SHREWSBURY, Mass., July 28 /PRNewswire-FirstCall/ -- TranXenoGen, Inc.
("TranXenoGen" or the "Company"), announces an operational restructuring
resulting from its financial position. In addition, the Company announces its
interim operating results for the six-months ended June 30, 2004.
Highlights
-- On July 23, 2004, the Board of Directors approved a plan to
significantly scale back operations and sell assets. As a result, the
Company will be performing an impairment analysis of its assets. No
adjustments have been made to the June 30, 2004 carrying value of the
Company's assets as a result of the plan.
-- Unrestricted cash was $732,000 at June 30, 2004.
-- Loss for six-months ended June 30, 2004 was $1.7 million (six-months
ended June 30, 2003 - loss $2.1 million); loss per share $0.05 (six-
months ended June 30, 2003 - loss per share $0.07).
-- Issuance by United States Patent office in June 2004 of patent covering
a method of reprogramming somatic cell nuclei for the production of
cloned animals or embryos using nuclear transfer techniques.
Licensing program for patent portfolio launched.
-- Publication of initial Anti-Neoplastic Urinary Protein ("ANUP")
results. Subsequent animal model studies showed up to 60% reduction
in tumor burden in an osteosarcoma nude mouse model.
-- Continued progress in the Gene Testes Technology program with six of
ten roosters testing positive for the selected transgene in their
sperm.
George Uveges, President and Chief Executive Officer, commented: "During
the last six-months the Company has been active in fund raising efforts on its
own and through several investment banking firms. Unfortunately, the results
of those efforts have not been successful. As a result, the Company has
developed a plan to:
-- Reduce its workforce to three key people whose focus will be on
transforming the Company into a technology company focused primarily
on licensing/selling the Company's technology portfolio, advancing its
ANUP product to the point it can be licensed to a development partner
and marketing the Company's other assets.
-- Place its Shrewsbury facility up for sale
-- Sell off excess assets (principally laboratory equipment) to fund on-
going operations.
-- Continue to seek additional funds to support its licensing activity.
The Board will continue to monitor the status of its cloning licensing
program and progress in developing the remaining technology platforms. Upon
completion of the sale of its Shrewsbury facility, the Board will review its
net cash position, the status of its licensing program and the viability of
the remaining business to determine the best us of the available cash.
As part of the restructuring, my last day as President and CEO will be
July 31, 2004. I will remain a Director and support the transformation of the
Company. Paul DiTullio will take over day-to-day management effective August
1, 2004."
Contact:
TranXenoGen, Inc. Tel: 001-508-936-4214
George Uveges, President and CEO Email: guveges@tranxenogen.com
800 Boston Turnpike
Shrewsbury, MA 01545
USA
Risk Warning Notice:
TranXenoGen, Inc. (LSE: TXN.L) is a publicly traded development stage,
biotechnology company, and, as such, investors should be aware that an
investment in the Company involves a substantially high degree of risk. Its
shares are quoted on the Alternative Investment Market of the London Stock
Exchange. The securities of the Company have not been registered under the
Securities Act of 1933 and therefore, may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements under such Act.
This press release contains forward-looking statements that can be
identified by terminology such as "expects", "potential", "suggests", "may",
"will" or similar expressions. Such forward-looking statements regarding our
business, which are not historical facts, are "forward-looking statements"
that involve risk and uncertainties, which could cause the Company's actual
results and financial condition to differ materially from those anticipated by
the forward-looking statements. Actual results may differ materially from
statements made as a result of various factors, including, but not limited to
sufficiency of cash to fund the Company's planned operations, risk associated
with inherent uncertainty of product research and development, risk of
protecting proprietary rights and competition. Forward-looking statements
speak only as to the date they are made. The Company does not undertake to
update forward-looking statements to reflect the circumstances or events that
occur after the date the forward-looking statements are made.
TranXenoGen, Inc.
