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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 2, 1999
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IDEC PHARMACEUTICALS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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DELAWARE 0-19311 33-0112644
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
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11011 TORREYANA ROAD, SAN DIEGO, CALIFORNIA 92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 550-8500
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ITEM 5. OTHER EVENTS
On February 2, 1999, IDEC Pharmaceuticals Corporation (the "Company")
issued a press release reporting its financial results for the fourth quarter
ended December 31, 1998.
On February 2, 1999, the Company issued a press release announcing an
offering of certain debt securities.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A copy of the Company's press release reporting its financial results for
the fourth quarter ended December 31, 1998 is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
A copy of the Company's press release announcing its offering of certain
debt securities is attached hereto as Exhibit 99.2 and is incorporated herein by
reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IDEC PHARMACEUTICALS CORPORATION
Dated: February 2, 1999 By: /s/ PHILLIP M. SCHNEIDER
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Phillip M. Schneider
Vice President and Chief Financial
Officer
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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99.1 Press Release of the Company, dated February 2, 1999,
reporting the Company's financial results for the fourth
quarter ended December 31, 1998.
99.2 Press Release of the Company, dated February 2, 1999,
announcing the Company's offering of certain debt
securities.
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EXHIBIT 99.1
COMPANY PRESS RELEASE
IDEC PHARMACEUTICALS REPORTS FIRST YEAR OF PROFITABILITY
SAN DIEGO -- (BW HealthWire) -- Feb. 2, 1999 -- IDEC Pharmaceuticals
Corporation (Nasdaq: IDPH -- news) today announced its financial results for the
fourth quarter and year ended December 31, 1998.
Total revenues were $87.0 million in 1998, a $42.4 million or 95% increase
over 1997 revenues of $44.6 million. The company reported net income of $21.5
million, or $0.92 per share on a diluted basis, in 1998 versus a net loss of
$15.5 million in 1997, or $0.83 loss per share on a diluted basis, in 1997.
Revenues for 1998 increased primarily due to $53.8 million recorded from the
commercialization of Rituxan(R) (Rituximab) through IDEC's joint business
arrangement with Genentech, Inc.
Total revenues for the fourth quarter ended December 31, 1998 were $27.8
million compared to $26.1 million for the fourth quarter of 1997. Net income in
the fourth quarter of 1998 was $5.7 million, or $0.24 per share on a diluted
basis, compared to net income of $8.1 million, or $0.35 per share on a diluted
basis, for the same period in 1997. Revenues for the fourth quarter of 1998
increased primarily due to the aforementioned revenue resulting from the
commercialization of Rituxan, the recognition of $2.8 million in deferred
contract revenue from Eisai Co, Ltd., payable upon the achievement of a product
development event for IDEC's anti-gp39 antibody, offset by decreased license fee
revenue in the fourth quarter of 1998. License fee revenues in the fourth
quarter of 1997 reflected a $15.0 million milestone payment from Genentech for
FDA approval of Rituxan. The timing of research and development payments and
non-recurring licensing revenue and milestone payments may vary from quarter to
quarter.
"Rituxan has made our transition to profitability possible," stated William
H. Rastetter, chairman, chief executive officer and president. "It also serves
as the cornerstone of our oncology franchise, providing the cash flows to fund
the development of other cancer products such as our investigational
radioimmunotherapy, IDEC-Y2B8." Rastetter continued, "We anticipate completing
patient accrual in two pivotal clinical trials for IDEC-Y2B8 during 1999."
Revenues from unconsolidated joint business for the quarter and year ended
December 31, 1998 reflect the financial results from the Rituxan collaboration
and commercialization with Genentech. This line item includes various revenues
associated with Rituxan commercialization such as IDEC's share of the pretax
copromotion profits, reimbursement of IDEC's sales force and sales
infrastructure costs, revenues from the sale of bulk Rituxan to Genentech and
royalty income on sales of Rituxan outside the United States. For the fourth
quarter of 1998, IDEC's share of the pretax copromotion profits amounted to
approximately 26% of U.S. net sales of Rituxan before reimbursements to IDEC for
certain manufacturing, sales and development expenses.
Under IDEC's agreement with Genentech, IDEC's share of the fourth quarter
pretax copromotion profits rose to a higher percentage upon achievement of an
annual fixed profit target by the Rituxan joint business arrangement during the
latter part of the third quarter of 1998. IDEC's share of copromotion profits
will return to the lower percentage beginning in January 1999 until such time
that the annual fixed profit target is achieved again by the Rituxan joint
business arrangement which is expected to occur in mid-1999.
