ImClone quarterly sales reach $71.4 Million

Jul 22 2004

ImClone Systems Incorporated has announced its financial results for the second quarter and six months ended June 30, 2004.

Total revenues for the second quarter of 2004 were $71.5 million as compared with $17.9 million for the second quarter of 2003 and $109.6 million in the first quarter of 2004. Revenues included four principal components:

• License fees and milestone revenues of $18.1 million in the second quarter of 2004 compared with $11.5 million in the second quarter of 2003 and $67.5 million in the first quarter of 2004. In 2004, first quarter license fees and milestone revenues were higher than second quarter amounts due to the receipt of a $250 million milestone payment in the first quarter and its resulting one time "catch-up" effect of approximately $42 million;
• Manufacturing revenues of $14.8 million in the second quarter of 2004 (no manufacturing revenues were recorded in 2003) compared with $25.5 million in the first quarter of 2004. Purchases by Bristol-Myers Squibb are timed at their discretion to accommodate forecasts and safety stock needs, and are not necessarily indicative of historical in-market sales or future sales expectations;
• Royalty revenues of $28.5 million in the second quarter of 2004 (no royalty revenues were recorded in 2003) compared with $7.1 million in the first quarter of 2004. Royalty revenues for the second quarter of 2004 include $27.8 million representing 39% of Bristol-Myers Squibb's in-market ERBITUX(TM) (Cetuximab) net sales of $71.4 million, compared with first quarter in-market net sales of $17.5 million. These in-market sales, reflecting a drop-ship distribution methodology, represent ERBITUX shipments to end-user accounts only, with no wholesaler stocking; and
• Collaborative agreement revenues of $10.1 million in the second quarter of 2004 compared with $6.4 million in the second quarter of 2003 and $9.5 million in the first quarter of 2004.

Total operating expenses for the second quarter of 2004 were $44.1 million, compared with $51.7 million in the second quarter of 2003. Operating expenses included three principal components:

• Research and development expenses for the second quarter of 2004 were $18.8 million compared with $33.4 million in the second quarter of 2003. The principal reason for the decline is that prior to FDA approval of ERBITUX on February 12, 2004, costs to manufacture or purchase the product were included as a component of research and development expenses; subsequent to that date, such costs are capitalized as inventory;
• Clinical and regulatory expenses in the second quarter of 2004 were $6.2 million compared with $8.4 million in the second quarter of 2003; and
• Marketing, general and administrative expenses were $19.0 million in the second quarter of 2004 compared with $9.9 million in the second quarter of 2003. The increase principally reflects costs associated with our field force of Scientific Services Liaisons which was not in place in 2003, as well as the accrual of royalty expenses associated with certain business development transactions.

The effective tax rate for fiscal year 2004 is estimated to be 10%, which has been applied to the second quarter of 2004.

Net income for the second quarter of 2004 was $24.3 million with basic earnings per share of $.31 and fully diluted earnings per share of $.29, compared with a net loss of $34.8 million in the second quarter of 2003 with a loss per basic and fully diluted common share of $.47.

Total revenues for the six months ended June 30, 2004 were $181.2 million compared with $37.4 million for the same period in 2003. Operating expenses for the six months ended June 30, 2004 were $82.9 million compared with $105.6 million for the same period in 2003. Net income for the first six months of 2004 was $87.0 million with basic earnings per share of $1.14 and fully diluted earnings per share of $1.02 compared with a net loss for the same period in 2003 of $69.6 million, with a net loss per basic and fully diluted common share of $.94.

"This has been another successful quarter for the company from both a financial and product development standpoint," stated Daniel S. Lynch, Chief Executive Officer of ImClone Systems. "Key milestones during the quarter included approval of ERBITUX for certain patients with late-stage colorectal cancer in the European Union, Iceland, Norway, Mexico, Argentina and Chile, the licensure of our BB36 manufacturing facility, the closing of a $600 million convertible note offering and the presentation of encouraging study data on ERBITUX at this year's American Society of Clinical Oncology annual meeting."

"We expect to remain a profitable entity for the balance of the year, with continued progress in the key aspects of our business, while managing expenses to maximize our long-term prospects," said Michael J. Howerton, Chief Financial Officer of ImClone Systems.