Strong Year of Execution Produces Solid 2004 Financial Performance
-- TKT Exceeds Guidance on 2004 Revenue, Net Loss and Cash --
CAMBRIDGE, Mass., Feb. 23 /PRNewswire-FirstCall/ -- Transkaryotic
Therapies, Inc. (NASDAQ:TKTX) today announced its consolidated
financial results for the three and twelve months ended December
31, 2004. 2004 Financial Highlights at a Glance * Replagal sales
increased 35% compared to 2003 * Operating expenses increased 12%
compared to 2003 * Net loss per share decreased 13% compared to
2003 * Cash and marketable securities amounted to $155 million at
year-end "In 2004 we achieved quarter-over-quarter sales growth
with Replagal and advanced our lead clinical programs at an
impressive rate," said Michael Astrue, President and CEO of TKT.
"We expect 2005 will be another important year to achieve this same
level of execution as we aim to bring the first approved therapy to
Hunter syndrome patients, to expand our Replagal franchise, and to
partner Dynepo outside the United States." Total revenues for the
three and twelve months ended December 31, 2004 were approximately
$23.0 million and approximately $78.1 million, respectively. Sales
of Replagal(TM) (agalsidase alfa), TKT's enzyme replacement therapy
for Fabry disease, were approximately $22.5 million for the fourth
quarter of 2004, which represents an increase of 45% over the same
period in 2003 and an increase of 15% over the $19.5 million
recorded in the third quarter of 2004. Compared to sales of
approximately $57.2 million for the twelve months ended December
31, 2003, Replagal sales totaled approximately $77.4 million for
the twelve months ended December 31, 2004, exceeding TKT's
forecasted range of $67 million to $77 million. A weaker dollar
compared with the Euro contributed about $2.4 million and $6.5
million to the increase in revenues for the three months and year
ended December 31, 2004, respectively. Costs of goods sold in the
fourth quarter of 2004 totaled approximately $7.5 million, or 33%
of product sales, compared to approximately $1.4 million, or 9% of
product sales, for the corresponding quarter in 2003. The increase
in cost of goods sold was attributed to increased unit sales as
well as costs incurred to improve the Replagal manufacturing
process. For the twelve months ended December 31, 2004, cost of
goods sold was approximately $16.4 million, or 21% of product
sales, compared to approximately $12.5 million, or 22% of product
sales, for the twelve months ended December 31, 2003. Research and
development expenses totaled approximately $22.5 million in the
fourth quarter of 2004, compared to approximately $18.3 million for
the same period in 2003. For the year ended December 31, 2004,
research and development expenses totaled approximately $88.1
million, compared to approximately $74.1 million for the same
period in 2003. The increase in research and development expenses
was attributed primarily to clinical trial and manufacturing costs
associated with iduronate-2-sulfatase (I2S), enzyme replacement
therapy for Hunter syndrome, and Gene-Activated(R)
glucocerebrosidase (GA-GCB), enzyme replacement therapy for Gaucher
disease, as well as contract manufacturing development costs for
Dynepo(TM) (epoeitin delta), TKT's Gene-Activated(R) erythropoietin
product for the treatment of anemia associated with renal disease.
Selling, general and administrative (SG&A) expenses were
approximately $13.3 million in the fourth quarter of 2004, compared
to approximately $10.7 million for the same period in 2003. For the
year ended December 31, 2004, SG&A was approximately $44.2
million, compared to approximately $36.6 million for the year ended
December 31, 2003. The increase in SG&A for the three and
twelve months ended December 31, 2004 was attributed primarily to
higher sales and marketing expenses associated with incentive
compensation of the European sales and marketing organization. Net
loss for the fourth quarter of 2004 was approximately $12.7
million, or $0.36 per share, compared to a net loss of
approximately $14.7 million, or $0.43 per share, for the same
period in 2003. For the twelve months ended December 31, 2004, net
loss was approximately $65.9 million, or $1.89 per share, compared
to a net loss of about $75.2 million, or $2.18 per share, for the
twelve months ended December 31, 2003. TKT expected its net loss
for 2004 to be in the range of $70.0 million to $75.0 million.
