TNOX Tanox (MM)

Xolair Royalty Revenue Totaled $7.3 Million, a 121 Percent Increase From Second Quarter of 2004 HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- Tanox, Inc. (NASDAQ:TNOX) today reported financial results for the second quarter ended June 30, 2005. Revenues for the second quarter of 2005 were $7.4 million, compared to $3.5 million for the second quarter of 2004 and $5.9 million for the first quarter of 2005. Net royalty revenue from sales of Xolair(R) (omalizumab) was $7.3 million in the second quarter of 2005, compared to $3.3 million in the second quarter of 2004 and $5.9 million in the first quarter of 2005 -- increases of 121 percent and 24 percent, respectively. Tanox reported a net loss of $5.4 million, or $0.12 per share, for the second quarter of 2005, compared to a net loss of $4.1 million, or $0.09 per share, for the second quarter of 2004 and a net loss of $20.5 million(1), or $0.46 per share, for the first quarter of 2005. The year-over-year net loss increase was due primarily to additional costs related to re-commissioning activities at the company's manufacturing facility in San Diego, Calif. and an increased level of clinical-trial activity. "The second quarter was the seventh consecutive quarter in which Xolair sales grew, which provides increasing royalty revenue for Tanox," said Nancy Chang, Ph.D., Tanox president and chief executive officer. "This sales growth reflects both increasing patient awareness and demand, and physician acceptance of this first-in-class biologic. We are also very pleased with the recent favorable opinion about Xolair from European health authorities, which is a key step in getting the drug approved in Europe." The Committee for Medicinal Products for Human Use (CHMP) gave a positive opinion on July 28, 2005 to Novartis Pharma AG regarding marketing authorization for Xolair for the treatment of severe persistent allergic asthma in adults and adolescents (12 years of age and above). The opinion could lead to approval of Xolair by the European Commission later this year, after which the drug could be launched in the first European countries. If approved, Xolair would be the first humanized antibody available in Europe for the treatment of asthma. In terms of expenses, research and development costs for the second quarter of 2005 were $12.0 million, compared to $6.5 million for the second quarter of 2004, and $11.7 million in the first quarter of 2005. R&D expenses increased for the second quarter of this year due primarily to costs related to manufacturing activities, an increased level of clinical-trial activities for TNX-355 and TNX-832, and increased spending for preclinical programs. General and administrative expenses were $1.8 million for the second quarter of 2005, compared to $1.8 million for the second quarter of 2004, and $1.9 million for the first quarter of 2005. As of June 30, 2005, Tanox had $173.6 million in cash and investments, compared to $202.5 million at Dec. 31, 2004 and $182.7 million at March 31, 2005. Cash and investments for all periods included restricted amounts of $5.0 million. (1) The net loss for the first quarter of 2005 included a $13.7 million expense for in-process research and development costs related to the company's acquisition of a tissue factor antagonist program from Sunol Molecular Corporation. Second Quarter Highlights Tanox accomplishments and highlights in the second quarter of 2005 included: * Completion of the integration of the tissue factor antagonist program into the company's clinical and research operations. The program was acquired in the first quarter of 2005 from Sunol Molecular Corporation. The lead product in the program, TNX-832, is in a Phase 1/2 clinical trial for the treatment of acute lung injury and acute respiratory distress syndrome. During the second quarter, Tanox initiated patient recruitment of the second cohort of the trial and held an investigators' meeting with participating study sites. * Initiated research activities examining the potential effects of TNX- 832 in cancer indications. * Continued re-commissioning activities at the company's San Diego manufacturing facility, with initial scale up of the Phase 3 production process for TNX-355 clinical material. * Filed a universal shelf registration statement with the Securities and Exchange Commission for the sale of up to $100 million of equity or debt securities in one or more offerings. Tanox has no immediate plans to offer or sell any of its