FILED BY: EYETECH PHARMACEUTICALS, INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: EYETECH PHARMACEUTICALS, INC.
COMMISSION FILE NO.: 333-128446
(EYETECH LOGO)
FOR IMMEDIATE RELEASE
CONTACT:
INVESTORS: MEDIA:
GLENN SBLENDORIO CHRIS SMITH
CHIEF FINANCIAL OFFICER PUBLIC RELATIONS & CORPORATE COMMUNICATIONS
T: 212-824-3100 T: 212-824-3203
E-mail: glenn.sblendorio@eyetech.com E-mail: chris.smith@eyetech.com
www.eyetech.com www.eyetech.com
EYETECH REPORTS THIRD QUARTER 2005 FINANCIAL RESULTS
COMPANY ACHIEVES OPERATING PROFITABILITY, EXCLUDING CERTAIN CHARGES, BASED ON
TOTAL REVENUE OF $67.4 MILLION AND NET PRODUCT REVENUE OF $55.5 MILLION
NEW YORK - OCTOBER 31, 2005 - EYETECH PHARMACEUTICALS, INC. (NASDAQ: EYET), a
biopharmaceutical company that specializes in the development and
commercialization of novel therapeutics to treat diseases of the eye, today
reported its consolidated financial results for the third quarter of 2005. Key
results and developments included:
o Total revenue was $67.4 million. Net product revenue for Macugen was $55.5
million, an 18% increase over the previous quarter. GAAP net loss was $5.2
million, compared to a GAAP net loss of $24.7 million for the comparable
period in 2004. The GAAP net loss included a $5.3 million non-cash charge
for restricted stock primarily issued in June 2005 and $2.7 million of
merger and other non-recurring charges. Excluding these charges, Eyetech
achieved operating profitability during the quarter, with non-GAAP net
income of $2.8 million.
o On August 21, 2005, Eyetech entered into a definitive merger agreement
with OSI Pharmaceuticals, Inc. (Nasdaq: OSIP), whereby OSI has agreed to
acquire Eyetech. On November 10, 2005, Eyetech will hold a special meeting
of stockholders to vote on the
Eyetech Reports Third Quarter 2005 Financial Results
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acquisition by OSI. Assuming a positive vote, Eyetech anticipates that the
transaction will close shortly thereafter.
"Macugen continued to capture an increasing share of a growing market, allowing
Eyetech to achieve operating profitability for the first time, excluding certain
charges," noted David R. Guyer, M.D., Chief Executive Officer of Eyetech. "We
have set a solid financial foundation as we approach our next phase of growth
and development as part of OSI Pharmaceuticals."
Macugen is the most prescribed treatment for neovascular age-related macular
degeneration (neovascular AMD), with more than 50,000 patients treated since the
product was launched in January 2005. Twice as many patients were treated with
Macugen than with photodynamic therapy during July, according to the most recent
data from Verispan, a firm that tracks physician claims submitted to Medicare
and private insurers. More than 138,000 patients were treated for neovascular
AMD year-to-date through July, a 44% increase over the same period in 2004.
"Recently published data provide new insight into Macugen's efficacy in patients
with early disease, and also points to Macugen's potential in the treatment of
diabetic eye complications," noted Paul Chaney, Chief Operating Officer of
Eyetech. A retrospective analysis published in the October/November issue of
Retina suggests that treatment with Macugen may provide better results in
patients with early stage neovascular AMD. Results of a Phase 2 study of Macugen
for the treatment of diabetic macular edema (DME) were published in the October
issue of Ophthalmology.
The clinical development program for Macugen continues. Eyetech and Pfizer have
completed enrollment of a Phase 2 study of Macugen for the treatment of retinal
vein occlusion (RVO). As announced earlier this month, Eyetech and Pfizer
enrolled the first patient in a Phase 3 study of Macugen for the treatment of
DME and diabetic retinopathy. During the quarter, Eyetech and Pfizer also
announced that they expect the European Medicines Agency to approve Macugen for
the treatment of neovascular AMD, based on a positive opinion from an advisory
committee.
