OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its
financial results for the year ended December 31, 2009. The Company
reported total revenues from continuing operations of $428 million
for 2009 compared to revenues of $379 million for 2008, a 13%
increase over the prior year. Total revenues from continuing
operations for the three months ended December 31, 2009 were $124
million, compared with $98 million for the same period last year, a
26% increase over the prior year. Total worldwide net sales of
Tarceva® (erlotinib) for the three and twelve months ended December
31, 2009, as reported to the Company by its collaborator Roche,
were approximately $333 million and $1.2 billion, respectively,
representing a 7% growth in annual sales and a 17% increase in
sales for the fourth quarter of 2009 compared to the same periods
last year.
The Company reported net income from continuing operations of
$76 million (or $1.29 per share) in 2009, compared to $437 million
(or $6.93 per share) in 2008. In 2008, a $319 million (or $4.77 per
share) non-cash gain was recorded in the fourth quarter, related to
the recognition of certain deferred tax assets and based primarily
on the expected utilization of the Company’s net operating loss
carryforwards (NOL’s). 2009 is the first full year of financial
reporting in which OSI has shown a full tax provision on its
earnings. Adjusting for non-cash tax expense (to reflect OSI’s
actual cash tax rate of approximately 3%), restructuring and other
charges related to our consolidation of U.S. operations, expense
related to equity-based compensation, non-cash interest expense on
our convertible notes, and certain other items detailed in the
attached reconciliation of GAAP to non-GAAP financial measures, the
Company reported that non-GAAP net income from continuing
operations increased to $181 million (or $2.89 per share) in 2009,
compared to $157 million (or $2.56 per share) in 2008, an increase
of 15% over the prior year. For the fourth quarter of 2009,
non-GAAP net income from continuing operations increased to $57
million (or $0.90 per share), compared to $38 million (or $0.62 per
share) in the fourth quarter of 2008, an increase of 50% over the
prior year.
Overall, total revenues were comprised of the following key
items:
- Tarceva-related revenues of $359
million in 2009 compared with $335 million in 2008, based primarily
on the following:
- Net revenues from the unconsolidated
joint business for Tarceva of $209 million in 2009, compared with
$196 million in 2008, arising from the Company's co-promotion
arrangement with Genentech, a wholly-owned member of the Roche
Group. The net revenues were based on total U.S. Tarceva net sales
of $479 million, compared to $457 million in 2008, an increase of
5%. Net revenues from the unconsolidated joint business for Tarceva
for the three months ended December 31, 2009 were $60 million,
compared to $49 million for the same period last year, based upon
total U.S. Tarceva net sales of $137 million for the three months
ended December 31, 2009 compared with $118 million for the same
period last year;
- Royalties of $146 million in 2009
compared with $135 million in 2008 from Roche, the Company's
international collaborator for Tarceva. The royalty revenues for
2009 were based on total rest-of-world Tarceva net sales of
approximately $724 million, an increase of 9%, compared to $665
million in 2008. Royalties for the three months ended December 31,
2009 were $40 million compared with $34 million for the same period
last year. Royalty revenues for the three months ended December 31,
2009 were based upon rest-of-world Tarceva net sales of
approximately $196 million, compared with $167 million for the same
period last year;
- Other Revenues of $69 million in
2009 compared with $45 million in 2008, based primarily on the
following:
- Royalties of $62 million in 2009
compared with $41 million in 2008 related to worldwide
non-exclusive licensing agreements under the Company's DP-IV patent
portfolio covering the use of DP-IV inhibitors for treatment of
type 2 diabetes, representing an increase of 51% over the prior
year. Royalties for the three months ended December 31, 2009 were
$22 million compared with $14 million for the same period last
year;
- License, milestone and other revenues in
2009 of $7 million compared with $4 million in 2008.
