Ca$hmandt
23.08.2002, 13:12
Biopure Corporation today announced its financial results for the third fiscal quarter ended July 31, 2002. For the quarter, the company reported a net loss of $12.6 million, or $0.43 per common share, compared with a net loss of $11.9 million or $0.47 per common share for the corresponding period in 2001.
Revenues
Total revenues were $260,000 for the third quarter of fiscal 2002, compared to $946,000 for the corresponding period in 2001. This decrease in veterinary sales of Oxyglobin(R) is due to low inventory resulting from the expansion and revalidation of Biopure''s manufacturing facilities. The company is allocating product produced before the expansion to its largest customers, and expects to fill backorders during the first quarter of fiscal 2003 following regulatory clearance to ship product manufactured at the revalidated facilities.
Cost of revenues was $2.6 million for the third quarter of fiscal 2002, compared to $903,000 for the same period in 2001. When manufacturing resumed in late May 2002, the allocation of unabsorbed costs to research and development stopped and all costs were charged to cost of revenues or inventory. Cost of revenues for the third quarter of fiscal 2002 reflects manufacturing inefficiencies during ramp-up of the expanded facilities. Manufacturing costs incurred during the ramp-up that exceeded the selling price were charged to cost of revenues and not to inventory.
Expenses
Research and development expenses were $7.1 million for the third quarter of fiscal 2002, compared with $10.3 million for the corresponding period in 2001. This decrease is due to a one-time non-cash charge of $1.6 million in 2001 related to the acquisition of Reperfusion Systems, Inc., a $2.1 million reduction in expenses for activities associated with data organization and analyses for the Phase III orthopedic surgery trial of Hemopure(R), a $784,000 reduction in expenses for preclinical studies, and a $782,000 reduction in unabsorbed fixed manufacturing costs allocated to research and development. The decrease in expenses was partially offset by an increase of approximately $2.1 million for preparing the Biologic License Application (BLA) for Hemopure that was submitted to the U.S. Food and Drug Administration (FDA) on July 31, 2002.
Sales, general and administrative expenses were $3.4 million for the third quarter of fiscal 2002, compared with $2.3 million for the same period in 2001. This increase is due to the absence in 2002 of a $793,000 credit realized in 2001 for non-cash compensation for stock options and warrants previously issued to non-employees; the credit in 2001 was primarily due to stock options and warrants that fully vested in fiscal 2001 and require no further adjustments. The increase in sales, general and administrative expenses for the quarter also is due to higher consulting expenses, partially offset by lower Oxyglobin sales expenses. Hemopure-related sales and marketing expenses, charged to general and administrative expenses in prior quarters, were charged to sales and marketing in the third quarter of fiscal 2002 due to the production of product for future sale.
Other income was $210,000 in the third quarter of fiscal 2002, compared to $654,000 in the third quarter of fiscal 2001, a result of a decline in interest income in fiscal 2002 due to reduced cash balances and lower interest rates.
Financial Condition
On July 31, 2002, Biopure had $30.2 million in cash and cash equivalents. The cash on hand on July 31, 2002 is expected to fund operations into the second quarter of fiscal 2003 or possibly into the third quarter depending on Hemopure sales in South Africa.
CORPORATE DEVELOPMENTS Senior Management
During the third quarter, Biopure elected Dr. Charles A. Sanders as chairman of the Board and Thomas A. Moore as president, CEO and a member of the Board, appointed former Chairman and CEO Carl W. Rausch vice chairman and chief technology officer, and added Barry L. Scott as vice president of International Business Development. Former President and Chief Operating Officer Paul A. Looney retired from Biopure in mid-August at the conclusion of his three-year employment contract.
BLA Filing
On July 31, 2002, Biopure submitted a BLA to the FDA seeking regulatory approval to market Hemopure in the United States for the treatment of the signs and symptoms of acute anemia in adult patients undergoing orthopedic surgery, and for the purpose of eliminating or reducing the need for red blood cells in these patients. The FDA has 60 business days from the submission of a BLA to determine the application''s acceptability for review, and it generally determines the approvability of an accepted application within 12 to 16 months of the submission date.
Manufacturing Expansion
Following a six-month expansion, Biopure reopened its manufacturing facilities in Massachusetts and Pennsylvania and finished validating its facilities and process to produce up to 75,000 Hemopure units per year. The validation of newly installed product fill equipment in Cambridge is expected to further increase the company''s annual production capacity to 100,000 Hemopure units within the next 12 months.