Eyetech will not hold a conference call to discuss quarterly results.
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Eyetech Reports Third Quarter 2005 Financial Results
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THIRD QUARTER 2005 FINANCIAL HIGHLIGHTS
Three Months Ended
September 30,
-------------
2005 2004
---- ----
REVENUE:
Gross product revenue ............ $ 58,649 $ --
Less: Distribution service fees,
allowance and returns ............ (3,171) --
-------- --------
Net product revenue .............. 55,478 --
License fees ..................... 3,061 1,408
Reimbursement of development costs 7,678 12,058
Other revenue .................... 1,161 --
-------- --------
TOTAL REVENUE .................... $ 67,378 $ 13,466
======== ========
- - For the third quarter of 2005, total revenue was $67.4 million. Gross
product revenue from Macugen was $58.6 million, while net product revenue
was $55.5 million. On September 30, we estimate that there was less than
two weeks of Macugen supply in the wholesale distribution network, which
is consistent with prior periods.
- - Collaboration revenues were $10.8 million for the third quarter of 2005,
compared to $13.5 million for the same period in 2004. Collaboration
revenue in the third quarter of 2005 comprises $7.7 million in
reimbursement of development costs from Pfizer Inc and $3.1 million from
the amortization of deferred license fees, compared to $12.1 million and
$1.4 million, respectively, for the same period in 2004.
- - Cost of goods sold for the third quarter of 2005 includes costs associated
with the manufacture of Macugen, royalty expenses and other fees. Royalty
expenses are paid under our agreements with Gilead Sciences, Isis
Pharmaceuticals and Nektar Therapeutics and are based on net Macugen
sales. Gross margins on net sales of Macugen continued at 79% in the third
quarter of 2005.
- - Research and development expenses were $23.3 million for the third
quarter of 2005, compared to $25.9 million for the same period in 2004.
The change in research and development expenses was primarily
attributable to a $3.0 million reduction in licensing fees incurred in
connection with regulatory filings in 2004 and a $2.4 million reduction
in manufacturing related costs, which prior to the approval of Macugen
had
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Eyetech Reports Third Quarter 2005 Financial Results
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been included in research and development expenses. These reductions were
partially offset by an increase of $3.4 million in expenditures related to
clinical trials for the use of Macugen in the treatment of neovascular
AMD, DME and retinal vein occlusion (RVO) and pre-trial costs for a Phase
4 cosmbination trial of Macugen and Visudyne versus Macugen, as well as
discovery and development of other product candidates.
- - Sales and marketing expenses increased to $10.7 million for the third
quarter of 2005 from $9.3 million for the same quarter in 2004. The
increase in sales and marketing expenses of $1.4 million was primarily
related to an increase of $3.1 million in expenses relating to our sales
field force and a non-cash charge for the restricted stock, which was
offset by a reduction of $1.7 million incurred in non-personnel
promotional and marketing expenses from the same period in 2004.
- - General and administrative expenses were $6.9 million for the third
quarter of 2005, compared to $4.0 million for the same quarter in 2004.
General and administrative expense in the third quarter of 2005 includes
$2.0 million of expenses related to our pending merger with OSI
Pharmaceuticals, a $2.1 million non-cash charge for restricted stock and a
$0.7 million write-off of previously capitalized assets related to changes
in our manufacturing build plan.
- - Collaboration profit sharing of $22.0 million consists of Pfizer's share
of net product sales of Macugen less cost of goods sold within the United
States.
- - GAAP net loss attributable to common stockholders decreased to $5.2
million for the third quarter of 2005, compared to $24.7 million for
the same period in 2004. The GAAP net loss of $5.2 million in 2005
included a non-cash charge of $5.3 million related to the restricted
stock primarily issued in June 2005, merger expenses of $2.0 million
and other non-recurring charges of $0.7 million. Excluding these
charges, we had non-GAAP net income for the third quarter of $2.8
million.