IDEC is in the process of completing a modification to its collaborative
agreement with Genentech that will allow IDEC to terminate early its obligations
to supply Genentech with bulk Rituxan manufactured at IDEC's plant. Rather than
supplying bulk Rituxan to Genentech through November 1999, IDEC now anticipates
transferring all manufacturing responsibilities for bulk Rituxan to Genentech at
the end of the third quarter of 1999. Genentech is licensed to manufacture
Rituxan, has been manufacturing Rituxan in the U.S. and has sufficient capacity
to supply worldwide demand. When completed this change will result in decreased
bulk manufacturing reimbursements to IDEC and lower cost of goods for the
collaboration. IDEC will then
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use its manufacturing capacity for BLA-enabling lots/commercial supply of
IDEC-Y2B8, production of clinical material and some third-party contract
manufacturing.
As reported on January 21, 1999, the collaboration between IDEC and
Genentech achieved U.S. net sales of Rituxan totaling $48.8 million in the
fourth quarter of 1998, bringing total U.S. net sales to $152.1 million for the
year ended December 31, 1998. Early in the fourth quarter, IDEC and Genentech
completed the transition from drop-shipment of Rituxan directly to end users to
the more standard practice of distribution via drug wholesalers.
Operating costs and expenses increased to $22.7 million for the fourth
quarter of 1998 compared to $18.2 million for the fourth quarter of 1997. The
increased operating expenses are mainly the result of increased sales and
marketing expenses resulting from the commercial launch of Rituxan and contract
manufacturing expenses for components of IDEC-Y2B8.
Annual operating costs and expenses increased by $5.5 million, from $62.6
million in 1997 to $68.1 million in 1998. This increase was primarily due to the
expenses discussed above, plus increased personnel expenses, increased bulk
Rituxan manufacturing costs and higher clinical trial expenses offset by lower
technology acquisition expenses. Operating expenses in 1997 included a $3.0
million upfront licensing fee for the acquisition of technology rights related
to 9-aminocamptothecin; there was no commensurate technology acquisition in
1998. Over the next year, the company expects to see a higher level of
investment in research and development as its products move forward in the
development pipeline.
IDEC ended 1998 with $73.5 million in cash, cash equivalents and marketable
securities, an increase of $3.8 million from $69.7 million at the end of 1997.
The increase in cash, cash equivalents and marketable securities is due to cash
provided by operations and employee stock plans offset by repayment of debt
obligations and investments in capital equipment.
Based on the emerging product profile from recently completed Phase I/II
trials and the open label extension trial in rheumatoid arthritis, SmithKline
Beecham (SB) and IDEC Pharmaceuticals have reconsidered the development strategy
for IDEC-151. SB has elected to discontinue development of IDEC-151 in
rheumatoid arthritis at this time and instead will conduct a pilot clinical
study with IDEC-151 in psoriasis. SB and IDEC will continue their collaboration
within this new clinical focus.
IDEC Pharmaceuticals focuses on the commercialization and development of
targeted therapies for the treatment of cancer and autoimmune diseases. IDEC's
antibody products act chiefly through immune system mechanisms, exerting their
effect by binding to specific, readily targeted immune cells in the patient's
blood or lymphatic systems.
IDEC Pharmaceuticals' news releases are available at no charge through
Business Wire's News on Demand Plus. For a menu of IDEC's current press releases
and quarterly reports or to retrieve a specific release, call 888/239-2309. On
the Internet see http://www.businesswire.com/cnn/idph.htm and
http://www.shareholdernews.com/idph.
The statements made in this press release contain certain forward-looking
statements that involve a number of risks and uncertainties. Actual events or
results may differ from IDEC's expectations. In addition to the matters
described in this press release, achievement of product development milestone
events and future product sales, the timing, success, and cost of product
launches and clinical studies, and the level of manufacturing performance may
result in period to period fluctuations in IDEC's revenues and earnings. In
addition to these matters, the risk factors listed from time to time in IDEC's
SEC filings, including but not limited to its Annual Report on Form 10-K/A for
the year ended December 31, 1997, and Form 10-Q for the quarter ended September
30, 1998, may affect the actual results achieved by IDEC.
