Pharmacyclics Reports Results for Six and Three Months Ended December 31, 2012

Pharmacyclics Reports Results for Six and Three Months Ended December 31, 2012

PR Newswire

SUNNYVALE, Calif., Feb. 14, 2013

SUNNYVALE, Calif., Feb. 14, 2013 /PRNewswire/ -- Pharmacyclics, Inc. (the
"Company") (Nasdaq: PCYC) today reported financial results and recent
developments for its six and three months ended December 31, 2012. As
previously announced, the Company changed its fiscal year end from June 30 to
December 31, effective December 31, 2012. As a result, the six month period
ended December 31, 2012 represents a transition period, with the next fiscal
year covering the period from January 1, 2013 through December 31, 2013.

Financial Results for the Six and Three Months Ended December 31, 2012

The GAAP (Generally Accepted Accounting Principles) net income for the six
months ended December 31, 2012 was $117.5 million, or $1.69 and $1.58 per
basic and diluted earnings per share, respectively, compared with GAAP net
income of $41.7 million, or $0.61 and $0.58 per basic and diluted earnings per
share, respectively, for the six months ended December 31, 2011.

The GAAP net income for the quarter ended December 31, 2012 was $41.9 million,
or $0.60 and $0.56 per basic and diluted earnings per share, respectively,
compared to GAAP net income of $56.3 million or $0.82 and $0.78 per basic and
diluted earnings per share, respectively, for the three months ended December
31, 2011.

The non-GAAP net income reported for the six months ended December 31, 2012
was $125.0 million, or $1.79 and $1.68 income per basic and diluted earnings
per share, respectively, compared with non-GAAP net income of $46.3 million,
or $0.68 and $0.65 income per basic and diluted earnings per share,
respectively for the six months ended December 31, 2011. See "Use of Non-GAAP
Financial Measures" below for a description of our Non-GAAP measures.
Reconciliation between certain GAAP and non-GAAP measures is provided at the
end of this press release.

The non-GAAP net income reported for the quarter ended December 31, 2012 was
$46.2 million, or $0.66 and $0.62 income per basic and diluted earnings per
share, respectively, compared to non-GAAP net income of $58.6 million, or
$0.85 and $0.82 income per basic and diluted earnings per share, respectively
for the quarter ended December 31, 2011.

Revenue for the six months ended December 31, 2012 was $160.7 million compared
to $77.9 million for the six months ended December 31, 2011. Revenue for the
quarter ended December 31, 2012 was $58.0 million compared to $77.9 million
for the quarter ended December 31, 2011. Revenue for the quarter ended
December 31, 2012 consisted primarily of $50.0 million of milestone revenue
due to the Company's achievement of one clinical milestone in connection with
the Company's collaboration and license agreement (the "Agreement") with
Janssen Biotech, Inc. and its affiliates ("Janssen") and $5.0 million of
license revenue related to the Company's license agreement with Novo Nordisk
A/S under which Novo Nordisk A/S acquired the exclusive worldwide rights for
the Company's small molecule Factor VIIa inhibitor, PCI-27483, in a restricted
disease indication outside of oncology.

To date, the Company has received three milestone payments from Janssen of $50
million each, totaling $150 million, under the Agreement. The Company may
receive up to an additional $675 million in development and regulatory
milestone payments, however, clinical development entails risks and the
Company has no assurance as to whether or when the milestone targets might be
achieved.

The Agreement with Janssen includes a cost sharing arrangement for certain
development activities. In general Janssen is responsible for approximately
60% of development costs and the Company is responsible for 40% of development
costs. The Agreement with Janssen also provides for a $50 million annual cap
of the Company's share of development costs and pre-tax commercialization
losses for each calendar year. Under the Agreement with Janssen, total amounts
in excess of the annual cap ("Excess Amounts") plus interest may not exceed
$225 million.

The Company has recognized the Excess Amounts as a reduction to operating
expenses in the current year as the Company's repayment of the Excess Amounts
to Janssen is contingent and would become payable only after the third
profitable calendar quarter for the product under the collaboration. Further,
the Excess Amounts shall be reimbursable only from the Company's share of
future full calendar quarter pre-tax profits (if any) after the third
profitable calendar quarter for the product under the collaboration.

