American Pharmaceutical Partners Reports Record 2005 Sales And Net Income
Published: Feb 17, 2006
SCHAUMBURG, Ill., Feb. 17 /PRNewswire-FirstCall/ -- American Pharmaceutical Partners, Inc. today reported record quarterly net sales of $144.8 million for the fourth quarter ended December 31, 2005, an 18% increase over net sales of $122.6 million in the fourth quarter of 2004. Fourth quarter 2005 results included net sales of ABRAXANE(R), launched in February 2005, of $47.5 million. Impacted by the Melrose Park, IL facility upgrade and subsequent revalidation, fourth quarter 2005 core business net sales were $97.3 million versus $122.6 million in the same quarter last year.
Net sales for the year ended December 31, 2005 increased 28% to $518.8 million versus $405.0 million last year. Full year 2005 results included ABRAXANE net sales of $133.7 million and core business net sales of $385.1 million.
"This has been an exciting year of growth for the company. We have exceeded, for the first time, half a billion in net sales supported by the approval and successful launch of ABRAXANE and the stability of the base business," said, Patrick Soon-Shiong, APP's president and chief executive officer. "APP continues to gain momentum as exemplified by six ANDA approvals received in 2005 and the five already received in 2006. The importance of ABRAXANE continues to be acknowledged as data are published in major journals, such as the Journal of Clinical Oncology, and presented at recent medical meetings. In addition, the January 1, 2006 implementation of the J-code for Medicare and Medicaid reimbursement will support the continued adoption and use of ABRAXANE in 2006.
"We are pleased that our Melrose Park facility returned to fully operational status in December. We have a number of manufacturing initiatives underway in 2006 designed to expand capacity, add bag and syringe capabilities sought by our customers, and finalize EU capabilities for ABRAXANE," continued Soon-Shiong. "Finally, at year-end, we announced a pivotal event for the company with the proposed merger with ABI, creating Abraxis BioScience, a fully-integrated biopharmaceutical company with global potential. We are building our management team and board in preparation for the completion of the merger and are diligently working through the exciting possibilities yielded by the combination of the two companies. We enter 2006 in a position that we believe holds enormous promise for growth and long-term shareholder value."
Gross margin for the 2005 fourth quarter was 57.4%, including the impact of $6.2 million of costs associated with the revalidation of the company's Melrose Park, IL facility and the first ABRAXANE profit sharing expense of $3.3 million. This compares with gross margin of 54.2% in the fourth quarter of 2004. For the full year, gross margin was 56.5%, which included the fourth quarter ABRAXANE profit sharing and costs of $15.9 million resulting from the extended Melrose Park facility revalidation. Gross margin was 53.3% in 2004.
ABRAXANE-related operating expenses in the 2005 fourth quarter totaled $16.1 million and $58.6 million for the year versus $10.2 million and $49.8 million in the respective 2004 periods.
On a reported basis, net income in the 2005 fourth quarter increased 7% to $23.4 million, or $0.32 per diluted share, versus $21.9 million, or $0.30 per diluted share, in the prior year period. Excluding the impact of severance and merger costs of $7.3 million, or $0.06 per diluted share, 2005 fourth quarter earnings were $0.38 per diluted share.
For the full year, net income increased 52% to $86.4 million, or $1.17 per diluted share, versus $56.7 million, or $0.78 per diluted share, in 2004. Excluding the impact of severance and merger costs of $13.3 million, or $0.11 per diluted share, 2005 earnings were $1.28 per diluted share.
The company presents adjusted financial information, which excludes merger related expenses (including severance costs), in order to facilitate presentation of our ongoing operations. Refer to the enclosed table for a reconciliation of adjusted net income to GAAP net income.
Cash and short-term investments totaled $81.2 million at December 31, 2005 and currently cash on hand was approximately $136 million.
Conference Call Information and Forward-Looking Statements
On Friday, February 17, 2006, the company will host a conference call with interested parties beginning at 11:30 a.m. (EST) to review the results of operations for the fourth quarter ended December 31, 2005. Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's revenues, margins, operating expenses, distribution arrangements, the pending merger with American BioScience and clinical or FDA developments, and any comments the company may make about its future in response to questions from participants on the conference call. The conference call may be heard by any interested party through a live audio Internet broadcast at www.appdrugs.com and www.fulldisclosure.com. For those unable to listen to the live broadcast, a playback of the webcast will be available at both websites for one year beginning shortly after the conclusion of the call.
About American Pharmaceutical Partners, Inc.
American Pharmaceutical Partners, Inc. is a specialty drug company that develops, manufactures and markets injectable pharmaceutical products, focusing on the oncology, anti-infective and critical care markets. Abraxis Oncology, the proprietary division of APP, is devoted entirely to developing and promoting innovative, next-generation cancer therapies such as ABRAXANE(R) for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound). For more information, visit APP's website at www.appdrugs.com and www.abraxisoncology.com.
