- - Net loss improves 11%, revenue up 20% and cash burn down compared to first
quarter 2003 - -
RESEARCH TRIANGLE PARK, N.C., April 26 /PRNewswire-FirstCall/ -- Paradigm
Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today reported
financial results for the quarter ended March 31, 2004. The Company reported
improved net loss, increased revenue and improved cash burn for the first
quarter 2004, as compared to the same period in 2003.
Paradigm Genetics reported a first quarter 2004 net loss of $3.7 million,
or $0.11 per common share. This represents an improvement over the first
quarter 2003 net loss of $4.1 million, or $0.13 per common share.
Total revenue for the first quarter 2004 increased to $4.9 million as
compared to $4.1 million in the first quarter 2003. First quarter 2004 revenue
from Paradigm's ongoing contracts with Bayer CropScience and Monsanto remained
in line with management expectations, as did revenue from the start-up phase
of the Company's new contract with Pioneer Hi-Bred. Increases in first quarter
2004 revenue related to the Company's Paradigm Array Labs services, which
began operations during the second half 2003, and also from its contract with
the National Institute of Environmental Health Sciences, were less than
expected due to temporary vendor difficulties.
Total operating expenses for the first quarter 2004 increased to
$8.5 million compared to $8.1 million in first quarter 2003. This increase is
primarily due to targeted investments the company is making to accelerate R&D
programs in human health and agriculture. The approximately $0.8 million, or
13%, increase in R&D expenses was partially offset by productivity gains and
also by cost reductions of approximately $0.3 million, or 16%, in SG&A
expenses.
The net decrease in cash, cash equivalents and investments ("cash burn")
for the first quarter 2004 was reduced by 73% to $1.1 million from
$4.0 million during the same period in 2003. This improvement is due primarily
to reduced losses and the $2.5 million in cash proceeds related to the
acquisition of TissueInformatics.Inc, offset in part by the repayment of
$0.8 million on the line of credit with Silicon Valley Bank.
As of March 31, 2004, the Company reported unrestricted cash, cash
equivalents and short-term investments in the amount of $15.2 million.
The Company also indicated that the terms of a financial covenant related
to the quick ratio in its debt financing with Silicon Valley Bank have been
modified to provide the Company with greater flexibility to continue targeted
investments in R&D.
"During the first quarter, we managed our cash, while making careful
decisions about where to invest in programs with the greatest potential to
build value," said Heinrich Gugger, Ph.D., President and CEO of Paradigm
Genetics. "We were very pleased to see that the potential of biomarkers,
including gene-based biomarkers, as a tool for improving the drug development
process is increasingly being recognized by regulatory agencies. For example,
the FDA, in a recent report, stated that 'biomarkers of safety and
effectiveness are urgently needed to improve predictability and efficiency
along the critical path from laboratory concepts to commercial product.'(1) We
believe that it is the discovery of biomarkers as well as novel drug targets
and agrichemicals that will ultimately drive the value of this Company."
On March 11, 2004, Paradigm completed the acquisition of
TissueInformatics.Inc and issued 3.4 million shares of common stock valued at
$4.6 million based on the average closing price of Paradigm Genetics' stock
around the date of the acquisition. An additional 2.7 million shares may be
payable on an "earn-out" basis contingent upon the successful achievement of
performance milestones on or before December 31, 2004. Based upon preliminary
estimates of the fair values of the assets acquired and the liabilities
assumed, the opening balance sheet at the date of the acquisition included
approximately $7.7 million of assets (including $2.5 million in cash and
$4.2 million in intangible assets) and $3.1 million of liabilities (including
an estimate of $2.6 million in contingent purchase consideration related to
the performance milestones). The acquisition had minimal impact on operating
results, as Paradigm Genetics and TissueInformatics.Inc had combined
operations for only 14 business days in the first quarter 2004.
About Paradigm Genetics
Paradigm Genetics is a biotechnology company discovering safer, more
effective drugs and agrichemicals by exploiting the power of systems biology.
Paradigm Genetics has major collaborations with the National Institute of
Environmental Health Sciences, Bayer CropScience, the Monsanto Company,
Pioneer Hi-Bred International, the National Institute of Standards &
Technology's Advanced Technology Program, and L'Oreal Inc. For more
information, visit http://www.ParadigmGenetics.com .
Quarterly Conference Call
Paradigm will host a conference call at 8:30 a.m. ET on Tuesday, April 27,
2004 to review financial results for the three months ended March 31, 2004.
This call will be webcast via the Internet at http://www.paradigmgenetics.com , where
any supplemental financial information will be available, and will be
accessible through the investor relations section and home page of Paradigm's
web site. To listen to the call via telephone, dial 888-202-2422 (U.S. and
Canadian callers) or 913-981-5592 (international callers) and enter conference
ID #780147. A taped replay will be available at 888-203-1112 from 11:30 a.m.
on April 27, 2004 through midnight on April 30, 2004.