For the calendar year ended December 31, 2012, the Company's total share of
collaboration expenses under the Agreement was $68.1 million. As of December
31, 2012, total Excess Amounts totaled $18.1 million, of which during the
quarter ended December 31, 2012, $17.3 million was recorded as a reduction to
research and development expense and $0.8 million was recorded as a reduction
to general and administrative expense.

GAAP operating expenses were $40.6 million for the six months ended December
31, 2012, compared to $30.6 million for the six months ended December 31,
2011. Included in operating expenses for the six months ended December 31,
2012 is the $18.1 million reduction to operating expenses for Excess Amounts.

GAAP operating expenses were $16.7 million for the quarter ended December 31,
2012, compared to $16.0 million for the quarter ended December 31, 2011 and
$23.9 million for the quarter ended September 30, 2012. Included in operating
expenses for the quarter ended December 31, 2012 is the $18.1 million
reduction to operating expenses for the Excess Amounts.

At December 31, 2012, the Company had cash, cash equivalents and marketable
securities of $317.1 million, compared with $203.6 million at June 30, 2012.
In addition, as of December 31, 2012, the Company had $26.6 million receivable
from Janssen, of which $8.5 million was related to cost sharing and $18.1
million was related to the Excess Amounts, which are due to be received during
our quarter ending March 31, 2013. At June 30, 2012, the Company had $5.8
million due from Janssen related to cost sharing. At September 30, 2012, the
Company had cash, cash equivalents and marketable securities of $286.1
million.

The Company expects to end calendar year 2013 with cash, cash equivalents and
marketable securities of more than $225 million.

"Ibrutinib has demonstrated great clinical progress during this past year.
Today we have a very solid development program in place with 5 Phase III
trials initiated and several more trials to be started this year. We were
honored to announce this past Tuesday that ibrutinib received Breakthrough
Designation in two B-cell malignancies. We look forward to working with the
FDA to bring this therapy to market in a timely manner," said Bob Duggan, CEO
and Chairman of the Board. "Looking ahead, our goals for this year are star
high as we are continuing to unfold our clinical program. With our partner
Janssen, we are committed to a shared vision of patient friendly, body
harmonious solutions intended to improve the quality of life, increase
duration of life and resolve serious medical health care needs for patients."

Recent Developments & Highlights

Breakthrough Therapy Designation

The Breakthrough Therapy Designation is intended to expedite the development
and review of a potential new drug for serious or life-threatening diseases
where preliminary clinical evidence indicates that the drug may demonstrate
substantial improvement over existing therapies on one or more clinically
significant endpoints, such as substantial treatment effects observed early in
clinical development. The designation of a drug as a Breakthrough Therapy was
enacted as part of the 2012 Food and Drug Administration Safety and Innovation
Act.

Pharmacyclics, together with Janssen, is working with the FDA to determine the
implications of this Breakthrough Therapy Designation to the ongoing and
planned development and the filing requirements for the use of ibrutinib in
patients with mantle cell lymphoma (MCL) and in patients with Waldenstrom's
macroglobulinemia (WM). The Company expects to finalize the MCL filing prior
to year end and will provide guidance on the WM filing after further
discussions with the FDA. Pharmacyclics will provide regulatory updates as
further information on implementing the requirements with respect to
Breakthrough Therapies are developed by the Secretary of Health and Human
Services.

ASH 2012

Pharmacyclics had 9 oral and 9 poster presentations at this year's American
Society of Hematology (ASH) Annual Meeting providing an update on the broad
development program of ibrutinib.  Among the data presented at ASH were
updates on the safety and efficacy of ibrutinib in the most mature clinical
programs of chronic lymphocytic leukemia (CLL) and MCL. Two of the CLL oral
presentations were acknowledged as 'Best of ASH' during the event.
Additionally, investigators presented data in diffuse large b-cell lymphoma
(DLBCL), follicular lymphoma (FL), and multiple myeloma (MM).  Most of the
oral presentations can be found on the Company's website. 

