- Agreement Strengthens Paradigm's Balance Sheet and
Further Reduces Cash Burn -
- Company Also Updates Guidance -
RESEARCH TRIANGLE PARK, N.C., July 10 /PRNewswire-FirstCall/ --
Paradigm Genetics, Inc. (Nasdaq: PDGM) today announced that it has signed a
$7.5 million debt financing agreement with Silicon Valley Bank of Santa Clara,
California. The financing includes a $5 million, four-year secured term loan
at significantly lower rates than the company's current loan and a
$2.5 million revolving line of credit. The company will use approximately
$3.0 million of the proceeds from the term loan to pay off its current
equipment financing loan with Transamerica Technology Finance, which was to
mature in June 2004. The balance of the funds will be available for general
corporate purposes. Separately, the company updated financial guidance.
"This financing with Silicon Valley Bank represents another important step
in strengthening our balance sheet and moving towards financial
self-sustainment," said Philip R. Alfano, Vice President, Finance, and Chief
Financial Officer for Paradigm Genetics. "With this refinancing, we've
extended our loan payments until 2007 and at significantly lower rates,
thereby lowering our quarterly debt payments and, thus, our burn rate. We
will continue to pursue other opportunities to further strengthen our balance
sheet, such as obtaining additional equipment financing."
Heinrich Gugger, Ph.D., Paradigm's President and CEO, said, "The fact that
we were able to secure this bank financing speaks to the market's increasing
confidence in our future success and represents a key milestone in the
transformation of Paradigm. We are now better able to take a longer-term view
towards creating new business and building shareholder value. While we still
need to bring in new revenues to meet our goals, this financing creates
greater financial flexibility in our discussions with prospective partners,
and it provides additional insulation against unanticipated delays in current
and new projects."
The financing agreement requires that the company meet certain financial
tests and is subject to other normal and customary conditions and covenants.
The company also updated guidance as follows:
* The company expects to meet its earlier Q2 2003 guidance of between $.10
to $.12 loss per share and also reconfirmed its projection of between
$.06 to $.07 loss per share in Q3 2003. While the company is still
targeting profitability in Q4 2003, it is revising its Q4 2003 guidance
to between a loss of $.04 per share and a profit of $.01 per share, due
to uncertainty in the timing of revenues related to current and
projected deals.
* The company now projects having $13 to 15 million in available cash and
cash equivalents at the end of 2003, including amounts available from
its line of credit. This compares to its most recent guidance of a
year-end cash balance between $7 and 9 million.
About Silicon Valley Bank
Silicon Valley Bank serves emerging growth and mature companies in the
technology, life science and premium wine markets, as well as other targeted
industries. Through its focus on specialized markets and extensive knowledge
of the people and business issues driving them, Silicon Valley Bank provides a
level of service and partnership that measurably impacts its clients' success.
Founded in 1983 and headquartered in Santa Clara, Calif., the Bank serves more
than 9,500 clients across the country through 27 regional offices. More
information on the Bank can be found at http://www.svb.com.
About Paradigm Genetics
Paradigm is a biotechnology company aiming to increase R&D productivity by
focusing its integrated suite of technologies on the product development
cycle, from target discovery to subsequent enhancement of the safety and
efficacy profiles of development candidates in agriculture and human health.
Paradigm chooses a systems biology approach to understand gene function in the
context of biological pathways, to develop assays and biomarkers for molecular
diagnostic solutions tailored to the needs of our partners. Paradigm's
proprietary Gene to Cell to System(TM) approach has three major components:
gene expression profiling, biochemical profiling (also known as metabolomics)
and data integration and coherence. For more information, visit
http://www.paradigmgenetics.com.
This press release contains forward-looking statements, including
statements regarding the effect of executing Paradigm's strategic plan on
increasing shareholder value going forward. 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 Form 10-Q for the quarter ended March 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
http://www.svb.com
CONTACT:
Melissa Matson, Director, Corporate
Communications of Paradigm Genetics, Inc., +1-919-425-3000; or
Mark Vincent, Vice President of Noonan Russo Presence Euro RSCG,
+1-212-845-4200
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