SUNNYVALE, Calif., July 31, 2014 /PRNewswire/ -- Pharmacyclics, Inc. (the "Company") (Nasdaq: PCYC) today reported financial results and recent developments for the quarter ended June 30, 2014.
Financial Results for the Six Months and Quarter Ended June 30, 2014
Revenue
Total revenue for the quarter ended June 30, 2014 increased to $113.0 million from $54.7 million for the quarter ended June 30, 2013 primarily due to IMBRUVICA® (ibrutinib) net product revenue of $109.5 million.
Total revenue for the six months ended June 30, 2014 increased to $232.4 million from $57.5 million for the six months ended June 30, 2013 primarily due to net product revenue of $165.7 million from sales of IMBRUVICA.
The quarter ended June 30, 2014 represented the Company's first full quarter of IMBRUVICA sales after receiving approval from the U.S. Food and Drug Administration (FDA) under accelerated approval on February 12, 2014 as a single agent for the treatment of patients with chronic lymphocytic leukemia (CLL) who have received at least one prior therapy. IMBRUVICA first came to market on November 13, 2013 after receiving approval from the FDA under accelerated approval as a single agent for the treatment of patients with mantle cell lymphoma (MCL) who have received at least one prior therapy.
Subsequent to June 30, 2014, we announced on July 28, 2014 that the FDA granted IMBRUVICA regular (full) approval for the treatment of patients with CLL who have received at least one prior therapy, and for the treatment of CLL patients with deletion of the short arm of chromosome 17 (del 17p CLL), including treatment naive (frontline) and previously treated del 17p CLL patients. This approval of IMBRUVICA in del 17p CLL triggers $60 million in milestone payments to us under our Agreement with Janssen, which will be recognized as revenue in the third quarter of 2014.
To date, in addition to the upfront payment of $150 million, we have earned milestone payments of $505 million under the Agreement. We may receive up to an additional $320 million ($50 million for development progress, $70 million for regulatory progress and $200 million for approval) in development, regulatory and approval milestone payments, however, clinical development entails risks and we have no assurance as to whether or when the milestone targets might be achieved.
GAAP and Non-GAAP net income (loss)
Non-GAAP net income for the six months ended June 30, 2014 was $11.5 million, or $0.15 net income per diluted share, compared to non-GAAP net loss of $9.1 million, or $0.13 net loss per diluted share for the six months ended June 30, 2013.
Non-GAAP net loss for the quarter ended June 30, 2014 was $19.7 million, or $0.26 net loss per diluted share, compared to non-GAAP net income of $19.2 million, or $0.25 net income per diluted share for the quarter ended June 30, 2013. See "Use of Non-GAAP Financial Measures" below for a description of our Non-GAAP Financial Measures. Reconciliation between certain GAAP and Non-GAAP measures is provided at the end of this press release.
GAAP net loss for the six months ended June 30, 2014 was $18.8 million, or $0.25 net loss per diluted share, compared to GAAP net loss of $39.6 million, or $0.55 net loss per diluted share for the six months ended June 30, 2013.
GAAP net loss for the quarter ended June 30, 2014 was $37.1 million, or $0.49 net loss per diluted share, respectively, compared to GAAP net income of $12.4 million or $0.16 net income per diluted share for the quarter ended June 30, 2013.
"We're pleased to report these very strong results today that reflect our commercial success with IMBRUVICA and which indicate a continued strong growth trend for the remainder of the year," said Bob Duggan, Chairman & CEO of Pharmacyclics. "This quarter's results are bolstered by a well executed commercial strategy, availability of compelling clinical data, and a robust presence within scientific peer-review forums. In addition, recent regulatory actions both in the U.S. and in Europe continue to validate the efficacy, safety and tolerability of IMBRUVICA, and strengthen its brand within the CLL prescriber, patient and payor environments."
