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TranXenoGen, Inc. (LS:TXN) Final Results For The Year Ended December 31, 2003


10/19/2005 5:10:28 PM

SHREWSBURY, Mass., March 16 /PRNewswire-FirstCall/ -- TranXenoGen, Inc. ("TranXenoGen" or the "Company"), a developer of new therapeutic production technologies and products, announces operating results for the 12 months ended December 31, 2003.

  2003 Highlights

  * 2003 net loss of $4.4 million (2002: net loss of $4.4 million) or $0.14
      loss per share (2002: $0.14 loss per share).
  * Unrestricted cash $2.2 million at December 31, 2003.
  * Intellectual property portfolio enhanced by:
      -- Issuance of U.S. Patent 6,686,199, Genetic Manipulation of
          Spermatogonia, which relates to the Company's proprietary Gene-
          Testes Transfection Technology for the production of transgenic
          animals.
       -- Notice of Allowance received by Brandeis University from the U.S.
          Patent and Trademark Office for the patent application Nuclear
          Reprogramming Using Cytoplasmic Extracts.  The patent, which has
          a priority date of February 1993, covers techniques for the
          reprogramming of somatic cell nuclei for the generation of cloned
          and/or transgenic animals and is licensed exclusively to
          TranXenoGen.
  * R&D progress during 2003:
      -- Achievement in November 2003 of a key milestone in the ANUP program
         utilizing two synthetic peptides.  In animal model studies, tumor
         growth was inhibited by up to 70% and blood vessel formation was
         impacted by inhibiting angiogenesis and infiltration.
      -- Achievement of Human Serum Albumin (HSA) expression in chimeric
          eggs at 6 ng/ml as announced in May 2003.
      -- Development of germline transgenic chickens for HSA, Insulin and
          one partner's monoclonal antibody.  Germline transgenic chickens
          are tested for expression of the protein in order to identify a
          founder line.  If successfully bred, these founder birds could be
          used initially to generate material for clinical trials and then
          for commercial production.
      -- Continued development of second-generation transgenic technology
          (Gene-Testes Transfection) with the objective of reducing
          development time by up to 50% and improving the percentage of
          transgenic birds produced by the process.
  * Implementation of short-term revenue strategies including licensing
     efforts on recently allowed cloning patents, collaboration efforts to
     obtain grants and other funding in the area of biodefense/vaccine
     development and strategic partnering project for Anti-Neoplastic
     Urinary Protein (ANUP).

  George Uveges, President and Chief Executive Officer, commented:

"2003 was a year of transition and positioning for TranXenoGen. While progress continues on the development of the avian transgenic platform, the Company has increased its focus on several potential short-term revenue opportunities:

  * Partnering of its ANUP cancer treatment.
  * Licensing  its patent portfolio, specifically its cloning patents with a
     1993 filing date.
  * Seeking funded research programs in biodefense and vaccine development.

  In addition, the Company is actively pursuing raising additional capital.

The fund raising and revenue generation efforts are progressing. In order to provide additional time to execute on these initiatives, the Company has implemented the following actions in March to reduce its cash burn rate:

  * The Non-Executive Directors have agreed to defer payment of their
    director fees for twelve months.
  * Effective as of the end of March, the Chief Executive Officer salary
    will be reduced to $60,000 per year reflecting a reduced level of
    activity.
  * Salary reductions for the three senior management personnel.
  * Reduction in workforce by 30%.
  * Spending in other areas will be reduced correspondingly.

Based on these reductions, our cash burn rate as of April 2004 will decrease to approximately $650,000 per quarter. Our current cash position should fund operations through August 2004 at this reduced burn rate. The achievement of the outlined revenue generation programs should further reduce the cash burn rate and extend the period of operation supported by our current cash balance. As a result of these reductions, the Company will reduce its efforts in non-science areas and activities related to unfunded research.

The Company has made significant progress over the last several years as it has developed its product pipeline. The Company's well-balanced strategy of developing generic products and proprietary novel therapeutic products, licensing of its Intellectual property and contract manufacturing provides a variety of commercialization opportunities. We look forward to updating our shareholders on our fundraising and revenue efforts at the Company's annual general meeting in June."

Enquiries: TranXenoGen, Inc. Tel: 001-508-936-4214 George Uveges, President and CEO Email: guveges@tranxenogen.com College Hill Associates Tel: 020-7457-2020 Nicholas Nelson Risk Warning Notice:

TranXenoGen, Inc. is a publicly traded development stage, biotechnology company. 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.

The Company is focused on developing new therapeutic production technologies and products. TranXenoGen is a development stage company and, as such, investors should be aware that an investment in the Company involves a substantially high degree of risk.