PRESIDENT AND CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview
The first half of 2004 was a transition period for the Company as its
scientific developments progressed to the point that it could begin
commercialization activities. The commercialization activities were
principally in two areas:
-- Seeking a partner to support development of a novel protein, Anti-
Neoplastic Urinary Protein ("ANUP") for the treatment of several types
of cancer.
-- Marketing the Company's patent portfolio, specifically its cloning
patents.
The initial feedback on the ANUP partnering discussions is that while
various parties had an interest, the project was "too early" in the
development cycle. The Company intends to continue to develop the project on
a limited, resource/funding available basis, through the preclinical
development phase including additional animal model studies, seeking to
develop a recombinant ANUP protein therapeutic, exploring the mechanism action
to help formulate a clinical plan and preparation of a more complete licensing
package.
With the issuance of the U.S. nuclear transfer technique patent in June
2004 the Company has begun a communication program to notify potential
licensees of the availability of the patent portfolio for license. While the
program is still in its early stages, the Company believes that there is an
opportunity to obtain significant value in the cloning patent portfolio.
The Company has been unsuccessful in its fund raising and partnering
efforts to date. As a result, on July 23, 2004, the Board of Directors
approved the reduction of the Company's workforce to three key people whose
focus will be on:
-- Selling the Shrewsbury facility and laboratory equipment.
-- Licensing/selling the Company's technology portfolio.
-- On a resource available basis, continue to develop ANUP to the point it
can be licensed to a development partner.
The Company will incur a workforce reduction cost of approximately
$200,000, $30,000 of which will be paid in August and the balance will be
deferred until the Company either sells the Shrewsbury facility or receives
sufficient funds from its licensing program to have cash available to make the
payment.
After the sale of the Shrewsbury facility, the Company will review its net
cash position, the status of its licensing program and the viability of the
remaining business to determine the best use of its cash.
Financial Review as of and for the Six-Months Ended June 30, 2004
During March 2004, the Company implemented a cost reduction program to
reduce its cash burn to provide additional time to deliver on the Company's
initiatives. The March 2004 cost reduction program included a 30% workforce
reduction, reduced salaries for senior management, including a $100,000
reduction in annual salary for the President and CEO, and deferral of payment
of Director's fees for twelve months. Spending in other areas was reduced
correspondingly. The results of the March 2004 cost reduction program are
reflected in the operating results for the six-months ended June 30, 2004.
TranXenoGen's unrestricted cash position at June 30, 2004 was $732,000,
compared to $2.2 million at December 31, 2003. The Company's current cash
position is not sufficient to fund operations beyond the third quarter of 2004
at its current level of operations.
For the six-months ended June 30, 2004, TranXenoGen reported a net loss of
$1.7 million, or $0.05 per share, compared to a net loss of $2.1 million, or
$0.07 per share for the same period last year. On a cash basis (net loss
excluding (i) the non-cash charge related to the issuance of stock options
granted to directors and employees prior to the Initial Public Offering in
2000, (ii) depreciation and (iii) amortization), the net cash loss was $1.4
million for the six-months ended June 30, 2004 compared to $1.6 million for
the six-months ended June 30, 2003.
Research and development expenses declined $133,000, or 16.7%, over the
prior year reflecting cost savings associated with the cost reduction program
including lower expenses for chemicals and supplies, animal care/animal
facilities and outside testing as well as lower compensation expenses. The
cost reduction program also reduced selling, general and administrative
("SG&A") expenses, which declined $145,000, or 18.6%, over the prior year due
to lower compensation expenses, lower legal cost, lower building expenses and
lower sales and marketing expenses. Partially offsetting these lower SG&A
expenses were higher commercial insurance premiums, primarily D&O insurance
and investment banking fees related to investment banking activities. As of
June 2004, the non-cash charge for compensation expenses related to stock
options issued prior to the Company's initial public offering in July 2000 was
fully amortized. The higher net interest expense reflects lower interest
income due to lower funds invested (as cash was used to fund operations) at
lower rates.
