Pharmacyclics Reports Recent Developments and Financial Results for Fiscal Second Quarter 2011

Recent Developments & Highlights

Broad Clinical Development Progress for Btk Inhibitor PCI-32765 in B-cell malignancies

Pharmacyclics has designed a broad Phase II Program in mantle cell lymphoma, chronic lymphocytic leukemia and diffuse large B-cell lymphoma to inform the Phase III program and regulatory path for PCI-32765. Throughout 2011 we will closely monitor these Phase II studies for confirmatory efficacy and safety signals to establish our regulatory approval strategy in a timely manner.  Please refer to our website on the key trials listed below.

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Mantle Cell Lymphoma (MCL)

Our Phase IA results in the MCL subset presented at the 2010 American Society of Hematology (ASH) Meeting showed promising activity. We therefore designed a Phase II program which includes 1) an evaluation of PCI-32765 as a single agent in 2 groups (cohorts) of patients with relapsed or refractory disease, those who have failed bortezomib and those who have not yet received bortezomib and 2) a safety study of PCI-32765 in combination with bortezomib. The single agent trial protocol has been developed and we expect to enroll a total of approximately 100 patients, beginning in Q1 of calendar year 2011.

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Chronic Lymphocytic Leukemia/Small Cell Lymphocytic Lymphoma (CLL/SLL)

The Phase IB/II CLL/SLL program is well underway; to date we have dosed 75 patients and plan to complete enrollment by adding another 7 patients during the remainder of Q1 of calendar 2011. We are also evaluating the safety of PCI-32765 in combination with ofatumumab in a Phase IB/II study of patients with relapsed/refractory CLL/SLL. We began enrollment in this study in January of 2011 and expect to dose up to 40 patients and complete enrollment in the second half of calendar year 2011. We also plan to evaluate the safety of PCI-32765 in combination with several other common therapies in CLL and expect to begin enrollment in Q2 of calendar year 2011.

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Diffuse Large B-Cell Lymphoma (DLBCL)

Research has demonstrated that there are 2 distinct molecular subtypes in diffuse large B-cell lymphoma (ABC and GCB).  Activated B-cell, or ABC, is the poorer prognostic subtype and is characterized by activation of the B-cell receptor signaling pathway. Our Phase II program will evaluate 2 separate cohorts of patients with relapsed or refractory DLBCL who will receive single agent PCI-32765, those lymphoma patients with ABC and those with germinal center B-cell (GCB), the other molecular subtype. This study will evaluate safety and efficacy in approximately 60 patients. We anticipate that enrollment will begin during the first half of 2011. In parallel, we are also developing a Phase II safety trial combining PCI-32765 with chemotherapy in patients with relapsed or refractory DLBCL.

Abstract submitted to the 47th Annual Meeting of the American Society of Clinical Oncology (June 3 – 7, 2011) based on the Phase IB/II study data, evaluating safety and efficacy of administering the Btk Inhibitor, PCI-32765 as a single agent in CLL/SLL patients

Poster presentation at the 2011 GI Cancers Symposium of first in human Phase I results of Factor VIIa Inhibitor, PCI-27483 In the Phase I portion of the study, ascending repeated doses of PCI-27483 (dosages ranging from 0.8 to 1.5 mg/kg) were evaluated in 8 patients with pancreatic cancer receiving concomitant gemcitabine chemotherapy. Among the 5 patients in Phase I considered evaluable, all 5 had stable disease at week 12 and opted to extend treatment with PCI-27483. Three of the 5 patients have a progression free survival > / = 30 weeks (7 months). None of the patients receiving PCI-27483 experienced a thromboembolic event. We are currently in the Phase II portion of the study enrolling patients who receive either gemcitabine alone or gemcitabine plus PCI-27483 (dose at 1.2 mg/kg twice daily). We anticipate completion of enrollment in the Phase II portion during calendar year 2011.

Pharmacyclics, Inc.