Phase II/III clinical trials initiated with ibrutinib in the collaboration:

  o Phase III study of ibrutinib versus ofatumumab in patients with relapsed
    or refractory chronic lymphocytic leukemia / small lymphocytic lymphoma
    (CLL/SLL), RESONATE™. This trial is a randomized, multi-center, open-label
    Phase III trial of ibrutinib as a monotherapy. The primary endpoint of the
    study is to demonstrate a clinically significant improvement in
    progression-free survival when compared to ofatumumab. This global study
    is open and Pharmacyclics plans to enroll 350 patients worldwide. The
    Company anticipates having this study enrolled prior to the fourth quarter
    of 2013.
  o Phase III study of ibrutinib versus chlorambucil in frontline newly
    diagnosed elderly CLL/SLL patients, RESONATE™ -2.  This trial is a
    randomized, multicenter, open-label study of ibrutinib as a monotherapy
    versus chlorambucil in patients 65 years or older with treatment naïve
    CLL/SLL. The study design was granted a Special Protocol Assessment (SPA),
    designed to demonstrate superiority of ibrutinib with the primary endpoint
    of progression-free survival when compared to chlorambucil. This global
    study is open and Pharmacyclics plans to enroll 272 patients worldwide.
    The Company anticipates enrollment for this study will take approximately
    18 months to complete. 
  o Phase III study of ibrutinib in combination with bendamustine and
    rituximab in patients with relapsed or refractory CLL/SLL, HELIOS
    (CLL3001). This trial is a randomized, multi-center, double blinded,
    placebo controlled trial of ibrutinib in combination with bendamustine and
    rituximab in relapsed or refractory CLL/SLL patients who received at least
    one line of prior systemic therapy. The primary endpoint of the study is
    to demonstrate a clinically significant improvement in progression-free
    survival when compared to bendamustine and rituximab. This global study,
    conducted by Janssen, is open and Janssen plans to enroll 580 patients
    worldwide.
  o Phase II study, RESONATE™ -17p, which is a single-arm, open-label,
    multi-center trial using ibrutinib as a monotherapy in patients who have
    deletion 17p and who did not respond to or relapsed after at least one
    prior treatment with chemo immunotherapy (a high unmet need population).
    The primary endpoint of the study will be overall response rate. This
    global study is open and Pharmacyclics plans to enroll 111 patients
    worldwide. The Company anticipates enrollment for this study will take
    approximately 12 months to complete.
  o Phase III study of ibrutinib versus temsirolimus in relapsed or
    refractory  MCL patients, RAY (MCL3001). This trial is a randomized,
    multi-center, open-label trial of ibrutinib as a mono-therapy versus
    temsirolimus in relapsed or refractory MCL patients who received at least
    one prior rituximab-containing chemotherapy regimen. The primary endpoint
    of the study is progression free survival when compared to temsirolimus.
    This global study, conducted by Janssen outside the US, is open and
    Janssen plans to enroll 280 patients.
  o Phase III study of ibrutinib in combination with bendamustine and
    rituximab in patients with newly diagnosed MCL, SHINE (MCL3002). This
    trial is a randomized, multi-center, double-blinded, placebo-controlled
    trial of ibrutinib plus bendamustine and rituximab versus placebo plus
    bendamustine and rituximab in subjects with newly diagnosed MCL. The
    primary endpoint of the study is progression free survival when compared
    to bendamustine and rituximab. Janssen plans to enroll 520 patients in
    this study.
  o Phase II study of ibrutinib in patients with mantle cell lymphoma who
    progress after bortezomib therapy, SPARK (MCL2001). This is a single-arm,
    multi-center trial of ibrutinib as a monotherapy in relapsed or refractory
    MCL patients who received at least one prior rituximab-containing
    chemotherapy regimen and who progressed after bortezomib therapy. The
    primary endpoint of the study is overall response rate. This global study,
    conducted by Janssen, is open and Janssen plans to enroll 110 patients
    worldwide.
  o Phase II study of ibrutinib in patients with mantle cell lymphoma who
    progress after bortezomib therapy, SPARK (MCL2001). This is a single-arm,
    multi-center trial of ibrutinib as a monotherapy in relapsed or refractory
    MCL patients who received at least one prior rituximab-containing
    chemotherapy regimen and who progressed after bortezomib therapy. The
    primary endpoint of the study is overall response rate. This global study,
    conducted by Janssen, is open and Janssen plans to enroll 110 patients
    worldwide.
  o Phase Ib/II dose escalating study of ibrutinib in combination with R-CHOP
    in patients with newly diagnosed CD20 positive non-Hodgkin's lymphoma. The
    purpose of this study is to identify a safe and tolerable dose of
    ibrutinib in combination with R-CHOP, once a safe dose is established the
    study will expand and report responses of this combination in patients
    with newly diagnosed DLBCL. This global, multi-center study, conducted by
    Janssen, is open and Janssen plans to enroll 33 patients.
  o Phase II study of ibrutinib in subjects with relapsed or refractory
    multiple myeloma (MM): This is a Phase II, multi-center, open-label trial
    designed trial to assess the safety and efficacy of ibrutinib single agent
    and in combination with dexamethasone in subjects with relapsed or
    relapsed MM. This study is conducted by Pharmacyclics and is currently
    exploring ibrutinib administration at 560 mg in combination with
    dexamethasone. Two further cohorts are planned to be explored; 840 mg with
    dexamethasone and 840 mg as a single agent. The Company anticipates an
    update on this study will be provided by year end 2013.
  o Phase II open-label, multicenter, single-arm study of monotherapy
    ibrutinib in subjects with relapsed or refractory follicular lymphoma. The
    primary endpoint of this study is objective response rate. Janssen plans
    to enroll 110 patients in this study.