Operating
Expenses
Operating expenses from continuing operations for the fourth
quarter and year ended December 31, 2009 were $77 million and $275
million, respectively, compared to $73 million and $246 million,
respectively, for the same periods last year. Research and
development expenses for the fourth quarter and year ended December
31, 2009 were $41 million and $152 million, respectively, compared
to $41 million and $135 million, respectively, for the same periods
last year. The Company also recorded acquired in-process research
and development charges for the fourth quarter and year ended
December 31, 2009 of $1.5 million and $6.5 million, respectively,
compared to $4 million, respectively, in each of the same periods
last year. Selling, general and administrative expenses for the
fourth quarter and year ended December 31, 2009 were $29 million
and $103 million, respectively, compared to $25 million and $95
million, respectively, for the same periods last year. The Company
also recognized restructuring costs of $4.5 million in 2009 related
to its previously announced plans to consolidate its U.S.
operations onto a single campus at its recently acquired site in
Ardsley, New York. Most of the increase in 2009 in operating
expenses was focused on key strategic R&D programs.
Taxes and Interest
Expense
Beginning in 2009, the Company is required to report its tax
provision at its full effective tax rate, which, for 2009, was
approximately 40%. However, the Company will continue paying taxes
at the lower alternative minimum tax rates as it continues to
utilize its net operating loss carryforwards (NOLs). In addition to
the 40% tax rate, the income tax provision for 2009 includes a $3.3
million charge related to a valuation reserve adjustment as a
result of consolidating operations into a single site. The results
also reflect the retrospective application of Accounting Standards
Codification Subtopic 470-20 (formerly APB14-1) which was effective
January 1, 2009, and which includes guidance for convertible debt
instruments that may be settled in cash upon conversion, resulting
in higher interest expense reported in both 2009 and 2008 although
cash expenses for interest on these bonds was paid at the lower
coupon rate.
Net Income Including
Discontinued Operations
The Company's net income, including results from discontinued
operations, was $25 million (or $0.42 per share) and $76 million
(or $1.29 per share) for the three months and year ended December
31, 2009, respectively, compared with a net income of $342 million
(or $5.22 per share) and $442 million (or $7.00 per share),
respectively, for the same periods last year.
Use of Non- GAAP Financial
Measures
The accompanying tables contain both GAAP and non-GAAP financial
measures for the periods presented. The non-GAAP measures include
adjusted net income from continuing operations and adjusted diluted
earnings per share from continuing operations, each of which has
directly comparable GAAP equivalents. OSI has provided these
non-GAAP financial measures to adjust for the impact of (i)
restructuring and other costs related to consolidation of the
Company’s operations on to a single campus in Ardsley, New York,
(ii) equity-based compensation expense, (iii) imputed interest
expense related to the application of Accounting Standards
Codification Subtopic 470-20, which was effective January 1, 2009,
and which provides guidance for bifurcation of the conversion
feature from the debt component of convertible debt instruments
that may be settled in cash upon conversion, (iv) amortization of
acquired intangible assets, (v) non-cash tax expense to adjust
OSI’s effective tax rate of approximately 40% to reflect its actual
cash tax rate of approximately 3%, (vi) acquired in-process
research and development and (vii) non-cash impairment charges.
Management uses these non-GAAP financial measures internally to
evaluate the performance of the business, including the allocation
of resources as well as the planning and forecasting of future
periods and believes that these results are useful to others in
analyzing the core operating performance and trends of OSI for the
periods presented. Non-GAAP financial measures are not prepared in
accordance with GAAP and therefore are not necessarily comparable
to the financial results of other companies. These non-GAAP
measures should be considered as a supplement to, not a substitute
for, or superior to, the corresponding financial measures
calculated in accordance with GAAP.
Conference Call
OSI will host a conference call reviewing the Company's
financial results, product portfolio and business developments on
February 23, 2010 at 5:00PM (Eastern Time). To access the live
webcast via the Internet, log on to www.osip.com. Please connect to
the Company's website at least 15 minutes prior to the conference
call to ensure adequate time for any software download that may be
needed to access the webcast. Alternatively, please call
1-877-329-7568 (U.S.) or 1-719-325-2137 (international) to listen
to the call. The conference ID number for the live call is 8291684.