- - Basic and diluted net loss per common share for the quarter ended
September 30, 2005, was $0.12, compared to $0.60 in 2004.
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Eyetech Reports Third Quarter 2005 Financial Results
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- - On September 30, 2005, Eyetech had $231.5 million in cash, cash
equivalents and marketable securities. Accounts receivable and inventory
totaled $92.6 million and $10 million, respectively, at September 30,
2005.
OUTLOOK
For the year ending December 31, 2005, we maintain our forward-looking guidance
for net product revenue from the sale of Macugen at a range of $175-$190 million
and anticipate a continued trend toward profitability in the fourth quarter.
ABOUT EYETECH
Eyetech Pharmaceuticals, Inc. is a biopharmaceutical company that specializes in
the development and commercialization of novel therapeutics to treat diseases of
the eye. Eyetech's initial focus is on diseases affecting the back of the eye.
Eyetech is commercializing and further developing Macugen(R) (pegaptanib sodium
injection) with Pfizer Inc for the treatment of neovascular AMD. Macugen is also
being studied for other indications, including DME, diabetic retinopathy and
RVO.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
OSI and Eyetech have entered into a definitive merger agreement whereby OSI has
agreed to acquire Eyetech. OSI filed a registration statement on Form S-4 with
the Securities and Exchange Commission (SEC) containing a proxy
statement/prospectus in connection with the proposed merger. The registration
statement has been declared effective and the proxy statement/prospectus has
been mailed to the stockholders of Eyetech to consider and vote upon the
proposed merger at a special meeting scheduled for November 10, 2005. Investors
and stockholders are urged to carefully read the proxy statement/prospectus and
other relevant materials filed with the SEC because they contain important
information about OSI, Eyetech, the merger, and other related matters. Investors
and stockholders may obtain free copies of these documents and other documents
filed with the SEC at the SEC's web site at www.sec.gov. These documents can
also be obtained for free from OSI by directing a request to OSI Investor
Relations at 631-962-2000 and for free from Eyetech by directing a request to
Eyetech Investor Relations at 212-824-3100.
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Eyetech Reports Third Quarter 2005 Financial Results
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PARTICIPANTS IN THE MERGER
OSI, Eyetech and their respective executive officers, directors and other
members of management or employees may be deemed to be participants in the
solicitation of proxies from Eyetech stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding OSI's
executive officers and directors is available in OSI's Annual Report on Form
10-K for the year ended September 30, 2004 and its proxy statement dated
February 2, 2005 for its 2005 Annual Meeting of Stockholders, which are filed
with the SEC. Information regarding Eyetech's executive officers and directors
is available in Eyetech's Annual Report on Form 10-K for the year ended December
31, 2004, its proxy statement dated April 11, 2005 for its 2005 Annual Meeting
of Stockholders and its Current Report on Form 8-K dated June 15, 2005, which
are filed with the SEC. You can obtain free copies of these documents from OSI
and Eyetech using the contact information above. Additional information
regarding interests of such participants are included in the registration
statement containing the proxy statement/prospectus that has been filed with the
SEC and is available free of charge as indicated above.
In addition, in connection with the execution of the merger agreement, Dr. David
Guyer, Eyetech's Chief Executive Officer, Paul G. Chaney, Eyetech's Chief
Operating Officer, and Dr. Anthony P. Adamis, Eyetech's Chief Scientific
Officer, have entered into letter agreements with OSI setting forth the terms
under which these individuals will continue their employment with OSI following
the merger. Furthermore, in connection with the execution of the merger
agreement, Eyetech's Board of Directors authorized the payment of transaction
completion bonuses in the aggregate amount of $350,000. The recipients of these
bonuses, and the amounts they may receive, are determined by Eyetech's Board of
Directors based on the recommendation of its Compensation Committee. Such
recipients may include executive officers of Eyetech. Additional information
regarding these arrangements and the interests of such participants is included
in the registration statement containing the proxy statement/prospectus that has
been filed with the SEC and is available free of charge as indicated above.
