Dyax Corp. (DYAX)
Q2 2010 Earnings Conference Call
July 28, 2010 10:00 am ET
Nicole Jones - Director of IR & CC
Gustav Christensen - President & CEO
George Migausky - EVP & CFO
Ivana Magovcevic-Liebisch - EVP Corporate Development & General Counsel
Bill Pullman - EVP & CDO
Mark Monane - Needham & Company, LLC
Kim Lee - Global Hunter Securities, LLC
Phil Nadeau - Cowen & Co.
Jeff Elliott - UBS Securities LLC
Andrew Fein - Jefferies & Co.
Good morning and welcome, ladies and gentlemen, to Dyax Corp.’s Second Quarter 2010 Financial Earnings Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open up the call for a brief question-and-answer period at the end of the presentation.
Before turning the call over to Gustav Christensen, President and Chief Executive Officer of Dyax, the company will read their Safe Harbor statement.
This morning Dyax issued a press release concerning its second quarter 2010 financial results. Dyax would like to remind everyone that statements made today reflects current expectations, estimates, and projections about its products, programs, collaborations, strategies and financial performance on our forward-looking statements. These statements including those related to Dyax’s FDA-approved products, KALBITOR, are subject to risks and uncertainties that could cause actual events and results to differ materially.
Important information concerning these risks and uncertainties is contained in Dyax’s press release today and described or referred to in its most recent Form 10-K and other periodic filed with the SEC, and are also available on the company’s website at www.dyax.com.
I will now turn the call over to Gustav Christensen, our President and CEO. Gustav?
Thank you, Nicole. Good morning and thank you for joining Dyax’s second quarter earnings conference call. Joining me today are George Migausky, EVP and Chief Financial Officer; Ivana Magovcevic-Liebisch, EVP Corporate Development and General Counsel; and Bill Pullman, EVP and Chief Development Officer.
We are pleased with the positive progress made during our first full quarter of US commercial launch of KALBITOR. And we’ll turn to those updates and other company news shortly. However, before doing so, George will go through the financial highlights of the second quarter. George?
Thank you, Gustav, and good morning to all. This morning’s press release contains the full financial results for the second quarter. So let me begin by highlighting some of the noteworthy financial events of the quarter. This was the first full quarter of the US commercial launch of KALBITOR and cumulative net sales have now reached $3.2 million, which reflects a 55% increase over Q1. Operating costs in the first half of 2010 were reduced by 25% to $32.9 million despite adding all of the new KALBITOR commercial launch expenses.
In the second quarter of 2010, our net operating cash burn was reduced to $11.4 million and our cash balance at June 30, 2010, which includes a cash equivalents and investments totaled $94.4 million. As reported earlier today, for the second quarter of 2010, total revenues increased to $15.1 million as compared to $4.8 million in the same quarter last year. And for the six-month period, revenues increased to $35.2 million from $10.8 million in the prior year. The higher revenue in the second quarter was primarily due to two factors. First, net product sales of KALBITOR, which were 1.9 million and second, $9.8 million of revenue recognized from the sale of our rights to royalties and other payments related to the commercialization of Xyntha by Pfizer.
For the six month period, the 2010 increase was primarily due to two factors that are in addition to the two just mentioned for the quarter. First, $3.2 million of cumulative net product sales of KALBITOR, which became commercially available during the first quarter of 2010 and second, $13.8 million of revenue recognized in relation to the license agreement with Cubist Pharmaceuticals.
Now with respect to the progress of the progress of the KALBITOR launch, it’s important to note that in the first several quarters of the launch, there is no direct link between the net product sales reported by us, and the number of patients in KALBITOR Access or with drug placed the treatment centers including the number of patient treatments using KALBITOR. And this disconnect is due to the fact that while we are building a patient base, we recognized revenue with the time that we ship product to our exclusive distributor ABSG and have no direct visibility to actual KALBITOR usage. I’d like to reintegrate that because we are still in the early months of launch with the number of unknown launch related variables, we’re not in a position to provide KALBITOR sales guidance over the next several quarters.
Moving on to our operating expenses; operating expenses for the second quarter were $16.5 million as compared to $16.6 million in 2009, an amount that is basically flat and infact lower this year by a $100,000 despite adding all of the new KALBITOR commercial launch expenses. For the six month period, operating expenses were $32.9 million in 2010 as compared to $45.6 million in 2009 a decrease of 25%. Within operating costs, our research and development expenses in Q2 decreased by 30% to $8 million and for the six-month period they decreased by almost 50% to $15.8 million.