The Company had 14 employees as of June 30, 2004 compared to 20 employees
as of December 31, 2003.
Science Update
The Company has continued to make progress in regard to the ANUP program
and in the development of its avian transgenic technology platform. ANUP
research efforts have focused on testing of a synthetic peptide against
additional cancer models and identification of the ANUP protein/gene. A
number of animal models studies have been completed with both the synthetic
ANUP peptides as well as plasma derived ANUP. Using an osteosarcoma nude
mouse model, the synthetic ANUP peptide demonstrated the ability to inhibit
tumor growth by up to 60%. In addition, two partially purified preparations
of plasma derived ANUP have been tested in animal model studies and shown the
ability to reduce tumor burden. These results are encouraging and will aid in
the identification of the ANUP gene required for recombinant production.
Research on the avian transgenic platform has focused on identification of
founder hens expressing commercial levels of protein in their eggs and the
development of a more rapid and efficient technique for generating transgenic
chickens. Selected chimeric chickens from the direct-egg transfection method
continue to be bred to produce transgenic offspring, which will be screened
for expression of the protein of interest. The main focus has been on
producing transgenic chickens for the production of Human Serum Albumin and
Insulin.
In addition, the Gene-Testes technology continues to make progress and
provides an opportunity to reduce the development timeline by up to 50%.
Initial experiments have demonstrated the ability to effectively deliver the
transgene to the testes of a rooster and generate transgenic sperm.
Improvements in the basic gene delivery technique have resulted in six out of
ten roosters treated testing positive for the transgene. Based on these
results, a breeding program has been initiated to demonstrate the ability of
the technology to produce transgenic chickens.
Summary
It is unfortunate that the Company was unsuccessful in raising additional
capital as it had a number of opportunities in its future. We appreciate the
support and effort of our staff and it has been my pleasure to work with them
over the last two and a half years.
Paul DiTullio will take over day-to-day management effective August 1,
2004. I will continue as a member of the Board of Directors and will provide
Paul whatever support and assistance I can.
George Uveges
President and Chief Executive Officer
TranXenoGen, Inc.
UNAUDITED CONDENSED BALANCE SHEETS
(Amounts in US Dollars)
June 30, December 31,
2004 2003 2003
ASSETS
Current Assets:
Cash and cash equivalents $732,463 $ 3,772,024 $ 2,186,090
Prepaid expenses and
other current assets 42,869 51,945 128,684
Total current assets 775,332 3,823,969 2,314,774
Property and equipment, net 7,278,953 7,810,902 7,545,689
Other Assets:
Restricted cash 365,443 362,136 363,785
Other non-current assets 9,013 20,422 10,643
Total other assets 374,456 382,558 374,428
Total assets $8,428,741 $12,017,429 $10,234,891
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $69,703 $151,904 $215,157
Accrued expenses and other
current liabilities 243,654 172,386 224,367
Current portion of long-term
debt 136,420 109,841 136,420
Total current liabilities 449,777 434,131 575,944
Long-term deferred lease income 188,139 - 190,583
Long-term debt, less
current portion 3,495,592 3,638,661 3,548,283
Commitments and contingencies
Stockholders' Equity:
Common stock 40,570 40,560 40,570
Treasury stock (195,659) (195,659) (195,659)
Additional paid-in capital 22,964,558 22,962,668 22,964,558
Deferred compensation - (305,361) (98,236)
Accumulated deficit (18,514,236) (14,557,571) (16,791,152)
Total stockholders'
equity 4,295,233 7,944,637 5,920,081
Total liabilities
and stockholders'
equity $8,428,741 $12,017,429 $10,234,891
The accompanying notes are an integral part of these unaudited condensed
financial statements.