Telephone replay is available approximately two hours after the
call through March 12, 2010. To access the replay, please call
1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The
conference ID number for the replay is 8291684. The webcast will be
available via the investor relations section of the Company’s
website for a 12-month period following the call.
About OSI
Pharmaceuticals
OSI Pharmaceuticals is committed to "shaping medicine and
changing lives" by discovering, developing and commercializing
high-quality, novel and differentiated targeted medicines designed
to extend life and improve the quality of life for patients with
cancer and diabetes/obesity. For additional information about OSI,
please visit http://www.osip.com.
This news release contains forward-looking statements. These
statements are subject to known and unknown risks and uncertainties
that may cause actual future experience and results to differ
materially from the statements made. Factors that might cause such
a difference include, among others, OSI's and its collaborators'
abilities to effectively market and sell Tarceva and to expand the
approved indications for Tarceva, OSI’s ability to protect its
intellectual property rights, safety concerns regarding Tarceva,
competition to Tarceva and OSI’s drug candidates from other
biotechnology and pharmaceutical companies, the completion of
clinical trials, the effects of FDA and other governmental
regulation, including pricing controls, OSI's ability to
successfully develop and commercialize drug candidates, and other
factors described in OSI Pharmaceuticals' filings with the
Securities and Exchange Commission.
OSI Pharmaceuticals, Inc. and Subsidiaries
Selected Financial Information Consolidated Statements of
Operations
Three Months Ended December 31, Twelve Months
Ended December 31, (In thousands, except per share data)
2009 2008* 2009 2008*
Unaudited Unaudited
Unaudited Unaudited
Revenues: Tarceva-related revenues $ 100,816 $ 83,647 $ 358,730 $
334,653 Other revenues 23,142 14,780
69,418 44,735 Total revenues
123,958 98,427 428,148
379,388 Operating expenses: Cost of goods sold 2,326 2,567
8,786 9,315 Research and development 40,716 41,335 151,845 135,344
Acquired in-process research and development 1,500 4,000 6,500
4,000 Selling, general and administrative 28,924 24,945 102,989
94,930 Restructuring costs 3,306 - 4,454 - Amortization of
intangibles 227 605 920
2,489 Total operating expenses 76,999
73,452 275,494 246,078
Operating income from continuing operations 46,959 24,975
152,654 133,310 Other income (expense): Investment income -
net 2,353 3,291 8,148 12,961 Interest expense (6,501 ) (6,621 )
(27,085 ) (27,243 ) Other income (expense) - net 1,203
2,130 (438 ) 1,632
Income from continuing operations before income taxes 44,014 23,775
133,279 120,660 Income tax provision (benefit) 18,895
(318,810 ) 57,284 (316,049 ) Net income
from continuing operations 25,119 342,585 75,995 436,709 Income
(loss) from discontinued operations-net of tax 315
(1,052 ) (64 ) 4,884 Net income $
25,434 $ 341,533 $ 75,931 $ 441,593
Basic and diluted income (loss) per common share: Basic
income (loss) Continuing operations $ 0.43 $ 5.95 $ 1.31 $ 7.62
Discontinued operations 0.01 (0.02 ) (0.00 ) 0.09 Net income $ 0.44
$ 5.93 $ 1.31 $ 7.70 Diluted income (loss) Continuing operations $
0.42 $ 5.24 $ 1.29 $ 6.93 Discontinued operations 0.00 (0.02 )
(0.00 ) 0.07 Net income $ 0.42 $ 5.22 $ 1.29 $ 7.00 Weighted
average shares of common stock outstanding: Basic shares 58,056
57,610 57,939 57,316 Diluted shares 64,239 66,678 60,452 66,911
Computation of diluted income per share from continuing
operations: Net income from continuing operations $ 25,119 $
342,585 $ 75,995 $ 436,709 Add: Interest and issuance costs related
to dilutive convertible debt-net of tax 1,743
6,524 1,842 26,830 Net income
from continuing operations - diluted $ 26,862 $ 349,109
$ 77,837 $ 463,539 Basic shares 58,056
57,610 57,939 57,316 Dilutive effect of stock options and
restricted stock 433 453 554 729 Dilutive effect of the 2023 Notes
1,842 1,998 1,959 2,308 Dilutive effect of the 2025 Notes 3,908
3,908 - 3,908 Dilutive effect of the 2038 Notes -
2,709 - 2,650 Diluted
shares 64,239 66,678 60,452
66,911
December 31,
December 31, 2009
2008 Unaudited
Unaudited Cash and investments securities
(including restricted investments) $ 471,895 $ 515,511
* The three and twelve months ended December 31, 2008
reflect the retrospective application of ASC subtopic 470-20 which
includes the accounting guidance formerly known as FSP APB 14-1.
