Product Revenue Below Prior Year, Contract and License Revenue Up
ALAMEDA, Calif., May 9 /PRNewswire-FirstCall/ -- Xenogen Corporation
(Nasdaq: XGEN), maker of advanced imaging systems including instruments,
biological solutions and software designed to accelerate drug discovery and
development, today reported financial results for the first quarter of
2006.
Total revenue for the first quarter of 2006 was $8.7 million, a
$540,000 decrease from 2005 first quarter revenue of $9.3 million. For the
first quarter of 2006 versus the first quarter of 2005, product revenue was
$4.3 million compared to $5.3 million, contract revenue was $2.6 million
compared to $2.3 million, and licensing revenue was $1.8 million compared
to $1.7 million.
Loss from operations for the first quarter of 2006 was approximately
$5.7 million, compared to the loss from operations of $5.0 million for the
2005 first quarter. Net loss for the first quarter of 2006 was $5.6
million, or a loss of $0.28 per share, compared to a net loss of $5.2
million, or $0.35 per share, in the 2005 first quarter.
On February 10, 2006, Xenogen entered into a definitive Agreement and
Plan of Merger with Caliper Life Sciences, Inc. and its subsidiary, Caliper
Holdings, Inc., pursuant to which Xenogen will be merged with and into
Caliper Holdings and become a wholly-owned subsidiary of Caliper. Caliper
is a leading provider of drug discovery solutions for the pharmaceutical
and biotechnology industries. Xenogen supports the merger and believes the
merger is in its stockholders' best interests. The merger remains subject
to the approval of both the Caliper and Xenogen stockholders and the
satisfaction or waiver of certain closing conditions set forth in the
merger agreement.
"Our financial results during the first quarter of 2006 were below our
expectations," said David W. Carter, Chairman and Chief Executive Officer
of Xenogen. "Sales activity was slower than expected in the first quarter
2006 partially due to record revenue performance at the end of 2005 and
further exacerbated by distractions related to our pending merger with
Caliper announced in February. While we lost product sales momentum in the
first quarter, we believe that the second quarter already reflects an IVIS
sales uptick. In April 2006, we recognized four IVIS system sales and
booked three firm orders for IVIS systems, which we expect to recognize as
revenue in the second quarter. Compared to the 18 IVIS systems sold in the
first quarter this year, April appears to be a strong start for the second
quarter when most of our sales historically are completed in the month of
June."
Gross margin for the first quarter 2006 was $3.4 million, or 39%,
compared to gross margin for the first quarter 2005 of $3.3 million, or
35%. The increase of 400 basis points in gross margin was achieved despite
a revenue decrease of approximately 6% between the two periods. The
improvement in gross margin reflects increased IVIS instrument pricing
across all channels, improved operating efficiency in the contract revenue
line of business and higher licensing margins due to the increased
installed base of IVIS systems from the previous year.
Operating expenses for the first quarter 2006 were $9.1 million,
compared to $8.3 million for the first quarter 2005, a net increase of
$790,000. First quarter 2006 research and development expenses decreased to
$1.9 million from $2.3 million in the first quarter of 2005. This decrease
was anticipated as certain research programs underway in 2005 have been
completed. Selling, general and administrative expenses increased to $6.8
million in the first quarter of 2006 from $5.3 million in the first quarter
of 2005, primarily due to costs associated with the pending merger between
Xenogen and Caliper. In the first quarter of 2006, Xenogen's selling,
general and administrative expenses included approximately $830,000 in
legal, advisory and professional services expenses driven by the pending
merger and related regulatory filings, and additional consulting expenses
of approximately $160,000.
On March 3, 2006, Xenogen and AntiCancer, Inc. agreed to settle a
lawsuit that AntiCancer originally filed against Xenogen in August 2001.
AntiCancer and Xenogen have released each other from all claims relating to
this lawsuit, AntiCancer has dismissed, with prejudice, the complaint filed
with the court and Xenogen made a one-time cash payment of $1 million on
April 3, 2006. Xenogen accrued the $1 million settlement payment in the
fourth quarter 2005. This settlement does not affect Xenogen's patent
infringement lawsuit pending with AntiCancer. "We are pleased that this
lawsuit has been settled and this distraction is now behind us," said Mr.
Carter.
"In the first quarter we successfully launched the IVIS Lumina(TM)
Imaging System, a dual-mode imaging system competively priced at the entry
level of the market," said Mr. Carter. "Xenogen continues to deliver
leading technologies in the emerging field of in vivo optical imaging. We
are enthusiastic about the outlook for our business overall and believe
demand for Xenogen's products and services remains strong. Caliper and
Xenogen share a common vision for leading innovative pre-clinical drug
discovery and I believe the combination will create enhanced value for
stockholders of both companies."
About Xenogen Corporation
Xenogen Corporation is a leading biotechnology company offering an
integrated suite of biophotonic real-time in vivo imaging and genetic
modification technologies that can help expedite drug discovery and
development, and significantly reduce the cost and time to market for new
therapies. Xenogen's VivoVision(TM) Systems non-invasively illuminate and
monitor biological processes within living mammals, at the molecular level,
in real time. The technology is designed to provide high quality in vivo
data earlier in the drug discovery and development process. VivoVision(TM)
Solutions are designed to improve discovery and pre-clinical research in
multiple therapeutic areas. VivoVision(TM) Biosciences represents more than
15 years of experience in the creation and characterization of animal
models, including genetic modifications, comprehensive phenotyping,
compound profiling and custom design and production of light producing
cells, microorganisms and animals.