TranXenoGen, Inc.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in US Dollars)
Year-ended
Six-Months Ended June 30, December 31,
2004 2003 2003
Expenses:
Selling, general and
administrative $645,700 $790,973 $ 1,633,473
Research and development 663,443 796,790 1,647,762
Stock-based compensation 98,236 207,125 414,250
Depreciation and amortization 268,366 282,101 562,377
Total expenses 1,675,745 2,076,989 4,257,862
Operating loss (1,675,745) (2,079,989) (4,257,862)
Other Income (Expense):
Interest income 6,423 26,023 39,838
Interest expense (92,473) (99,837) (194,709)
Other income, net 38,711 33,704 62,053
Loss before provision
for income taxes (1,723,084) (2,117,099) (4,350,680)
Provision for income taxes - - -
Net loss $(1,723,084) $(2,117,099) $(4,350,860)
Net Loss per Share:
Basic and diluted $(0.05) $(0.07) $(0.14)
Basic and diluted weighted-average
common shares outstanding 32,180,000 32,170,000 32,172,904
The accompanying notes are an integral part of these unaudited condensed
financial statements.
TranXenoGen, Inc.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Amounts in US Dollars)
Year-Ended
Six-Months Ended June 30, December 31,
2004 2003 2003
Cash Flows from Operating Activities:
Net loss $(1,723,084) $(2,117,099) $(4,350,680)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization expense 268,366 282,101 562,377
Compensation expense related
to stock options issued 98,236 207,125 414,250
Changes in assets and liabilities:
Prepaid expenses and
other current assets 85,815 43,584 (33,155)
Accounts payable (145,454) (26,580) 36,673
Accrued expenses and
other current liabilities 16,843 (63,398) (16,534)
Proceeds from cell
tower lease - - 197,600
Net cash used in operating
activities (1,399,278) (1,674,267) (3,189,469)
Cash Flows for Investing Activities:
Additions to property and
equipment - (18,103) (23,387)
Increase in restricted cash (1,658) (2,006) (3,655)
Net cash used in investing
activities (1,658) (20,109) (27,042)
Cash Flows for Financing Activities:
Repayment of notes payable (52,691) (59,961) (123,760)
Net cash used in financing
activities (52,691) (59,961) (123,760)
Net decrease in cash and cash
equivalents (1,453,627) (1,754,337) (3,340,271)
Cash and cash equivalents,
beginning of period 2,186,090 5,526,361 5,526,361
Cash and cash equivalents,
end of period $732,463 $3,772,024 $2,186,090
Supplemental disclosure of cash flow information:
Cash paid for interest $93,248 $100,657 $196,064
Fair value of shares of common
stock issued in connection
with milestone payment $- $- $ 1,900
The accompanying notes are an integral part of these unaudited condensed
financial statements.
Notes to the Unaudited Condensed Financial Statements
1. Basis of Presentation and Management's Plan
The Unaudited Condensed Financial Statements included in this announcement
have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business, in conformity with accounting principles generally accepted in the
United States. The financial statements should be read in conjunction with
the Company's financial statements and notes thereto included in the Company's
Annual Report to Shareholders for the year ended December 31, 2003.
During the six-months ended June 30, 2004, the Company was focused on
several short-term revenue programs to support a longer-term business
strategy. The short-term revenue programs included:
-- Licensing of the Company's cloning patent portfolio.
-- Partnership of its Anti-Neoplastic Urinary Protein ("ANUP") for the
treatment of several types of cancer.
-- Seeking grants in the areas of biodefense and vaccine production.
The Company's longer-term business strategy was to pursue the development
of a practical, effective manufacturing platform to address the production
requirements for high-volume protein based therapeutics as well as to develop
novel therapeutic products. The three-pronged business strategy encompasses
the following:
-- Production of generic biologicals;
-- Production of high-volume novel therapeutics such as monoclonal
antibodies for strategic partners; and
-- Development and manufacture of novel therapeutic protein based products.
