SOURCE: Facet Biotech Corporation

Facet Biotech Corporation

November 03, 2009 16:02 ET

Facet Biotech Reports Third Quarter 2009 Financial Results

REDWOOD CITY, CA--(Marketwire - November 3, 2009) - Facet Biotech Corporation (NASDAQ: FACT) today reported financial results for the third quarter ended September 30, 2009.

"We are executing on our development programs while remaining vigilant on cost containment and expense management," said Faheem Hasnain, president and chief executive officer of Facet Biotech. "We expect our lead program, daclizumab in multiple sclerosis, to enter a second registration-enabling study in the first half of 2010, triggering a $30 million milestone payment to us from Biogen Idec. Our four development-stage oncology programs continue to progress, and for our elotuzumab and TRU-016 oncology programs, we remain on track toward achieving important development milestones in the coming year. Our strong balance sheet enables us to support our programs through these and other future critical milestones to the end of 2012. We possess a focused and promising pipeline and have never been more confident in the future growth prospects for Facet Biotech."

Summary of Financial Results

The financial results for the quarter ended September 30, 2009 represent the third full quarter of operations for Facet as an independent company since its spin-off from PDL BioPharma, Inc. (PDL) on December 18, 2008. The results for the quarter and nine months ended September 30, 2008 are comprised of the results of PDL's former biotechnology operations, which were derived from PDL's historical consolidated financial statements, prior to the spin-off.

--  Total revenues for the third quarter of 2009 were $10.8 million
    compared to $5.0 million in the same period of 2008. This increase
    was primarily due to an additional $4.6 million in revenues recognized
    under the company's collaboration with Bristol-Myers Squibb Company
    (BMS). The increase in revenues under the BMS collaboration was driven
    by the timing of the effectiveness of the collaboration agreement in
    September 2008, resulting in a full quarter of revenue in the 2009
    period as compared to approximately one month of revenue in the 2008

--  Total costs and expenses for the third quarter of 2009 were $53.1
    million compared to $53.5 million reported for the comparable 2008
    period. In the third quarter of 2009, total costs and expenses included
    $21.9 million in research and development (R&D) expenses related to the
    company's collaboration with Trubion Pharmaceuticals, Inc., which was
    entered into in August 2009, and $2.5 million of general and
    administrative (G&A) expenses related to Biogen Idec Inc.'s unsolicited
    offers to acquire the outstanding shares of common stock of the
    company. These costs, for which there were no corresponding expenses in
    the third quarter of 2008, were offset by lower personnel and overhead
    expenses resulting from the company's restructuring activities in 2009.

    --  R&D expenses were $45.1 million for the third quarter of 2009
        compared to $41.2 million for the same period of 2008. The increase
        was due primarily to costs related to the Trubion collaboration
        that was entered into during the 2009 period, including the $20.0
        million upfront license payment made to Trubion in September 2009.
        These increases were offset by lower employee-related and overhead
        expenses in 2009 resulting from the impact of the sale of the
        manufacturing assets during the first quarter of 2008 and
        restructuring activities, as well as a decrease in volociximab
        development costs.

    --  G&A expenses in the third quarter of 2009 decreased to $9.5 million
        from $11.3 million for the prior year comparable period. This
        decrease was primarily due to reduced personnel-related expenses as
        a result of prior period restructuring activities and was partially
        offset by higher legal and financial expenses incurred in the third
        quarter of 2009 in relation to the unsolicited offers to acquire
        the company made by Biogen Idec.

    --  Restructuring charges in the third quarter of 2009 included a $1.7
        million credit resulting from a change in estimate that reduced
        lease-related restructuring liabilities.  The $1.0 million in
        restructuring charges in the comparable 2008 period were the result
        of employee-related restructuring activities in 2008.

--  Net loss for the third quarter of 2009 was $40.9 million, or $1.70 per
    basic and diluted share, compared to a net loss of $49.0 million, or
    $2.05 per basic and diluted share, for the third quarter of 2008.

--  Cash, cash equivalents, marketable securities and restricted cash
    totaled $331.9 million at September 30, 2009, a decrease from $403.4
    million at December 31, 2008. In the three and nine months ended
    September 30, 2009, cash utilization was $39.2 million and $71.5
    million, respectively. The cash utilization amounts include the $20.0
    million collaboration upfront license payment made to Trubion in
    September 2009.

Recent Developments

--  In August, Facet Biotech announced, with its partner Biogen Idec, the
    decision to initiate the DECIDE phase 3 study for daclizumab in
    multiple sclerosis (MS), which is the second and final required
    registration-enabling study. In late July, a futility analysis was
    performed with respect to the ongoing SELECT trial, the first
    registration-enabling study. An independent statistician analyzed
    clinical data from approximately 150 trial subjects that had completed
    at least six months of treatment. An independent safety monitoring
    committee reviewed the interim data and recommended to both companies
    the continuation of the SELECT study for both daclizumab arms. In
    addition, to determine whether the collaboration should trigger the
    DECIDE phase 3 trial and to inform the design of this phase 3 trial,
    certain prearranged employees of both companies, who are not involved
    in the management of the SELECT study, reviewed summary data tables
    prepared by the independent statistician from the interim analysis.
    Based on this review and data from prior studies, the prearranged
    employees recommended that the collaboration should initiate the
    DECIDE phase 3 study. SELECT remains an ongoing blinded study and the
    primary endpoint data readout is expected to occur in the second half
    of 2011.