PCYC has received Orphan Drug and Fast Track designation for ibrutinib
treatment of chronic lymphocytic leukemia last year. The FDA has also granted
Orphan Drug and Fast Track designation most recently to ibrutinib for the
treatment of mantle cell lymphoma.  A US orphan drug designation provides the
drug developer with several benefits and incentives related to the orphan
drug, including a 7-year period of U.S. marketing exclusivity if the drug is
the first of its type approved for the specified indication. Fast track is a
process designed to facilitate the development, and expedite the review of
drugs to treat serious diseases and fill an unmet medical need. The purpose is
to get important new drugs to the patient earlier.

During the first half of 2013 the Company will be having discussions with
regulatory authorities regarding future clinical development plans for
ibrutinib's use in patients with DLBCL. The Company expects to be able to
provide further updates in the third quarter of 2013.

Conference Call and further Corporate Updates

The Company will hold a conference call today at 4:30 p.m. EST. To participate
in the conference call, please dial 1-877-407-0778 for domestic callers and
1-201-689-8565 for international callers. To access the live audio broadcast
or the subsequent archived recording, log on to
http://ir.pharmacyclics.com/events.cfm. The archived version of the webcast
will be available for 30 days on the Investor Relations section of the
company's Web site at http://www.pharmacyclics.com.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including operating
expenses and other expenses adjusted to exclude certain non-cash expenses.
These measures are not in accordance with, or an alternative to generally
accepted accounting principles, or GAAP, and may be different from non-GAAP
financial measures used by other companies. The items included in GAAP
presentations but excluded for purposes of determining non-GAAP financial
measures for the periods presented in this press release are employee related
non-cash expenses. The Company believes the presentation of non-GAAP financial
measures provides useful information to management and investors regarding
various financial and business trends relating to our financial condition and
results of operations. When GAAP financial measures are viewed in conjunction
with non-GAAP financial measures, investors are provided with a more
meaningful understanding of our ongoing operating performance. In addition,
these non-GAAP financial measures are among those indicators the Company uses
as a basis for evaluating operational performance, allocating resources and
planning and forecasting future periods. Non-GAAP financial measures are not
intended to be considered in isolation or as a substitute for GAAP financial
measures. To the extent this release contains historical non-GAAP financial
measures, the Company has also provided corresponding GAAP financial measures
for comparative purposes. Reconciliation between certain GAAP and non-GAAP
measures is provided below.