The Company's research and development efforts were targeted primarily on
achieving the production of protein-based drugs in the egg whites of
transgenic chickens. The Company was developing a transgenic process to
manufacture therapeutic protein-based drugs, including Human Serum Albumin,
Insulin and monoclonal antibodies.
The Company is subject to a number of risks common to emerging companies
in the life sciences industry. Among those risks are the successful
development of its transgenic technology, technological innovations,
dependence on key individuals, dependence on collaborative arrangements,
development of the same or similar technological innovations by the Company's
competitors, protection of proprietary technology, compliance with government
regulations and approval requirements, including those of the U.S. Food and
Drug Administration, uncertainty of market acceptance of products, product
liability and the ability to obtain additional financing necessary to fund
product development and operations.
2. Subsequent Events and Basis of Presentation
On July 23, 2004, the Board of Directors approved a plan to significantly
scale back operations and sell assets. The plan includes:
-- Reducing the Company's workforce from 13 to three people.
-- Offering for sale the Shrewsbury facility and laboratory equipment.
-- Significantly reducing the Company's development activity.
The Company's primary focus going forward will be on licensing/selling the
Company's technology portfolio.
The Company will incur in July 2004, a workforce reduction charge of
approximately $200,000 of which $30,000 will be paid in August 2004. The
balance will be deferred until the Company either sells the Shrewsbury
facility or receives sufficient funds from its licensing program to have cash
available to make the payment. The Company has severance agreements with the
remaining employees totaling approximately $150,000.
The Company believes that it can obtain higher value from the sale of the
Shrewsbury facility if it is sold to a user of the facility versus an investor
group. As such, the purchaser may also acquire certain equipment in the
facility. Other, stand-alone equipment will be sold to help finance the on-
going operations.
The Company has not determined if the assets will be sold in excess of net
book value ($7.3 million) or if a loss will be incurred on the sale. The
proceeds from the sale of the facility will be used to retire the mortgage on
the property, $3.6 million at June 30, 2004. The repayment of the mortgage
will release the $365,000 of restricted cash held by the mortgagor.
As a result of the July 2004 Board of Directors' approved plan described
above, the Company will be performing an impairment analysis of its assets.
No adjustments have been made to the June 30, 2004 carrying value of its
assets in the accompanying condensed financial statements as a result of this
plan.
Risk Warning Notice:
TranXenoGen, Inc. (LSE: TXN.L ) is a publicly traded development stage,
biotechnology company, and, as such, investors should be aware that an
investment in the Company involves a substantially high degree of risk. Its
shares are quoted on the Alternative Investment Market of the London Stock
Exchange. The securities of the Company have not been registered under the
Securities Act of 1933 and therefore, may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements under such Act.
This press release contains forward-looking statements that can be
identified by terminology such as "expects", "potential", "suggests", "may",
"will" or similar expressions. Such forward-looking statements regarding our
business, which are not historical facts, are "forward-looking statements"
that involve risk and uncertainties, which could cause the Company's actual
results and financial condition to differ materially from those anticipated by
the forward-looking statements. Actual results may differ materially from
statements made as a result of various factors, including, but not limited to
sufficiency of cash to fund the Company's planned operations, risk associated
with inherent uncertainty of product research and development, risk of
protecting proprietary rights and competition. Forward-looking statements
speak only as to the date they are made. The Company does not undertake to
update forward-looking statements to reflect the circumstances or events that
occur after the date the forward-looking statements are made.
Additional Copies:
Copies of this press release can be obtained directly from the Company at
800 Boston Turnpike, Shrewsbury, Massachusetts, USA 01545 or from the
Company's website at http://www.tranxenogen.com.
SOURCE TranXenoGen, Inc.
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Related links:
http://www.tranxenogen.com
CONTACT:
George Uveges, President and CEO of
TranXenoGen, Inc., 001-508- 936-4214, guveges@tranxenogen.com
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