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Eyetech Reports Third Quarter 2005 Financial Results
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SAFE HARBOR STATEMENT
This press release contains forward-looking statements that involve substantial
risks and uncertainties. All statements, other than statements of historical
facts, included in this press release regarding our strategy, future operations,
future clinical trials, future financial position, future sales, future
revenues, future profitability, projected costs, prospects, plans and objectives
of management are forward-looking statements. We may not actually achieve the
plans, intentions or expectations disclosed in our forward-looking statements
and you should not place undue reliance on our forward-looking statements.
Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. Various
important factors could cause actual results or events to differ materially from
the forward-looking statements that we make, including risks related to the
closing of the pending merger with OSI, continued acceptance of Macugen by the
medical community, by patients receiving therapy and by third party payors;
supplying sufficient quantities of Macugen to meet anticipated market demand;
our dependence on third parties to manufacture Macugen; the impact of
competitive products and potentially competitive product candidates; our
dependence on our strategic collaboration with Pfizer; obtaining, maintaining
and protecting the intellectual property incorporated into our product
candidates; new information arising out of clinical trial results; successful
recruitment of patients for the clinical development of Macugen in other
indications; successful outcomes in the further clinical development of Macugen;
regulatory approval of Macugen for other indications; and the success of
Macugen's recent launch generally. These and other risks are described in
greater detail in the "Risk Factors" section of the proxy statement/prospectus
on Form S-4 filed by OSI Pharmaceuticals, Inc. with the United States Securities
and Exchange Commission. Our forward-looking statements do not reflect the
potential impact of any future acquisitions, our pending acquisition by OSI,
dispositions, joint ventures or investments we may make. We do not assume any
obligation to update any forward-looking statements.
###
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Eyetech Reports Third Quarter 2005 Financial Results
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EYETECH PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands)
(Unaudited)
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
Gross product revenue $ 58,649 $ -- $ 133,725 $ --
Less: Distribution service fees, allowance and returns (3,171) -- (7,594) --
--------- --------- --------- ---------
Net product revenue 55,478 -- 126,131 --
Collaboration revenue 11,900 13,466 32,932 37,729
--------- --------- --------- ---------
Total revenue 67,378 13,466 159,063 37,729
Costs and expenses:
Cost of goods sold 11,640 -- 26,158 --
Research and development 23,326 25,879 67,388 81,723
Sales and marketing 10,698 9,342 33,062 19,320
Collaboration profit sharing 22,005 -- 50,226 --
General and administrative 6,921 3,962 15,365 9,924
--------- --------- --------- ---------
Total costs and expenses 74,590 39,183 192,199 110,967
Operating loss (7,212) (25,717) (33,136) (73,238)
Interest income, net 2,010 1,000 5,477 2,488
--------- --------- --------- ---------
Loss before income taxes (5,202) (24,717) (27,659) (70,750)
Provision for income taxes -- -- -- --
--------- --------- --------- ---------
Net loss (5,202) (24,717) (27,659) (70,750)
Preferred stock accretion -- -- -- (816)
--------- --------- --------- ---------
Net loss attributable to common
stockholders $ (5,202) $ (24,717) $ (27,659) $ (71,566)
========= ========= ========= =========
Basic and diluted net loss per
common share $ (0.12) $ (0.60) $ (0.64) $ (1.97)
========= ========= ========= =========
Weighted average common
shares outstanding 43,801 40,912 43,349 36,294
========= ========= ========= =========
Pro forma basic and diluted
net loss per common share $ (1.83)
=========
Pro forma weighted average
common shares outstanding 39,059
=========
Each outstanding share of preferred stock of the company automatically converted
into one share of common stock upon completion of the company's initial public
offering in February 2004. Accordingly, pro forma basic and diluted net loss per
common share has been calculated assuming the preferred stock was converted as
of the original date of issuance of the preferred stock. Pro forma common shares
outstanding for the quarter ended September 30, 2004 of 39,059 is based on the
conversion of 2,765 shares of our convertible preferred stock on a weighted
average basis as of September 30, 2004. All shares were converted at September
30, 2005 and have been included in the weighted average common shares
outstanding.