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this press release include statements regarding our expectations, beliefs, hopes, goals, intentions, initiatives or strategies, including statements regarding the expected time of completion of the merger and the benefits of the merger, including the creation of an integrated, global biopharmaceutical leader with continuing positive operating cash flow, the leverage of integrating APP's growing and profitable injectable pharmaceutical business with ABI's technology platform and product pipeline. Other forward-looking statements may include any comments APP and ABI may make about the future of the combined company and the merger in response to questions from participants on the conference call. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, unexpected delays in consummation of the merger, if at all, failure of the benefits of the merger to materialize, difficulties in integrating the businesses and operations of the two companies, the adverse impact of production delays on the sales and marketing of the combined company's products, the costs associated with the ongoing launch of ABRAXANE, the continued market adoption and demand of ABRAXANE in North America and its potential market penetration outside of the U.S., difficulties or delays in developing, testing, obtaining regulatory approval of, and producing and marketing any other products, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, the ability to successfully manufacture products in a time-sensitive and cost effective manner, the acceptance and demand of new pharmaceutical products, the impact of patents and other proprietary rights held by competitors and other third parties. Additional relevant information concerning risks can be found in APP's Form 10-K for the year ended December 31, 2004 and other documents it has filed with the Securities and Exchange Commission.
Contacts: American Pharmaceutical Partners, Inc. Nicole Williams Chief Financial Officer (888) 391-6300 Robert Jaffe/Rob Whetstone PondelWilkinson Inc. (310) 279-5963 FINANCIAL TABLES FOLLOW AMERICAN PHARMACEUTICAL PARTNERS, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, % % 2005 2004 Change 2005 2004 Change Net sales $144,829 $122,554 18% $518,813 $405,010 28% Cost of sales 61,710 56,072 10% 225,895 189,301 19% Gross profit 83,119 66,482 25% 292,918 215,709 36% Percent to sales 57.4% 54.2% 56.5% 53.3% Operating expenses: Research and development 7,716 4,451 30,162 25,797 Selling, general and administrative 37,155 26,451 129,398 92,034 Milestone payment -- -- -- 10,000 Other 2,028 334 1,229 (1,007) Total operating expenses 46,899 31,236 50% 160,789 126,824 27% Percent to sales 32.4% 25.5% 31.0% 31.3% Income from operations 36,220 35,246 3% 132,129 88,885 49% Percent to sales 25.0% 28.8% 25.5% 21.9% Other income, net (7) 600 1,741 1,934 Loss on early extinguishment of credit facility -- -- -- (1,986) Income before income taxes 36,213 35,846 1% 133,870 88,833 51% 7456.0% Income tax expense 12,790 13,980 47,458 32,140 Net income $23,423 $21,866 7% $86,412 $56,693 52% Net income per share: Basic $0.32 $0.31 $1.20 $0.81 Diluted $0.32 $0.30 $1.17 $0.78 Weighted - average common shares outstanding: Basic 72,382 70,498 71,826 70,305 Diluted 74,101 73,156 74,053 73,147 AMERICAN PHARMACEUTICAL PARTNERS, INC. CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2005 2004 ASSETS (Unaudited) (Audited) Current assets: Cash and cash equivalents $26,739 $1,154 Short-term investments 54,455 66,475 Accounts receivable, net 61,701 15,457 Inventory, net 175,282 151,035 Prepaid expenses and other 12,286 6,492 Deferred income taxes 14,785 12,825 Total current assets 345,248 253,438 Property, plant and equipment, net 141,941 106,410 Other assets 26,193 13,485 Total assets $513,382 $373,333 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $29,280 $22,247 Accrued expenses 41,678 35,562 Total current liabilities 70,958 57,809 Long-term deferred income tax liability 1,629 2,833 Total liabilities 72,587 60,642 Stockholders' Equity Common stock 79 77 Additional paid-in capital 250,202 212,399 Amounts due from American BioScience, Inc. (21,096) (21,603) Deferred stock-based compensation (400) (2,385) Retained earnings 266,655 180,243 Accumulated other comprehensive income 1,629 234 Less treasury stock, at cost (56,274) (56,274) Total stockholders' equity 440,795 312,691 Total liabilities and stockholders' equity $513,382 $373,333 AMERICAN PHARMACEUTICAL PARTNERS, INC. GAAP TO ADJUSTED NET INCOME RECONCILIATION (unaudited, in thousands, except per share amounts) Three months Twelve months ended ended December 31, December 31, 2005 2005 Reported net income $23,423 $86,412 ABI merger related expenses (a) 1,918 7,863 Severance (b) 5,403 5,403 Income tax benefit (c) (2,584) (4,709) Adjusted net income $28,160 $94,969 Reported net income per diluted share $0.32 $1.17 Adjusted net income per diluted share $0.38 $1.28 Weighted - average common shares outstanding diluted 74,101 74,053 (a) To eliminate costs associated with the ABI merger. (b) To eliminate merger related post-employment costs. (c) To reverse the related tax benefit of the above adjustments.American Pharmaceutical Partners, Inc.
CONTACT: Nicole Williams, Chief Financial Officer of AmericanPharmaceutical Partners, Inc., +1-888-391-6300; or Robert Jaffe, or RobWhetstone, both of PondelWilkinson Inc., +1-310-279-5963, for AmericanPharmaceutical Partners, Inc.