock option expense of $.3 million),compared with $13.6 million in the third quarter of 2005;
-- Marketing, general and administrative expenses were $16.0 million in thethird quarter of 2006 (or $14.8 million excluding stock option expense of $1.2million), compared with $19.5 million in the third quarter of 2005. The decreaseis principally attributed to lower legal fees and professional services feesfrom the comparable quarter in 2005;
-- Royalty expenses were $18.1 million in the third quarter of 2006 comparedwith $15.2 million in the third quarter of 2005 as the result of higher sales.Approximately $9.1 million and $5.5 million in 2006 and 2005, respectively werereimbursed as a component of collaborative agreement revenue, resulting in netroyalty expenses of $9.0 million for the third quarter of 2006 compared with$9.7 million in the third quarter of 2005; and
-- Cost of manufacturing revenue was $19.2 million in the third quarter of 2006compared with $3.1 million in the third quarter of 2005. The 2006 costsrepresent fully absorbed manufacturing costs, as substantially all previouslyexpensed material was sold through to our partners in 2005.
Operating income in the third quarter of 2006 was $57.5 million compared with$26.3 million in the third quarter of last year.
The effective tax rate for the full year 2006 is estimated to be approximately14%, excluding the effect of an adjustment recorded in the third quarter of 2006of approximately $1.8 million, resulting from changes in tax rates in certainjurisdictions. The resulting effective tax rate for the third quarter and ninemonths of 2006, including such adjustment, is 12.6% and 14.4%, respectively.These estimated rates exclude the release of a portion of the Company's taxvaluation allowance in the first quarter of 2006. The estimated tax rate for thequarter and full year 2006 is slightly lower than the 15% previously estimatedat the end of the second quarter of 2006.
Net income for the third quarter of 2006 was $57.3 million compared with $31.0million in the third quarter of last year. Diluted earnings per share were $.65in the third quarter of 2006 compared with $.35 in the third quarter of 2005.
Total revenues and net income for the nine months ended September 30, 2006 were$545.7 million and $324.1 million, respectively, compared with $284.7 millionand $85.8 million in the nine months ended September 30, 2005. Diluted earningsper share were $3.58 for the first nine months of 2006 compared with $.98 forthe first nine months of 2005. The results for the first nine months of 2006include the effect of the receipt of the $250 million milestone fromBristol-Myers Squibb and the partial release of the tax valuation allowancementioned above.
To provide investors with a clearer picture of the Company's growth versus lastyear, a reconciliation of non-GAAP diluted earnings per share to dilutedearnings per share prepared in accordance with GAAP is set forth below. For2006, non-GAAP diluted earnings per share for the quarter exclude the effects ofstock option expense and, for the nine months year-to-date, exclude the effectsof stock option expense and the tax benefit associated with the release of aportion of the Company's deferred asset valuation allowance in the first quarterof 2006. For 2005, non-GAAP diluted earnings per share for the third quarter andfirst nine months exclude expenses associated with the discontinuance of theCompany's small molecule research operation.
(Diluted per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2005 2006 2005
GAAP diluted earnings per
share $ .65 $ .35 $ 3.58 $ 0.98
Release of deferred tax
valuation allowance - - ($1.08) -
Stock option expense $ .02 - $ .06 -
Impact of discontinuance of
small molecule research - - - $ .07
------------------- -------------------
Non-GAAP diluted earnings per
share $ .67 $ .35 $ 2.56 $ 1.05
The Company believes that it is useful to present non-GAAP diluted earnings pershare financial measures because it provides investors with a more completeunderstanding of the Company's underlying operational results and trends. Youshould not consider non-GAAP diluted earnings per share financial measures inisolation or as a substitute for such measures determined in accordance withU.S. GAAP, as set forth above. Our definition of non-GAAP earnings may differfrom other such measures.
Conference Call
ImClone Systems will host a conference call with the financial community todiscuss third quarter 2006 financial results on Wednesday, October 25, 2006 at11:00 AM Eastern Daylight Time.
The conference call will be webcast live and may be accessed by visiting ImCloneSystems' website at www.imclone.com. A replay of the audio webcast will beavailable under "Earnings Webcast" in the "Investor Relations" section of theCompany's website starting shortly after the call on October 25, 2006.
Those parties interested in participating via telephone may join by dialing(800) 418-6860 domestically, or (973) 935-8756 for calls outside of Canada andthe United States, and referencing conference identification number 7985471. Atelephone replay of the conference call will be available shortly after the calluntil November 1, 2006 at midnight Eastern Daylight Time. To access thetelephone replay, dial (877) 519-4471 domestically, or (973) 341-3080 for callsoutside of Canada and the United States, and enter the conference identificationnumber 7985471.
