RESEARCH TRIANGLE PARK, N.C., March 24 /PRNewswire-FirstCall/ -- Biotechnology company Icoria, Inc. announced today that it is transitioning from agricultural R&D activities to concentrate on an aggressive program to discover and validate targets and potential drug candidates for the treatment of diabetes, obesity and liver injury. The company will leverage its metabolomics expertise, gene expression profiling proficiency, quantitative tissue analytics software and proprietary computational capabilities to focus on biomarker-enabled drug discovery.
The transition is facilitated by the sale of Icoria's agricultural genomics assets to Monsanto Company and by an amendment to the existing Monsanto contract. This transaction will have a $15 million direct impact to Icoria, including cash consideration of $6.75 million, reduced lease obligations of $5.2 million and $3 million in net cash flow benefit from the amendment. In addition, Icoria expects to yield $4 million in annual savings associated with lower general and administrative costs. Cash of $4.75 million was paid at signing with the remaining $2 million due in January 2006.
"This agreement is a win for Icoria's shareholders," said Steve Burrill, Chairman of the Icoria Board of Directors. "Icoria is now a streamlined, pure-play healthcare focused biotech with a stronger balance sheet and a lower burn rate."
"The sale of the majority of our agricultural R&D assets to Monsanto is highly strategic for Icoria," said Heinrich Gugger, Ph.D., President and CEO. "It allows us to explore broader strategic options and focus resources on the healthcare market and on our own program of biomarker identification and biomarker-enabled drug discovery in diabetes, obesity and related disorders."
New Company Direction
"The Monsanto deal is a bold step that reduces the size of Icoria and complexity of our business model," said Gugger. "We will be lean and focused with a much lower cost structure."
Icoria, which ended 2004 with 188 employees, expects to have fewer than 120 by the end of the second quarter. In addition to the approximately 60 employees that are expected to join Monsanto, Icoria recently reduced staffing at its Pittsburgh office. Approximately 20 Icoria personnel will provide transition services to Monsanto through the end of the year.
After the divestiture, the company's business activities will include:
-- Biomarkers and Drug Discovery, which uses metabolomics, gene
expression profiling and quantitative tissue analysis to identify
novel diagnostics, drug targets, and drug candidates. These platforms
are core to the company's internal discovery program but will also be
available to pharmaceutical and biotechnology companies through
-- Paradigm Array Labs(TM), which provides GLP-compliant RNA preparation,
transcript profiling and data analysis and microarray services using
Affymetrix Genechip(R) Gene Expression Analysis Arrays, Agilent Oligo
Microarrays and proprietary MirChip(TM) technology Icoria developed
with Rosetta Genomics, as well as Laser Capture Microdissection and
the ability to process paraffin-embedded tissues. Paradigm Array Labs
is primarily a service organization, providing array processing on a
fee-for-service basis, as well as supporting Icoria's internal
"Despite the scientific success and commercial progress of our agricultural business, we do not believe that the limited growth potential of a consolidating agricultural market can support us in the long term," said Gugger. "We will exit the agricultural business after our contractual obligations with Pioneer Hi-Bred and DuPont Crop Sciences draw to a close."
"I am very pleased that so many of our people will be able to continue to develop this exciting discovery platform under the auspices of a large, global agricultural company," continued Gugger. "Monsanto has more resources to fund and develop the GeneFunction Factory(TM) platform in transgenic plant applications than Icoria could hope to provide."
Biomarker Enabled Drug Discovery
Biomarker-enabled drug discovery represents a new approach that seeks to develop safer, more effective drugs at reduced cost and risk by identifying biological characteristics, or biomarkers, that are used to monitor drug action, predict patient response and stage disease. Icoria combines data from a variety of sources to discover biomarkers that associate closely with a disease state or the effects of a drug. These biomarkers can be used in the drug development process to select doses, stratify patients and provide sensitive, early signals of drug efficacy or adverse response.
The importance of biomarkers in guiding patient selection and medical decision-making has been highlighted in an FDA guidance document called "Challenge and Opportunity on the Critical Path to New Medical Products" issued in March 2004.
"Our biomarker and target discovery platform integrates gene expression, metabolomics, and quantitative tissue analysis with strong capabilities in computational biology," said Thomas Colatsky, Vice President of Healthcare Research. "We are already working with several pharmaceutical and biotechnology clients to discover biomarkers using individual components of our platform on a standalone basis. In our internal development programs, we use the combined analysis of all three data streams to discover unique biomarkers and previously unidentified drug targets. These will become part of an evolving portfolio of proprietary therapeutic products for Icoria."
Icoria's internal development programs will focus on the diabetes and metabolic disorders therapeutic area for three reasons: A critical need for new drugs and diagnostics in a therapeutic area with a growing patient population; initial research the company has done in preclinical models of disease; and Icoria's extensive knowledge of liver injury and metabolism, based on the company's gene expression, metabolomic and histomorphometry studies. Diabetes is also an area where Icoria's research staff has previous drug discovery and development experience at leading pharmaceutical companies.
"In diabetes, we are interested in biomarkers that may detect the disease at an earlier stage than current tests. We are also interested in the role of liver metabolism in the development and progression of insulin resistance and obesity. Our plan is to identify new drugs and drug targets that build on a clearer picture of the multiple stages of diabetes and how it affects the body," said Colatsky.
Conference Call Scheduled
Icoria's management team will conduct a conference call and webcast today at 4:30 p.m. ET to discuss the company's new direction and Icoria's year-end results. Interested participants should call 1-800-289-0496 or, for those calling internationally, 1-913-981-5519. The conference call ID number is 4676929. Icoria encourages participants to dial in 10 minutes before the call commences.
The webcast can be accessed from Icoria's web site at http://www.icoria.com/ by clicking on the Investor Relations link. For those unable to participate in the live call, replays of the call may be heard online at http://www.icoria.com/ or by calling (U.S.) 1-888-203-1112 or (International) 1-719-457-0820 until midnight, March 28, 2005.
Icoria, Inc. is a biotechnology company that uses gene expression, metabolomics and tissue feature profiling to identify biomarkers to accelerate drug discovery. In addition to its internal drug discovery program, the company provides services to clients in the pharmaceutical, biotech, agriculture, academic and public health research sectors, and has major contracts with the National Institute of Environmental Health Sciences and Pioneer Hi-Bred International (a subsidiary of DuPont). Icoria also has a major grant from the National Institute of Standards & Technology's Advanced Technology Program. For more information, visit http://www.icoria.com/ .
This press release contains forward-looking statements that include but are not limited to the Company's expectations for its evolving business focus, biomarker-enabled drug development platform and potential revenue 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 Icoria'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 Icoria'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 September 30, 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.