Revenues Increase 12%
Systems Biology Programs Make Significant Advancements
RESEARCH TRIANGLE PARK, N.C., Aug. 2 /PRNewswire-FirstCall/ -- Paradigm
Genetics, Inc. (Nasdaq: PDGM), today reported financial results for the
quarter ended June 30, 2004.
Paradigm Genetics' transition to a leading systems biology company
continues to drive its revenue growth. For the second quarter of 2004,
overall revenues increased by 12% to $6.3 million as compared to $5.6 million
in the second quarter of 2003. Revenue for the six months ended June 30, 2004
increased nearly 15% to $11.1 million as compared to $9.7 million in the same
period in 2003. About 30 customers utilize the Company's technology platform,
reflecting significant growth in the customer base compared to the two
customers the Company had two years earlier.
Systems biology is the simultaneous study of complex interactions of
multiple levels of biological information including DNA, RNA, proteins, tissue
pathology and biochemicals. It enables the Company to provide value added
products and services to our customers through the application of multiple
analytical systems, alone or using the full combination of the Company's
technology: gene expression profiling (transcriptomics), biochemical profiling
(metabolomics), tissue profiling (pathology) and phenotypic analysis
(phenomics). In addition, the Company expects to use this systematic approach
to more efficiently develop proprietary products for the Company's development
portfolio.
"We are excited about the successes we are seeing as we build our
expertise in systems biology and expand our offerings to a diverse customer
portfolio of both human health and agriculture companies. Many of first time
Paradigm Array Labs (PAL) customers have seen the value of the gene expression
profiling component of our systems biology platform and become repeat
customers. Other customers are currently assessing how our technology can
best complement their internal R&D efforts. We expect that these assessments
will lead to more and larger long-term collaborations. These new
collaborations would build upon our existing $140+ million in revenue
generating contracts, of which $65 million remains to be recognized," said
Heinrich Gugger, Ph.D., President and CEO of Paradigm Genetics.
"Our transformation from a functional genomics company to a true systems
biology company has reached a meaningful inflection point. As a result, on
August 17, 2004, we will unveil a new corporate identity for the Company that
reflects this evolution and our strategic direction," added Dr. Gugger.
Total operating expenses for the second quarter 2004 increased to
$9.8 million, or 10%, compared to $9.0 million in the second quarter 2003. For
the six months ended June 30, 2004, total operating expenses increased to
$18.3 million, or 8%, as compared to $17.0 million in the same period in 2003.
These operating expenses reflect the first full quarter of costs related to
our acquisition of TissueInformatics.Inc on March 11, 2004. The increases
in operating costs for both the quarter and six month period ended June 30,
2004 were due primarily to materials costs associated with higher NIEHS and
PAL services revenues, continued growth of our research and development
programs, additional sales and marketing costs as we expand our offerings,
certain one-time costs and amortization of intangible assets associated with
the TissueInformatics.Inc acquisition.
Paradigm reported a second quarter 2004 net loss of $3.6 million, or $0.10
per common share, in-line with the second quarter 2003 net loss of
$3.6 million, or $0.11 per common share. For the six months ended June 30,
2004, Paradigm reported a net loss of $7.3 million, or $0.21 per common share,
an improvement on the prior period net loss of $7.7 million, or $0.24 per
common share.
As of June 30, 2004, the Company reported unrestricted cash, cash
equivalents and short-term investments in the amount of $10.7 million.
Excluding the payoff of the $1.5 million balance of the line of credit
with Silicon Valley Bank, the net decrease in cash, cash equivalents and
investments ("cash burn") for the second quarter 2004 was $3.0 million, as
compared with $1.7 million during the same period in 2003. The second quarter
of 2004 cash burn consisted of $1.9 million from operating activities,
$0.3 million for capital expenditures and acquisition costs and $0.7 million
for recurring term debt and capital lease obligations. In July 2004, Silicon
Valley Bank renewed the Company's $2.5 million line of credit for another year
under the same favorable terms.
Paradigm's Significant Second Quarter Accomplishments:
The Company has previously announced:
- Paradigm Genetics expanded its liver toxicity collaboration with the
National Institute of Environmental Health Sciences to include the
study of four to six additional known liver toxicants.
- Paradigm Genetics expanded the technology focus of its toxicogenomics
research programs with the NIEHS to include additional work using small
interfering ribonucleic acid (siRNA) technology.
- Paradigm Genetics was awarded a Fast Track Small Business Innovation
Research Phase I/II contract from the National Institute of
Environmental Health Sciences, National Institutes of Health, for
biomarkers that predict the early onset of drug-induced liver injury.
- Paradigm Genetics was awarded a second Fast Track Small Business
Innovation Research Phase I/II contract from the National Institutes of
Health for Biomarker research in alcohol induced liver and brain
injury.
