Pharmacyclics reports $9.3 million increase in total revenue for 2010 fiscal year

Pharmacyclics, Inc. (Nasdaq: PCYC) today reported financial results for its fiscal year and fourth quarter which ended June 30, 2010.  

During the fiscal year ended June 30, 2010, total revenue recognized under GAAP was $9.3 million. No revenue was generated in the fiscal year ended June 30, 2009.  The GAAP net loss reported for the fiscal year ended June 30, 2010 was $15.0 million, or $0.31 per share. This compares to a GAAP net loss for the fiscal year ended June 30, 2009 of $23.5 million, or $0.88 per share.

The non-GAAP net loss for the fiscal year ended June 30, 2010 was $13.6 million, which compares to a non-GAAP net loss of $18.1 million for the year ended June 30, 2009. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Pharmacyclics also reported financial results for the fourth quarter of fiscal 2010. The company incurred a GAAP net loss of $6.8 million, or $0.13 per share and reported revenue of $2.5 million on a GAAP basis.  This compares to a GAAP net loss of $5.4 million, or $0.20 per share with no revenue reported for the fourth quarter of fiscal 2009.

The non-GAAP net loss for the fourth quarter of fiscal 2010 was $4.9 million which compares to a non-GAAP net loss of $4.2 million for the fourth quarter of fiscal 2009.

Upon the signing of a drug supply agreement with Les Laboratoires Servier ("Servier") in the quarter ended December 31, 2009, the company began recognizing revenue from its collaboration agreement with Servier, which was entered into in April 2009.  

As of June 30, 2010, the company had cash, cash equivalents and marketable securities totaling $74.1 million. This compares to $16.3 million in cash, cash equivalents and marketable securities as of June 30, 2009. In June 2010, the company raised, in a registered direct offering, $50.8 million, net of approximately $1.6 million in offering costs. Pharmacyclics' Chairman and CEO, Robert W. Duggan, participated in the offering in the amount of $7.0 million.

Fiscal 2011 Guidance

As a direct result of the success we are generating, accelerated investment for the purpose of collapsing the time required to achieve our goals is called for.

We expect net cash expenditures of approximately $32.5 million which equates to $35.0 million of operational expenses offset by $2.0 million in cash from R&D revenue and $0.5 million from the French Government in the form of a tax return.  Approximately 80% of the clinical expenditures in fiscal 2011 will be Btk inhibitor related.

Financial projections involve a high level of uncertainty due to, among other factors, the variability involved in predicting requirements of early stage research programs and clinical trials, the potential for entering into partnering arrangements or strategic collaborations, the timing of U.S. Food and Drug Administration (FDA) decisions and share-based compensation expense.

Commenting on the announcement, Bob Duggan, CEO of Pharmacyclics, said, "Whether you judge by the rapid pace of patient enrollment in BTK inhibitor PCI 32765 clinical trials, broad enthusiasm over the patient outcomes to date, strengthening the balance sheet through equity capital raises, or stock price appreciation year to date, fiscal 2010 was an awesome year. Rest assured the entire Pharmacyclics team is dedicated to producing even better results in fiscal 2011."

Dr. John Byrd, Ohio State University's Director of the Comprehensive Cancer Center, Division of Hematology, added,  "It is always nice when pre-clinical studies such as those recently published by Pharmacyclics in PNAS translate to positive results in clinical trials of lymphoma and CLL patients that we and others are now observing.  The laboratory and clinical members of the CLL and lymphoma program at OSU are very excited to be involved with the pre-clinical and clinical development of PCI32765."