GAAP and Non-GAAP expenses
Non-GAAP R&D expenses for the quarter ended June 30, 2014 were $37.5 million, compared to $24.2 million for the quarter ended June 30, 2013. Non-GAAP SG&A expenses were $36.2 million for the quarter ended June 30, 2014, compared to $11.6 million for the quarter ended June 30, 2013. Reconciliation between certain GAAP and Non-GAAP measures is provided at the end of this press release.
GAAP R&D expenses for the quarter ended June 30, 2014 were $45.7 million, compared to $27.9 million for the quarter ended June 30, 2013. GAAP SG&A expenses for the quarter ended June 30, 2014 were $45.0 million, compared to $14.7 million for the quarter ended June 30, 2013.
The Agreement with Janssen includes a cost sharing arrangement for certain development activities. In general, Janssen is responsible for approximately 60% of development costs and the Company is responsible for approximately 40% of development costs. Generally, costs associated with commercialization will be included in determining pre-tax profit or pre-tax loss relating to IMBRUVICA, and are to be shared 50% by the Company and 50% by Janssen. The Agreement with Janssen also provides for a $50 million annual cap of the Company's share of IMBRUVICA related R&D expenses, SG&A expenses, and offset by pre-tax commercial profits for each calendar year. The Company recognizes amounts incurred in excess of the annual cap (Excess Amounts) as a reduction to costs and expenses since the Company's repayment of Excess Amounts to Janssen is contingent and would become payable only after the third profitable calendar quarter for the product. Excess Amounts shall be reimbursable only from the Company's share of pre-tax profits (if any) after the third profitable calendar quarter for the product. Under the Agreement, Janssen will fund maximum Excess Amounts of $200 million, plus interest of up to $25 million.
The Company recorded no Excess Amounts for the three and six months ended June 30, 2014. Included in GAAP and non-GAAP costs and expenses for the three and six months ended June 30, 2013 was Excess Amounts of $20.4 million in total. Of the Excess Amounts recognized for the three and six months ended June 30, 2013, $17.4 million was recorded as a reduction to R&D expenses and $3.0 million was recorded as a reduction to SG&A expenses. To date, the Company had recorded Excess Amounts totaling $134.3 million.
For the three and six months ended June 30, 2014, the Company's share of R&D expenses and SG&A expenses related to IMBRUVICA under the Janssen collaboration Agreement was calculated as follows (in thousands):
Three Months Ended | Six Months Ended | ||||||
Jun. 30, | Jun. 30, | Jun. 30, | Jun. 30, | ||||
2014 | 2013 | 2014 | 2013 | ||||
Net collaboration costs for IMBRUVICAincluded within: | |||||||
Research and development expenses(1) | $ 30,072 | $ 21,424 | $ 54,474 | $ 43,596 | |||
Selling, general and administrative expenses(1) | 25,984 | 3,707 | 44,149 | 6,404 | |||
56,056 | 25,131 | 98,623 | 50,000 | ||||
Less: Pharmacyclics' 50% share of net product revenue less cost of goods sold (2) | 50,095 | - | 75,130 | - | |||
Total net costs for IMBRUVICAunder Janssen collaboration agreement (3) | $ 5,961 | $ 25,131 | $ 23,493 | $ 50,000 | |||
(1)Includes the reduction for Excess Amounts recorded in each period as follows: | |||||||
Three Months Ended | Six Months Ended | ||||||
Jun. 30, | Jun. 30, | Jun. 30, | Jun. 30, | ||||
2014 | 2013 | 2014 | 2013 | ||||
Research and development expenses(1) | $ - | $ 17,377 | $ - | $ 17,377 | |||
Selling, general and administrative expenses(1) | - | 3,006 | - | 3,006 | |||
Total Excess Amounts | $ - | $ 20,383 | $ - | $ 20,383 | |||
(2)Pharmacyclics 50% share of net product revenue less cost of goods sold: | |||||||
Three Months Ended | Six Months Ended | ||||||
Jun. 30, | Jun. 30, | Jun. 30, | Jun. 30, | ||||
2014 | 2013 | 2014 | 2013 | ||||
Product revenue, net | $ 109,495 | $ - | $ 165,674 | $ - | |||
