OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its
financial results for the Company�s first quarter ended March 31,
2009. The Company reported net income from continuing operations of
$16.5 million (or $0.28 per share) for the three months ended March
31, 2009, compared to $28.6 million (or $0.49 per share) for the
three months ended March 31, 2008.
Adjusting for non-cash tax expense (to reflect OSI�s actual cash
tax rate of approximately 3%), expense related to stock-based
compensation, interest expense related to the adoption of FSP APB
14-1 and certain other items detailed in the attached
reconciliation of GAAP to non-GAAP financial measures, the Company
reported non-GAAP earnings per share from continuing operations of
$0.58 and $0.61 for the three months ended March 31, 2009 and 2008,
respectively.
The Company reported total revenues from continuing operations
of $94 million for the first quarter of 2009 compared to revenues
of $91 million for the first quarter of 2008, an increase of 3%.
Revenues were comprised of the following key items:
- Tarceva Related Revenues of $84
million for the first quarter of 2009 compared to $82 million in
the first quarter of 2008, based primarily on the following:
- Net revenues from the
unconsolidated joint business for Tarceva of $49 million for the
first quarter of 2009, compared to $50 million in the first quarter
of 2008, arising from the Company's co-promotion arrangement with
Genentech, Roche�s wholly-owned subsidiary. The net revenues are
based on total U.S. Tarceva sales of $111 million for the first
quarter of 2009, compared to $111 million in the first quarter of
2008;
- Royalties on product licenses of
$34 million for the first quarter of 2009 compared to $32 million
in the first quarter of 2008 from Roche for sales of Tarceva. The
royalty revenues are based on total rest of world sales of $168
million for the first quarter of 2009 which increased 8%, compared
to the $156 million reported in the first quarter of 2008;
- Other Revenues of $10 million
for the first quarter of 2009 compared to $8 million in the first
quarter of 2008, based primarily on the following:
- Royalties of $9 million for the
first quarter of 2009 compared to $6 million in the first quarter
of 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.
- License, milestone and other
revenues of $400,000 for the first quarter of 2009 compared to $2
million in the first quarter of 2008.
Operating
Expenses
Operating expenses from continuing operations for the first
quarter of 2009 were $62 million compared to $58 million for the
same period last year, with the increase primarily driven by an
increase in research and development expenses related to the
advancement of our clinical pipeline. Research and development
expenses for the first quarter of 2009 were $35 million compared to
$31 million for the same period last year. Selling, general and
administrative expenses for the first quarter of 2009 were $24
million compared to $25 million for the same period last year.
Taxes and Interest
Income/Expense
Beginning in 2009, the Company is required to report its tax
provision at its full effective tax rate, which is estimated at
approximately 39%. However, the Company expects to continue paying
taxes at the lower alternative minimum tax rates as it continues to
utilize its net operating loss carryforwards (NOLs). The results
also reflect the retrospective adoption of FSP APB 14-1,
�Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement),�
resulting in higher interest expense reported in both 2009 and
2008. Interest income also declined by approximately $2 million
reflecting a decline in interest rates year over year.
Net Income Including
Discontinued Operations
The Company's net income including results from discontinued
operations was $16.4 million (or $0.28 per share) for the first
quarter of 2009 compared with a net income of $26.2 million (or
$0.45 per share) for the same period 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
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) stock
based compensation, (ii) imputed interest expense related to the
adoption of FASB Staff Position APB 14-1 �Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement),� (iii) amortization
of acquired intangible assets and (iv) non-cash tax expense, and to
adjust OSI�s effective tax rate of approximately 39% to reflect its
actual cash tax rate of approximately 3%. These items have been
adjusted because they are either non-cash, non-recurring or not
otherwise considered to be core to OSI�s business. 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
April 29, 2009 at 5:00PM (Eastern Time). To access the live webcast
or the archive 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 1-877-719-9791 (U.S.) or 1-719-325-4824 (international) to
listen to the call. The conference ID number for the live call is
5668462. Telephone replay is available approximately two hours
after the call through May 29, 2009. To access the replay, please
call 1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The
conference ID number is 5668462.