About Pharmacyclics

Pharmacyclics^® is a clinical-stage biopharmaceutical company focused on
developing and commercializing innovative small-molecule drugs for the
treatment of cancer and immune mediated diseases. Our mission and goal is to
build a viable biopharmaceutical company that designs, develops and
commercializes novel therapies intended to improve quality of life, increase
duration of life and resolve serious unmet medial healthcare needs; and to
identify promising product candidates based on scientific development and
administrational expertise, develop our products in a rapid, cost-efficient
manner and pursue commercialization and/or development partners when and where
appropriate.

Presently, Pharmacyclics has three product candidates in clinical development
and several research molecules in lead optimization. We are committed to high
standards of ethics, scientific rigor, and operational efficiency as we move
each of these programs to viable commercialization.

The Company is headquartered in Sunnyvale, California and is listed on NASDAQ
under the symbol PCYC. To learn more about how Pharmacyclics advances science
to improve human healthcare visit us at http://www.pharmacyclics.com.  

NOTE: This announcement may contain forward-looking statements made in
reliance upon the safe harbor provisions of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including statements, among others, relating to our future capital
requirements and the sufficiency of our current assets to meet these
requirements, our future results of operations, our expectations for and
timing of ongoing or future clinical trials and regulatory approvals for any
of our product candidates, and our plans, objectives, expectations and
intentions. Because these statements apply to future events, they are subject
to risks and uncertainties. When used in this announcement, the words
"anticipate", "believe", "estimate", "expect", "expectation", "goal",
"should", "would", "project", "plan", "predict", "intend" and similar
expressions are intended to identify such forward-looking statements. These
forward-looking statements are based on information currently available to us
and are subject to a number of risks, uncertainties and other factors that
could cause our actual results, performance or achievements to differ
materially from those projected in, or implied by, these forward-looking
statements. Factors that may cause such a difference include, without
limitation, our need for substantial additional financing and the availability
and terms of any such financing, the safety and/or efficacy results of
clinical trials of our product candidates, our failure to obtain regulatory
approvals or comply with ongoing governmental regulation, our ability to
commercialize, manufacture and achieve market acceptance of any of our product
candidates, for which we rely heavily on collaboration with third parties, and
our ability to protect and enforce our intellectual property rights and to
operate without infringing upon the proprietary rights of third parties.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, performance or
achievements and no assurance can be given that the actual results will be
consistent with these forward-looking statements. For more information about
the risks and uncertainties that may affect our results, please see the Risk
Factors section of our filings with the Securities and Exchange Commission,
including our annual report on Form 10-K and quarterly reports on Form 10-Q.
We do not intend to update any of the forward-looking statements after the
date of this announcement to conform these statements to actual results, to
changes in management's expectations or otherwise, except as may be required
by law.

Contact:

Joshua T. Brumm
Executive Vice President, Finance
Phone: 408-215-3311

Ramses Erdtmann
Vice President of Investor Relations
Phone: 408-215-3325

Pharmacyclics, Inc.
Condensed Consolidated Balance Sheets
(unaudited; in thousands)

 

                                 December 31,             June 30, 
                                 2012                     2012
Assets
Cash, cash equivalents and       $                        $              
marketable securities ^1          317,114                  203,607
Other current assets ^2          29,378                   9,788
       Total current assets      346,492                  213,395
Property and equipment, net      6,403                    3,842
Other assets                     2,234                    1,883
       Total assets              $                        $              
                                  355,129                  219,120
Liabilities and Stockholders'
Equity
Deferred revenue - current       $                        $                  
portion                             8,139                  8,054
Other current liabilities        21,118                   10,932
       Total current liabilities 29,257                   18,986
Deferred revenue - non-current   62,562                   67,324
portion
Deferred rent                    784                      687
       Total liabilities         92,603                   86,997
Stockholders' equity             262,526                  132,123
       Total liabilities and     $                        $              
stockholders' equity              355,129                  219,120
^1Marketable securities          $                        $                  
                                    9,681                  5,711
^2As of December 31, 2012 and June 30, 2012, Other current assets includes
$26.6 million and $5.8 million, respectively, due to the Company from Janssen
under the collaboration and license agreement.


