Exhibit 99.1
TANOX, INC.
10301 Stella Link
Houston, TX 77025
713.578.4000
CONTACT:
NEWS RELEASE Steve Sievert
May 2, 2006 713.578.4211
ssievert@tanox.com
TANOX REPORTS 2006 FIRST QUARTER RESULTS
Quarterly revenue grows 66% year over year
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Lead drug candidate, TNX-355, demonstrates strong antiviral response at 48 weeks
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Conference call today at 10 a.m., EDT
HOUSTON - Tanox, Inc. (NASDAQ: TNOX) today reported financial results for the
first quarter ended March 31, 2006.
Revenues for the first quarter of 2006 were $9.8 million compared to
revenues of $5.9 million for the first quarter of 2005, and $23.0 million1 for
the fourth quarter of 2005. Net royalty revenue from sales of Xolair(R)
(omalizumab) was $8.8 million for the first quarter of 2006, compared to Xolair
royalty revenue of $5.9 million for first quarter of 2005, and $8.5 million for
the fourth quarter of 2005.
In addition to royalty revenue, Tanox recorded net profit-sharing
revenue of $1.0 million for the first quarter of 2006. The profit-sharing
revenue represented Tanox's share of Novartis Pharma AG's net profits from U.S.
sales of Xolair in the fourth quarter of 2005. Profit-sharing payments are
calculated and recorded one quarter in arrears.
Tanox reported a net loss of $5.2 million, or $0.12 per share, for the
first quarter of 2006, compared to a net loss of $20.5 million2, or $0.46 per
share, for the first quarter of 2005, and net income of $9.8 million, or $0.23
per share, for the fourth quarter of 2005.
Results for the first quarter of 2006 reflect the company's Jan. 1,
2006 adoption of Statement of Financial Accounting Standards No. 123R. The
impact of expensing employee stock options is reflected in the table below:
LOSS PER SHARE BEFORE STOCK COMPENSATION REPORTED
STOCK COMPENSATION EXPENSE EXPENSE LOSS PER SHARE
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First Quarter 2006 $ (0.10) $ (0.02) $ (0.12)
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1 Fourth quarter 2005 revenue of $23.0 million included a one-time net milestone
payment of $12.8 million based on Xolair achieving sales of more than $300
million for the first time.
2 The net loss for the first quarter of 2005 included a one-time $13.7 million
expense for in-process research related to the company's acquisition of a
tissue factor antagonist program from Sunol Molecular Corporation.
www.tanox.com
"We continue to be pleased with the market performance of Xolair and
the impact the collaboration with Genentech and Novartis is having on our
business," said Danong Chen, president and chief executive officer of Tanox.
"Increasing revenue from our Xolair collaboration is providing us with financial
resources to invest in our drug development programs and advance our pipeline."
Research and development costs for the first quarter of 2006 were $14.0
million, compared to $11.7 million for the first quarter of 2005, and $12.7
million for the fourth quarter of 2005. The increase in research and development
costs for the first quarter of this year was attributed primarily to expenses
associated with manufacturing activities in preparation for planned clinical
trials, increased spending for preclinical programs and employee stock
compensation expense.
General and administrative expenses were $2.8 million for the first
quarter of 2006, compared to $1.9 million for the first quarter of 2005, and
$1.9 million for the fourth quarter of 2005. The increase in general and
administrative costs for the first quarter of this year was due primarily to
expenses related to business development activities and employee stock
compensation expense.
As of March 31, 2006, Tanox had $171.9 million in cash and investments,
compared to $164.5 million at Dec. 31, 2005. The increase in cash is due
primarily to the one-time net milestone payment of $12.8 million received in the
first quarter of 2006.
RECENT AND FIRST QUARTER COMPANY HIGHLIGHTS
o Earlier today, Tanox reported positive 48-week results of the Phase 2
clinical trial of TNX-355. The results showed that TNX-355, when given
in combination with an optimized background regimen (OBR) of other
antiretroviral therapies, produced a statistically significant greater
reduction in viral load in HIV-infected patients than did placebo in
combination with OBR. The 48-week results also showed that patients who
received TNX-355 plus OBR experienced a statistically significant
increase in CD4+ cells compared to patients who received placebo plus
OBR. An end-of-Phase 2 meeting with the Food and Drug Administration
(FDA) is scheduled to take place by the end of the second quarter of
this year.
o The company began Good Manufacturing Practice (GMP) production of
TNX-355 clinical material at its San Diego facility.
o Tanox continued to advance its drug-development pipeline in the first
quarter, with ongoing patient enrollment in a Phase 1/2 clinical trial
of TNX-832 (acute lung injury/acute respiratory distress syndrome), and
preclinical studies for TNX-650 (inflammatory disease), TNX-833
(cancer) and TNX-234 (age-related macular degeneration). In addition,
the company anticipates dosing patients in a Phase 1 clinical trial of
TNX-650 in Hodgkin's lymphoma in the second quarter of 2006.