In addition, Sumter Realty Group, LLC recently received a letter of commitment from a potential investor for the full $120 million required to finance construction of a new manufacturing facility in Sumter, S.C., which is designed to produce 500,000 Hemopure units per year. Sumter Realty Group has not yet accepted and is currently negotiating certain details of this financing proposal.
South Africa
During the last week of July, approximately 400 medical professionals in South Africa attended accredited medical education seminars to learn about the physiology, pharmacology and clinical use of Hemopure in the treatment of surgical patients who are acutely anemic. During the past year, Biopure has provided approximately 1,700 units of product free of charge for use by doctors who have completed this program. The company expects to begin selling product in South Africa once these free units have been depleted, most likely during the first fiscal quarter of 2003.
In preparation for Hemopure sales countrywide in early 2003, Biopure is hiring a business manager, a medical affairs consultant, a pharmacovigilance consultant and product specialists to work with the medical community and the distributor in South Africa. Biopure has also hired a pharmacoeconomic consultant to document the potential cost benefits of Hemopure and build a pricing model for use in South Africa and other countries.
European Patent Defense
On July 18, 2002, Biopure prevailed in a decision by an Appeal Board of the European Patent Office (EPO) setting aside a 1995 Opposition Division decision that revoked a Biopure process patent. The patent, entitled "Extra pure semi-synthetic blood substitute," was originally granted on April 1, 1992. Six parties subsequently filed oppositions challenging all of the patent''s claims. The Opposition Division of the EPO revoked the patent following oral proceedings in November 1995, and Biopure narrowed the patent''s claims prior to filing its successful appeal. The Appeal Board''s decision upholds the patent in the 24 member states of the European Patent Organization.
Medical and Investor Meetings
On September 16th, Dr. Lewis Levien and a clinical investigator from the U.S. military will provide an overview of Hemopure at the 34th International Congress of Military Medicine in Sun City, South Africa. On October 16th, Dr. Jonathan S. Jahr will present an oral poster discussion, "Pivotal Phase III Study: Safety of Polymerized Bovine Hemoglobin (HBOC-201, Hemopure(R)) as Compared to RBC in Patients Undergoing Orthopedic Surgery," at the 2002 Annual Meeting of the American Society of Anesthesiology in Orlando, Fla. On October 28th, Dr. John P. Williams will give an oral presentation, "Transfusion Requirements in Phase III Study of HBOC-201 (Hemopure(R), Hemoglobin Glutamer- 250, Bovine), a Bovine Hemoglobin Based Blood Substitute," at the American Association of Blood Banks 2002 Annual Meeting in Orlando, Fla.
Biopure President and CEO Thomas Moore will give investor presentations in New York City at The Wall Street Analyst Forum (September 10), the UBS Warburg Global Life Sciences Conference (October 7-10), and the Citigroup Health Care Conference (October 28-30). He will also present in Boston at Techvest''s Annual Healthcare Conference (October 22-24).
Biopure Corporation
Biopure Corporation, headquartered in Cambridge, Mass., is a leading developer, manufacturer and marketer of oxygen therapeutics, a new class of pharmaceuticals that are intravenously administered to deliver oxygen to the body''s tissues. Hemopure(R) [hemoglobin glutamer - 250 (bovine), or HBOC-201] is commercially available in the Republic of South Africa for the treatment of adult surgical patients who are acutely anemic and for the purpose of eliminating, delaying or reducing the need for allogenic red blood cell transfusion in these patients. The company has submitted an application to the FDA to market Hemopure in the United States for a similar indication in orthopedic surgical patients, and it plans to file applications in Europe and other markets. Hemopure is in earlier stages of clinical development for use in cancer and in preclinical development for trauma and ischemic events such as heart attack and stroke. Biopure''s veterinary product Oxyglobin(R) [hemoglobin glutamer - 200 (bovine), or HBOC- 301], the only oxygen therapeutic approved by the FDA and the European Commission, is indicated for the treatment of anemia in dogs.
