Dyax Corp. Reports Operating Results (10-Q)
Dyax Corp. has a market cap of $228.6 million; its shares were traded at around $2.4 with and P/S ratio of 10.6. Dyax Corp. had an annual average earning growth of 0.6% over the past 5 years.DYAX is in the portfolios of Chuck Royce of Royce& Associates, PRIMECAP Management, Louis Moore Bacon of Moore Capital Management, LP.
Highlight of Business Operations:In June 2010, we entered into a strategic partnership agreement with Sigma-Tau to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, the Middle East and Russia. We retained our rights to ecallantide in all other territories. Under the terms of the agreement, Sigma-Tau made a $2.5 million upfront payment to us and also purchased 636,132 shares of our common stock at a price of $3.93 per share, which represented a 50% premium over the 20-day average closing price through June 17, 2010, for an aggregate purchase price of $2.5 million. We will also be eligible to receive over $100 million in development and sales milestones related to ecallantide and royalties equal to 41% of net sales of product. Sigma-Tau will pay the costs associated with regulatory approval and commercialization in the licensed territories. In addition, we and Sigma-Tau will share equally the costs for all development activities for future indications developed in partnership with Sigma-Tau.
Development and License Fees. We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators. This revenue fluctuates from quarter-to-quarter due to the timing of the clinical activities of our collaborators and licensees. This revenue was $4.3 million in the 2010 Quarter and $4.5 million in the 2009 Quarter. The 2010 decrease was due to $1.1 million of revenue recognized in the 2009 Quarter associated with the Cubist license, for which there was no revenue in the 2010 Quarter. This decrease was partially offset by $498,000 in revenue recognized under our agreement with Sigma-Tau which was executed in June 2010.
Development and License Fees. We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators. This revenue fluctuates from period-to-period due to the timing of the clinical activities of our collaborators and licensees. This revenue was $36.3 million in the 2010 Period and $15.3 million in the 2009 Period. The 2010 increase was due to $9.8 million in revenue recognized under the sale of rights to royalties and other payments related to Xyntha, a product developed by one of our licensees under the LFRP and $13.8 million of previously deferred revenue associated with the Cubist license that was fully recognized during the 2010 Period based upon Cubist s announcement to end its ecallantide development program. During the 2009 Period, $3.2 million of revenue was recognized associated with the Cubist license.
Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of the sales and marketing costs of commercializing KALBITOR in 2010, costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees and the reporting requirements of a public company. Selling, general and administrative expenses for the 2010 and 2009 Periods were $24.6 million and $18.9 million, respectively. Costs increased $7.7 million during the 2010 Period due to additional infrastructure to support the commercialization of KALBITOR, including the expansion of sales and marketing personnel. This includes increases of $5.1 million in internal sales and marketing expenses and $2.1 million in external sales and marketing expenses. These increases are offset by a $1.1 million charge for share-based compensation expense for amendments to the exercise and vesting schedules of certain options in the 2009 Period.
The principal use of cash in our operations was to fund our net loss, which was $15.6 million during the nine months ended September 30, 2010. Of this net loss, certain costs were non-cash charges, such as depreciation and amortization costs of $1.2 million and stock-based compensation expense of $2.9 million. In addition to non-cash charges, we also had a net change in other operating assets and liabilities of $14.0 million, including a decrease in accounts payable and accrued expenses of $4.3 million, a decrease in accounts receivable of $937,000, and a decrease in deferred revenue of $9.4 million. The change in deferred revenue is primarily due to the recognition of $13.8 million of revenue associated with Cubist s announced termination of its ecallantide development program.
For 2009, our net loss was $51.5 million, of which certain costs were non-cash charges, such as depreciation and amortization costs of $2.3 million, interest expense of $1.3 million, impairment of fixed assets totaling $1.0 million, and stock-based compensation expense of $4.4 million. In addition to non-cash charges, we also had a net change in other operating assets and liabilities of $2.3 million, including a decrease in accounts payable and accrued expenses of $4.8 million, offset by a decrease in accounts receivable of $3.6 million.
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