Formerly known as IDEC-C2B8, Rituxan (Rituximab) and IDEC Pharmaceuticals
are registered U.S. trademarks of the company. IDEC's headquarters is located at
11011 Torreyana Road, San Diego, CA 92121.
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IDEC PHARMACEUTICALS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
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1998 1997 1998 1997
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(UNAUDITED)
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Revenues:
Revenues from unconsolidated joint business....... $22,767 $5,056 $53,813 $ 9,266
Contract revenues................................. 4,986 4,057 14,846 11,840
License fees...................................... -- 17,000 18,300 23,500
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27,753 26,113 86,959 44,606
Operating costs and expenses:
Manufacturing costs............................... 8,617 8,400 19,602 18,875
Research and development.......................... 9,298 6,653 31,485 32,407
Selling, general and administrative............... 4,743 3,137 16,968 11,320
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22,658 18,190 68,055 62,602
Income (loss) from operations....................... 5,095 7,923 18,904 (17,996)
Interest income, net................................ 758 332 2,996 2,572
Income tax provision................................ (140) (114) (422) (114)
Net income (loss)................................... $ 5,713 $8,141 $21,478 $(15,538)
Earnings (loss) per share:
Basic............................................. $ 0.29 $ 0.43 $ 1.08 $ (0.83)
Diluted........................................... $ 0.24 $ 0.35 $ 0.92 $ (0.83)
Shares used in calculation of earnings (loss) per
share:
Basic............................................. 20,015 19,151 19,838 18,739
Diluted........................................... 23,411 23,485 23,377 18,739
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CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
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DECEMBER 31,
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1998 1997
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Current assets:
Cash, cash equivalents and securities
available-for-sale..................................... $ 73,502 $ 69,657
Inventories............................................... 5,346 4,134
Other current assets...................................... 22,179 5,402
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Total current assets.............................. 101,027 79,193
Property and equipment, net................................. 20,897 23,449
Other non-current assets.................................... 3,349 3,371
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Total assets...................................... $125,273 $106,013
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities......................................... $ 14,483 $ 19,432
Non-current liabilities..................................... 4,362 5,902
Stockholders' equity........................................ 106,428 80,679
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Total liabilities and stockholders' equity........ $125,273 $106,013
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EXHIBIT 99.2
COMPANY PRESS RELEASE
IDEC PHARMACEUTICALS ANNOUNCES OFFERING OF ZERO COUPON CONVERTIBLE NOTES
SAN DIEGO -- (BW HealthWire) -- Feb. 2, 1999 -- IDEC Pharmaceuticals
Corporation (Nasdaq: IDPH -- news) today announced that it intends, subject to
market and other conditions, to raise approximately $100 million (excluding
proceeds of the over-allotment option, if any) through an offering of 20-year
convertible zero coupon subordinated notes due 2019.
IDEC expects that the proceeds from the offering will be used for general
corporate purposes, including, but not limited to funding U.S. licensing
applications for IDEC-Y2B8 and, if approved, commercialization of IDEC-Y2B8 in
the United States; financing strategic acquisitions of products, product
candidates, technologies or other businesses; financing the expansion of our
facilities, including but not limited to design and engineering costs for
expansion of IDEC's manufacturing facility; potentially funding research and
development activities through off-balance sheet transactions; and funding
general working capital requirements.
This press release does not constitute an offer to sell or the solicitation
of an offer to buy the notes, nor shall there be any sale of the notes in any
state in which such offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of such states. Any
offers of the securities will be made only by means of a private offering
memorandum. The offered securities will not be registered under the Securities
Act of 1933, as amended, or applicable state securities laws, and may not be
offered or sold in the United States absent registration under the Securities
Act and applicable state securities laws or available exemptions from such
registration requirements.
IDEC Pharmaceuticals focuses on the commercialization and development of
targeted therapies for the treatment of cancer and autoimmune diseases. IDEC's
antibody products act chiefly through immune system mechanisms, exerting their
effect by binding to specific, readily targeted immune cells in the patient's
blood or lymphatic systems.
The statements made in this press release contain certain forward-looking
statements that involve a number of risks and uncertainties. Actual events or
results may differ from IDEC's expectations. For a more complete listing of
risks involved, see the risk factors listed from time to time in IDEC's SEC
filings, including but not limited to its Annual Report on Form 10-K/A for the
year ended December 31, 1997, and Form 10-Q for the quarter ended September 30,
1998, which may affect the actual results achieved by IDEC.
IDEC Pharmaceuticals' news releases are available at no charge through
Business Wire's News on Demand Plus. For a menu of IDEC's current news releases
and quarterly reports or to retrieve a specific release, call (888) 239-2309. On
the Internet see http://www.businesswire.com/cnn/idph.htm and
http://www.shareholdernews.com/idph.
Formerly known as IDEC-C2B8, Rituxan (Rituximab) and IDEC Pharmaceuticals
are registered U.S. trademarks of the company. IDEC's headquarters is located at
11011 Torreyana Road, San Diego, CA 92121.