Statements in this press release that are not strictly historical are forward-looking statements. Actual results may differ from those projected in forward-looking statements due to risks and uncertainties that exist in the company''s operations and business environment. These risks include, without limitation, the company''s stage of product development, history of operating losses and accumulated deficits, uncertainties and possible delays related to the filing and acceptance of applications to the FDA and foreign regulatory authorities or related to regulatory clearances for new or revalidated manufacturing facilities, the uncertainties of clinical trials, possible healthcare reform, manufacturing capacity, marketing, market acceptance, competition and the availability of sufficient financing to support operations. Discussions of Biopure''s operations and financial condition, and specific factors that could cause the company''s actual performance to differ from current expectations, can be found on the company''s Web site at http://www.biopure.com/corporate/legal/home_legal.htm and in the company''s filings with the U.S. Securities and Exchange Commission, which can be accessed in the EDGAR database at the SEC Web site, http://www.sec.gov/, or through the Investor section of Biopure''s Web site, http://www.biopure.com/.
BIOPURE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 2002 2001 2002 2001 Total revenues $ 260 $ 946 $ 1,916 $ 2,519 Cost of revenues 2,559 903 4,305 2,587 Gross profit (loss) (2,299) 43 (2,389) (68) Operating expenses: Research and development 7,063 10,297 22,188 27,486 Sales and marketing 875 784 1,953 2,070 General and administrative 2,569 1,538 9,303 13,364 Total operating expenses 10,507 12,619 33,444 42,920 Loss from operations (12,806) (12,576) (35,833) (42,988) Other income, net 210 654 821 2,960 Net loss $ (12,596) $ (11,922) $ (35,012) $(40,028) Basic and diluted net loss per common share $ (0.43) $ (0.47) $ (1.30) $ (1.60) Weighted-average common shares outstanding 29,141 25,134 26,854 25,018 Actual common shares outstanding at July 31, 2002 were 29,205 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) July 31, 2002 October 31, 2001 Assets Total current assets(1) $ 36,948 $ 42,249 Net property and equipment(2) 38,089 30,162 Other assets 11,674 11,776 Total assets $ 86,711 $ 84,187 Liabilities and stockholders'' equity Total current liabilities $ 7,619 $ 6,297 Long term debt(2) 9,762 5,205 Deferred compensation 184 1,792 Total liabilities 17,565 13,294 Total stockholders'' equity 69,146 70,893 Total liabilities and stockholders'' equity $ 86,711 $ 84,187 (1) Includes cash and cash equivalents totaling $30.2 million and $36.1 million at July 31, 2002 and October 31, 2001, respectively. (2) At July 31, 2002, $11.1 million has been included in property, plant and equipment and $9.8 million in long-term debt reflecting engineering and design costs of the planned manufacturing facility in Sumter, S.C. This engineering has been funded by Biopure''s $11.1 million contribution to the project.
Revenues
Total revenues were $260,000 for the third quarter of fiscal 2002, compared to $946,000 for the corresponding period in 2001. This decrease in veterinary sales of Oxyglobin(R) is due to low inventory resulting from the expansion and revalidation of Biopure''s manufacturing facilities. The company is allocating product produced before the expansion to its largest customers, and expects to fill backorders during the first quarter of fiscal 2003 following regulatory clearance to ship product manufactured at the revalidated facilities.
Cost of revenues was $2.6 million for the third quarter of fiscal 2002, compared to $903,000 for the same period in 2001. When manufacturing resumed in late May 2002, the allocation of unabsorbed costs to research and development stopped and all costs were charged to cost of revenues or inventory. Cost of revenues for the third quarter of fiscal 2002 reflects manufacturing inefficiencies during ramp-up of the expanded facilities. Manufacturing costs incurred during the ramp-up that exceeded the selling price were charged to cost of revenues and not to inventory.
Expenses
Research and development expenses were $7.1 million for the third quarter of fiscal 2002, compared with $10.3 million for the corresponding period in 2001. This decrease is due to a one-time non-cash charge of $1.6 million in 2001 related to the acquisition of Reperfusion Systems, Inc., a $2.1 million reduction in expenses for activities associated with data organization and analyses for the Phase III orthopedic surgery trial of Hemopure(R), a $784,000 reduction in expenses for preclinical studies, and a $782,000 reduction in unabsorbed fixed manufacturing costs allocated to research and development. The decrease in expenses was partially offset by an increase of approximately $2.1 million for preparing the Biologic License Application (BLA) for Hemopure that was submitted to the U.S. Food and Drug Administration (FDA) on July 31, 2002.
Sales, general and administrative expenses were $3.4 million for the third quarter of fiscal 2002, compared with $2.3 million for the same period in 2001. This increase is due to the absence in 2002 of a $793,000 credit realized in 2001 for non-cash compensation for stock options and warrants previously issued to non-employees; the credit in 2001 was primarily due to stock options and warrants that fully vested in fiscal 2001 and require no further adjustments. The increase in sales, general and administrative expenses for the quarter also is due to higher consulting expenses, partially offset by lower Oxyglobin sales expenses. Hemopure-related sales and marketing expenses, charged to general and administrative expenses in prior quarters, were charged to sales and marketing in the third quarter of fiscal 2002 due to the production of product for future sale.
