66% Revenue Growth; HERmark Breast Cancer Assay launched commercially
- Conference call today at 4:30 p.m. ET -
SOUTH SAN FRANCISCO, Calif., July 29 /PRNewswire-FirstCall/ -- Monogram
Biosciences, Inc. (Nasdaq: MGRM) today reported financial results for the
quarter ended June 30, 2008.
The Company had revenues of $16.1 million for the second quarter of
2008, 66% higher than $9.7 million in the second quarter of 2007. This
growth was driven by revenue from Trofile(TM) for selecting HIV patients to
be treated with Selzentry(TM), Pfizer's CCR5 antagonist, and by revenue
from use of Monogram's PhenoSense HIV(TM) resistance test and Trofile in a
phase III trial by a pharmaceutical company customer.
Revenue for the six months ended June 30, 2008 was $31.0 million, an
increase of 62% over $19.1 million in the first six months of 2007.
In addition to the reported revenue for the quarter, Monogram recorded
as deferred revenue, the sale of Trofile assays to Pfizer for patient
testing outside of the U.S. and for use in clinical trials. These deferred
revenues were $1.2 million and $2.0 million for the three and six months
ended June 30, 2008, respectively. This revenue was recorded as deferred
revenue due to the accounting for the Company's collaboration with Pfizer.
Had these sales not been accounted for as deferred revenue, total revenue
on a Non-GAAP basis, for the three and six months ended June 30, 2008 would
have been $17.3 million and $33.0 million, respectively.
Monogram has performed over 8,000 Trofile tests to date for U.S.
patients and revenue from Trofile in the quarter ended June 30, 2008 was
$3.7 million.
"Revenues were again at a record level in the second quarter," said
Alfred Merriweather, Monogram's Chief Financial Officer. "Gross margin on
product revenues for the second quarter was 54%."
The Company had approximately $26.9 million in cash, cash equivalents
and short-term investments at June 30, 2008. Cash used in operations for
the first six months of 2008 was $8.4 million.
HIV Tropism and Resistance Testing
Recent significant developments in Monogram's HIV business include:
-- Introduction in June of sensitivity enhancements to Trofile enabling
the identification of X4 virus present at a level as low as 0.3% of the
total viral population, a thirty-fold increase in sensitivity.
-- Presentation in June, at the Drug Resistance Workshop in Sitges,
Spain, of data providing clinical validation of optimized patient selection
with the enhanced assay format.
-- Establishment of coverage for Trofile by New York and California
state Medicaid programs.
-- Announcement of the availability August 4 of the PhenoSense
Integrase assay for assessing resistance to the integrase class of HIV
drugs.
-- Extension of Trofile's availability outside of the U.S. to thirteen
European countries, Canada, Brazil and Argentina.
"Selecting the right treatment regimens for HIV patients is critical,
not only to assure that each individual drug is appropriate for the
individual patient but also to make sure that the entire regimen is as
robust as possible to protect the other drugs in the patient's regimen from
unnecessary exposure to the development of resistance," said William Young,
Monogram Chief Executive Officer. "The implementation of enhanced
sensitivity in Trofile and the introduction of our resistance test for the
integrase class of HIV drugs further extend Monogram's industry-leading
portfolio of assays for guiding HIV therapy decisions."
HERmark(TM) Breast Cancer Assay
Recent significant developments for Monogram's HERmark Breast Cancer
Assay include:
-- Presentation by collaborators at ASCO in June of a study
demonstrating the superiority of HERmark over FISH as a predictor of
trastuzumab response ("Total HER2 and HER2 Homodimer Levels Predict
Response to trastuzumab").
-- Commercial introduction in July of HERmark for assessment of HER2
status in patients with breast cancer -- providing a precise and
quantitative measurement of HER2 total protein and HER2 homodimer levels by
a CLIA-validated assay through Monogram's CAP-certified clinical
laboratory.
-- Establishment of initial sales organization to introduce HERmark to
the oncology community.