Less: Cost of goods sold | 9,305 | - | 15,415 | - | |||
100,190 | - | 150,259 | - | ||||
Janssen's share of pre-tax profits | 50% | 50% | 50% | 50% | |||
Total Cost of collaboration (Janssen's 50% share as per the Agreement) | $ 50,095 | $ - | $ 75,130 | $ - | |||
Pharmacyclics' 50% share of net product revenue less cost of goods sold | $ 50,095 | $ - | $ 75,130 | $ - | |||
(3)The Company's total share of net costs under the Agreement did not exceed the $50 million annual cap provided for in the Agreement. As such, no Excess Amounts were recorded for the three and six months ended June 30, 2014. |
Regulatory Update
On July 28, 2014, the U.S. FDA granted IMBRUVICA full approval for the treatment of CLL patients who have received at least one prior therapy, and for the treatment of CLL patients with deletion of the short arm of chromosome 17 (del 17p CLL), including treatment naive (frontline) and previously treated del 17p CLL patients. This was the first full FDA approval for IMBRUVICA, and was granted only five and a half months after the original accelerated approval for patients with previously treated CLL, which was granted in February 2014.
This full approval is based on data from the Phase III RESONATE study (PCYC-1112-CA), a randomized, multi-center, international head-to-head comparison of single-agent, orally-administered IMBRUVICA (ibrutinib) versus the intravenous, monoclonal antibody ofatumumab targeting the CD 20 antigen. This study enrolled 373 patients with CLL and 18 patients with small lymphocytic lymphoma (SLL), who received at least one prior therapy. The median number of prior treatments was 2 (range, 1 to 13 treatments). At baseline, the median age of these patients was 67 years, 58% of whom had at least one tumor 5 cm, and 32% of whom had the del 17p mutation. Patients receiving IMBRUVICA demonstrated a statistically significant improvement in progression-free survival (PFS), overall survival (OS) and overall response rate (ORR) as compared to patients treated with ofatumumab. The median PFS and OS has not been reached on the IMBRUVICA arm. There was a 78% reduction in the risk of progression or death as assessed by an independent review committee (IRC) according to the modified IWCLL criteria (HR 0.22, 95% CI, 0.15 to 0.32, P<0.0001). In addition, the analysis of overall survival demonstrated a 57% statistically significant reduction in the risk of death for patients in the IMBRUVICA arm (HR 0.43; 95 CI, 0.24 to 0.79, P<0.005). This was observed despite a total of 57 patients who were initially randomized to ofatumumab crossing over to receive IMBRUVICA prior to the analysis. For previously treated del 17p CLL patients, there was a 75% reduction in the risk of progression or death as assessed by an IRC (HR 0.25, 95% CI, 0.14 to 0.45, P<0.0001).
In addition, on July 25, 2014, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion recommending full marketing approval for IMBRUVICA in the European Union. The CHMP recommendation for IMBRUVICA is for the treatment of adult patients with relapsed or refractory MCL, or adult patients with CLL who have received at least one prior therapy, or in first line in the presence of 17p deletion or TP53 mutation in patients unsuitable for chemoimmunotherapy. The positive opinion was based on data from the Phase II study (PCYC-1104) in MCL, a Phase III RESONATE study (PCYC-1112-CA) and a Phase II study (PCYC-1102) in CLL.
The EMA is a decentralized agency of the European Union responsible for the scientific evaluation of medicines developed by pharmaceutical companies for use in the 28 countries of the European Union. The positive opinion of the EMA's CHMP will be reviewed by the European Commission, and a final decision on IMBRUVICA is anticipated later this year. In addition to European markets, a worldwide regulatory filing program for IMBRUVICA currently is underway.
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