Other income was $210,000 in the third quarter of fiscal 2002, compared to $654,000 in the third quarter of fiscal 2001, a result of a decline in interest income in fiscal 2002 due to reduced cash balances and lower interest rates.
Financial Condition
On July 31, 2002, Biopure had $30.2 million in cash and cash equivalents. The cash on hand on July 31, 2002 is expected to fund operations into the second quarter of fiscal 2003 or possibly into the third quarter depending on Hemopure sales in South Africa.
CORPORATE DEVELOPMENTS Senior Management
During the third quarter, Biopure elected Dr. Charles A. Sanders as chairman of the Board and Thomas A. Moore as president, CEO and a member of the Board, appointed former Chairman and CEO Carl W. Rausch vice chairman and chief technology officer, and added Barry L. Scott as vice president of International Business Development. Former President and Chief Operating Officer Paul A. Looney retired from Biopure in mid-August at the conclusion of his three-year employment contract.
BLA Filing
On July 31, 2002, Biopure submitted a BLA to the FDA seeking regulatory approval to market Hemopure in the United States for the treatment of the signs and symptoms of acute anemia in adult patients undergoing orthopedic surgery, and for the purpose of eliminating or reducing the need for red blood cells in these patients. The FDA has 60 business days from the submission of a BLA to determine the application''s acceptability for review, and it generally determines the approvability of an accepted application within 12 to 16 months of the submission date.
Manufacturing Expansion
Following a six-month expansion, Biopure reopened its manufacturing facilities in Massachusetts and Pennsylvania and finished validating its facilities and process to produce up to 75,000 Hemopure units per year. The validation of newly installed product fill equipment in Cambridge is expected to further increase the company''s annual production capacity to 100,000 Hemopure units within the next 12 months.
In addition, Sumter Realty Group, LLC recently received a letter of commitment from a potential investor for the full $120 million required to finance construction of a new manufacturing facility in Sumter, S.C., which is designed to produce 500,000 Hemopure units per year. Sumter Realty Group has not yet accepted and is currently negotiating certain details of this financing proposal.
South Africa
During the last week of July, approximately 400 medical professionals in South Africa attended accredited medical education seminars to learn about the physiology, pharmacology and clinical use of Hemopure in the treatment of surgical patients who are acutely anemic. During the past year, Biopure has provided approximately 1,700 units of product free of charge for use by doctors who have completed this program. The company expects to begin selling product in South Africa once these free units have been depleted, most likely during the first fiscal quarter of 2003.
In preparation for Hemopure sales countrywide in early 2003, Biopure is hiring a business manager, a medical affairs consultant, a pharmacovigilance consultant and product specialists to work with the medical community and the distributor in South Africa. Biopure has also hired a pharmacoeconomic consultant to document the potential cost benefits of Hemopure and build a pricing model for use in South Africa and other countries.
European Patent Defense
On July 18, 2002, Biopure prevailed in a decision by an Appeal Board of the European Patent Office (EPO) setting aside a 1995 Opposition Division decision that revoked a Biopure process patent. The patent, entitled "Extra pure semi-synthetic blood substitute," was originally granted on April 1, 1992. Six parties subsequently filed oppositions challenging all of the patent''s claims. The Opposition Division of the EPO revoked the patent following oral proceedings in November 1995, and Biopure narrowed the patent''s claims prior to filing its successful appeal. The Appeal Board''s decision upholds the patent in the 24 member states of the European Patent Organization.
Medical and Investor Meetings
On September 16th, Dr. Lewis Levien and a clinical investigator from the U.S. military will provide an overview of Hemopure at the 34th International Congress of Military Medicine in Sun City, South Africa. On October 16th, Dr. Jonathan S. Jahr will present an oral poster discussion, "Pivotal Phase III Study: Safety of Polymerized Bovine Hemoglobin (HBOC-201, Hemopure(R)) as Compared to RBC in Patients Undergoing Orthopedic Surgery," at the 2002 Annual Meeting of the American Society of Anesthesiology in Orlando, Fla. On October 28th, Dr. John P. Williams will give an oral presentation, "Transfusion Requirements in Phase III Study of HBOC-201 (Hemopure(R), Hemoglobin Glutamer- 250, Bovine), a Bovine Hemoglobin Based Blood Substitute," at the American Association of Blood Banks 2002 Annual Meeting in Orlando, Fla.