--  In August, Facet Biotech announced a collaboration agreement with
    Trubion for the global development and commercialization of TRU-016, a
    CD37-directed small modular immunopharmaceutical protein therapeutic in
    phase 1 clinical trials for chronic lymphocytic leukemia. The
    collaboration agreement covers TRU-016 and all other CD37-directed
    protein therapeutics in all indications. Under the terms of the
    collaboration agreement, Facet Biotech paid Trubion an upfront license
    fee of $20.0 million and could pay up to $176.5 million in additional
    contingent payments upon the achievement of certain development,
    regulatory and sales-based milestones for each product under the
    collaboration agreement, the significant majority of which are for
    achievement of later-stage development, regulatory and sales-based
    milestones. In addition, in connection with the execution of the
    collaboration agreement, Facet Biotech purchased 2,243,649 shares of
    newly issued Trubion common stock for an aggregate purchase price of
    $10.0 million.

--  In September, Facet Biotech announced the election of Hoyoung Huh,
    M.D., Ph.D. as a member of its board of directors. Dr. Huh is currently
    president and chief executive officer of BiPar Sciences, Inc., which
    was acquired by sanofi-aventis in April 2009 and remains as a center of
    innovation within sanofi-aventis. Prior to BiPar, Dr. Huh served at
    Nektar Therapeutics, Inc., as a member of its board of directors, chief
    operating officer and head of the PEGylation Business Unit. Dr. Huh has
    led multiple partnerships with major pharmaceutical companies,
    including Bayer AG, Baxter International Inc., Bristol-Myers Squibb
    Co., Novartis AG, Pfizer, Inc and Roche Holding Ltd. He was a partner
    at McKinsey & Company where he served as a leader in the healthcare and
    biotechnology practice across U.S., Europe and Asia. He currently
    serves on the board of directors at BayBio, Epizyme, Inc., Interplast,
    Inc. and SciDose LLC. Dr. Huh received his M.D. degree from Cornell
    University, Ph.D. in Genetics/Cell Biology from Cornell University/
    Sloan-Kettering Institute, and A.B. in Biochemistry from Dartmouth

--  In September, Facet Biotech presented data for the daclizumab program
    at the European Committee for Treatment and Research in Multiple
    Sclerosis (ECTRIMS) meeting in Dusseldorf, Germany. An analysis of
    samples from a subset of patients who participated in the completed
    phase 2 CHOICE trial, which compared multiple sclerosis patients
    treated with daclizumab added to interferon-beta to those treated with
    interferon-beta alone, showed that patients treated with daclizumab
    experienced rapid expansion of immunoregulatory CD56bright NK cells in
    a dose-dependent and reversible manner. Further, the expansion of these
    cells correlated with a statistically significant reduction in new or
    enlarged gadolinium-enhancing lesions, with an 87 percent reduction
    (P=0.024) seen in patients treated with daclizumab plus interferon-beta
    when compared to patients treated with interferon-beta alone.

--  In September, Facet Biotech confirmed receipt of Biogen Idec's letter
    dated September 4, 2009 offering $14.50 per share for all of the
    outstanding shares of Facet Biotech common stock. Upon reviewing Biogen
    Idec's unsolicited proposal, Facet Biotech's board of directors, with
    the assistance of its financial and legal advisors, determined that the
    $14.50 per share proposal was inadequate and not in the best interests
    of Facet Biotech's stockholders. Accordingly, the board rejected Biogen
    Idec's proposal. Thereafter, Biogen Idec filed an unsolicited
    conditional tender offer to acquire all of the outstanding shares of
    common stock of Facet Biotech for $14.50 per share in cash.

        --  On October 1, Facet Biotech announced that its board of
            directors unanimously recommended that its stockholders reject
            the unsolicited conditional tender offer from Biogen Idec to
            acquire all of the outstanding shares of Facet Biotech for
            $14.50 per share in cash. The board, with the assistance of its
            financial and legal advisors, determined that the offer was
            inadequate and not in the best interests of Facet Biotech's
            stockholders. The company's response was included in a Schedule
            14D-9 filed with the Securities and Exchange Commission (SEC).

        --  On October 19, in response to Biogen Idec's extension of its
            unsolicited conditional tender offer of $14.50 per share in
            cash to December 16, 2009, Facet Biotech's board of directors
            recommended that stockholders continue to reject the tender
            offer and not tender their shares for $14.50 per share. As of
            5:00 p.m. Eastern Time on October 15, 2009, 28,336 shares of
            Facet Biotech common stock, which represents only 0.1% of the
            25,046,212 shares outstanding as of September 28, 2009, had
            been tendered.

