BOULDER, Colo., October 25 /PRNewswire-FirstCall/ -- Pharmion Corporation today reported financial results for its quarter ended September 30, 2006. Third quarter net sales totaled $61.6 million, compared to $56.8 million of sales achieved in the year-ago quarter. Sales of Vidaza(R) (azacitidine for injectable suspension) totaled $36.6 million in the third quarter of 2006, compared to $33.0 million in the third quarter of 2005. Third quarter named patient and compassionate use sales of thalidomide totaled $20.2 million, compared to $19.3 million in the third quarter of 2005.
For the nine months ended September 30, 2006, net sales totaled $178.6 million, compared to net sales of $164.8 million for the nine months ended September 30, 2005. Sales of Vidaza totaled $105.6 million in the first nine months of 2006, compared to $92.0 million in the same period in 2005. Named patient and compassionate use sales of thalidomide totaled $58.8 million in the first nine months of 2006, compared to $61.0 million in the same period in 2005.
"We are very pleased with our financial results as well as the considerable milestones achieved with our recently-licensed products during the third quarter," said Patrick J. Mahaffy, Pharmion's president and CEO. "We achieved our best quarter of Vidaza sales to date, and we announced positive results from the satraplatin pivotal Phase Three SPARC trial, and initiated a Phase Two clinical program for our histone deacetylase (HDAC) inhibitor, MGCD0103. It is especially encouraging to see these products demonstrate significant progress less than a year after we acquired our rights to them. Based on the encouraging satraplatin results, we intend to file a Marketing Authorization Application in Europe for satraplatin in the treatment of second-line hormone refractory prostate cancer, as well as a Marketing Authorization Application for thalidomide in the treatment of first-line multiple myeloma, during the first part of 2007."
Pharmion reported a GAAP net loss of $(3.6) million, or $(0.11) per share for the third quarter of 2006. For the nine months ended September 30, 2006, the Company's GAAP net loss totaled $(26.8) million, or $(0.84) per share. GAAP net loss for the third quarter of 2006 includes stock compensation expense of $0.8 million reflecting the implementation of Statement of Financial Accounting Standards No. 123R and a charge of $4.0 million for the payment of a development milestone associated with the initiation of the first Phase Two study for MGCD0103. For the nine months ended September 30, 2006, GAAP net loss includes stock compensation expense of $2.4 million and charges of $24.5 million for acquired in-process research associated with the MGCD0103 licensing and the payment of the Phase Two development milestone. Excluding the impact of these items, the Company's adjusted net income for the third quarter of 2006 would have been $1.3 million, or $0.04 per share, and for the first nine months of 2006 would have been $0.1 million, or $0.00 per share. GAAP net income for the third quarter of 2005 was $8.8 million, or $0.27 per share, and for the nine months ended September 30, 2005 was $18.7 million, or $0.57 per share.
As planned, Pharmion's investment in research and development significantly increased during the first nine months of 2006 as the Company expanded its product portfolio with the addition of satraplatin and MGCD0103 product rights and increased development activities for Vidaza and thalidomide. Excluding stock compensation expense, research and development costs totaled $16.4 million for the third quarter, compared to $9.8 million in the year-ago quarter. For the nine months ended September 30, 2006, excluding stock compensation expense, research and development costs totaled $49.5 million, compared to $29.1 million for the nine-month period ended September 30, 2005.
Excluding stock compensation expense, selling, general and administrative expenses totaled $23.8 million for the third quarter of 2006, compared to $19.5 million in the year-ago quarter, and $71.2 million for the nine months of 2006, compared to $62.8 million in the first nine months of 2005. These increases were planned and are due to increased commercial activities in the U.S. in response to an expanding and more competitive market for Vidaza as well as pre-approval activities in Europe for Vidaza, satraplatin and thalidomide.
As of September 30, 2006, Pharmion had $187.8 million in cash, cash equivalents and short-term investments, and no outstanding debt, compared to $188.5 million as of June 30, 2006.
Recent Milestones & Upcoming Events
Pharmion achieved several development and regulatory milestones during the quarter:
Satraplatin
Pharmion, together with its partner GPC Biotech, announced positive topline results for the double-blinded, randomized satraplatin pivotal Phase Three registrational trial, the SPARC trial (Satraplatin and Prednisone Against Refractory Cancer). The trial is evaluating satraplatin plus prednisone versus placebo plus prednisone as the second-line treatment in the 950 patients with hormone-refractory prostate cancer (HRPC). The study data results for progression-free survival (PFS) are highly statistically significant (p<0.00001) using the protocol-specified log-rank test, and the study results also showed a 40 percent reduction in the risk of disease progression. PFS, the primary endpoint of this study, will also serve as the primary basis for a Marketing Authorization Application (MAA) in Europe which Pharmion plans to file with the European regulatory authorities in the first half of 2007.
