MGI Pharma reports $19.4 million second quarter net loss

By Jennifer Lanning Drey

Eugene, Ore., July 19 - MGI Pharma, Inc. reported a $19.4 million GAAP net loss, or $0.25 per diluted share, on revenue of $87.2 million for the second quarter, according to a company news release.

The company reported GAAP net income of $12.7 million, or $0.17 per diluted share, on revenue of $67.2 million for the same period in 2005, according to the release.

MGI Pharma had $91.1 million in cash and marketable debt securities on June 30.

In the second quarter, Aloxi (palonosetron hydrochloride) gained additional market share over competing products in the chemotherapy induced nausea and vomiting (CINV) market and demonstrated 11% year-over-year growth, said Lonnie Moulder, president and chief executive officer of MGI Pharma, during a company conference call on Wednesday.

The growth was the result of expanded promotional efforts in hospitals and increased market penetration in clinics, he said.

"This is clearly a key brand franchise for MGI Pharma that has enabled us to build our business and expand our pipeline to support future growth," he said.

However, MGI Pharma now expects a generic first-generation 5-HT(3) receptor antagonist that will compete with Aloxi in the CINV market to be introduced earlier in the fourth quarter than previously expected.

As a result, the company believes a disruption in CINV market reimbursement dynamics could also begin in the fourth quarter, Moulder said.

"Despite several moving pieces, we believe this disruption will be transient and will now normalize earlier in 2007 than originally expected," he said.

"Aloxi is a differentiated product with a superior product profile and ultimately, we believe clinical benefits will drive decision making in selecting a 5-HT(3) receptor antagonist," Moulder also said.

The company expects sales of Aloxi to remain strong through the third quarter, and then possibly drop in the clinic market segment in the fourth quarter, said Bill Spengler, chief financial officer of MGI Pharma, during the call.

"We have less visibility into the fourth quarter potential due to the anticipated changes in the market environment," he said.

MGI Pharma said it will look to execute on commercial initiatives to maximize the potential of the Aloxi franchise.

The company plans to complete pivotal trials of oral capsule Aloxi and Aloxi for post-operative nausea and vomiting in the fourth quarter.

Saforis granted priority review

MGI Pharma also said Wednesday that it has submitted a New Drug Application for Saforis (glutamine in UpTec) powder for oral suspension, and the application has been accepted for priority review by the Food and Drug Administration. The company has a Prescription Drug User Fee Act goal date of Oct. 12, Moulder said.

In addition, the company has signed a license agreement granting exclusive development and commercialization rights for Dacogen (decitabine) for injection in all territories outside the North America to Janssen-Cilag companies.

"Over time, this agreement will help offset development costs associated with our clinical programs for Dacogen," said Moulder.

Dacogen is a treatment for patients with myelodysplastic syndromes that occur from a defect in the blood-forming stem cells. The drug was launched during the second quarter.

Following the terms of the agreement, MGI Pharma will receive an upfront payment of $10 million from Cilag GmbH. MGI Pharma could earn milestone payments potentially totaling more than $47 million if all specified clinical development, regulatory and commercial goals are achieved, according to a company news release.

MGI is an oncology- and acute care-focused biopharmaceutical company located in Minneapolis.

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