Forward-looking Statements

This press release contains forward-looking statements, including regarding Facet Biotech's (i) expected initiation of a phase 3 trial of daclizumab in MS in the first half of 2010; (ii) potential receipt of a $30 million milestone payment from Biogen Idec, which would be triggered upon the enrollment of the first patient in a phase 3 trial of daclizumab in MS; and (iii) continued progress of Facet Biotech's development programs, including TRU-016 and elotuzumab, and achievement of development milestones.

Each of these forward-looking statements involves risks and uncertainties. Actual results may differ materially from those, express or implied, in these forward-looking statements. Many factors may cause differences between current expectations and actual results, including risks and uncertainties associated with Biogen Idec's tender offer. For example, the development of Facet Biotech's drug candidates could be adversely impacted by changes in Facet Biotech's development plans or timelines, including because of unexpected safety or efficacy data observed during clinical trials, enrollment rates in clinical trials, changes in expected competition and changes in regulatory support for the path towards registration. As a result, the phase 3 trial of daclizumab in MS may not be initiated by the first half of 2010 or at all, which would adversely impact the receipt of or delay the receipt of the $30 million milestone payment Facet Biotech would otherwise receive upon enrollment of the first patient into the phase 3 study. The results observed to date in clinical trials of Facet Biotech's drug candidates may not be predictive of results to be obtained in the additional evaluations and studies that would be necessary to demonstrate these drug candidates to be safe and effective as therapeutic agents. Other factors that may cause Facet Biotech's actual results to differ materially from those expressed or implied in the forward-looking statements in this press release are discussed in Facet Biotech's filings with the SEC, including the "Risk Factors" sections of the Company's periodic reports on Form 10-K and Form 10-Q filed with the SEC. Copies of Facet Biotech's filings with the SEC may be obtained at the "Investors" section of Facet Biotech's website at Facet Biotech expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Facet Biotech's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based for any reason, except as required by law, even as new information becomes available or other events occur in the future. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.

About Facet Biotech

Facet Biotech is a biotechnology company dedicated to advancing its pipeline of five clinical-stage products, leveraging its research and development capabilities to identify and develop new oncology drugs and applying its proprietary next-generation protein engineering technologies to potentially improve the clinical performance of protein therapeutics. Facet Biotech launched in December 2008 as a spin-off from PDL BioPharma, Inc.

NOTE: Facet Biotech and the Facet Biotech logo are considered trademarks of Facet Biotech Corporation.

                        FACET BIOTECH CORPORATION
                 (in thousands, except per share amounts)

                              Three Months Ended      Nine Months Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
  Collaboration             $    8,837  $    4,031  $   24,971  $    8,538
  Other                          2,011         925       6,027       3,075
                            ----------  ----------  ----------  ----------
    Total revenues              10,848       4,956      30,998      11,613
  Research and development
   (1)                          45,084      41,173      96,288     123,455
  General and
   administrative (1)            9,525      11,328      27,863      35,078
  Restructuring charges         (1,652)        990      19,418       9,441
  Asset impairment charges         185           -       1,028       3,784
  Gain on sale of assets             -           -           -     (49,671)
                            ----------  ----------  ----------  ----------
    Total costs and
     expenses                   53,142      53,491     144,597     122,087
                            ----------  ----------  ----------  ----------
    Operating loss             (42,294)    (48,535)   (113,599)   (110,474)
Interest and other income          678           8       2,803          13
Interest expense                  (415)       (427)     (1,256)     (1,293)
                            ----------  ----------  ----------  ----------
    Loss before income
     taxes                     (42,031)    (48,954)   (112,052)   (111,754)
Income tax expense
 (benefit)                      (1,116)         17      (1,116)         76
                            ----------  ----------  ----------  ----------
    Net loss                $  (40,915) $  (48,971) $ (110,936) $ (111,830)
                            ==========  ==========  ==========  ==========

 DILUTED SHARE (2)          $    (1.70) $    (2.05) $    (4.63) $    (4.68)
                            ==========  ==========  ==========  ==========

 BASIC AND DILUTED (2)          23,999      23,901      23,940      23,901
                            ==========  ==========  ==========  ==========

(1) Amounts include stock-
 based compensation as
  Research and development  $      551  $    1,233  $    4,672  $    4,258
  General and
   administrative                  616         134       2,531       2,359
                            ----------  ----------  ----------  ----------
     Total stock-based
      compensation          $    1,167  $    1,367  $    7,203  $    6,617
                            ==========  ==========  ==========  ==========

(2) For the three and nine months ended September 30, 2008, the
computation of net loss per basic and diluted share and the
weighted-average shares outstanding are based on 23.9 million shares that
were issued in connection with the spin-off on December 18, 2008.

                              (in thousands)

                                               September 30,  December 31,
                                                   2009           2008
                                               -------------  -------------
Cash, cash equivalents, marketable securities
 and restricted cash                           $     331,884  $     403,418
Total assets                                   $     451,137  $     538,021
Total stockholders' equity                     $     336,013  $     435,633

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