About OSI
Pharmaceuticals
OSI Pharmaceuticals is committed to "shaping medicine and
changing lives" by discovering, developing and commercializing
high-quality, novel and differentiated personalized 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 March 31, (In thousands, except per share data)
2009 �
2008*
Unaudited
Unaudited
Revenues: Tarceva-related revenues $ 83,856 $ 82,358 Other revenues
� 9,821 � � 8,377 � Total revenues � 93,677 � � 90,735 � Operating
expenses: Cost of goods sold 2,194 2,170 Research and development
35,436 30,549 Selling, general and administrative 24,201 24,531
Amortization of intangibles � 228 � � 602 � Total operating
expenses � 62,059 � � 57,852 � � Income from continuing operations
31,618 32,883 � Other income (expense): Investment income - net
2,214 3,734 Interest expense (6,393 ) (6,305 ) Other income
(expense) - net � (384 ) � (900 ) � Income from continuing
operations before income taxes 27,055 29,412 Income tax provision �
10,551 � � 816 � Net income from continuing operations 16,504
28,596 Loss from discontinued operations � (104 ) � (2,426 ) Net
income $ 16,400 � $ 26,170 � � Basic and diluted income (loss) per
common share: Basic income (loss) Continuing operations $ 0.29 $
0.50 Discontinued operations (0.00 ) (0.04 ) Net income $ 0.28 $
0.46 Diluted income (loss) Continuing operations $ 0.28 $ 0.49
Discontinued operations (0.00 ) (0.04 ) Net income $ 0.28 $ 0.45 �
Weighted average shares of common stock outstanding: Basic shares
57,818 57,130 Diluted shares 60,630 57,813 � Computation of diluted
income per share from continuing operations: � Net income from
continuing operations $ 16,504 $ 28,596 Add: Interest and issuance
costs related to dilutive convertible debt � 495 � � - � Net income
from continuing operations - diluted $ 16,999 � $ 28,596 � � Basic
shares 57,818 57,130 Dilutive effect of options and restricted
stock 814 683 Dilutive effect of the 2023 Notes 1,998 - Dilutive
effect of the 2025 Notes - - Dilutive effect of the 2038 Notes � -
� � - � Diluted shares � 60,630 � � 57,813 � �
March 31,
December 31,
2009
2008
Unaudited
Cash and investments securities (including restricted investments)
$ 541,238 � $ 515,511 � � * The three months ended March 31, 2008
have been restated to reflect the adoption of FSP APB 14-1. � OSI
Pharmaceuticals, Inc. and Subsidiaries
Reconciliation From Reported Net
Income from Continuing Operations to Adjusted Net Income from
Continuing Operations and Reported Dilutive Income Per Share to Non
GAAP Adjusted Diluted Income Per Share
Unaudited (In thousands, except per share data) �
Three Months Ended March 31,
2009
�
2008
� Reported diluted income per common share from continuing
operations $ 0.28 $ 0.49 Adjustments per common share � 0.30 � �
0.12 � Adjusted diluted income per common share from continuing
operations $ 0.58 � $ 0.61 � � Net income from continuing
operations $ 16,504 $ 28,596 Non-GAAP Adjustments: Stock-based
compensation 6,183 5,472 Imputed interest related to the adoption
of FSP APB 14-1 3,448 3,067 Amortization of acquired intangibles
228 602 Non cash tax expense 9,848 - Income tax effect on
adjustments � (256 ) � (253 ) Adjusted net income from continuing
operations $ 35,955 � $ 37,484 � � Computation of adjusted diluted
income per common share from continuing operations: Adjusted net
income from continuing operations $ 35,955 $ 37,484 Add: Interest
and issuance costs related to dilutive convertible debt � 1,490 � �
2,160 � Adjusted net income from continuing operations - diluted $
37,445 � $ 39,644 � � Computation of adjusted diluted shares: Basic
shares 57,818 57,130 Adjustment to dilutive shares: Dilutive effect
of options and restricted stock 814 683 Dilutive effect of the 2023
Notes 1,998 2,936 Dilutive effect of the 2025 Notes 3,908 3,908
Dilutive effect of the 2038 Notes (issued in January 2008) � - � �
- � Adjusted dilutive shares � 64,538 � � 64,657 �
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