HOUSTON, Nov. 2 /PRNewswire-FirstCall/ -- Tanox, Inc. today reported financial results for the third quarter ended September 30, 2005.
Revenues for the third quarter of 2005 were $8.3 million, compared to $2.5 million for the third quarter of 2004 and $7.4 million for the second quarter of 2005. Net royalty revenue from sales of Xolair(R) (omalizumab) was $7.7 million in the third quarter of 2005, compared to $2.3 million in the third quarter of 2004 and $7.3 million in the second quarter of 2005 -- increases of 235 percent and 5 percent, respectively.
Tanox reported a net loss of $3.4 million, or $0.08 per share, for the third quarter of 2005, compared to a net loss of $4.9 million, or $0.11 per share, for the third quarter of 2004 and a net loss of $5.4 million, or $0.12 per share, for the second quarter of 2005.
In addition to the Xolair royalty revenue in the third quarter of 2005, Tanox recorded manufacturing-rights revenue of $650,000 from Genentech and Novartis based on the quantity of Xolair produced in the first half of 2005. Under terms of the tripartite collaboration agreement (TCA) among Tanox, Genentech and Novartis, Tanox relinquished any rights to manufacture Xolair in exchange for the right to receive payments based on the quantity of Xolair produced.
The company also received its first profit-sharing payment of $562,000(1) in the third quarter of 2005, representing Tanox’s share of Novartis’ U.S. net profits from the sales of Xolair in the first half of 2005. This payment is also made under terms of the TCA.
“We continue to be encouraged by the sales growth of Xolair and its long-term potential in the moderate-to-severe, allergic asthma market,” said Nancy Chang, Ph.D., Tanox president and chief executive officer. “Sales of the drug this year have surpassed the $200 million mark for the first time, which reflects impressive growth for a first-in-class biologic. Additionally, securing European approval will open up several new markets for Xolair.”
The European Commission approved Xolair in October 2005 for the treatment of severe allergic asthma in all 25 European Union member states. Xolair, the first monoclonal antibody approved for the treatment of asthma in Europe, is expected to be available in initial EU markets within the next few weeks.
In terms of expenses, research and development costs for the third quarter of 2005 were $11.4 million, compared to $6.6 million for the third quarter of 2004, and $12.0 million in the second quarter of 2005. The year-over-year increase in R&D expenses is due primarily to costs related to manufacturing activities, increased clinical-trial costs associated with TNX-355 and TNX-832, and increased personnel costs.
General and administrative expenses were $1.5 million for the third quarter of 2005, compared to $1.6 million for the third quarter of 2004, and $1.8 million for the second quarter of 2005.
As of September 30, 2005, Tanox had $171.9 million in cash and investments, compared to $202.5 million at Dec. 31, 2004 and $173.6 million at June 30, 2005. Cash and investments for all periods included restricted amounts of $5.0 million.
Company Highlights Recent Tanox accomplishments and highlights include: * Reporting positive Phase 2 clinical results of its novel HIV drug candidate, TNX-355. The 24-week results of the study show that TNX-355 at the 10 mg/kg dose, when given in combination with optimized background therapy (OBT), produced a considerably greater reduction in viral load in HIV-infected patients than did placebo in combination with OBT. TNX-355, the first monoclonal antibody in development for treatment of HIV, was well tolerated, with no serious adverse events related to the drug. The study met its primary endpoint with TNX-355 plus OBT demonstrating a statistically significant reduction in viral load -- the level of HIV in the bloodstream -- compared to placebo plus OBT at Week 24. * Completing patient enrollment in the second cohort of the Phase 1/2 clinical trial of TNX-832 for the treatment of acute lung injury and acute respiratory distress syndrome. * Continuing development of several pre-clinical compounds, including TNX-650 as a potential treatment for Hodgkin’s lymphoma, other cancer indications and inflammatory disease. TNX-650 is a humanized monoclonal antibody targeting interleukin 13. The company remains on schedule to file an Investigational New Drug (IND) application for TNX 650 later this year and initiate clinical trials in Hodgkin’s lymphoma in the first half of 2006. * Strengthening the company’s management team with the addition of Dr. Linda Paradiso as vice president of Clinical & Regulatory Affairs. Paradiso brings 23 years of pharmaceutical and biotechnology experience to this new role to provide leadership for the company’s clinical operations and regulatory affairs departments. Financial Outlook
The company’s net cash expenditures for 2005 continue to be estimated at approximately $40 million.