Biopure President and CEO Thomas Moore will give investor presentations in New York City at The Wall Street Analyst Forum (September 10), the UBS Warburg Global Life Sciences Conference (October 7-10), and the Citigroup Health Care Conference (October 28-30). He will also present in Boston at Techvest''s Annual Healthcare Conference (October 22-24).
Biopure Corporation
Biopure Corporation, headquartered in Cambridge, Mass., is a leading developer, manufacturer and marketer of oxygen therapeutics, a new class of pharmaceuticals that are intravenously administered to deliver oxygen to the body''s tissues. Hemopure(R) [hemoglobin glutamer - 250 (bovine), or HBOC-201] is commercially available in the Republic of South Africa for the treatment of adult surgical patients who are acutely anemic and for the purpose of eliminating, delaying or reducing the need for allogenic red blood cell transfusion in these patients. The company has submitted an application to the FDA to market Hemopure in the United States for a similar indication in orthopedic surgical patients, and it plans to file applications in Europe and other markets. Hemopure is in earlier stages of clinical development for use in cancer and in preclinical development for trauma and ischemic events such as heart attack and stroke. Biopure''s veterinary product Oxyglobin(R) [hemoglobin glutamer - 200 (bovine), or HBOC- 301], the only oxygen therapeutic approved by the FDA and the European Commission, is indicated for the treatment of anemia in dogs.
Statements in this press release that are not strictly historical are forward-looking statements. Actual results may differ from those projected in forward-looking statements due to risks and uncertainties that exist in the company''s operations and business environment. These risks include, without limitation, the company''s stage of product development, history of operating losses and accumulated deficits, uncertainties and possible delays related to the filing and acceptance of applications to the FDA and foreign regulatory authorities or related to regulatory clearances for new or revalidated manufacturing facilities, the uncertainties of clinical trials, possible healthcare reform, manufacturing capacity, marketing, market acceptance, competition and the availability of sufficient financing to support operations. Discussions of Biopure''s operations and financial condition, and specific factors that could cause the company''s actual performance to differ from current expectations, can be found on the company''s Web site at http://www.biopure.com/corporate/legal/home_legal.htm and in the company''s filings with the U.S. Securities and Exchange Commission, which can be accessed in the EDGAR database at the SEC Web site, http://www.sec.gov/, or through the Investor section of Biopure''s Web site, http://www.biopure.com/.
BIOPURE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 2002 2001 2002 2001 Total revenues $ 260 $ 946 $ 1,916 $ 2,519 Cost of revenues 2,559 903 4,305 2,587 Gross profit (loss) (2,299) 43 (2,389) (68) Operating expenses: Research and development 7,063 10,297 22,188 27,486 Sales and marketing 875 784 1,953 2,070 General and administrative 2,569 1,538 9,303 13,364 Total operating expenses 10,507 12,619 33,444 42,920 Loss from operations (12,806) (12,576) (35,833) (42,988) Other income, net 210 654 821 2,960 Net loss $ (12,596) $ (11,922) $ (35,012) $(40,028) Basic and diluted net loss per common share $ (0.43) $ (0.47) $ (1.30) $ (1.60) Weighted-average common shares outstanding 29,141 25,134 26,854 25,018 Actual common shares outstanding at July 31, 2002 were 29,205 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) July 31, 2002 October 31, 2001 Assets Total current assets(1) $ 36,948 $ 42,249 Net property and equipment(2) 38,089 30,162 Other assets 11,674 11,776 Total assets $ 86,711 $ 84,187 Liabilities and stockholders'' equity Total current liabilities $ 7,619 $ 6,297 Long term debt(2) 9,762 5,205 Deferred compensation 184 1,792 Total liabilities 17,565 13,294 Total stockholders'' equity 69,146 70,893 Total liabilities and stockholders'' equity $ 86,711 $ 84,187 (1) Includes cash and cash equivalents totaling $30.2 million and $36.1 million at July 31, 2002 and October 31, 2001, respectively. (2) At July 31, 2002, $11.1 million has been included in property, plant and equipment and $9.8 million in long-term debt reflecting engineering and design costs of the planned manufacturing facility in Sumter, S.C. This engineering has been funded by Biopure''s $11.1 million contribution to the project.