OUTLOOK
-------------------------------------------------------------------------------- MDKK Revised Guidance** Previous Guidance August 30, 2012 August 15, 2012 -------------------------------------------------------------------------------- Revenue 435 - 460 375 - 400 Operating expenses (600) - (625) (600) - (625) Operating loss continuing operations (140) - (190) (200) - (250) Discontinued operation (40) (40) Cash position beginning of year* 1,105 1,105 Cash used in operations (375) - (400) (375) - (400) Cash from license agreement & 800 - share subscription agreement Cash position at end of year* excl. MN 1,505 - 1,530 705 - 730 sale Facility sale 320 320 Cash position at end of year* 1,825 - 1,850 1,025 - 1,050 -------------------------------------------------------------------------------- *Cash, cash equivalents, and marketable securities **Dependent on closing of the transaction with Janssen and JJDC -------------------------------------------------------------------------------- -
Continuing Operations We expect our 2012 revenue to now be in the range of DKK 435 - 460 million, an improvement of DKK 60 million from the previous DKK 375 - 400 million. The increased revenue is primarily due to the daratumumab license agreement and share subscription agreement entered into with Janssen and JJDC, respectively. The agreements include reimbursement of certain research and development costs and the amortization of the upfront payment and a part of the share premium which initially is recognized as deferred income and allocated as revenue over a number of years.
Our revenue consists primarily of non-cash amortization of deferred revenue totaling DKK 250 million (previous guidance was DKK 230 million) and royalties on sales of Arzerra, which still are expected to be in the range of DKK 90 - 100 million.
We anticipate that our 2012 operating expenses from continuing operations will remain the same as the previous guidance at DKK 600 - 625 million.
With the increase in revenue and no change to the operating expense guidance, the operating loss also improves. We expect the operating loss from continuing operations for 2012 to be approximately DKK 140 - 190 million, an improvement of DKK 60 million over the previous guidance of DKK 200 - 250 million.
Discontinued Operation The discontinued operation guidance of DKK 40 million relates to the ongoing running costs of maintaining the Minnesota manufacturing facility in a validated state and represents a full 12 months of activity. This expense could be lower if the facility is sold before the end of the year.
The fair value of the facility less cost to sell is currently estimated to be USD 58 million, approximately DKK 320 million at an assumed exchange rate of USD 1.00 = DKK 5.50. As of August 29, 2012, the exchange rate between USD and DKK was 5.9388. We remain focused on entering a sales agreement and anticipate the sale of the facility in 2012.
Cash Position As of December 31, 2011, we had a cash position of DKK 1,105 million and are still projecting a cash burn from operations in 2012 of DKK 375 - 400 million as the reimbursement of certain research and development costs under the daratumumab license agreement will be received in early 2013.
We are now projecting a cash position at the end of 2012, excluding the facility sale, of DKK 1,505 - 1,530 million, an increase of DKK 800 million compared to the previous guidance of DKK 705 - 730 million. The improvement is due to the equity investment and upfront payment related to the daratumumab license agreement and share subscription agreement. Taking into account the planned sale of the facility, the projected cash position at the end of 2012 would increase by DKK 320 million to DKK 1,825 - 1,850 million, compared to the previous guidance of DKK 1,025 - 1,050 million.
In addition to factors already mentioned, the estimates above are subject to change for numerous reasons, including but not limited to, closing of the transaction with Janssen and JJDC, the timing and variation of development activities (including activities carried out by our collaboration partners) and related income and costs; the successful completion of the manufacturing facility sale; fluctuations in the value of our marketable securities; Arzerra sales and corresponding royalties to Genmab; and currency exchange rates. The financial guidance also assumes that no significant new agreements are entered into during 2012 that could materially affect the results.