RESEARCH TRIANGLE PARK, N.C., Nov. 6 /PRNewswire-FirstCall/ --
Paradigm Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today
reported financial results for the third quarter ended September 30, 2002.
For the three months ended September 30, 2002, total revenue decreased 16%
to $5.2 million, compared to $6.3 million for the same period in 2001.
Despite this revenue decrease, overall profitability slightly improved when
compared to the same period last year. For the nine months ended
September 30, 2002, total revenue decreased 8% to $16.4 million compared to
$17.8 million for the same period in 2001. The decrease in revenue, which we
anticipated, resulted primarily from lower throughput in the GeneFunction
Factory(TM) under Paradigm's commercial partnership with Bayer AG. This lower
throughput was due to Paradigm's shift from the target discovery phase of the
Bayer partnership to the assay development phase. The revenue decrease was
partially offset by higher throughput in GeneFunction Factory(TM) under the
commercial partnership with The Monsanto Company and revenue from the VDDI
research collaboration, which was signed in February 2002.
Total operating expenses for the three months ended September 30, 2002
decreased 12% to $9.0 million compared to $10.2 million for the same period in
2001. Total operating expenses for the nine months ended September 30, 2002
were $30.2 million compared to $30.3 million for the same period in 2001. The
decrease in operating expenses resulted primarily from our internal
restructuring which we completed in April 2002 and continued cost control.
Including non-cash compensation charges, the company reported a third
quarter 2002 net loss of $3.9 million, or $0.12 per common share. This
compares to a net loss of $4.1 million, or $0.15 per common share, for the
same period in 2001. Excluding the non-cash compensation charges, the net
loss for the three months ended September 30, 2002 would have been
$3.8 million, or $0.12 per common share. For the nine months ended
September 30, 2002, the company reported a net loss of $14.2 million, or $0.44
per common share, which includes non-cash compensation charges of $544,000.
This compares to a net loss of $12.4 million, or $0.47 per common share, for
the same period in 2001.
"In the past 90 days, we set our strategy and secured a key toxicogenomics
contract, resulting in the creation of important momentum for the company,"
said Heinrich Gugger, Ph.D., president and CEO. "This momentum has enabled us
to hire two very accomplished executives -- Phil Alfano as Chief Financial
Officer and Barry Buzogany as General Counsel -- thus completing our executive
team. We now have the necessary competence and firepower to shift gears from
strategy to implementation and to tackle the growth opportunities inherent in
our new approach.
"Our goal now is to expand the market access for our suite of proven and
emerging technologies. We believe we can significantly improve the research
productivity of our existing and future partners by applying our gene
expression and biochemical profiling technologies and data coherence tools
throughout the full product lifecycle, from early discovery to in-market
products."
Highlights
During the third quarter 2002, Paradigm:
* Received a five-year, $23.8 million toxicogenomics contract from the
National Institute of Environmental Health Sciences. The contract is focused
on determining how toxicants work and cause damage at the cellular level. The
research may result in better methods of risk assessment and compound
optimization for both the pharmaceutical and agricultural chemical industries.
* Paradigm and Agilent Technologies Inc. announced the commercial
availability of an Arabidopsis microarray kit featuring more than 14,800 plant
gene sequences derived from public domain databases. The specific gene
sequences contained on one industry-standard glass slide will enable
scientists to conduct high-content, genome-wide screening of Arabidopsis
thaliana, a model organism used in the research and development of new plants
and foods.
* Paradigm's Board of Directors appointed Heinrich Gugger, Ph.D., as
President and Chief Executive Officer. Dr. Gugger brings to Paradigm
extensive general management experience in a wide variety of industries,
including crop protection, electronic materials, and laser applications.
* Paradigm appointed Thomas Colatsky, Ph.D., to the position of Vice
President, Healthcare Research. Colatsky brings significant pharmaceutical
industry experience to Paradigm, including 17 years at Wyeth-Ayerst, most
recently as Vice President, Cardiovascular and Metabolic Disorders, Discovery
Research and three years at Physiome Sciences as Executive Vice President and
Chief Scientific Officer.
Strategic Actions
In line with Paradigm's efforts to focus its business and restructure its
current economics in line with its strategy, the company took the following
actions:
* Completed a revision of its research plan in its commercial partnership
with Monsanto, providing an improved product to Monsanto, in line with
its current agbiotech strategy. This rescope has no effect on the
company's cash projection. However, it alters the timing of revenue
recognition. The revised partnership better captures efficiencies
developed in the GeneFunction Factory(TM) resulting in improved
profitability for Paradigm.