(1) "Challenge and Opportunity on the Critical Path to New Medial
Products," Food and Drug Administration; March
2004 http://www.fda.gov/oc/initiatives/criticalpath/ and "Guidance for
Industry: Pharmacogenomic Data Submissions," Food and Drug Administration;
November 2003 http://www.fda.gov/cder/guidance/5900dft.pdf
Financial Charts Follow
PARADIGM GENETICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
(unaudited)
2004 2003
Revenues:
Commercial partnerships $4,365,000 $3,839,000
Grant revenues 523,000 228,000
Total revenues 4,888,000 4,067,000
Operating expenses:
Research and development (includes
$1,000 and $136,000 of stock based
compensation expense for the three
months ended March 31, 2004 and
March 31, 2003, respectively) 6,634,000 5,850,000
Selling, general and administrative
(includes $1,000 and $149,000 of
stock based compensation expense for
the three months ended March 31,
2004 and March 31, 2003
respectively) 1,886,000 2,234,000
Total operating expenses 8,520,000 8,084,000
Loss from operations (3,632,000) (4,017,000)
Other Interest income (expense), net (62,000) (125,000)
Net loss from continuing operations (3,694,000) (4,142,000)
Discontinued operations 23,000 25,000
Net loss attributable to common $(3,671,000) $(4,117,000)
stockholders
Net loss per share - basic and diluted
Loss for continuing operations $(0.11) $(0.13)
Loss from discontinued operations -- --
Net loss per share $(0.11) $(0.13)
Weighted average common shares
outstanding - basic and diluted 33,425,000 32,041,000
Paradigm Genetics, Inc.
2003 First-Quarter Results
Condensed Balance Sheet Data
March 31, December 31,
2004 2003
(unaudited)
Assets:
Cash, cash equivalents, short-term
investments $15,193,000 $16,285,000
Other current assets 2,681,000 4,005,000
Total Current Assets 17,874,000 20,290,000
Property plant & equipment net 17,447,000 17,337,000
Other noncurrent assets 6,370,000 1,827,000
Total Assets $41,691,000 $39,454,000
Liabilities and Stockholders' Equity:
Current liabilities 15,246,000 16,094,000
Long-term obligations 3,329,000 3,846,000
Contingent Purchase Consideration 2,578,000 --
Stockholders' equity 20,538,000 19,514,000
Total Liabilities and Stockholders'
Equity $41,691,000 $39,454,000
Paradigm Genetics, Inc.
Supplemental Information Re: Increase/(Decrease) in Cash, Cash
Equivalents,
Short - Term and Long - Term Investments (See Note Below)
(Unaudited)
Three Months Ended March 31,
2004 2003
Net cash used in operating activities $(1,564,000) $(2,889,000)
Net cash provided by (used in) investing
activities, excluding purchases and
maturities of short-term investments 1,895,000 (17,000)
Net cash (used in) financing activities (1,423,000) (1,104,000)
Net (decrease) in cash, cash equivalents,
short-term investments (1,092,000) (4,010,000)
Cash, cash equivalents, short-term
investments, beginning of period 16,285,000 21,232,000
Cash, cash equivalents, short-term
investments, end of period $15,193,000 $17,222,000
Note: The above presentation of the change in cash and investments is
not meant to be in accordance with generally accepted accounting
principles ("GAAP") in the U.S. GAAP requires the presentation of a
statement of cash flows only (i.e., excluding changes in short and long-
term investments). In order to fully assess the Company's liquidity
position, management believes that the cash flow measure presented above,
which includes short-term investments, is an appropriate measure for
evaluating the Company's liquidity, because this reflects all liquid
resources available for strategic opportunities including, among others,
to invest in the business and continue operating activities. However this
measure should be considered in addition to, and not as a substitute for,
or superior to, cash flows prepared in accordance with generally accepted
accounting principles in the U.S.
Under GAAP, cash flows from investing activities above would improve
by net maturities of investment securities and unrealized gains and losses
on investments in the amount of $3.0 million and $6.1 million for the
three months ended March 31, 2004 and 2003, respectively. Also under GAAP,
cash and cash equivalents at the beginning and end of the period would be
less, as they would exclude short investments of $9.1 million as of
December 31, 2003 and $6.1 million as of March 31, 2004; and short and
long-term investments of $15.3 million as of December 31, 2002 and $9.3
million as of March 31, 2003. Cash, cash equivalents, short-term and long-
term investments exclude restricted cash.
This press release contains forward-looking statements, including
statements regarding the Company's expectations for using its systems
biology platform to discover biomarkers and inaccessible targets for small
molecule discovery. Such forward-looking statements are based on
management's current expectations and are subject to a number of risks,
factors and uncertainties that may cause actual results, events and
performance to differ materially from those referred to in the forward-
looking statements. These risks, factors and uncertainties include, but
are not limited to, Paradigm's early stage of development, history of net
losses, technological and product development uncertainties, reliance on
research collaborations, uncertainty of additional funding and ability to
protect its patents and proprietary rights. Certain of these and other
risks are identified in Paradigm's annual report on Form 10-K for the year
ended December 31, 2003, filed with the Securities and Exchange
Commission. The Company does not intend to update any of the forward-
looking statements after the date of this release to conform these
statements to actual results or to changes in our expectations, except as
may be required by law.
SOURCE Paradigm Genetics, Inc.
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Related links:
http://www.paradigmgenetics.com
CONTACT:
Melissa Matson, Director, Corporate
Communications of Paradigm Genetics, Inc., +1-919-425-3000; or
Brian Ritchie, or Mark Vincent of Noonan Russo Presence Euro
RSCG, +1-212-845-4200
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