EXHIBIT 99.3
Good morning, this is Michael Becker, president and chief executive officer of
Cytogen Corporation.
Before I begin, let me remind you that certain statements on this conference
call constitute forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of 1995 and actual
results and events could differ materially from those indicated by these forward
looking statements. For a detailed discussion of factors that could cause actual
results to vary from these forward-looking statements, please refer to the
company's most recent filings with the Securities and Exchange Commission,
including our annual report on Form 10-K for fiscal year 2001, and our other
recent reports on Form 10-Q and Form 8-K.
On Friday, January 24th Cytogen issued a press release through PR Newswire
announcing that it provided DRAXIMAGE Inc., the radiopharmaceutical subsidiary
of DRAXIS Health Inc., with notice of termination for each of its License and
Distribution Agreement and Product Manufacturing and Supply Agreement with
respect to both of DRAXIS' BrachySeed(TM) I-125 and BrachySeed(TM) Pd-103
products. The full text of this press release as well as a replay of this
conference call can be accessed through Cytogen's website, at www.cytogen.com. A
copy of the press release can also be obtained by contacting Stacy Shearer,
Investor Relations for Cytogen Corporation at 609-750-8289.
Cytogen provided such notice of termination upon a determination that there is
no reasonable expectation that DRAXIS can consistently supply the BrachySeed
products at quantities, activity levels, and schedules amenable to commercial
sale, which has negatively impacted Cytogen's ability to market such products.
As you may be aware, the introduction of BrachySeed I-125 occurred in the first
half of 2001 and the introduction of BrachySeed Pd-103 occurred in the second
quarter of 2002. This morning DRAXIS issued a press release indicating its
belief that Cytogen failed to meet certain minimum annual sales requirements set
out in the agreements. It must be understood that the reason such sales were not
achieved is because of DRAXIS' failure to provide their products as required by
contract.
DRAXIS' unilateral decision to indefinitely halt the production of BrachySeed
Pd-103 further contributed to Cytogen's decision to terminate its licensing,
distribution and manufacturing arrangements with DRAXIS. As previously
communicated, both companies' decision to enter the brachytherapy field was
predicated on the successful launch of both the Iodine and Palladium
brachytherapy products.
Despite our notice of termination to DRAXIS, Cytogen expects that existing
orders for BrachySeed I-125 will be processed. However, effective January 24,
2003, Cytogen will no longer accept or fill new orders for the BrachySeed I-125
and BrachySeed Pd-103 products. We regret any inconvenience this service and
supply disruption may create for our customers.
At this time, I would like to discuss BrachySeed's historical contribution to
Cytogen's product revenue. Cytogen expects that fourth quarter and year ended
2002 financial results will be available in mid-February 2003. Therefore,
today's remarks will be limited to BrachySeed sales through the third quarter of
2002, our most recent financial disclosure.
As you may be aware, Cytogen primarily generates revenue from the sale of
products marketed through its in-house specialty sales force and from royalties
received on the sale of Quadramet(R) through Berlex Laboratories in the United
States. Collectively, we refer to this as "product-related revenue." In the
third quarter of 2002, BrachySeed accounted for $698,000, or 23% of the $3.04
million in product-related revenue for the period. During the nine months ended
September 30, 2002, BrachySeed accounted for $1.72 million, or 19% of the $9.22
million in product-related revenue for the period.
Cytogen provided financial guidance for 2002, the most recent example of which
can be found in our third quarter 2002 financial release dated November 5, 2002.