(a development stage enterprise)

Condensed Consolidated Balance Sheets

(unaudited; in thousands)

December 31,

2010

June 30,

2010

ASSETS

  Cash, cash equivalents and marketable securities*

$             61,610

$           74,149

  Other current assets

1,751

1,896

     Total current assets

63,361

76,045

  Property and equipment, net

536

459

  Other assets

315

316

     Total assets

$             64,212

$           76,820

LIABILITIES AND STOCKHOLDERS' EQUITY

  Deferred revenue

$               2,368

$             6,099

  Other current liabilities

4,483

3,910

     Total current liabilities

6,851

10,009

  Deferred rent

36

50

    Total liabilities

6,887

10,059

     Stockholders' equity

57,325

66,761

        Total liabilities and stockholders' equity

$             64,212

$           76,820

* Marketable securities

$             43,771

$           22,950

Pharmacyclics, Inc.

(a development stage enterprise)

Condensed Consolidated Statements of Operations

(unaudited; in thousands, except per share data)

Three Months Ended

December 31,

Six Months Ended

December 31,

2010

2009

2010

2009

Revenues:

  License and milestone revenues

$       2,824

$     4,702

$     4,788

$    4,702

     Total revenues

2,824

4,702

4,788

4,702

Operating expenses:

  Research and development

8,256

3,723

15,958

7,011

  General and administrative

2,093

1,765

3,927

3,298

     Total operating expenses

10,349

5,488

19,885

10,309

Loss from operations

(7,525)

(786)

(15,097)

(5,607)

Interest and other income (expense), net

26

18

75

(6)

Loss before provision for income tax

(7,499)

(768)

(15,022)

(5,613)

Benefit from income tax

-

550

-

550

Net loss

$       (7,499)

$       (218)

$  (15,022)

$   (5,063)

Basic and diluted net loss per share

$        (0.13)

$      (0.00)

$       (0.25)

$   (0.11)

Shares used to compute basic and

  diluted net loss per share

59,715

50,076

59,497

45,535

Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)

(unaudited; in thousands, except per share data)

Three Months Ended

December 31,

2010

2009

GAAP net loss

$             (7,499)

$                (218)

Adjustments:

Research & development share-based compensation(2)

1,267

216

General & administrative share-based compensation(2)

671

356

Income tax adjustment(3)

-

(550)

Therapeutic discovery project tax grant, net(4)

(586)

-

1,352

22

License and collaboration revenues(5)

-

(1,211)

-

(1,211)

Non-GAAP net loss

$             (6,147)

$             (1,407)

Non-GAAP net loss per share

$              (0.10)

$               (0.03)

(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.

(3) Represents a reclaiming of paid French Withholding Tax of $550 thousand for the $11 million upfront payment from Servier.

(4) Represents the therapeutic discovery project tax grant, net of related expenses.

(5) Represents the pro-rata portion of services performed under the Servier Collaboration arrangement prior to fiscal year 2010.

Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)

(unaudited; in thousands, except per share data)

Six Months Ended

December 31,

2010

2009

GAAP net loss

$             (15,022)

$              (5,063)

Adjustments:

Research & development share-based compensation(2)

2,961

374

General & administrative share-based compensation(2)

1,149

446

Interest adjustment for related party loan(3)

-

21

Income tax adjustment(4)

-

(550)

Therapeutic discovery project tax grant, net(5)

(586)

-

3,524

291

License and collaboration revenues(6)

-

(1,211)

-

(1,211)

Non-GAAP net loss

$             (11,498)

$              (5,983)

Non-GAAP net loss per share

$                (0.19)

$               (0.13)

(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.

(3) Due to the below market interest rate of the related party loan, total GAAP interest expense includes non-cash interest expense of $21 for the six months ended December 31, 2009.

(4) Represents a reclaiming of paid French Withholding Tax of $550 thousand for the $11 million upfront payment from Servier.

(5) Represents the therapeutic discovery project tax grant, net of related expenses.

(6) Represents the pro-rata portion of services performed under the Servier Collaboration arrangement prior to fiscal year 2010.