Included in the net loss were foreign currency gains totaling
approximately $7.7 million for the three months and year ended
December 31, 2004, associated with amounts due from TKT Europe. At
year-end 2004, the company had cash, cash equivalents, and
marketable securities of approximately $155.0 million, exceeding
TKT's guidance of $125.0 million to $140.0 million. Long-term debt
totaled $94.0 million. Selected 2004 Highlights and Upcoming
Milestones Replagal for Fabry Disease * TKT received marketing
authorization for Replagal in Canada in February 2004 and in Taiwan
in April 2004, increasing to 34 the number of countries where it is
approved. * TKT raised its estimate of the size of the worldwide
Fabry market from 5,000 patients to 8,000 - 10,000 patients. * TKT
accelerated its Replagal sales targets and now expects to achieve
Replagal sales of $95 to $105 million in 2005 and sales of greater
than $100 million in 2006. * Following the annual re-assessment of
Replagal in Europe, the Committee for Human Medicinal Products
(CHMP) issued a positive opinion reaffirming the favorable
risk/benefit profile of Replagal. I2S for Hunter Syndrome * In
March 2004, TKT completed enrollment of its ninety-six patient
pivotal trial evaluating I2S as a treatment for Hunter syndrome,
making it the largest trial ever conducted for a lysosomal storage
disorder. TKT expects to report top-line data in June 2005 and if
the results are positive, to file applications for regulatory
approval in the second half of 2005. * In July 2004, the FDA
granted Fast Track designation to TKT for I2S. Fast Track
regulations are designed to facilitate the development of products
to treat serious or life-threatening diseases where an unmet
medical need exists. * In September 2004, the FDA's Office of
Orphan Products Development awarded TKT a $300,000 development
grant for I2S, which will cover a portion of the I2S pivotal trial
costs. * In 2004, TKT's second program for Hunter syndrome,
designed to evaluate direct infusion of enzyme into the central
nervous system (CNS), advanced into preclinical development.
Research findings, presented at the American Society of Human
Genetics' 54th Annual Meeting, showed that repeated injections of
I2S in animal models resulted in the accumulation of enzyme in
various cells of the CNS. TKT intends to file an IND for its I2S
CNS program in the first half of 2006. GA-GCB for Gaucher Disease *
In April 2004, TKT commenced an open-label Phase I/II clinical
trial evaluating GA-GCB for the treatment of Gaucher disease in
twelve patients. TKT expects the Phase I/II trial to conclude in
the second quarter of 2005 and TKT intends to report top-line data
during the second half of 2005. * Preliminary safety data from the
Phase I/II study indicates that treatment was generally
well-tolerated. These findings were presented at the American
Society of Human Genetics Annual Meeting in October 2004. Dynepo
for Anemia * In March 2004, TKT regained exclusive rights to Dynepo
outside the United States. Subject to the establishment of
manufacturing and commercial capabilities in the European Union,
TKT expects a commercial partner to offer Dynepo for commercial
sale in Europe during the first half of 2006. * In October 2004,
TKT prevailed over Amgen in the U.K. Dynepo patent litigation. The
House of Lords upheld an earlier unanimous Court of Appeal decision
that activities relating to Dynepo do not infringe Amgen's European
patent and revoked the patent. TKT also appealed to the Federal
Circuit a U.S. District Court decision that activities relating to
Dynepo infringed certain claims of Amgen's U.S. patents. Research
Pipeline * TKT initiated a new research program outside the
lysosomal storage disease area for familial hypercholesterolemia
(FH). TKT expects to complete research studies of TX-1501, its
recombinant LDL receptor- transferrin fusion protein (LDLR/TF), in
2006. Business Activities * In October 2004, TKT completed its
acquisition of the 20% minority interest in TKT Europe-5S for
approximately $62.0 million in cash. With this purchase, TKT now
owns 100% of its European operations. * In May 2004, TKT raised
approximately $94.0 million through the sale of senior convertible
notes due in 2011. * TKT expanded its management team across the
organization with the appointment and promotions of the following
executives: Theresa Heggie, General Manager, Europe; Tamara Joseph,
Vice President and General Counsel; Dr. Neil Kirby, Senior Vice
President, Strategic Product Development; Dr. Kip Martha, Senior
Vice President and Chief Medical Officer; Gregory D. Perry, Senior
Vice President and Chief Financial Officer; and Linda Pettingell,
Senior Vice President, Human Resources and Corporate Services.