At this time, we have no reason to alter this guidance, which dictated that:
- Total revenues = $12.5 million to $14.5 million
- Cost of sales = $4.4 million to $5.3 million
- Operating expenses excluding the cost of sales and one-time, non-cash
items = $20 million to $22 million
- Cash resources at the end of the third quarter of 2002 of $16.25 million
should be sufficient to fund the Company's current operations during 2003
- Estimated cash usage from operating activities for the year 2002 is
expected to be in the range of $9.5 million to $10.5 million, of which
$6.94 million was used during the nine-month period ending September
30, 2002
You may be wondering if Cytogen will initiate change in its strategic direction
as a result of the announced exit from the brachytherapy market. The resounding
answer is NO - the strategic direction for Cytogen remains clear: we are a
product-driven, oncology-focused biopharmaceutical company. Our marketed
products, such as ProstaScint(R), Quadramet and NMP22(R) BladderChek(TM); as
well as late-stage opportunities, such as Combidex(R), and our evolving PSMA
development pipeline reflect Cytogen's reputation for bringing innovation to
patients and physicians in the fight against cancer. Through continued success
in licensing late-stage and/or marketed products, we expect to leverage
Cytogen's strategic investment in a sales and marketing infrastructure. To
reemphasize the issue: Cytogen's decision to exit the brachytherapy market was
driven by the fact that DRAXIS could not meet its contractual commitments with
respect to both of its Iodine and Palladium products, not due to a deviation
from our product-focused strategy.
Importantly, Cytogen's participation in the brachytherapy market has - and
continues to - provide value separate and apart from DRAXIS through the
continued research of new product applications for our lead product ProstaScint,
such as:
- Combining or fusing ProstaScint with CT (computed tomography) or MRI
(magnetic resonance imaging) scans in a digital overlay ("image
co-registration"); and
- Using ProstaScint scans to guide therapy ("image-guided therapy"),
which is not limited to enhancing the placement of brachytherapy seeds,
but can also be applied to cryosurgery and external beam radiation,
such as intensity modulated radiation therapy (IMRT), an advanced and
more powerful form of therapy that uses computers to focus radiation
more precisely on the tumor.
Cytogen believes that future growth in ProstaScint is largely dependent upon,
among other things, the implementation and continued research of these exciting
new product applications. Further, the Company believes it is well positioned to
now leverage the experience and knowledge gained through the brachytherapy
market as a driver across the broad range of treatment options that may benefit
from novel image-guided therapy research applications. As evidence of this
strategy, in June 2002 Cytogen announced that researchers at the Mayo Clinic
have initiated a new phase I/II clinical study to evaluate the utility of
ProstaScint in helping to guide advanced radiation therapy for prostate cancer
with greater precision and reduced damage to surrounding tissue. The study will
use ProstaScint to guide IMRT, an advanced and more powerful form of therapy
that uses computers to focus radiation more precisely on the tumor.
Our vision for the future is clear: regardless of which prostate cancer therapy
prevails in the marketplace, whether it is IMRT, brachytherapy, cryosurgery, or
otherwise, Cytogen would like to see ProstaScint imaging used to enhance the
treatment of prostate cancer.
At Cytogen, we are committed to making a difference for our customers - the
physicians, technologists, physicists, nurses and support staff who use our
products and services to benefit the care of oncology patients. Further, Cytogen
is committed to making a difference in the lives of our employees, the
community, and our shareholders. This vision is becoming a reality through
Cytogen's marketed products, our fully integrated sales and marketing
organization, the Company's evolving diverse and innovative pipeline, and our
distinct competitive position in targeting technology for cancer imaging and
therapy.
While our historical financial results show an operating loss, Cytogen's
management understands the importance of the bottom line. Therefore, the Company
will focus on higher margin products and continue to carefully evaluate focused
investments in research, development, and commercialization activities that will
result in measurable performance for the company going forward. As a
product-driven, oncology-focused biopharmaceutical company, we believe Cytogen
is in a stronger position to explore new in-licensing opportunities while
realizing the full value of its PSMA development pipeline.
Before we open the call to take your questions, let me close by saying that
Cytogen's stock price will fluctuate, and may - or may not - reflect our
achievements at any given point in time. However, I am confident that we are
laying a solid foundation for growth in the future and continue to be optimistic
about Cytogen's prospects.
At this time we will open the call for your questions, which we would like to
confine to the topic of BrachySeed. We expect to conduct future conference calls
to address other corporate matters.