-- Introduction at ASCO of a Collaborative Biomarker Study, designed to
(i) compare conventional IHC and FISH methods of HER2 testing with the
quantitative measurements of HER2 total protein and HER2 homodimers
provided by HERmark, and (ii) to describe the expression/co-expression
profiles identified by Monogram's HER1 and HER3 Total Protein Assays along
with HER2 total protein and homodimer levels identified by HERmark to
facilitate analyses of how such measurements may correlate with certain
laboratory and clinical parameters, including disease progression.
"Current technologies -- IHC, FISH and CISH -- are well recognized by
breast cancer researchers and oncologists as being inadequate for the
accurate assessment of HER2 status," continued Young. "This is the
important clinical need that HERmark addresses by providing accurate and
quantitative measurements of the drug target."
Physicians currently use these semi-quantitative technologies to
determine HER2 status and decide whether or not to prescribe Herceptin(R).
Inaccurate measurements of HER2 may lead to inappropriate therapy
selection. Guidance recently issued jointly by ASCO and CAP (the College of
American Pathologists) indicated that approximately 20% of HER2
determinations conducted in local laboratories by current testing
technologies may be inaccurate.
"We have correlated the HERmark assay with IHC, FISH and CISH results
obtained in central laboratories in more than one thousand patients, and we
see a high degree of concordance between the best central laboratory tests
and HERmark," said Michael Bates, M.D., Vice President of Clinical Research
at Monogram. "However, even when compared to the best central laboratory
measurements, HERmark identifies patients with high HER2 levels but who are
HER2-negative by other assays, as well as some patients with low HER2
levels but who are judged positive by conventional assays. Comparisons with
local laboratory IHC or FISH results suggest significantly larger numbers
of discordant results. We believe the HERmark Assay measures HER2 total
protein and homodimer levels very accurately and will help physicians to
make treatment decisions with high confidence." Monogram expects that as
many as 15-20% of patients determined by conventional technologies to be
HER2-negative would be reclassified by HERmark.
VeraTag(TM) Oncology Platform
Recent significant developments for the VeraTag technology platform
include:
-- Introduction to biopharmaceutical companies of the HER1 and HER3
Total Protein Assays for research use.
-- Issuance of three U.S. patents and one European patent covering the
detection and profiling with VeraTag technology of protein complexes,
including homodimers and heterodimers.
While the HERmark Breast Cancer Assay, which measures the expression of
the HER2 protein and the HER2:HER2 homodimer, is the first product to be
developed based on Monogram's proprietary VeraTag technology, Monogram has
a growing portfolio of VeraTag assays that measure proteins, protein
complexes and post-translational modifications such as phosphorylation, in
FFPE tumor samples. In addition to the HER1, HER2 and HER3 total protein
assays and the HER2:HER2 homodimer assay, Monogram has assays in advanced
development for the measurement of:
-- heterodimers of HER1 and HER2 (HER1:HER2)
-- heterodimers of HER2 and HER3 (HER2:HER3)
-- the HER3:PI3K complex, which is related to the Akt signaling pathway
for tumor cell survival
-- the truncated form of HER2, known as p95.
These activated protein complexes are believed to mediate resistance to
Herceptin(R) in patients with breast cancer and are targets of other cancer
drugs in development.
"As we extend the range of assays beyond HER2, we will be able to
address not only resistance pathways to Herceptin in breast cancer but also
provide assays that may be informative in lung, colorectal and other
cancers," added Young. "With a broad range of assays, our VeraTag platform
is intended to inform the rational design of combination therapies, such as
those for patients with resistance to Herceptin."