Conference Call
Tanox will host a conference call for investors today at 10 a.m., EST. To participate in the conference call, U.S. callers should dial 800-591-6923. International access is available by calling 617-614-4907. The pass code is 6659-2677. Live audio of the call will be webcast on the Internet. The webcast can be accessed from the Tanox Web site at http://www.tanox.com in the Investor Relations section. An audio replay of the webcast will be available beginning at 11 a.m., EST, Nov. 2 through 11 a.m., EST, Nov. 15, 2005. Access phone numbers for the replay are: 888-286-8010 (U.S.) and 617-801-6888 (international); conference pass code 3562-3386.
About Tanox, Inc.
Tanox is a biotechnology company specializing in the discovery and development of biotherapeutics based on monoclonal antibody technology. The company develops innovative therapeutic agents for the treatment of immune-mediated diseases, infectious disease, inflammation and cancer. Tanox’s lead investigational therapy, TNX-355, is a humanized, anti-CD4 monoclonal antibody to treat HIV and AIDS. TNX-355 received Fast Track Status from the U.S. Food and Drug Administration and is currently in Phase 2 clinical testing. Tanox’s first-approved drug, Xolair(R) (omalizumab), is the first anti-immunoglobulin E (anti-IgE) antibody to be brought to market. Xolair was developed in collaboration with Genentech, Inc. and Novartis Pharma AG for the treatment of allergic asthma. Tanox is based in Houston, Texas and maintains a manufacturing facility in San Diego, California. Additional corporate information is available at http://www.tanox.com .
This news release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. We typically identify forward-looking statements by using terms such as “may,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “intend,” “estimate,” “predict,” “potential” or similar words, although we express some forward-looking statements differently. You should be aware that actual events could differ materially from those suggested in the forward-looking statements, with respect to Xolair, due to a number of factors, including the continued market acceptance of Xolair(R); the results of our collaborators, Genentech and Novartis, in growing sales of Xolair; failure to effectively launch or receive marketing acceptance for Xolair in Europe; and the strength of our patent portfolio. The absence of safety concerns after 24 weeks of treatment with TNX-355 in 82 patients does not ensure that safety issues will not be identified after extended treatment or in larger-scale clinical trials. The therapeutic potential of TNX-355 as a treatment for HIV-1-infected patients is subject to the risks inherent in drug development, and success in early stage clinical trials does not ensure that later-stage or larger-scale trials will be successful. Problems or delays may arise during clinical trials or in the course of developing, testing or manufacturing drugs. Prospective investors should carefully consider the information contained in the company’s Form 10-K and other Securities and Exchange Commission (SEC) filings, including the sections titled Business: Forward-looking Statements and Business: Factors That May Affect Our Future Results; and Management’s Discussion and Analysis of Financial Condition and Results of Operations, when evaluating an investment in the shares of Tanox Common Stock. The Tanox logo is a registered trademark with the U.S. Patent and Trademark Office.
(1) Tanox recorded the amount paid by Novartis as deferred revenue at September 30, 2005, pending resolution of TCA interpretation differences with Novartis. TANOX, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share data) Summary of Operations (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Royalties, development agreements, licensing fees, and manufacturing rights, net $8,347 $2,466 $21,652 $14,919 Operating expenses: Research and development 11,402 6,622 35,156 18,698 Acquired in-process research and development --- --- 13,680 --- General and administrative 1,515 1,639 5,270 5,150 Total operating expenses 12,917 8,261 54,106 23,848 Loss from operations (4,570) (5,795) (32,454) (8,929) Other income 1,187 882 3,192 2,482 Net loss $(3,383) $(4,913) $(29,262) $(6,447) Basic loss per share $(0.08) $(0.11) $(0.66) $(0.15) Diluted loss per share $(0.08) $(0.11) $(0.66) $(0.15) Shares used in computing loss per share: Basic and Diluted 44,063 44,006 44,596 44,014 Summary Balance Sheet Information September 30, 2005 December 31, 2004 (Unaudited) Assets: Cash, cash equivalents and investments* $171,938 $202,511 Property, plant and equipment (net) 30,691 25,506 Other assets 14,198 10,536 Total assets $216,827 $238,553 Liabilities and Stockholders Equity: Accounts payable and accrued liabilities $8,351 $9,355 Deferred revenue 562 --- Notes Payable 5,000 5,000 Stockholders’ equity 202,914 224,198 Total liabilities and stockholders’ equity $216,827 $238,553 * Includes restricted cash and investments of $5,000 at both September 30, 2005 and December 31, 2004.
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050207/TNOXLOGOPRN Photo Desk,photodesk@prnewswire.comTanox, Inc.
CONTACT: Steve Sievert of Tanox, Inc., +1-713-578-4211, orssievert@tanox.com
Web site: http://www.tanox.com/