* Decided to divest ParaGen, its plant genotyping business. This business
is not envisioned as adding to our toxicogenomics and biomarker
discovery program. We feel ParaGen will be more attractive to companies
focused on plant breeding.
* Decided to sell its fungicide assets, which are not capitalized on the
company's books.
* Deferred providing further research services to the fermentation and
nutrition industries.
As a result of these strategic actions, Paradigm revises its guidance for
fourth quarter 2002 from a $0.12 loss per share to a $0.29 loss per share.
"It is very important to understand that the increase in the fourth
quarter 2002 loss is not performance related and does not affect cash flow
negatively. Rather, it is a reflection of critical decisions to improve our
profitability, sharpen our focus and better position us for 2003 and beyond,"
said Gugger. "The Monsanto rescope affects the timing, not the amount, of the
revenues. The ParaGen divestiture is financially neutral and frees up
essential resources."
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. 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 commercial and government partners. For more
information, visit http://www.paradigmgenetics.com.
Note: Paradigm will host a conference call at 8:30 a.m. EST on
Thursday, November 7, 2002 to review financial results for the three months
ended September 30, 2002. This call will be broadcast simultaneously via the
Internet at http://www.paradigmgenetics.com and will be accessible through the
investor relations section and homepage of Paradigm's web site through
November 21, 2002. 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 Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenues:
Collaborative research
agreements $5,154,581 $6,250,701 $16,276,221 $17,629,795
Grant revenues 74,991 -- 74,991 129,729
Total revenues 5,229,572 6,250,701 16,351,212 17,759,524
Operating expenses:
Research and development
(includes $77,824 and
$100,463 of stock based
compensation expense for
the three months ended
September 30, 2002 and
September 30, 2001,
respectively, and includes
$272,362 and $461,244 of
stock based compensation
expense for the nine
months ended
September 30, 2002 and
September 30, 2001,
respectively;) 6,388,020 7,382,283 22,146,454 20,713,714
Selling, general and
administrative (includes
$50,488 and $118,317 of
stock based
compensation expense
for the three months
ended September 30, 2002
and September 30, 2001,
respectively, and
includes $271,641 and
$392,330 of stock
based compensation
expense for the nine
months ended
September 30, 2002 and
September 30, 2001,
respectively;) 2,606,069 2,794,433 8,057,482 9,566,756
Total operating
expenses 8,994,089 10,176,716 30,203,936 30,280,470
Loss from
operations (3,764,517) (3,926,015) (13,852,724) (12,520,946)
Other income (expense), net
Interest income 233,645 359,787 929,632 1,444,259
Interest expense (312,354) (490,456) (1,145,109) (1,414,488)
(Loss) Gain on sale
of assets (89,743) -- (89,743) 126,671
Other income (expense),
net (168,452) (130,669) (305,220) 156,442
Net loss $(3,932,969) (4,056,684) $(14,157,944) (12,364,504)
Net loss per share
- basic and diluted $(0.12) $(0.15) $(0.44) (0.47)
Weighted average
common shares
outstanding - basic
and diluted 31,993,748 26,347,387 31,958,180 26,254,351
Paradigm Genetics, Inc.
2002 Third-Quarter Results
Condensed Balance Sheet Data
September 30, December 31,
2002 2001
(unaudited)
Assets:
Cash, cash equivalents, short-term
investments $9,369,282 $10,735,521
Other current assets 8,706,076 8,497,284
Total Current Assets 18,075,358 19,232,805
Long term investments 14,090,225 32,256,050
Property plant & equipment net 24,255,062 27,854,068
Other noncurrent assets 5,389,932 5,744,086
Total Assets $61,810,577 $85,087,009
Liabilities and Stockholders' Equity (Deficit):
Current liabilities 17,452,421 24,164,651
Long-term obligations 4,343,523 7,678,395
Stockholders' equity 40,014,633 53,243,963
Total Liabilities and Stockholders' Equity
(Deficit) $61,810,577 $85,087,009
This press release contains forward-looking statements, including
statements regarding Paradigm's ability to increase R&D productivity by
focusing its integrated suite of technologies on the product development
cycle, from target discovery to the subsequent enhancement of the safety and
efficacy profiles of development candidates; the ability of the company to
understand gene function in the context of biological pathways; the prospects
of Paradigm to develop assays and biomarkers for molecular diagnostic
solutions tailored to the needs of its partners; Paradigm's ability to meet or
exceed the expectations of its partners and customers; as well as Paradigm's
prospects for growth and innovation. 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 June 30, 2002, 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, Manager, Corporate
Communications of Paradigm Genetics, Inc., +1-919-425-3000, or
Amy Garay of Noonan Russo Presence Euro RSCG, +1-212-845-4200,
for Paradigm Genetics, Inc.
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