Recent and Upcoming Milestones and Program Updates

• Bruton's Tyrosine Kinase (Btk) Inhibitor, PCI-32765, results from first in human phase I trial were presented at an oral presentation at the American Society of Clinical Oncology (ASCO) annual meeting that took place in Chicago, Illinois in June 2010. These results were also presented at the European Hematology Association in Barcelona, Spain in June 2010. The presentations reported data from the ongoing open-label, dose-escalation study of PCI-32765 in recurrent B cell malignancies.
• Trial Results as of August 31, 2010: In the first 6 dose cohorts, a total of 47 relapsed/refractory and progressing patients with a variety of B cell malignancies were enrolled. Forty-one of the enrolled patients had an on-treatment tumor assessment of therapy and are evaluable as of August 31, 2010. Twenty-one of these evaluable patients had a complete or partial response as their best response and eleven patients had stable diseases. This equates to a response rate of 51% in the evaluable patients (69% in CLL, 75% in Mantle, 42% in Follicular, 33% in Marginal and 38% in DLBCL). On an intent-to-treat ("ITT") basis the overall response rate ("ORR") was 45%.
• Using our probe assay to define target kinase occupancy we established that starting with cohort 2, PCI-32765 fully occupied the target kinase. Examining response in fully occupied dose cohorts the response rate ("RR") was 56% in the evaluable patient population and 48% in the ITT patient population. Including disease control in the form of stable disease in our assessment of evaluable patients, the disease control rate was 78% (10% CRs, 41% PRs and 27% SDs). Of note, the median tumor reduction from base line in our objective responding patients was 75% as of August 31, 2010.  
• As of August 31, 2010, 23 patients continue to remain on study. This compares with 25 patients on study as of the ASCO presentation on June 4, 2010.  Median duration of response has not yet been determined in this ongoing study. The company has submitted an abstract describing the duration of response to the American Society of Hematology (ASH) in Orlando, FL on December 4-7, 2010; consistent with ASH's guidelines, we will not be disclosing these data prior to our ASH presentation.
• PCI-32765 appears to be well tolerated through the initial exposure even in its highest dosing cohort (including 12.5 mg/kg). Only 2 patients of the enrolled 47 patients have experienced a dose limiting toxicity (DLT) on this trial (drug hypersensitivity and delay in dosing due to neutropenia for 7 days). No other DLTs have been observed. Thirteen of the 47 patients had 1 or more serious adverse events, but only 2 were considered drug related by investigators.
• As previously announced we have initiated a Phase Ib trial in CLL/SLL patients studying 2 populations. One population is relapsed or refractory patients at 420 mg (24 patients with fixed dosing). The second population is elderly naive patients at 420 mg (12 patients with fixed dosing). Enrollment commenced end of May and as of to date we have dosed 30 patients (22/24 in the 420 mg relapsed or refractory dosed arm and 8/12 elderly naive patients). Amongst all patients dosed we maintain a benign safety profile in line with our oral presentation at ASCO. As of August 31, 2010 we have completed enrollment of an additional cohort of 10 patients using a fixed, continuous dosing of 560 mg daily. Additionally, the National Cancer Institute (NCI) has dosed the first of 10 pre-typed ABC DLBCL patients. The company has submitted an abstract to the 2010 ASH annual meeting that describes the responses and the duration in all of the CLL/SLL patients dosed to date and we cannot disclose any information contained in the abstract prior to the meeting held in December.
• Over the last 3 months the company held multiple advisory boards in the US and EU with experts in the field of lymphoma and CLL to obtain feedback to our clinical development plan. We now announce that the company is planning multiple Phase II trials in select B-cell derived malignancies (Mantle Cell in Velcade failure and Velcade naive patients, DLBCL in R-CHOP and transplant failures and CLL combination-safety trials with Bendamustine-Rituxan and Ofatumumab and other investigator initiated trials). Timelines for reportable events and regulatory interactions from these planned Phase II trials will be communicated after the ASH meeting in December.
• A second Bruton's Tyrosine Kinase (Btk) Inhibitor, PCI-45292, is being developed for autoimmune disease; we are on track to complete IND-enabling preclinical safety studies. The company is planning to file an IND by the end of the second quarter of calendar 2011 with this molecule.
• Factor VIIa Inhibitor, PCI-27483, is a potent and highly selective small molecule inhibitor of coagulation Factor VIIa.  Factor VIIa is best known for its role in triggering the extrinsic pathway of blood coagulation following contact and complex formation with the cell surface glycoprotein Tissue Factor.  Tissue Factor is over-expressed in pancreatic, gastric, lung, breast, colon and many other cancers of epithelial origin. FVIIa Inhibitor, PCI-27483, is currently being evaluated in a multicenter Phase I/II randomized study in patients with locally advanced or metastatic pancreatic cancer. As planned, we have completed the Phase I portion of this Phase I/II trial and have successfully advanced to Phase II. In the Phase II portion of this study each pancreatic cancer patient will receive a maximum of 12 weeks of treatment with gemcitabine alone or gemcitabine plus PCI-27483. As of to date we have dosed 11 pancreatic cancer patients and the study continues enrolling in the randomized Phase II segment of the trial. We anticipate completing enrollment of 46 patients in the second half of 2011.
• Histone deacetylase (HDAC) Inhibitor, PCI-24781, is the company's orally-bioavailable HDAC Inhibitor that disrupts DNA repair and contributes to tumor cell death. In 3 Phase I clinical trials, conducted in patients with hematologic or solid tumors, clinical response or control of tumor growth has been observed following single-agent therapy with our HDAC Inhibitor. Pharmacyclics' HDAC Inhibitor has demonstrated a good safety profile in approximately 90 patients treated so far; the main dose-limiting toxicity was a rapidly reversible thrombocytopenia, which we believe is related to the pharmacologic mechanism of action. The magnitude of thrombocytopenia can be attenuated by modification of the treatment schedule. The Phase II portion of our ongoing trial is continuing in patients with follicular and mantle cell lymphoma.  Results are anticipated in the second half of 2011. To date we have enrolled 7 follicular and 3 mantle cell patients; so far in this study 1 patient had a partial response and 4 patients have reported stable disease after 2 cycles.
• The HDAC Inhibitor PCI-24781 has also shown synergy in preclinical testing with several approved cancer therapeutics. A Phase I/II trial in sarcoma patients is ongoing and is co-sponsored by prominent investigators at Massachusetts General Hospital and the Dana-Farber Cancer Institute. In this study Pharmacyclics' HDAC Inhibitor is being administered in combination with doxorubicin.  To date 8 patients enrolled in this study and 3 have reported at least stable disease. Currently, 4 patients are on treatment, 2 of which have completed 4 cycles of treatment.  These early results are considered encouraging in this deadly and rapidly progressing disease, which represents a serious unmet medical need.
• Histone deacetylase 8 (HDAC 8) Inhibitor Program, is currently in the preclinical lead optimization stage. The company is on track to conclude its lead optimization work by the end of calendar year 2010.