Revenues up 27%, net loss reduced by 28%;
Company accelerates focus on growth opportunities
RESEARCH TRIANGLE PARK, N.C., Aug. 6 /PRNewswire-FirstCall/ -- Paradigm
Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today reported
financial results for the quarter ended June 30, 2003. During the second
quarter, the company continued its positive trend by announcing increased
revenues over the first quarter and further reductions in its net loss and
improved cash flow from operations.
Paradigm reported a second quarter 2003 net loss of $3.6 million, or $0.11
per common share, which is a 28% improvement over second quarter 2002 net loss
of $5.0 million, or $0.16 per common share. The loss is in line with earlier
guidance provided by the company of $0.10 to $0.12 loss per common share.
Total revenues for second quarter 2003 increased 27% to $5.6 million
compared to $4.4 million in the second quarter 2002. This improvement was
primarily due to increases in revenues recognized from the new National
Institute of Environmental Health Sciences contract, a one-time service
contract and the Advanced Technology Program grant -- compared to no revenues
for these programs in the second quarter 2002. These increases were partially
offset by anticipated decreases in revenues from Bayer CropSciences and The
Monsanto Company. For the first six months of 2003, revenues decreased 4% to
$9.7 million compared to $10.1 million for the same period in 2002. This
decrease was primarily due to anticipated decreases in revenues from Bayer
CropSciences and The Monsanto Company, partially offset by revenues from the
new NIEHS contract, a one-time service contract and the Advanced Technology
Program grant.
While making targeted investments in its R&D programs for human health and
agriculture, Paradigm continued to reduce overall operating expenses. Total
expenses for second quarter 2003 decreased 7% to $9.0 million compared to
$9.6 million in second quarter 2002. For the first six months of 2003,
operating expenses decreased 16% to $17.0 million compared to $20.2 million
for the same period in 2002, due primarily to reduced payroll expenses and
other cost control measures.
As further evidence of its improving financial health, the Company
reported:
* Paradigm used approximately $1.7 million of cash in second quarter 2003
compared to a use of $4.0 million in first quarter 2003 and $4.4 million
in second quarter 2002.
* Net cash used in operating activities decreased 81% to $0.6 million in
second quarter 2003 compared to $2.9 million in first quarter 2003.
* Capital expenditures in second quarter 2003 were held to $0.3 million.
The company expects that the need for new capital expenditures will
continue to remain at significantly lower levels than those experienced
in prior years.
* Debt payments in second quarter 2003 remained consistent with previous
quarters at $1.1 million. The $7.5 million refinancing with Silicon
Valley Bank -- which closed in July 2003 and, therefore, is not included
in second quarter 2003 results -- enabled Paradigm to pay off its
approximately $3 million equipment loan with Transamerica Technology
Finance, provided a $2.5 million revolving line of credit, and increased
working capital by an additional $3.0 million. The new financing is at
substantially lower rates and will reduce scheduled debt payments by
approximately $0.6 million for the remainder of the year.
* While revenues were up $1.5 million, or 38%, to $5.6 million in second
quarter 2003 from the first quarter 2003, total operating expenses only
increased $0.9 million, or 11%, to $9.0 million for the same period.
Further, approximately $0.5 million of the increase in expenses related
to non-recurring charges.
* As of June 30, 2003, the company reported unrestricted cash and
investments in the amount of $15.5 million, in the form of cash, cash
equivalents, short- and long-term investments, compared to $17.2 million
at the end of the first quarter 2003. On a pro forma basis, if the
refinancing with Silicon Valley Bank had closed on June 30, 2003,
unrestricted cash plus amounts available under the revolving line of
credit would have totaled $19.6 million. The company forecasts a year-
end 2003 balance of unrestricted cash plus amounts available under the
revolving line of credit of at least $13.0 to $15.0 million.
"Our improved cash flow is direct evidence of the financial and
operational improvements we've made in the past 12 months. Proactive
management of challenges such as delays in contract revenues or the Nasdaq
listing situation is now paying a dividend," said Heinrich Gugger, Ph.D.,
President and CEO of Paradigm Genetics. "The recent refinancing with Silicon
Valley Bank, along with rigorous cash controls and operations improvements,
further solidifies our financial position and creates greater flexibility for
us. Recent increases in work flow from the NIEHS contract and the opportunity
for increased revenues from our ATP grant help partially offset the normal
delays in closing new deals with large companies."
"Looking forward," Gugger said, "we are focused on building on our core
competencies and providing results for our existing and future commercial
partners. Additionally, to take Paradigm to the next level, we will leverage
our technology platforms to create a portfolio of proprietary products for our
human health business and novel product concepts for our agricultural
business. By doing so, we can create the opportunity for long-term,
sustainable growth and a sustainable competitive advantage for Paradigm."
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.
Quarterly Conference Call
Paradigm will host a conference call at 8:30 a.m. ET on Thursday,
August 7, 2003 to review financial results for the three months ended
June 30, 2003. 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
homepage of Paradigm's web site through August 21, 2003. Contact Investor
Relations at (919) 425-3000 for information on accessing a taped replay via
telephone.