Upcoming Presentations * In the first quarter of 2005, TKT will
present at the SG Cowen Health Care Conference being held in
Boston, Massachusetts, March 14-17, 2005 and the Lehman Brothers
Healthcare Conference in Miami, Florida, March 30-April 1, 2005. *
In the second quarter of 2005, TKT will present at several health
care conferences including Deutsche Bank's 30th Annual Health Care
Conference in Baltimore, MD, May 2-4, 2005; The Rodman and Renshaw
Techvest 2nd Annual Global Health Care Conference in Paris, France,
May 4-6, 2005; Banc of America's 2005 Health Care Conference in Las
Vegas, NV, May 17-19, 2005; and Pacific Growth's Life Sciences
Growth Conference in San Francisco, CA, June 6-8, 2005. Conference
Call and Webcast TKT invites the public to participate on a
conference call and live webcast with investment analysts beginning
today, February 23, 2005, at 10:00 a.m. Eastern Time to discuss its
fourth quarter and full year 2004 financial results and financial
outlook for 2005 as well as an update on its Sarbanes Oxley
assessment of internal controls compliance efforts. To participate
by telephone, dial (913) 981-5533. A live audio webcast can be
accessed on the TKT web site at http://www.tktx.com/ within the
Investor Information section. A replay of the call will be
available for two weeks beginning at 1:00 p.m. Eastern Time on
February 23, 2005, by dialing (719) 457-0820 and using the access
code: 6847230. A replay of the webcast will be archived on the TKT
web site under Events in the Investor Information section. About
TKT Transkaryotic Therapies, Inc. is a biopharmaceutical company
primarily focused on researching, developing and commercializing
treatments for rare diseases caused by protein deficiencies. Within
this focus, the company markets Replagal(TM), an enzyme replacement
therapy for Fabry disease, and is developing treatments for Hunter
syndrome and Gaucher disease. Outside its focus on rare diseases,
TKT intends to commercialize Dynepo(TM), its Gene- Activated(R)
erythropoietin product for anemia related to kidney disease, in the
European Union. TKT was founded in 1988 and is headquartered in
Cambridge, Massachusetts, with additional operations in Europe,
Canada and South America. Additional information about TKT is
available on the company's website at http://www.tktx.com/.