securities under the registration filing. "During the second quarter, we continued to make progress toward achieving our major 2005 milestones," said Chang. "We remain on track to report top- line, 24-week results from the Phase 2 clinical trial of TNX-355 in the fourth quarter. Another key focus during the second quarter was preparing for an IND application for TNX-650, which we expect to submit by the end of the year." Financial Outlook The company's net cash expenditures for 2005 continue to be estimated at approximately $41 million. Conference Call Tanox will host a conference call for investors today at 10 a.m., EDT. To participate in the conference call, U.S. callers should dial 800-591-6923. International access is available by calling 617-614-4907. The pass code is 26464188. Live audio of the call will be webcast on the Internet. The webcast can be accessed from the Tanox Web site at http://www.tanox.com/ in the Investor Relations section. An audio replay of the webcast will be available beginning at 11 a.m., EDT, Aug. 3 through 11 a.m., EDT, Aug. 15, 2005. Access phone numbers for the replay are: 888-286-8010 (U.S.) and 617-801-6888 (international); conference pass code 21386139. About Tanox, Inc. Tanox is a biotechnology company specializing in the discovery and development of biotherapeutics based on monoclonal antibody technology. The company develops innovative therapeutic agents for the treatment of immune- mediated diseases, infectious disease, inflammation and cancer. Tanox's lead investigational therapy, TNX-355, is a humanized, anti-CD4 monoclonal antibody to treat HIV and AIDS. TNX-355 received Fast Track Status from the U.S. Food and Drug Administration in 2003 and is currently in Phase 2 clinical testing. Tanox's first-approved drug, Xolair(R) (omalizumab), is the first anti- immunoglobulin E (anti-IgE) antibody to be brought to market. Xolair was developed in collaboration with Genentech, Inc. and Novartis Pharma AG and was approved for marketing in the United States in 2003 for adult and adolescent patients with moderate-to-severe, confirmed allergic asthma. Tanox is based in Houston, Texas and maintains a manufacturing facility in San Diego, California. Additional corporate information is available at http://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; failure to receive marketing approval for Xolair in Europe; our ability to successfully recruit participants for human clinical trials; our ability to successfully manufacture products for initiation or continuation of human clinical trials; failure to achieve positive results in clinical trials; and the strength of our patent portfolio. 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: Forward-looking Statements and Business: Factors That May Affect Our Future Results; 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. TANOX, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share data) Summary of Operations (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Royalties, development agreements and license fees, net $7,378 $3,458 $13,306 $12,453 Operating expenses: Research and development 12,015 6,548 23,755 12,076 Acquired in-process research and development --- --- 13,680 --- General and administrative 1,822 1,814 3,755 3,511 Total operating expenses 13,837 8,362 41,190 15,587 Loss from operations (6,459) (4,904) (27,884) (3,134) Other income 1,042 780 2,005 1,600 Net loss $(5,417) $(4,124) $(25,879) $(1,534) Basic loss per share $(0.12) $(0.09) $(0.58) $(0.03) Diluted loss per share $(0.12) $(0.09) $(0.58) $(0.03) Shares used in computing loss per share: Basic and Diluted 44,060 44,004 44,457 44,005 Summary Balance Sheet Information June 30, 2005 December 31, 2004 (Unaudited) Assets: Cash, cash equivalents and investments* $173,645 $202,511 Property, plant and equipment (net) 30,809 25,506 Other assets 14,362 10,536 Total assets $218,816 $238,553 Liabilities and Stockholders Equity: Accounts payable and accrued liabilities $7,735 $9,355 Notes Payable - long term 5,000 5,000 Stockholders' equity 206,081 224,198 Total liabilities and stockholders' equity $218,816 $238,553 * Includes restricted cash and investments of $5,012 and $5,000 at June 30, 2005 and December 31, 2004, respectively. Contact: Steve Sievert 713.578.4211 http://www.newscom.com/cgi-bin/prnh/20050207/TNOXLOGO DATASOURCE: Tanox, Inc. CONTACT: Steve Sievert of Tanox, Inc., +1-713-578-4211, or Web site: http://www.tanox.com/

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