OSI Pharmaceuticals, Inc. and Subsidiaries
Reconciliation From Reported Net
Income from Continuing Operations to Non-GAAP Net Income from
ContinuingOperations and Reported Diluted Income Per Share to
Non-GAAP Diluted Income Per Share
Unaudited (In thousands, except per share data)
Three Months Ended December 31, Twelve
Months Ended December 31, 2009 2008
2009 2008 Reported diluted income per
common share from continuing operations $ 0.42 $ 5.24 $ 1.29 $ 6.93
Adjustments per common share 0.48 (4.62 )
1.60 (4.37 ) Non-GAAP diluted income per
common share from continuing operations $ 0.90 $ 0.62
$ 2.89 $ 2.56 Net income from continuing
operations $ 25,119 $ 342,585 $ 75,995 $ 436,709 Non-GAAP
Adjustments: Site consolidation-related costs: Restructuring costs
3,306 - 4,454 - Net operating loss valuation allowance adjustment*
- - 3,308 - Accelerated depreciation on leasehold improvements**
1,203 - 2,408 -
Total site consolidation related costs 4,509 - 10,170 -
Equity-based compensation expense 6,772 5,853 25,269 20,782 Imputed
interest related to the application of ASC 470*** 2,926 3,182
13,416 12,484 Amortization of acquired intangibles 227 605 920
2,489 Non-cash tax expense (benefit) 16,685 (319,222 ) 49,445
(319,222 ) Acquired in-process research and development 1,500 4,000
6,500 4,000 Non-operating impairments 54 1,200 663 1,200 Income tax
effect on adjustments (860 ) (260 ) (1,823 )
(983 ) Non-GAAP net income from continuing operations $
56,932 $ 37,943 $ 180,555 $ 157,459
Computation of Non-GAAP diluted income per common share from
continuing operations: Non-GAAP net income from continuing
operations $ 56,932 $ 37,943 $ 180,555 $ 157,459 Add: Interest and
issuance costs related to dilutive convertible debt-net of tax
3,405 3,219 12,991
13,879 Non-GAAP net income from continuing operations -
diluted $ 60,337 $ 41,162 $ 193,546 $ 171,338
Computation of Non-GAAP diluted shares: Basic shares
58,056 57,610 57,939 57,316 Adjustment to dilutive shares: Dilutive
effect of options and restricted stock 433 453 554 729 Dilutive
effect of the 2023 Notes 1,842 1,998 1,959 2,308 Dilutive effect of
the 2025 Notes 3,908 3,908 3,908 3,908 Dilutive effect of the 2038
Notes 2,610 2,709 2,684
2,650 Non-GAAP dilutive shares 66,849
66,678 67,044 66,911
* Represents a valuation allowance adjustment included in
the tax provision for state and local net operating losses not
expected to be realized as a result of consolidating operations.
** Represents the impact of shortening the estimated useful
lives of leasehold improvements as a result of our intention to
exit certain facilities. *** The Accounting Standards
Codification subtopic 470-20 or ASC subtopic 470-20 includes the
accounting guidance for literature formerly known as FSP APB 14-1.
Osi Pharmaceuticals (NASDAQ:OSIP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Osi Pharmaceuticals (NASDAQ:OSIP)
Historical Stock Chart
From Jul 2023 to Jul 2024