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. CONDENSED STATEMENTS OF OPERATIONS (Amounts in US Dollars) Years ended December 31, 2003 2002 Revenue: Contract revenue $- $33,333 Expenses: Selling, general and administrative 1,633,473 1,496,290 Research and development 1,647,762 1,871,691 Stock-based compensation 414,250 503,875 Depreciation and amortization 562,377 562,579 Total expenses 4,257,862 4,434,435 Operating loss (4,257,862) (4,401,102) Other Income (Expense): Interest income 39,838 132,818 Interest expense (194,709) (219,296) Other income, net 62,053 67,511 Loss before provision for income taxes (4,350,680) (4,420,069) Provision for income taxes - - Net loss $(4,350,680) $(4,420,069) Net Loss per Share: Basic and diluted $(0.14) $(0.14) Basic and diluted weighted-average common shares outstanding 32,172,904 32,071,329 The accompanying notes are an integral part of these condensed financial statements. TranXenoGen, Inc. CONDENSED BALANCE SHEETS (Amounts in US Dollars) December 31, 2003 2002 ASSETS Current Assets: Cash and cash equivalents $ 2,186,090 $ 5,526,361 Other current assets 128,684 95,529 Total current assets 2,314,774 5,621,890 Property and equipment, net 7,545,689 8,065,120 Other Assets: Restricted cash 363,785 360,130 Other non-current assets 10,643 30,202 Total other assets 374,428 390,332 Total assets $10,234,891 $14,077,342 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $215,157 $178,484 Accrued expenses and other current liabilities 224,367 235,784 Current portion of long-term debt 136,420 109,841 Total current liabilities 575,944 524,109 Long-term deferred lease income 190,583 - Long-term debt, less current portion 3,548,283 3,698,622 Commitments and contingencies Stockholders' Equity: Common stock 40,570 40,560 Treasury stock (195,659) (195,659) Additional paid-in capital 22,964,558 22,962,668 Deferred compensation (98,236) (512,486) Accumulated deficit (16,791,152) (12,440,472) Total stockholders' equity 5,920,081 9,854,611 Total liabilities and stockholders' equity $10,234,891 $14,077,342 The accompanying notes are an integral part of these condensed financial statements. TranXenoGen, Inc. CONDENSED STATEMENTS OF CASH FLOWS (Amounts in US Dollars) Years ended December 31, 2003 2002 Cash Flows from Operating Activities: Net loss $(4,350,680) $(4,420,069) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 562,377 562,579 Compensation expense related to stock options issued 414,250 503,875 Changes in assets and liabilities: Other current assets (33,155) (6,567) Accounts payable 36,673 (472,216) Accrued expenses and other current liabilities (16,534) (313,216) Proceeds from cell tower lease 197,600 - Net cash used in operating activities (3,189,469) (4,145,614) Cash Flows from Investing Activities: Additions to property and equipment (23,387) (634,325) Increase in restricted cash (3,655) (8,594) Net cash used in investing activities (27,042) (642,919) Cash Flows from Financing Activities: Exercise of stock options - 6,000 Proceeds from notes payable - 407,705 Repayment of notes payable (123,760) (91,537) Net cash (used in) provided by financing activities (123,760) 322,168 Net decrease in cash and cash equivalents (3,340,271) (4,466,365) Cash and cash equivalents, beginning of period 5,526,361 9,992,726 Cash and cash equivalents, end of period $ 2,186,090 $ 5,526,361 Supplemental disclosure of cash flow information: Cash paid for interest $196,064 $219,602 Fair value of shares of common stock used in connection with milestone payment $ 1,900 $ - The accompanying notes are an integral part of these condensed financial statements. Notes to the Condensed Financial Statements 1. Basis of Presentation and Management's Plan

The Condensed Financial Statements included in this announcement have been extracted from the audited financial statements of the Company, which have been prepared in conformity with accounting principles generally accepted in the United States. The Condensed 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.

The Company has a three-pronged business strategy 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 is currently targeting its efforts primarily on achieving the production of protein-based drugs in the egg whites of transgenic chickens. The Company is developing transgenic processes to manufacture therapeutic protein-based drugs, including Insulin, Human Serum Albumin and antibodies for strategic partners.

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.

The Company's financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, at December 31, 2003, the Company had an unrestricted cash balance of $2.2 million and liabilities of $4.1 million. The Company's cash expenses currently exceed its cash receipts, and management expects this trend to continue for the foreseeable future. These factors give rise to substantial doubt about the Company's ability to continue as a going concern.

The Company's continuation as a going concern is dependent upon its ability to continue its development activities, obtain government approvals, including that of the U.S. Food and Drug Administration, to market and/or manufacture its products, generate sales, meet its obligations, raise additional capital financing and, ultimately, attain profitable operations. Management is actively pursuing financing alternatives and potential collaborative agreements and government sponsored grants so that the Company can meet its obligations and sustain operations. The financial statements do not include any adjustments that might be necessary should the Company be unable to succeed in these efforts.

Risk Warning Notice:

TranXenoGen, Inc. is a publicly traded development stage, biotechnology company. 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.

The Company is focused on developing new therapeutic production technologies and products. TranXenoGen is a development stage company and, as such, investors should be aware that an investment in the Company involves a substantially high degree of risk.

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.

CONTACT: George Uveges, President and CEO of TranXenoGen, Inc.,001-508-936-4214, guveges@tranxenogen.com; or Nicholas Nelson of College HillAssociates, 020-7457-2020



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