Nabi Biopharmaceuticals (NABI) filed Quarterly Report for the period ended 2009-09-26.
Nabi Biopharmaceuticals is a vertically integrated company committed to unlocking the power of the human immune system to help people with serious unmet medical needs. The company has a broad product portfolio and significant research capabilities focused on the development and commercialization of drugs that prevent and treat infectious and autoimmune diseases. Nabi Biopharmaceuticals has a market cap of $172.5 million; its shares were traded at around $3.4 with and P/S ratio of 1.9.
Highlight of Business Operations:
In 2006, we began to explore strategic initiatives to enhance shareholder value. In November 2006, we sold our PhosLo (calcium acetate) product and the product’s related assets to a U.S. subsidiary of Fresenius Medical Care, or Fresenius. Under the sale agreement, we received $65.0 million in cash at closing and received an additional $13.0 million of milestone payments as of September 26, 2009. We can also receive royalties and additional milestone payments up to $72.5 million. The royalties relate to sales of a new product formulation over a base amount for 10 years after the closing date. In June 2007, we sold certain assets related to our product Aloprim (allopurinol sodium for Injection) for $3.7 million. On December 4, 2007, we sold our Biologics SBU and certain corporate shared services assets to Biotest Pharmaceuticals Corporation, or Biotest, for $185.0 million. In November 2009, we completed the sale to GSK of all assets, including intellectual property and related rights, to our Staph program (including S.aureus and S.epidermidis) and received $21.5 million in cash at closing.
Effective January 1, 2009, we adopted new accounting guidance relating to our Convertible Senior Notes. The new accounting guidance clarifies that (1) convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are not considered conventional debt instruments and (2) issuers of such instruments should separately account for the liability and equity components of those instruments by allocating the proceeds from issuance of the instrument between the liability component and the embedded conversion option (i.e., the equity component). The new accounting guidance is effective for fiscal years beginning after December 15, 2008 and is required to be applied retrospectively to convertible debt instruments that are within the scope of this guidance and were outstanding during any period presented in the financial statements. We adopted the new guidance in the first quarter 2009. The cumulative effect of the adoption as of December 30, 2007 (the first day of our 2008 fiscal year) was a $25.4 million increase in capital in excess of par, a $17.4 million increase in accumulated deficit, a $7.3 million net increase in the convertible note balance and a $0.7 million net increase in other assets with no effect on our net consolidated cash and cash equivalents or our cash interest payments for the period. The effect of the adoption on the three- and nine-month periods ended September 26, 2009 was a $0.1 million and $0.4 million increase in interest expense, respectively.
Other income (expenses), net. We adopted new accounting guidelines for our Convertible Senior Notes in the first quarter of 2009, and retrospectively applied the new guidelines to 2008 and prior periods. The new accounting guidelines require that we apportion any gains and losses resulting from the repurchase of our Convertible Senior Notes between equity (for the conversion option) and current period income (loss) (for the liability). In the first nine months of 2008 we repurchased $38.6 million face value of our Convertible Senior Notes at a total discount of $3.5 million. Of this amount, $0.9 million was reflected as an increase in other expenses. In the first nine months of 2009, we repurchased $10.4 million face value of our Convertible Senior Notes at a total discount of $0.3 million with no impact to other expenses. Other income of $0.1 million for the first nine months of 2009 represents miscellaneous income for the period.
Income from Discontinued Operations (net of taxes). In the first nine months of 2008, we recognized income from discontinued operations of $2.5 million related to the 2006 sale of our PhosLo product, $2.2 million for the arbitration proceeding against Inhibitex, a net reduction in liabilities from discontinued operations of approximately $1.7 million, and provided an intra-period tax provision of approximately $2.5 million. We had no income from discontinued operations in 2009.
Our cash, cash equivalents and marketable securities at September 26, 2009 totaled $103.3 million compared to $130.3 million at December 27, 2008. This decline is primarily the result of our net cash used in operations along with the payments of approximately $10.1 million for the repurchase of our Convertible Senior Notes and approximately $3.5 million for the repurchases of shares of our common stock, offset partially by the release of $4.5 million of restricted cash related to the sale of our Biologics SBU to Biotest. At September 26, 2009, we had remaining restricted cash of $5.7 million that was held in escrow subject to indemnification claims by Biotest. This cash was released to us in November 2009 in connection with our settlement with Biotest (see Note 4 of the condensed consolidated financial statements for further discussion).
In 2007, our Board of Directors approved the repurchase of up to $65 million of our common stock in the open market or in privately negotiated transactions. In the first nine months of 2009, we acquired a total of 1,064,997 shares for a total cost of $3.1 million under the program. In addition, as purchases of treasury shares are accounted for on the trade date, the settlement of trades executed in the fourth quarter of 2008 which were settled in the first quarter of 2009 increased the cash used to purchase treasury shares in the first quarter by $0.4 million to $3.5 million as reported in the Condensed Consolidated Statement of Cash Flows. In 2005, we issued $112.4 million of Convertible Senior Notes through a private offering to qualified institutional buyers as defined under Rule 144A of the Securities Act of 1933, as amended, the Securities Act. Net cash proceeds from the offering totaled $108.7 million. In 2007 we repurchased $38.8 million of our Convertible Senior Notes and in 2008 we repurchased an additional $57.3 million of our Convertible Senior Notes. In 2009 we repurchased an additional $10.4 million of our Convertible Senior Notes and we paid $10.1 million for the notes. As of September 26, 2009, we have approximately $6.1 million face value of our Convertible Senior Notes outstanding. Interest on our Convertible Senior Notes is payable on each April 15 and October 15, beginning October 15, 2005. We can redeem our Convertible Senior Notes at 100% of their principal amount, plus accrued and unpaid interest, any time on or after April 18, 2010. Holders of our Convertible Senior Notes may require us to repurchase our Convertible Senior Notes for 100% of their principal amount, plus accrued and unpaid interest, on April 15, 2010, April 15, 2012, April 15, 2015 and April 15, 2020, or following the occurrence of a change in control as defined in the indenture agreement governing the Notes. We may continue to repurchase our Convertible Senior Notes in the open market or in privately negotiated transactions.
NABI is in the portfolios of Daniel Loeb of Third Point, LLC, George Soros of Soros Fund Management LLC.
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