Abraxis BioScience, Inc. (NASDAQ:ABII), a fully integrated biotechnology company, today reported unaudited financial results for the third quarter ending September 30, 2009.
As of January 2, 2009, the company re-acquired the exclusive rights to market ABRAXANE® for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) in the U.S. As a result, beginning in 2009, the company no longer recognizes deferred revenue related to the original co-promotion agreement.
Net revenue for the third quarter of 2009 was $96.6 million compared with $93.4 million for the third quarter of 2008. ABRAXANE revenue for the third quarter of 2009 was $82.9 million compared with $92.0 million for the same period in 2008, which included recognition of deferred revenue of $9.1 million related to the co-promotion agreement. Excluding the recognition of deferred revenue, total revenue from sales of ABRAXANE remained steady at $82.9 million for both the third quarter of 2009 and 2008. Other revenue for the third quarter of 2009 increased to $13.8 million from $1.3 million in the comparable period last year, primarily due to increased sales of raw material.
Gross profit for the third quarter of 2009 was $76.9 million, or 80 percent of net revenue, compared with $82.3 million, or 88 percent of net revenue, for the third quarter of 2008. Excluding the recognition of deferred revenue, gross margin for the third quarter of 2009 was 80 percent versus 87 percent for the same period in 2008. The decrease in gross margin was primarily due to an increase in the sales volume of lower margin products, a voluntarily initiated recall of certain lots of ABRAXANE and increased sales of ABRAXANE outside of the United States.
“We have ambitious plans for ABRAXANE and the nab® technology franchise and continue to optimize our global and U.S. commercial resources to support growth in our current markets as well as those we are targeting for 2010,” said Lonnie Moulder, President and Chief Executive Officer of Abraxis BioScience. “Additionally, we are advancing three pivotal Phase III studies for ABRAXANE, in non-small cell lung cancer, pancreatic cancer and melanoma, which could enable us to broaden the utility of this important oncology product. We have an exciting future before us as we continue to bring this important therapy to cancer patients worldwide.”
Research and development expense for the third quarter of 2009 was $51.0 million compared with $21.0 million for the same period in 2008. The majority of the increase was due to additional spending on Phase III clinical trials for non-small cell lung cancer, pancreatic cancer and melanoma. The remainder of the increase was primarily attributable to investments in early stage discovery and other research and development projects.
Selling, general and administrative (SG&A) expenses for the third quarter of 2009 were $58.0 million versus $56.3 million for the same period in 2008. The re-acquisition of ABRAXANE marketing rights in the U.S. yielded savings due to the elimination of commission payments. These savings were primarily offset by increased investment in the global expansion of ABRAXANE primarily in China and the European Union, and increased spending on U.S. sales and marketing.
On a GAAP basis, net loss for common shareholders for the third quarter of 2009 was $37.7 million, or $0.94 per share, compared with net loss for common shareholders of $15.1 million, or $0.38 per share, for the third quarter of 2008.
Adjusted net loss for common shareholders for the third quarter of 2009 was $24.2 million, or $0.60 per share, compared to adjusted net income for common shareholders of $10.5 million, or $0.26 per share, for the third quarter of the prior year. Adjusted net (loss) income for common shareholders excludes amortization of acquired intangible assets, litigation costs, acquired in-process research and development, impairment charge, realized loss on marketable securities and non-cash stock-based compensation expense.
Financial Results: Nine Months Ended September 30, 2009
Net revenue for the first nine months of 2009 was $254.3 million compared with $253.1 million for the same period of 2008. ABRAXANE revenue for the first nine months of 2009 was $228.6 million compared with $245.8 million for the same period in 2008, which included recognition of deferred revenue of $27.3 million related to the co-promotion agreement. Excluding the recognition of deferred revenue, total revenue from the sales of ABRAXANE for the first nine months of 2009 grew $10.1 million, or 5 percent, to $228.6 million compared with $218.5 million for the same period in 2008. Incremental revenue from the continued global expansion into China, Australia, and European markets, as well as a higher average net selling price in the United States, contributed to the increase in revenue compared to the prior year.
Other revenue for the first nine months of 2009 increased to $25.7 million from $7.3 million in the comparable period last year, primarily due to raw materials sales beginning in the second quarter of 2009.
Gross profit for the first nine months of 2009 was $210.9 million, or 83 percent of net revenue, compared with $223.5 million, or 88 percent of net revenue, for the comparable period of 2008. Excluding the recognition of deferred revenue, gross margin for the first nine months of 2009 was 83 percent versus 87 percent for the same period in 2008. The decrease in gross margin was primarily due to an increase in the sales volume of lower margin products, a voluntarily initiated recall of certain lots of ABRAXANE and increased sales of ABRAXANE outside of the United States.
Research and development expense for the first nine months of 2009 was $122.8 million compared with $61.3 million for the same period in 2008. An increase in spending on Phase III clinical trials for non-small cell lung cancer, pancreatic cancer and melanoma accounted for approximately 50% of the increase in R&D expense. The remainder of the increase is primarily attributable to investments in early stage discovery and other research and development projects.