FINANCIAL OUTLOOK
The company reaffirms its previous guidance and continues to anticipate
net cash usage in 2006 of approximately $15 million.
CONFERENCE CALL
Tanox will host a conference call for investors today at 10 a.m., EDT.
The conference call can be accessed at 1-800-591-6923 (domestic) or
1-671-614-4907 (international). The pass code is 7480-2827. Live audio of the
call will be webcast on the Internet. The webcast can be accessed from the Tanox
Web site at www.tanox.com in the Investor Relations section. An audio replay of
the webcast will be available beginning at noon, EDT, May 2, 2006 through 11
a.m., EDT, June 2, 2006. Access phone numbers for the replay are: 1-888-286-8010
(domestic) and 1-617-801-6888 (international); conference pass code 7399-0184.
ABOUT TANOX, INC.
Tanox is a biotechnology company specializing in the discovery and
development of monoclonal antibodies. The company develops innovative
biotherapeutics for the treatment of immune-mediated diseases, inflammation,
infectious disease and cancer. Tanox's lead investigational therapy, TNX-355, is
a viral-entry inhibitor antibody to treat HIV/AIDS. TNX-355 has shown
significant antiviral activity in Phase 2 clinical testing. Tanox's
first-approved drug, Xolair(R) (omalizumab), is the first antibody approved to
treat moderate-to-severe confirmed, allergic asthma. Xolair was developed in
collaboration with Genentech, Inc. and Novartis Pharma AG and is approved for
marketing in the United States, Canada and major European countries. Tanox is
based in Houston and has a manufacturing facility in San Diego. Additional
corporate information is available at www.tanox.com.
This news release contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. We typically
identify forward-looking statements by using terms such as "may," "should,"
"could," "expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or similar words, although we express some forward-looking
statements differently. You should be aware that actual events could differ
materially from those suggested in the forward-looking statements due to a
number of factors, including: the continued market acceptance of Xolair(R); the
results of our collaborators, Genentech and Novartis, in growing sales of
Xolair; our ability to successfully recruit participants for human clinical
trials; failure to achieve positive results in human clinical trials; and the
strength of our patent portfolio. The absence of safety concerns after 48 weeks
of treatment with TNX-355 in 82 patients does not ensure that safety issues will
not be identified in larger-scale clinical trials. The therapeutic potential of
TNX-355 as a treatment for HIV-1-infected patients is subject to the risks
inherent in drug development. The timing of future trials can depend on
regulatory review. Success in early stage clinical trials does not ensure that
later-stage or larger-scale clinical trials will be successful, and the results
achieved in later stage trials may not be sufficient to meet applicable
regulatory standards. Prospective investors should carefully consider the
information contained in the company's Form 10-K and other Securities and
Exchange Commission (SEC) filings, including the sections titled Business: Risk
Factors and Management's Discussion and Analysis of Financial Condition and
Results of Operations, when evaluating an investment in the shares of Tanox
Common Stock. The Tanox logo is a registered trademark with the U.S. Patent and
Trademark Office.
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TANOX, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Data)
Summary of Operations
(unaudited)
Three Months Ended
March 31,
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2006 2005
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Revenues, net $ 9,815 $ 5,928
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Operating expenses:
Research and development 13,961 11,740
Acquired in-process research and development -- 13,680
General and administrative 2,794 1,933
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Total operating expenses 16,755 27,353
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Loss from operations (6,940) (21,425)
Other income (net) 1,759 963
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Net loss $ (5,181) $ (20,462)
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Loss per share - basic and diluted $ (0.12) $ (0.46)
Shares used in computing loss per share - basic
and diluted 44,694 44,050
Employee stock compensation expense included in
operating expenses:
Research and development $ 332 $ --
General and administrative 361 --
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Total $ 693 $ --
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Summary Balance Sheet Information
March 31, 2006 December 31, 2005
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(Unaudited)
Assets:
Cash, cash equivalents and investments $ 171,887 $ 164,501
Property and equipment (net) 31,146 31,214
Other assets 15,584 34,221
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Total assets $ 218,617 $ 229,936
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Liabilities and Stockholders' Equity:
Accounts payable and accrued liabilities $ 8,932 $ 16,495
Stockholders' equity 209,685 213,441
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Total liabilities and stockholders' equity $ 218,617 $ 229,936
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