Forward-looking Statements This press release contains
forward-looking statements including statements regarding TKT's
development of certain products, including Replagal, I2S, GA-GCB
and Dynepo, as well as statements containing the words "believes,"
"anticipates," "plans," "expects," "estimates," "intends,"
"should," "could," "will," "may," and similar expressions. There
are a number of important factors that could cause the company's
actual results to differ materially from those indicated by such
forward-looking statements, including: whether any of the company's
products will achieve the commercial success anticipated by the
company; the timing of submissions to and decisions by regulatory
authorities regarding clinical trials and marketing and other
applications; whether the FDA, the EMEA and equivalent regulatory
authorities will grant marketing approval for the company's
products on a timeline consistent with TKT's expectations, or at
all; whether TKT will be able to complete clinical trials of its
products on a timely basis; whether the results of clinical trials
will be consistent with the results of earlier clinical trials of
the company's products and warrant submission of applications for
regulatory approval for such products to the FDA and equivalent
regulatory authorities; whether TKT and its third party
manufacturers will be able to complete the manufacturing
development necessary to satisfy regulatory requirements on a
timeline consistent with TKT's expectations or at all and to
manufacture sufficient quantities of TKT's products to satisfy both
clinical trial requirements and commercial demand, or to
manufacture material at all, if approved; the availability and
extent of coverage from third party payors and the timing and
receipt of reimbursement approvals for the company's products;
whether competing products will reduce any market opportunity that
may exist; whether TKT will be able to enter into a collaboration
agreement for Dynepo in Europe and whether such collaboration will
be successful; results of ongoing litigation and the risks of
future litigation; whether competitors will be able to limit access
to markets in which TKT is attempting to sell Dynepo, through legal
maneuvering or otherwise; the need for cash; and other factors set
forth under the caption "Certain Factors That May Affect Future
Results" in the company's quarterly report on Form 10-Q for the
quarter ending September 30, 2004, which is on file with the
Securities and Exchange Commission and which factors are
incorporated herein by reference. While the company may elect to
update forward-looking statements at some point in the future, the
company specifically disclaims any obligation to do so, even if its
expectations change. Gene-Activated(R) is a registered trademark
and Replagal(TM) is a trademark of Transkaryotic Therapies, Inc.
Dynepo(TM) is a trademark of Sanofi-Aventis SA. Condensed
Consolidated Statements of Operations (unaudited) (In thousands,
except per share amounts) Three Months Ended Year Ended December
31, December 31, 2004 2003 2004 2003 Product sales $22,452 $15,487
$77,372 $57,225 License and research revenues 515 87 754 1,664
22,967 15,574 78,126 58,889 Operating expenses: Cost of goods sold
7,460 1,439 16,367 12,484 Research and development 22,474 18,332
88,148 74,062 Selling, general and administrative 13,299 10,694
44,192 36,557 Restructuring charges 940 1,137 3,970 12,461
Amortization of intangible assets 509 - 509 - Intellectual property
license expense - - - 1,350 44,682 31,602 153,186 136,914 Loss from
operations before minority interest (21,715) (16,028) (75,060)
(78,025) Minority interest in net (income)/loss of consolidated
subsidiary - (108) 55 (413) Loss from operations after minority
interest (21,715) (16,136) (75,005) (78,438) Foreign currency
exchange gain 7,702 - 7,685 - Net interest income 1,308 876 1,877
2,704 Gain/(loss) on disposal of fixed assets 2 44 (431) - Other
income - 500 - 500 Net loss $(12,703) $(14,716) $(65,874) $(75,234)
Basic and diluted net loss per share $(0.36) $(0.43) $(1.89)
$(2.18) Shares used to compute basic and diluted net loss per share
34,811 34,585 34,796 34,559 Condensed Consolidated Balance Sheets
(unaudited) December 31, December 31, (In thousands) 2004 2003 Cash
and marketable securities $155,214 $180,947 Other current assets
51,276 44,392 Property and equipment, net 60,992 61,908 Goodwill
39,038 - Intangible assets, net 21,931 - Other assets 4,899 1,922
Total assets $333,350 $289,169 Total current liabilities $36,735
$21,149 Long term liabilities 8,304 9,285 Long term debt 94,000 -
Minority interest - 413 Total stockholders' equity 194,311 258,322
Total liabilities and stockholders' equity $333,350 $289,169 For
More Information Contact: Justine E. Koenigsberg Senior Director,
Corporate Communications (617) 349-0271 Daniella M. Lutz Corporate
Communications Manager (617) 349-0205
http://www.newscom.com/cgi-bin/prnh/19990913/TKTLOGO
http://photoarchive.ap.org/ DATASOURCE: Transkaryotic Therapies,
Inc. CONTACT: Justine E. Koenigsberg, Senior Director, Corporate
Communications, +1-617-349-0271, or Daniella M. Lutz, Corporate
Communications Manager, +1-617-349-0205 both of Transkaryotic
Therapies, Inc. Web site: http://www.tktx.com/ Company News
On-Call: http://www.prnewswire.com/comp/120657.html
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