GAAP and Non-GAAP Proforma Results
Net Loss and Net Loss Per Share is shown below in accordance with GAAP
and also on a Non-GAAP Proforma Basis. The Company is reporting Non-GAAP
Proforma results which exclude certain items to provide a clearer view of
ongoing results without the impact of non-cash valuation adjustments
related to our convertible debt. A reconciliation of these Non-GAAP
Proforma results to GAAP results is included with the Statement of
Operations data attached to this release.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net Loss ($ Millions)
GAAP Net Loss $(5.5) $(3.9) $(7.2) $(15.4)
Non-GAAP Proforma Net Loss $(5.7) (8.3) $(12.1) (18.1)
Net Loss Per Share ($)
GAAP Net Loss Per Share $(0.04) $(0.03) $(0.05) $(0.12)
Non-GAAP Proforma Net Loss
Per Share $(0.04) $(0.06) $(0.09) $(0.14)
Non-cash "mark-to-market" adjustments to the 3% Senior Secured
Convertible Note and the 0% Convertible Senior Unsecured Debt that were
reflected in non-operating income and expense for the periods ended June
30, 2008 and 2007 are excluded from proforma net loss. Favorable
adjustments of $0.1 million and $4.5 million were recorded in the three
months ending June 30, 2008 and 2007, respectively. Favorable adjustments
of $4.8 million and $0.4 million were recorded in the six months ending
June 30, 2008 and 2007, respectively. In addition, a favorable adjustment
of $2.2 million was recorded at January 1, 2007 for the cumulative effect
of the change in accounting principle at that date. Such adjustments could
be significant and unpredictable in future quarters depending on several
factors, including the level of the Company's common stock price.
Stock-based compensation in accordance with SFAS123(R) is recorded as
expense for purposes of both GAAP and our Non-GAAP Proforma results. Such
costs were $1.2 million in the second quarter of 2008, compared to $1.1
million in the prior year's second quarter.
We believe that the foregoing presentation of these Non-GAAP financial
measures will enable investors, analysts and readers of our financial
statements to compare Non-GAAP measures with relevant GAAP measures in all
periods presented. Any Non-GAAP financial measure used by us should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP.
Capital Structure
At June 30, 2008, a total of 134.9 million shares of common stock were
outstanding and stock options were outstanding on 24.2 million shares of
common stock. The principal amount of Pfizer's $25 million convertible
note, issued in May 2006, is convertible into approximately 9.2 million
shares of common stock. The $30 million principal amount of our 0%
Convertible Senior Unsecured Notes, issued in January 2007, is convertible
into approximately 11.9 million shares of common stock.
Conference Call Details
Monogram will host a conference call today at 4:30 p.m. Eastern Time.
To participate in the live teleconference please call (877) 675-4748, or
(719) 325-4848 for international callers, fifteen minutes before the
conference begins. Live audio of the call will be simultaneously broadcast
over the Internet and will be available to members of the news media,
investors and the general public. Access to live and archived audio of the
conference call will be available by following the appropriate links at
http://www.monogrambio.com and clicking on the Investor Relations link. Following
the live broadcast, a replay of the call will also be available at (888)
203-1112, or (719) 457-0820 for international callers. The replay passcode
is 3249168. The information provided on the teleconference is only accurate
at the time of the conference call, and Monogram assumes no obligation to
provide updated information except as required by law.
About Monogram
Monogram is advancing individualized medicine by discovering,
developing and marketing innovative products to guide and improve treatment
of serious infectious diseases and cancer. The Company's products are
designed to help doctors optimize treatment regimens for their patients
that lead to better outcomes and reduced costs. The Company's technology is
also being used by numerous biopharmaceutical companies to develop new and
improved anti-viral therapeutics and vaccines as well as targeted cancer
therapeutics. More information about the Company and its technology can be
found on its web site at http://www.monogrambio.com.
Forward Looking Statements
Certain statements in this press release are forward-looking. These
forward-looking statements include references to the demand and outlook for
our products, including our Trofile and HERmark assays, the outlook for
Selzentry, Pfizer's CCR5 antagonist HIV drug, reimbursement for Trofile and
HERmark, the ability of VeraTag technology, including HERmark, to
significantly improve the information available to physicians, results of
studies intended to demonstrate clinical utility of our VeraTag technology
and HERmark products and activities related to the Pfizer collaboration.