About ImClone Systems Incorporated
ImClone Systems Incorporated is committed to advancing oncology care bydeveloping and commercializing a portfolio of targeted biologic treatmentsdesigned to address the medical needs of patients with a variety of cancers. TheCompany's research and development programs include growth factor blockers andangiogenesis inhibitors. ImClone Systems' strategy is to become a fullyintegrated biopharmaceutical company, taking its development programs from theresearch stage to the market. ImClone Systems' headquarters and researchoperations are located in New York City, with additional administration andmanufacturing facilities in Branchburg, New Jersey.
Certain matters discussed in this news release may constitute forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of1995 and the Federal securities laws. Although the company believes that theexpectations reflected in such forward-looking statements are based uponreasonable assumptions, it can give no assurance that its expectations will beachieved. Forward-looking information is subject to certain risks, trends anduncertainties that could cause actual results to differ materially from thoseprojected. Many of these factors are beyond the company's ability to control orpredict. Important factors that may cause actual results to differ materiallyand could impact the company and the statements contained in this news releasecan be found in the company's filings with the Securities and ExchangeCommission, including quarterly reports on Form 10-Q, current reports on Form8-K and annual reports on Form 10-K. For forward-looking statements in this newsrelease, the company claims the protection of the safe harbor forforward-looking statements contained in the Private Securities Litigation ReformAct of 1995. The company assumes no obligation to update or supplement anyforward-looking statements, whether as a result of new information, futureevents or otherwise.
IMCLONE SYSTEMS INCORPORATED
Consolidated Condensed Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Royalty revenue $ 78,599 $ 46,647 $213,483 $124,810
License fees and milestone
revenue 34,948 27,146 212,807 76,171
Manufacturing revenue 20,884 10,748 68,589 29,661
Collaborative agreement
revenue 16,266 21,984 50,805 54,039
--------- --------- --------- ---------
Total revenues 150,697 106,525 545,684 284,681
--------- --------- --------- ---------
Operating expenses:
Research and development 26,437 28,958 87,013 74,564
Clinical and regulatory 13,527 13,583 43,537 31,357
Marketing, general and
administrative 15,977 19,463 56,941 53,919
Royalty expense 18,051 15,165 56,531 42,069
Cost of manufacturing revenue 19,187 3,099 61,466 4,948
Discontinuation of small
molecule research program - - - 6,200
--------- --------- --------- ---------
Total operating expenses 93,179 80,268 305,488 213,057
--------- --------- --------- ---------
Operating income 57,518 26,257 240,196 71,624
--------- --------- --------- ---------
Other income, net (8,084) (5,448) (22,094) (15,486)
--------- --------- --------- ---------
Income before income taxes 65,602 31,705 262,290 87,110
Provision for income taxes 8,286 754 (61,826) 1,308
--------- --------- --------- ---------
Net income $ 57,316 $ 30,951 $324,116 $ 85,802
========= ========= ========= =========
Income per common share:
Basic $ 0.68 $ 0.37 $ 3.86 $ 1.03
========= ========= ========= =========
Diluted $ 0.65 $ 0.35 $ 3.58 $ 0.98
========= ========= ========= =========
Shares used in calculation of
income per share:
Basic 84,335 83,785 84,013 83,561
========= ========= ========= =========
Diluted 91,915 92,136 91,974 92,287
========= ========= ========= =========
IMCLONE SYSTEMS INCORPORATED
Consolidated Condensed Balance Sheets
(Unaudited)
(in thousands)
September 30, December 31,
Assets 2006 2005
-------------- --------------
Current assets:
Cash and cash equivalents $ 15,308 $ 3,403
Securities available for sale 976,172 752,973
Inventories 58,923 81,394
Other current assets 136,657 71,348
-------------- --------------
Total current assets 1,187,060 909,118
Property, plant and equipment, net 425,750 406,595
Other assets (includes $28.2 million of
inventories) 171,978 27,702
-------------- --------------
Total assets $ 1,784,788 $ 1,343,415
============== ==============
Liabilities and Stockholders' Equity
Current liabilities $ 237,304 $ 242,119
Deferred revenue, long term 271,255 246,401
Long-term obligations 603,645 602,491
-------------- --------------
Total liabilities 1,112,204 1,091,011
Stockholders' equity 672,584 252,404
-------------- --------------
Total liabilities and stockholders'
equity $ 1,784,788 $ 1,343,415
============== ==============
SOURCE: ImClone Systems Incorporated
CONTACT: ImClone Systems IncorporatedInvestors:Andrea F. Rabney / Stefania Bethlen, 646-638-5058orMedia:David M. F. Pitts, 646-638-5058
Copyright Business Wire 2006
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