Using the protocol-specified hazard ratio, which measured the overall risk of disease progression, patients in the SPARC trial who received satraplatin plus prednisone had a 40 percent reduction in the risk of disease progression (hazard ratio of 0.6; 95 percent Confidence Interval: 0.5-0.7) compared with patients who received prednisone plus placebo. The improvement seen in progression-free survival by patients treated with satraplatin increased over time. Progression-free survival at the median (50th percentile) demonstrated a 13 percent improvement in patients who received satraplatin plus prednisone (11 weeks) compared to patients who received prednisone plus placebo (9.7 weeks). Progression-free survival at the 75th percentile showed an 89 percent improvement for patients in the satraplatin arm (36 weeks) versus patients in the placebo arm (19 weeks). At six months, 30 percent of patients in the satraplatin arm had not progressed, compared to 17 percent of patients in the control arm. At 12 months, 16 percent of patients who received satraplatin had not progressed, compared to seven percent of patients in the control arm. All of these analyses were conducted on an intent-to-treat basis.
The improvement in PFS in the satraplatin arm was not affected by the type of prior chemotherapy; in particular, the improvement was seen equally for patients who had received prior Taxotere(R)(docetaxel), as well as those who received other types of chemotherapy treatments. All disease progression events were adjudicated by an independent expert review committee of medical oncologists and radiologists. The vast majority of progression events were based on radiological progressions and pain progressions.
In accordance with the recommendation of the independent Data Monitoring Board for the SPARC trial, patients who have not progressed will continue to be treated, and all patients will be followed for overall survival. With approximately half of the patients from the trial still alive, the companies currently expect to have final overall survival results in the fall of 2007, rather than the previously communicated mid-2007.
Satraplatin is Pharmion's oral platinum compound for which the Company licensed the commercial rights in Europe and certain international markets in December 2005. A broad clinical program is underway for satraplatin in a range of tumors, both as monotherapy and in combination with radiation and other cancer therapies.
MGCD0103
Pharmion initiated a Phase Two clinical development program for its lead oncology HDAC inhibitor product candidate, MGCD0103, during the third quarter, which includes the initiation of a trial in patients with relapsed or refractory B-cell lymphomas. Specific patient populations include patients with diffuse large B-cell lymphoma (DLBCL) and follicular lymphoma, two tumor types that are classified as non-Hodgkin's lymphomas (NHL).
Pharmion initiated a second Phase Two clinical trial of MGCD0103 in patients with relapsed or refractory Hodgkin's lymphoma, a cancer initially located in the lymph nodes. In this single-agent, open-label trial, MGCD0103 will be given orally at a dose of 110 mg, three times per week to patients with Hodgkin's lymphoma who have failed other treatments or whose disease has relapsed. Key objectives of the study will be to determine the effectiveness of MGCD0103 as a treatment option for patients with refractory or relapsed Hodgkin's lymphoma.
MGCD0103 is the lead HDAC inhibitor compound product candidate for which Pharmion licensed the commercial rights in January 2006 from MethylGene Inc., in addition to its pipeline of second generation HDAC inhibitor compounds for oncology indications. Pharmion's licensed territories include North America, Europe, Middle East and certain other markets.
Thalidomide
Pharmion intends to submit its European Marketing Authorization Application for first-line multiple myeloma in the first quarter of 2007, based upon recently published or otherwise made public data from four Phase Three clinical studies in patients with newly diagnosed multiple myeloma: a French clinical study comparing thalidomide plus melphalan/prednisone (MPT) to melphalan/prednisone (MP) alone which demonstrated a 22 month survival advantage for MPT versus MP; a similarly-designed study conducted in Italy; MM-003, the pivotal study supported by Pharmion and Celgene Corporation comparing thalidomide plus dexamethasone with dexamethasone alone; and an Eastern Cooperative Oncology Group (ECOG) clinical study also comparing thalidomide plus dexamethasone to dexamethasone alone.
Vidaza
Pharmion's new drug application (NDA) supplement to add IV administration to instructions in the prescribing information for Vidaza, the Company's demethylating agent, is pending with the U.S. Food and Drug Administration (FDA) and Pharmion expects an agency response within the next several weeks. If the NDA supplement is approved, the dose and schedule of Vidaza would remain the same for IV administration as for the current approved subcutaneous administration.
2006 Financial Outlook
The Company is reiterating its sales guidance for 2006 to be in line with 2005 sales of $221.2 million. Through the first nine months of 2006, total sales of $178.6 million are up eight percent over the same period in 2005, which the Company considers to be within its guidance.
Research and development expenses for 2006 are expected to increase by approximately 63 percent over 2005 to approximately $70 million, adjusted from the prior estimate of 75 percent over 2005 expenses. This increase over 2005 is driven by increased development expenses associated with the licensing of satraplatin and MGCD0103 product rights as well as increased development activities for Vidaza and thalidomide. Selling, general and administrative expenses are expected to increase by approximately 15 percent over 2005 to approximately $96 million, consistent with our previous guidance. Charges for acquired in-process research and development, including the payment of development milestones, are expected to total $24.5 million for 2006, reflecting upfront payments for the oncology HDAC inhibitor program licensing as well as the Phase Two milestone payment incurred in the third quarter.