These forward-looking statements are subject to risks and uncertainties and
other factors, which may cause actual results to differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. These risks and uncertainties include, but are not limited to:
the risk that physicians may not use a molecular diagnostic for patient
selection for Selzentry or other HIV drugs; risks related to the
implementation of the collaboration with Pfizer; risks related to our
ability to recognize revenue from activities under the collaboration with
Pfizer; risks and uncertainties relating to the performance of our
products; the growth in revenues; the size, timing and success or failure
of any clinical trials for CCR5 inhibitors, entry inhibitors or integrase
inhibitors; the risk that our Trofile Assay may not be utilized for patient
use with Selzentry and other CCR5 inhibitors; the risk that our VeraTag
assays, including HERmark, may not predict response to particular
therapeutic agents; the risk that we may not be able to obtain additional
cohorts of patient samples for additional VeraTag studies, our ability to
successfully conduct clinical studies and the results obtained from those
studies; whether larger confirmatory clinical studies will confirm the
results of initial studies; our ability to establish reliable, high-volume
operations at commercially reasonable costs; expected reliance on a few
customers for the majority of our revenues; the annual renewal of certain
customer agreements; actual market acceptance of our products and adoption
of our technological approach and products by pharmaceutical and
biotechnology companies; our estimate of the size of our markets; our
estimates of the levels of demand for our products; the impact of
competition; the timing and ultimate size of pharmaceutical company
clinical trials; whether payers will authorize reimbursement for our
products and services and the amount of such reimbursement that may be
allowed; whether the FDA or any other agency will decide to further
regulate our products or services, including Trofile; whether existing
levels of reimbursement will be reviewed and reduced by third party payers,
including Medicare; whether the draft guidance on Multivariate Index Assays
issued by FDA will be subsequently determined to apply to our current or
planned products; whether we will encounter problems or delays in
automating our processes; the ultimate validity and enforceability of our
patent applications and patents; the possible infringement of the
intellectual property of others; whether licenses to third party technology
will be available; whether we are able to build brand loyalty and expand
revenues; restrictions on the conduct of our business imposed by the
Pfizer, G.E. and other debt agreements; the impact of additional dilution
if our convertible debt is converted to equity; and whether we will be able
to raise sufficient capital in the future, if required. For a discussion of
other factors that may cause actual events to differ from those projected,
please refer to our most recent annual report on Form 10-K and quarterly
reports on Form 10-Q, as well as other subsequent filings with the
Securities and Exchange Commission. We do not undertake, and specifically
disclaim any obligation, to revise any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
PhenoSense, PhenoSenseGT, Trofile, HERmark and VeraTag are trademarks of
Monogram Biosciences, Inc. Herceptin is a registered trademark of Genentech,
Inc. Selzentry is a trademark of Pfizer Inc.
MONOGRAM BIOSCIENCES, INC.
SELECTED STATEMENT OF OPERATIONS DATA
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue:
Product revenue $15,440 $8,907 $29,447 $18,006
Contract revenue 687 485 1,506 803
License revenue 5 300 15 300
Total revenue 16,132 9,692 30,968 19,109
Operating costs and expenses:
Cost of product revenue 7,124 5,327 13,488 11,032
Research and development 6,244 5,176 12,268 10,507
Sales and marketing 4,133 4,159 8,485 8,102
General and administrative 4,163 3,629 8,729 7,857
Total operating costs and expenses 21,664 18,291 42,970 37,498
Operating loss (5,532) (8,599) (12,002) (18,389)
Convertible debt valuation adjustment
and interest income/(expense), net (58) 4,727 4,684 717
Contingent Value Rights
valuation adjustment 72 - 72 -