Financial Charts Follow
PARADIGM GENETICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenues:
Revenues from commercial
and government
contracts $ 5,282,000 $ 4,414,000 $ 9,121,000 $ 10,057,000
Grant revenues 315,000 -- 543,000 --
Total revenues 5,597,000 4,414,000 9,664,000 10,057,000
Operating expenses:
Research and development
(includes $190,000 and
$90,000 of stock based
compensation expense for
the three months ended
June 30, 2003 and June 30,
2002, respectively, and
includes $326,000 and
$195,000 of stock based
compensation expense for
the six months ended
June 30, 2003 and June 30,
2002,
respectively;) 6,513,000 7,089,000 12,345,000 14,721,000
Selling, general and
administrative (includes
$245,000 and $62,000 of
stock based compensation
expense for the
three months ended
June 30, 2003
and June 30, 2002,
respectively, and
includes $394,000
and $221,000 of
stock based compensation
expense for the six
months ended June 30, 2003
and June 30, 2002,
respectively;) 2,446,000 2,506,000 4,698,000 5,451,000
Total operating
expenses 8,959,000 9,595,000 17,043,000 20,172,000
Loss from
operations (3,362,000) (5,181,000) (7,379,000) (10,115,000)
Other interest
income (expense),
net (104,000) (81,000) (228,000) (137,000)
Net loss from continuing
operations (3,466,000) (5,262,000) (7,607,000) (10,252,000)
Discontinued
operations (121,000) 254,000 (96,000) 27,000
Net loss attributable
to common
stockholders $(3,587,000) $(5,008,000) $(7,703,000) $(10,225,000)
Net loss per share - basic and diluted
Loss from continuing
operations $ (0.11) $ (0.16) $ (0.24) $ (0.32)
Loss from discontinued
operations (0.00) 0.01 0.00 0.00
Net loss per
common share $ (0.11) $ (0.16) $ (0.24) $ (0.32)
Weighted average
common shares
outstanding - basic
and diluted 32,068,000 31,942,000 32,054,000 31,940,000
Paradigm Genetics, Inc.
2003 Second-Quarter Results
Condensed Balance Sheet Data
June 30, December 31,
2003 2002
(unaudited)
Assets:
Cash, cash equivalents, short-term
investments $ 9,318,000 $ 10,909,000
Other current assets 5,684,000 6,500,000
Total Current Assets 15,002,000 17,409,000
Long term investments 6,172,000 10,323,000
Property plant & equipment net 19,840,000 22,431,000
Other noncurrent assets 1,707,000 2,459,000
Total Assets $ 42,721,000 $ 52,622,000
Liabilities and Stockholders' Equity:
Current liabilities $ 17,358,000 $ 18,557,000
Long-term obligations 1,524,000 3,378,000
Stockholders' equity 23,839,000 30,687,000
Total Liabilities and Stockholders' Equity $ 42,721,000 $ 52,622,000
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
2003 2002 2003 2002
Net cash used in
operating
activities $ (557,000) $ (3,197,000) $ (3,446,000) $ (9,471,000)
Net cash (used in)
provided by investing
activities, excluding
purchases and
maturities of short-term
and long-term
investments (122,000) 30,000 (139,000) (646,000)
Net cash used in
financing
activities (1,053,000) (1,245,000) (2,157,000) (4,872,000)
Net decrease in cash,
cash equivalents,
short-term investments
and long-term
investments (1,732,000) (4,412,000) (5,742,000) (14,989,000)
Cash, cash
equivalents,
short-term investments
and long term
investments,
beginning of
period 17,222,000 32,415,000 21,232,000 42,992,000
Cash, cash
equivalents,
short-term investments
and long term
investments,
end of period $15,490,000 $28,003,000 $15,490,000 $28,003,000
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 and
Long-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 and unrealized gains and losses on
investments in the amount of $0.04 million and $5.7 million for the three
months ended June 30, 2003 and 2002, respectively, and by $6.1 million and
$13.3 million for the six months ended June 30, 2003 and 2002, 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
$9.3 million and $29.3 million, and $9.3 million and $23.6 million for the
three months ended June 30, 2003 and 2002, respectively and by $15.3 million
and $36.8 million, and $9.3 million and $23.6 million for the six months ended
June 30, 2003 and 2002, 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 regarding business development
activities and near-term revenue opportunities; the financial statement impact
of the significant reduction in SG&A expense and increase in R&D investment;
and the Company's ability to hit its milestones and execute on its strategy.
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 annual report on Form 10-K
for the year ended December 31, 2002 and in its quarterly report on Form 10-Q
for the quarter ended March 31, 2003, 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:
Melissa Matson, Director, Corporate
Communications of Paradigm Genetics, Inc., +1-919-425-3000, or
Mark Vincent of Noonan Russo Presence Euro RSCG, +1-212-845-4200,
for Paradigm Genetics, Inc.
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