Pharmion now expects its balance of cash, cash equivalents and short-term investments will be approximately $180 to $185 million at the end of 2006, up from the prior estimate of $170 to $175 million. This forecast does not reflect any additional product licensing or acquisitions that could occur during the year.
This financial guidance excludes stock compensation expense resulting from the implementation of SFAS No. 123R.
Pharmion will hold a conference call to discuss third quarter 2006 results this afternoon, October 25, at 5:00 p.m. ET. The conference call will be simultaneously webcast on the Company's Web site, and archived for future review as a webcast and a podcast.
About Pharmion:
Pharmion is a biotechnology company focused on acquiring, developing and commercializing innovative products for the treatment of hematology and oncology patients in the U.S., Europe and additional international markets. Pharmion has a number of products on the market including the world's first approved epigenetic cancer therapy, Vidaza(R), a DNA demethylating agent. For additional information about Pharmion, please visit the company's website at www.pharmion.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which express the current beliefs and expectations of management, including Pharmion's plans for clinical development and regulatory submissions of Pharmion's products and product candidates, and Pharmion's anticipated financial results for 2006. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause Pharmion's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include the outcome of ongoing clinical trials, the status and timing or regulatory approvals for Pharmion's product candidates; the impact of competition from other products under development by Pharmion's competitors; the regulatory environment and changes in the health policies and structure of various countries; uncertainties regarding market acceptance of products newly launched, currently being sold or in development; Pharmion's ability to successfully acquire rights to, develop and commercialize additional pharmaceutical products; failure of third-party manufacturers to produce the product volumes required on a timely basis, fluctuations in currency exchange rates, and other factors that are discussed in Pharmion's filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and Pharmion undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
PHARMION CORPORATION CONSOLIDATED FINANCIAL RESULTS (In thousands, except for share and per share amounts) Unaudited Three Months Ended Nine Months Ended September 30, 2006 September 30, 2006 2006 2005 2006 2005 Net sales $61,636 $56,805 $178,596 $164,798 Operating expenses: Cost of sales, inclusive of royalties, exclusive of product rights amortization 16,629 15,355 48,514 44,422 Research and development 16,675 9,799 50,194 29,062 Acquired in-process research 4,000 -- 24,480 -- Selling, general and administrative 24,465 19,483 72,963 62,781 Product rights amortization 2,454 2,443 7,344 6,909 Total operating expenses 64,223 47,080 203,495 143,174 Operating income (loss) (2,587) 9,725 (24,899) 21,624 Interest and other income, net 1,870 1,535 5,286 4,530 Income (loss) before taxes (717) 11,260 (19,613) 26,154 Income tax expense 2,834 2,432 7,188 7,503 Net income (loss) $(3,551) $8,828 $(26,801) $18,651 Net income (loss) per common share: Basic $(0.11) $0.28 $(0.84) $0.59 Diluted $(0.11) $0.27 $(0.84) $0.57 Weighted average number of common and common equivalent shares used to calculate net income (loss) per common share: Basic 32,053,143 31,844,331 31,993,452 31,823,939 Diluted 32,053,143 32,868,766 31,993,452 32,919,643 CONSOLIDATED BALANCE SHEET DATA September 30, 2006 December 31, 2005 Cash, cash equivalents and short-term investments $187,777 $243,406 Total assets 376,701 432,630 Total liabilities 46,050 86,006 Total stockholders' equity 330,651 346,624 PHARMION CORPORATION RECONCILIATION OF GAAP NET LOSS TO ADJUSTED NET INCOME (In thousands, except for share and per share amounts) Unaudited Three Months Ended Nine Months Ended September 30, 2006 September 30, 2006 Net Net Net Net income income income income (loss) (loss) (loss) (loss) per per per per common common common common share share share share Amount Basic Diluted Amount Basic Diluted GAAP net loss $(3,551) $(0.11) $(0.11) $(26,801) $(0.84) $(0.82) Stock compensation expense: Research and development 230 0.01 0.01 670 0.02 0.02 Selling, general and administrative 617 0.02 0.02 1,740 0.05 0.05 Total stock compensation expense (1) 847 0.03 0.03 2,410 0.07 0.07 Acquired in-process research (2) 4,000 0.12 0.12 24,480 0.77 0.75 Adjusted net income $1,296 $0.04 $0.04 $89 $-- $-- Weighted average number of common and common equivalent shares used to calculate net income (loss) per common share: Basic 32,053,143 31,993,452 Diluted 32,586,172 32,548,087 (1) Stock compensation expense is attributable to the adoption of SFAS 123R. (2) Acquired in-process research expense is associated with the licensing of MethylGene Inc.'s oncology HDAC inhibitor program, including a $4 million Phase II development milestone payment made during the three months ended September 30, 2006.
Pharmion CorporationCONTACT: Anna Sussman, Director, Investor Relations and CorporateCommunications, of Pharmion Corporation, +1-720-564-9150
Web site: http://www.pharmion.com/