More information is available at http://www.xenogen.com. Xenogen(R), Living
Image(R), VivoVision(TM), Lumina TM and IVIS(R) are trademarks of Xenogen
Corporation.
Forward-Looking Statements
This press release contains forward-looking statements regarding future
sales of our IVIS Systems, the outlook for our business, demand for our
products and services and our proposed merger with Caliper Life Sciences.
Our forward-looking statements are based on our current expectations,
estimates and assumptions and are subject to many risks, uncertainties and
unknown future events that could cause actual results to differ materially.
Actual results may differ materially from those set forth in this release
due to the risks and uncertainties inherent in our business, including,
without limitation: Caliper and Xenogen may not complete the merger, and if
completed, the expected benefits from combining Caliper with Xenogen may
not be realized; merger-related distractions that could impact our business
prior to completion of the merger; our expectations regarding growth in
acceptance of our products, services and technology; unpredictability of
our operating results; the capital spending policies of pharmaceutical,
biotechnology and chemical companies and biomedical research institutions
that are our primary customers; failure to manufacture and deliver
sufficient quantities of our products at acceptable costs to meet
anticipated customer demand; our limited sales and marketing organization;
our ability to attract and retain skilled personnel; competition from other
companies or alternative technologies; our ability to enforce our
intellectual property rights or operate without infringing the patent
rights of others; and our ability to obtain additional financing as
necessary to support our operations. For a discussion of these and other
factors that could impact our financial results and cause our results to
differ materially from those in the forward-looking statements, please
refer to our filings with the Securities and Exchange Commission,
particularly our Annual Report on Form 10-K for the Year Ended December 31,
2005 filed with the Securities and Exchange Commission on March 24, 2006.
Xenogen is under no obligation to (and specifically disclaims any such
obligation to) update or alter its forward-looking statements whether as a
result of new information, future events or otherwise.
Participants in the Solicitation
In connection with Xenogen's proposed merger with Caliper, Caliper has
filed a registration statement on Form S-4 with the Securities and Exchange
Commission and Xenogen will be filing a proxy statement with the Securities
and Exchange Commission. Investors and security holders of Xenogen
Corporation are advised to read the proxy statement regarding the proposed
merger referred to in this communication when it becomes available because
it will contain important information. Xenogen expects to mail a proxy
statement about the proposed merger to its stockholders. In addition to the
proxy statement, Xenogen files annual, quarterly, and special reports,
proxy statement and other information with the Securities and Exchange
Commission. Investors and security holders may obtain a free copy of the
proxy statement and any other documents filed by Xenogen Corporation at the
Securities and Exchange Commission's web site at http://www.sec.gov and
directly from Xenogen.
Xenogen and its officers and directors may be deemed to be participants
in the solicitation of proxies from stockholders of Xenogen with respect to
the proposed merger. A description of the interests that Xenogen's
directors and officers have in the proposed merger is available in the Form
S-4 registration statement. Additional information regarding such officers
and directors is included in Xenogen Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 2005, filed with the Securities
and Exchange Commission. This document is available free of charge at the
Securities and Exchange Commission's web site at http://www.sec.gov and
directly from Xenogen Corporation.
XENOGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
Three Months Ended
March 31,
2006 2005
Revenue:
Product $4,338 $5,293
Contract 2,582 2,271
License 1,814 1,710
Total revenue 8,734 9,274
Cost of revenue:
Product 2,680 3,438
Contract 2,453 2,259
License 203 319
Total cost of revenue 5,336 6,016
Gross margin 3,398 3,258
Operating expenses:
Research and development 1,892 2,334
Selling, general and administrative 6,808 5,308
Depreciation and amortization 367 635
Total operating expenses 9,067 8,277
Loss from operations (5,669) (5,019)
Other income (loss)-net 206 (15)
Interest income 126 57
Interest expense (289) (168)
Net loss $(5,626) $(5,145)
Weighted average number of common
shares outstanding 20,303,013 14,821,840
Loss per share data (basic and diluted):
Net loss per share attributable to
common stockholders $(0.28) $(0.35)
(1) Loss per share (LPS) is computed using the weighted average number
of shares outstanding during the quarter while LPS for the
year-to-date period is calculated using the weighted average number
of shares outstanding during the period. Thus, the sum of the LPS
for each quarter may not equal the LPS for the year-to-date period.
The Statement of Operations includes charges for stock based compensation
as follows:
Three Months Ended March 31,
2006 2005
Cost of revenue:
Product $22 $(15)
Contract 55 (4)
License 11 (2)
Total cost of revenue $88 $(21)
Research and development $33 $(77)
Selling, general and administrative $210 $144
XENOGEN CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
(2005 unaudited)
March 31, December 31,
2006 2005
Cash, cash equivalents and short term
investments $18,310 $20,737
Working capital 13,467 19,011
Total assets 35,457 42,829
Deferred revenue 9,074 9,739
Long term obligations 8,064 8,099
Stockholders' Equity 8,185 12,905
Note: The selected balance sheet information at March 31, 2006 and
December 31, 2005 has been derived from audited and unaudited
financial statements and does not include all of the information
and footnotes required by generally accepted accounting principals
for complete financial statements.
SOURCE Xenogen Corporation
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Related links:
http://www.xenogen.com/
CONTACT:
William A. Albright, Chief Financial Officer
of Xenogen Corporation, +1-510-291-6100
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