Pharmacyclics, Inc.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)

                        Three Months Ended                 Six Months Ended
                        Dec. 31,     Sep. 30,   Dec. 31,   Dec. 31,   Dec. 31,
                        2012         2012       2011       2012       2011
Revenue:
  License and milestone $ 55,000     $ 100,000  $ 77,605   $ 155,000  $  
revenue                                                               77,605
  Collaboration         2,963        2,695      298        5,658      335
services revenue
     Total revenue      57,963       102,695    77,903     160,658    77,940
Operating expenses*:
  Research and          27,567       19,072     12,076     46,639     23,324
Development
  Less: Excess amounts
related to Research and (17,306)     -          -          (17,306)   -
Development
     Research and       10,261       19,072     12,076     29,333     23,324
Development, net
  General and           7,225        4,868      3,944      12,093     7,294
Administrative
  Less: Excess amounts
related to General and  (819)        -          -          (819)      -
Administrative
     General and        6,406        4,868      3,944      11,274     7,294
Administrative, net
     Total operating    16,667       23,940     16,020     40,607     30,618
expenses
Income from operations  41,296       78,755     61,883     120,051    47,322
Interest and other      77           52         21         129        44
income, net
Income before income    41,373       78,807     61,904     120,180    47,366
taxes
Income tax benefit      554          (3,201)    (5,651)    (2,647)    (5,651)
(provision)
Net income              $ 41,927     $          $ 56,253   $ 117,533  $  
                                     75,606                           41,715
Net income per share:
    Basic               $      0.60  $          $          $          $      
                                      1.09       0.82       1.69       0.61
    Diluted             $      0.56  $          $          $          $      
                                      1.02       0.78       1.58       0.58
Weighted average shares
used to compute
net income per share:
    Basic               69,839       69,512     68,658     69,676     68,491
    Diluted             74,399       74,456     71,725     74,408     71,312
* Includes share-based
compensation as
follows:
Research and            $   2,767    $          $   1,701  $          $    
development                           2,590                 5,357     3,239
General and             1,503        576        675        2,079      1,301
administrative
                        $   4,270    $          $   2,376  $          $    
                                      3,166                 7,436     4,540

Reconciliation of Selected GAAP Measures to Non-GAAP Measures ^(1)
(unaudited; in thousands, except per share data)

                       Three Months Ended               Six Months Ended
                       Dec. 31,   Sep. 30,   Dec. 31,   Dec. 31,     Dec. 31,
                       2012       2012       2011       2012         2011
GAAP net income        $          $          $          $            $      
                       41,927     75,606     56,253      117,533     41,715
Adjustments:
    Research and
Development            2,767      2,590      1,701      5,357        3,239
share-based
compensation (2)
    General and
Administrative         1,503      576        675        2,079        1,301
share-based
compensation (2)
                       4,270      3,166      2,376      7,436        4,540
Non-GAAP net income    $          $          $          $            $      
                       46,197     78,772     58,629      124,969     46,255
GAAP net income per    $          $          $          $            $        
share - basic            0.60       1.09       0.82     1.69           0.61
    Share-based        0.06       0.04       0.03       0.10         0.07
compensation expense
Non-GAAP net income    $          $          $          $            $        
per share - basic        0.66       1.13       0.85     1.79           0.68
GAAP net income per    $          $          $          $            0.58
share - diluted          0.56       1.02       0.78     1.58
    Share-based        0.06       0.04       0.04       0.10         0.07
compensation expense
Non-GAAP net income    $          $          $          $            $        
per share - diluted      0.62       1.06       0.82     1.68           0.65

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are
not meant to be considered in isolation or as a substitute for comparable GAAP
measures and should be read only in conjunction with our financial statements
prepared in accordance with GAAP.
(2) All share-based compensation was excluded for the non-GAAP analysis.

SOURCE Pharmacyclics, Inc.

Website: http://www.pharmacyclics.com