Apr 23 2010
OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its financial results for the first quarter ended March 31, 2010. The Company reported total revenues from continuing operations of $107 million for the first quarter of 2010, a 14% increase over revenues of $94 million for the first quarter of 2009. Total worldwide net sales of Tarceva® (erlotinib) for the first quarter of 2010, as reported to the Company by its collaborator Roche, were approximately $308 million, representing a 10% increase in sales over the first quarter of 2009.
The Company reported net income from continuing operations of $4.7 million (or $0.08 per share) for the three months ended March 31, 2010, compared to $16.5 million (or $0.28 per share) for the three months ended March 31, 2009. The decline was due primarily to $11 million in costs recorded in connection with the unsolicited tender offer commenced by Astellas Pharma, Inc. in March 2010, and an $8 million non-operating impairment on the Company's investment holding in AVEO Pharmaceuticals, Inc. following that company's IPO.
The Company reported that non-GAAP net income from continuing operations increased to $39.6 million (or $0.63 per share) for the first quarter of 2010, compared to $36.0 million (or $0.58 per share) in the first quarter of 2009. The Company adjusted for non-cash tax expense (to reflect OSI's actual cash tax rate of approximately 3%), tender offer related costs, restructuring and other charges related to our consolidation of U.S. operations in Ardsley, New York, 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.
Total revenues for the first quarter were comprised of the following key items:
- Tarceva-related revenues of $92 million in the first quarter of 2010 compared with $84 million for the same period in 2009, based on the following:
- Other revenues of $14 million in the first quarter of 2010 compared with $10 million for the same period in 2009, based primarily on the following:
Operating Expenses
Operating expenses from continuing operations for the first quarter of 2010 were $88 million compared to $62 million for same period last year, with the increase primarily driven by tender offer related costs, an increase in research and development expenses related to the advancement of our clinical pipeline and an increase in Ardsley-related restructuring and consolidation project expenses. Research and development expenses for the first quarter of 2010 were $42 million compared to $35 million for the same period last year. Selling, general and administrative expenses for the first quarter of 2010 were $29 million compared to $24 million for the same period last year. OSI also recognized restructuring costs of $3 million for the Ardsley project. In 2009, the Company previously announced plans to consolidate its U.S. operations onto a single campus in Ardsley, New York. The consolidation project is on schedule to be completed in 2010. OSI also recorded $11 million of expenses during the first quarter of 2010 in relation to legal, consulting and bankers fees associated with the ongoing tender offer by Astellas Pharma Inc.
Other income (expense) - net
Included in other income (expense) - net for the first quarter of 2010 is a $7.9 million impairment charge recorded to reduce the carrying value of our investment in AVEO Pharmaceuticals, Inc. to fair market value following its public offering in March 2010.
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) non-cash impairment charges and (vii) costs related to the tender offer by Astellas Pharma, Inc. for the Company's shares. 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.
Source:
OSI Pharmaceuticals, Inc.