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Eyetech Reports Third Quarter 2005 Financial Results
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EYETECH PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
(Unaudited)
SEPTEMBER 30, 2005 DECEMBER 31, 2004
------------------ -----------------
Cash and cash equivalents $ 40,664 $ 40,780
Marketable securities 190,814 170,715
Other current assets 114,796 99,834
Net fixed assets and other assets 37,964 28,130
-------- --------
Total assets $384,238 $339,459
======== ========
Current liabilities $ 93,197 $ 41,294
Long-term liabilities 8,159 7,321
Deferred revenue, less current portion 149,820 159,706
Stockholders' equity 133,062 131,138
-------- --------
Total liabilities and stockholders' equity $384,238 $339,459
======== ========
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Eyetech Reports Third Quarter 2005 Financial Results
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The press release contains both GAAP and non-GAAP financial measures for
the three months ended September 30, 2005. The non-GAAP financial measure
included in the press release is GAAP net income excluding $5.3 million of
non-cash restricted stock charges, $2.0 million of direct merger costs and $0.7
million of other non-recurring expenses. The equity charge of $5.3 million is
related primarily to the June 28, 2005 issuance of 1,481,611 shares of
restricted stock with a purchase price of $0.01 per share to most employees and
directors of the Company. The restricted stock has a one year vesting
requirement. The direct merger costs of $2.0 million were incurred for due
diligence activities related to the proposed acquisition of the Company by OSI
Pharmaceuticals, Inc., such as external accounting and legal fees. The
non-recurring expenses of $0.7 million related to changes in our manufacturing
build plan. Non-GAAP financial measures should be considered in addition to, and
not as a substitute for, or superior to, financial measures prepared in
accordance with GAAP. The table of reconciliation is attached.
The press release includes non-GAAP financial measures because our
management uses this information to monitor and evaluate Eyetech's operating
results and trends on an on-going basis. Our management believes the non-GAAP
information is also useful for investors because the charges relating to the
recently issued restricted stock and direct merger related expenses are both
unusual due their size and infrequency. Consequently, excluding those items from
our net income provides users of the financial statements an important insight
into our operating results and related trends that affect our business. In
addition, our management uses non-GAAP financial information and measures
internally for operating, budgeting and financial planning purposes.
EYETECH PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands)
(Unaudited)
QUARTER ENDED SEPTEMBER 30,
---------------------------
2005
----
NON-CASH MERGER OTHER NON-
GAAP COMPENSATION RELATED COSTS RECURRING NON-GAAP
---- ------------ ------------- --------- --------
Net product revenue $ 55,478 $ -- $ -- $ -- $ 55,478
Collaboration revenue 11,900 -- -- -- 11,900
-------- -------- -------- -------- --------
Total revenue 67,378 -- -- -- 67,378
Costs and expenses:
Cost of goods sold 11,640 -- -- -- 11,640
Research and development 23,326 1,819 -- -- 21,507
Sales and marketing 10,698 1,387 -- -- 9,311
Collaboration profit sharing 22,005 -- -- -- 22,005
General and administrative 6,921 2,061 2,015 701 2,145
-------- -------- -------- -------- --------
Total costs and expenses 74,590 5,268 2,015 701 66,607
Operating loss (7,212) (5,268) (2,015) (701) 771
Interest income, net 2,010 -- -- -- 2,010
-------- -------- -------- -------- --------
Loss before income taxes (5,202) (5,268) (2,015) (701) 2,781
Provision for income taxes -- -- -- -- --
-------- -------- -------- -------- --------
Net loss (5,202) (5,268) (2,015) (701) 2,781
Preferred stock accretion
-------- -------- -------- -------- --------
Net loss attributable to common
stockholders $ (5,202) $ (5,268) $ (2,015) $ (701) $ 2,781
======== ======== ======== ======== ========
Basic and diluted net loss per
common share $ (0.12)
========
Weighted average common
shares outstanding 43,801
========
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