- Pharmaceutical Executive Peter G. Tombros, current Chairman and CEO of
VivoQuest, and former President and CEO of Enzon, Inc. and senior
executive of Pfizer, Inc. joined Paradigm's Board of Directors during
the second quarter.
About Paradigm Genetics
Paradigm Genetics is a biotechnology company applying its proprietary
systems biology platform to the discovery of safer, more effective drugs and
agrochemicals. 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 4:30 p.m. ET on Monday, August 2,
2004 to review financial results for the three months ended June 30, 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 800-361-0912 (U.S. and Canadian callers) or 913-981-5559
(international callers) and enter conference ID #305523. A replay of the
webcast will be available via telephone from 6:30 p.m. on August 2, 2004
through midnight on August 5, 2004 at 888-203-1112 (U.S. and Canadian callers)
or 719-457-0820 (international callers) and enter conference ID #305523. A
replay of the webcast will also be available via website until August 1, 2005.
PARADIGM GENETICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
Revenues:
Revenues from commercial
and government
contracts $5,910,000 $5,282,000 $10,276,000 $9,121,000
Grant revenues 344,000 315,000 867,000 543,000
Total revenues 6,254,000 5,597,000 11,143,000 9,664,000
Operating expenses:
Research and
development 6,755,000 6,513,000 12,877,000 12,345,000
Selling, general and
administrative 3,056,000 2,446,000 5,454,000 4,698,000
Total operating
expenses 9,811,000 8,959,000 18,331,000 17,043,000
Loss from operations (3,557,000) (3,362,000) (7,188,000) (7,379,000)
Other interest income
(expense), net (64,000) (104,000) (126,000) (228,000)
Net loss from continuing
operations (3,621,000) (3,466,000) (7,314,000) (7,607,000)
Discontinued operations 3,000 (121,000) 26,000 (96,000)
Net loss attributable to
common stockholders $(3,618,000) $(3,587,000) $(7,288,000) $(7,703,000)
Net loss per share -
basic and diluted
Loss from continuing
operations $(0.10) $(0.11) $(0.21) $(0.24)
Loss from discontinued
operations (0.00) (0.00) (0.00) (0.00)
Net loss per common share $(0.10) $(0.11) $(0.21) $(0.24)
Weighted average common
shares outstanding -
basic and diluted 36,241,000 32,068,000 34,833,000 32,054,000
Paradigm Genetics, Inc.
2004 Second-Quarter Results
Condensed Balance Sheet Data
June 30, December 31,
2004 2003
(unaudited)
Assets:
Cash, cash equivalents, short-term
investments $10,723,000 $16,285,000
Other current assets 2,388,000 4,005,000
Total Current Assets 13,111,000 20,290,000
Property plant & equipment net 16,486,000 17,337,000
Other noncurrent assets 5,180,000 1,827,000
Total Assets $34,777,000 $39,454,000
Liabilities and Stockholders' Equity:
Current liabilities 13,772,000 16,094,000
Contingent Purchase Consideration 1,108,000 ---
Long-term obligations 2,816,000 3,846,000
Stockholders' equity 17,081,000 19,514,000
Total Liabilities and Stockholders' Equity $34,777,000 $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 Six Months Ended
June 30 June 30
2004 2003 2004 2003
Net cash used in
operating activities $(1,887,000) $(557,000) $(3,660,000) $(3,446,000)
Net cash (used in)
provided by investing
activities, excluding
purchases and maturities
of short-term and
long-term investments (348,000) (122,000) 1,757,128 (139,000)
Net cash used in
financing activities (2,236,000) (1,053,000) (3,658,000) (2,157,000)
Net decrease in cash,
cash equivalents,
short-term investments
and long-term
investments (4,471,000) (1,732,000) (5,561,000) (5,742,000)
Cash, cash equivalents,
short-term investments
and long term
investments, beginning
of period 15,193,000 17,222,000 16,285,000 21,232,000
Cash, cash equivalents,
short-term investments
and long term
investments, end of
period $10,723,000 $15,490,000 $10,723,000 $15,490,000
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 in the amount of $0.05 million and
$0.04 million for the three months ended June 30, 2004 and 2003, respectively,
and by $3.0 million and $6.1 million for the six months ended June 30, 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 and
long-term investments of $6.1 million and $6.0 million, and $9.3 million and
$9.2 million for the three months ended June 30, 2004 and 2003, respectively
and by $9.1 million and $6.0 million, and $15.3 million and $9.2 million for
the six months ended June 30, 2004 and 2003, respectively. 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 for understanding drug toxicities and human
disease, its future commercialization opportunities and plans for future
growth. 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, potential NASDAQ
delisting, 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 and in its quarterly report on Form 10-Q for the quarter
ended March 31, 2004, each 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:
Brian Ritchie or Mark Vincent of Euro RSCG
Life NRP, +1-212-845-4200
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