Net loss before cumulative effect of
change in accounting principle (5,518) (3,872) (7,246) (17,672)
Cumulative effect of change in
accounting principle - - - 2,242
Net loss after cumulative effect of
change in accounting principle $(5,518) $(3,872) $(7,246) $(15,430)
Basic and diluted net loss per common
share before cumulative effect of
change in accounting principle $(0.04) $(0.03) $(0.05) $(0.13)
Cumulative effect per share of change
in accounting principle $- $- $- $0.01
Basic and diluted net loss per common
share after cumulative effect of
change in accounting principle $(0.04) $(0.03) $(0.05) $(0.12)
Weighted-average shares used in
computing basic net loss per
common share 134,553 132,026 134,372 131,805
Reconciliation of Non-GAAP Proforma
Results to GAAP
Net loss after cumulative effect of
change in accounting principle $(5,518) $(3,872) $(7,246) $(15,430)
Adjustments for certain non-cash
items:
Cumulative effect of change in
accounting principle - - - (2,242)
Contingent Value Rights
valuation adjustment (72) - (72) -
Convertible debt valuation adjustment (66) (4,463) (4,802) (408)
Non-GAAP Proforma net loss (5,656) (8,335) (12,120) (18,080)
Non-GAAP Proforma net loss per common
share, basic $(0.04) $(0.06) $(0.09) $(0.14)
Management believes that this Non-GAAP proforma financial data
supplements the Company's GAAP financial statements by providing investors
with additional information which allows them to have a clearer picture of
the Company's operations, financial performance and the comparability of
the Company's operating results from period to period as they exclude the
effects of revaluation of the Company's convertible debt that management
believes are not indicative of the Company's ongoing operations. The
presentation of this additional information is not meant to be considered
in isolation or as a substitute for results prepared in accordance with
GAAP. Above, management has provided a reconciliation of the Non-GAAP
proforma financial information with the comparable financial information
reported in accordance with GAAP.
MONOGRAM BIOSCIENCES, INC.
SELECTED BALANCE SHEET DATA
(In thousands)
(Unaudited)
June 30, December 31,
2008 2007(1)
ASSETS
Current assets:
Cash and cash equivalents $21,943 $18,762
Short-term investments 4,984 11,828
Accounts receivable, net 13,731 9,100
Prepaid expenses 1,164 1,279
Inventory 1,761 1,250
Other current assets 1,249 917
Total current assets 44,832 43,136
Property and equipment, net 7,913 7,665
Goodwill 9,927 9,927
Deferred costs 12,675 8,043
Other assets 94 540
Total assets $75,441 $69,311
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $1,765 $2,116
Accrued compensation 5,402 3,324
Accrued liabilities 4,708 3,818
Current portion of restructuring
costs 610 610
Deferred revenue, current portion 727 605
Current portion of loans payable and
capital lease obligations 10,175 4,469
Contingent value rights 2,060 2,119
Total current liabilities 25,447 17,061
Long-term 3% convertible promissory
note 19,678 20,786
Long-term 0% convertible promissory
note 14,817 18,511
Long-term portion of restructuring
costs - 289
Long-term deferred revenue 20,248 13,622
Other long-term liabilities 661 282
Total liabilities 80,851 70,551
Stockholders' deficit:
Common stock 135 134
Additional paid-in capital 289,243 286,196
Accumulated other comprehensive loss (3) (31)
Accumulated deficit (294,785) (287,539)
Total stockholders' deficit (5,410) (1,240)
Total liabilities and
stockholders' deficit $75,441 $69,311
(1) The balance sheet data at December 31, 2007 is derived from audited
financial statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2007 filed with the Securities and Exchange
Commission.
contacts: Alfred G. Merriweather Jeremiah Hall
Chief Financial Officer Feinstein Kean Healthcare
Tel: 650 624 4576 Tel: 415 677 2700
amerriweather@ jeremiah.hall@
monogrambio.com fkhealth.com
SOURCE Monogram Biosciences, Inc.
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Related links:
http://www.monogrambio.com
CONTACT:
Alfred G. Merriweather, Chief Financial
Officer of Monogram Biosciences, Inc., +1-650-624-4576,
amerriweather@monogrambio.com, or Jeremiah Hall of Feinstein Kean
Healthcare, +1-415-677-2700, jeremiah.hall@fkhealth.com, for
Monogram Biosciences, Inc.
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