GAITHERSBURG, Md., Nov. 8 /PRNewswire-FirstCall/ -- BioVeris Corporation reported today the financial results for its fiscal second quarter ended September 30, 2005.
BioVeris adopted FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46), as of March 31, 2004 based on a determination that Meso Scale Diagnostics, LLC (MSD) qualified as a variable interest entity with the Company as the primary beneficiary. Accordingly, beginning as of March 31, 2004, the Company consolidated the financial information of MSD in its financial statements. In August 2004, the Company and MSD entered into a settlement agreement that resolved litigation between the parties and constituted a reconsideration event under FIN 46. The Company has determined that it no longer meets the conditions to be designated as the primary beneficiary of MSD, as certain provisions of the settlement agreement reallocated the obligation to absorb the majority of MSD’s future expected losses and beginning August 12, 2004, the Company deconsolidated the financial results of MSD. Accordingly, the statement of operations for the quarter and six months ended September 30, 2004 includes the consolidated revenue and expenses of MSD and the quarter and six months ended September 30, 2005 includes only the financial results of BioVeris and its wholly-owned subsidiaries.
Revenues for the three months ended September 30, 2005 decreased to $6.1 million from $7.9 million in the corresponding prior year period. Of this $1.8 million decrease, $1.3 million represents MSD revenues which were consolidated with BioVeris’ revenues in the prior year. Revenues for the six months ended September 30, 2005 decreased to $11.0 million from $16.1 million in the corresponding prior year period. Of this $5.1 million decrease, $4.3 million represents MSD revenues which were consolidated with BioVeris’ revenues in the prior year.
Revenues include product sales, which were $5.8 million for the three months ended September 30, 2005, compared to $7.2 million in the corresponding prior year period. Of this $1.4 million decrease, $1.0 million was due to the consolidation of MSD’s product sales in the prior year. Product sales were $10.4 million for the six months ended September 30, 2005, compared to $15.1 million in the corresponding prior year period. Of this $4.7 million decrease, $4.0 million represents MSD product sales which were consolidated with BioVeris’ product sales in the prior year.
Sales of biodefense products for the three and six months ended September 30, 2005 were $2.9 million and $5.2 million, respectively, a decrease of $1.1 million from each of the respective prior year periods. Sales of biodefense products for the three and six months ended September 30, 2004 included a $1.3 million sale to the U.S. Air Force under a single order.
Sales of products for the life science market for the three and six months ended September 30, 2005 were $2.9 million and $5.2 million, respectively, representing increases of $700,000 and $400,000 over the respective prior year periods. These changes in product sales reflect the change of orders and product deliveries which are based on customers’ requirements.
Product costs were $2.1 million (37% of total product sales) for the quarter ended September 30, 2005 compared to $3.5 million (49% of total product sales) in 2004. The current year decrease of $1.4 million was due to the consolidation of MSD’s product costs in 2004. Product costs were $4.2 million (40% of total product sales) for the six months ended September 30, 2005 compared to $8.1 million (54% of total product sales) in 2004. The current year decrease of $3.9 million consists of $3.7 million due to the consolidation of MSD’s product costs in 2004, and a $200,000 reduction in BioVeris’ costs. BioVeris’ product costs for the three and six months ended September 30, 2005, as a percentage of total product sales, were 37% and 40%, respectively, compared to 35% and 40% for the respective prior year periods.
Research and development expenses were $4.2 million for the quarter ended September 30, 2005, compared to prior year costs of $5.6 million. The $1.4 million decrease consists of $1.0 million due to the consolidation of MSD’s research and development expenses in 2004, and a $400,000 decrease in BioVeris’ costs. Research and development expenses were $9.0 million for the six months ended September 30, 2005, compared to prior year costs of $12.7 million. The $3.7 million decrease is due primarily to the consolidation of MSD’s research and development expenses in 2004. Research and development expenses primarily relate to ongoing development costs and product enhancements associated with the M-SERIES family of products, development of new assays and research and development of new systems and technologies, including point-of-care products.
Selling, general and administrative expenses were $6.9 million in the quarter ended September 30, 2005, compared to prior year costs of $9.0 million. Of this $2.1 million decrease, $1.4 million represents MSD’s selling, general and administrative expenses in 2004. Selling, general and administrative expenses were $12.6 million in the six months ended September 30, 2005, compared to prior year costs of $18.7 million. Of this $6.1 million decrease, $4.5 million represents MSD’s selling, general and administrative expenses in 2004. BioVeris’ decrease in selling, general and administrative costs in the quarter and six months ended September 30, 2005 was primarily attributable to lower professional fees in the current year. Professional fees in the prior year included costs associated with the Company’s litigation and settlement with MSD.
Interest income was $1.3 million and $900,000 in the quarters ended September 30, 2005 and 2004, respectively, and was $2.6 million and $1.3 million in the six months ended September 30, 2005 and 2004, respectively. Interest income increased in the current year due to higher rates of return on invested funds. Interest income in the quarter and six months ended September 30, 2005 also includes approximately $400,000 and $800,000, respectively, from the accretion of income related to the note receivable from MSD. During 2004, the Company also recorded a $400,000 non-cash credit to other income representing a reduction in the value of MSD’s option to purchase its interests in MSD.
BioVeris’ net loss for the quarter ended September 30, 2005 was $6.5 million ($0.24 per common share), compared to a net loss of $45.6 million ($1.71 per common share) in 2004. The net loss for the six months ended September 30, 2005 was $13.2 million ($0.49 per common share), compared to a net loss of $58.5 million ($2.19 per common share) in 2004.
At September 30, 2005, the Company had cash, cash equivalents and short- term investments of $81.7 million.
BioVeris Corporation is a global integrated health care company developing proprietary technologies in diagnostics and vaccinology. The Company is dedicated to the commercialization of innovative products and services for healthcare providers, their patients and their communities. BioVeris is headquartered in Gaithersburg, Maryland. More information about the Company can be found at http://www.bioveris.com.
This press release contains forward-looking statements within the meaning of the federal securities laws that relate to future events or BioVeris’ future financial performance. All statements in this press release that are not historical facts, including any statements about consolidation of future financial information and future financial or operational plans are hereby identified as “forward-looking statements.” The words “may,” “should,” “will,” “expect,” “could,” “anticipate,” “believe,” “estimate,” “plan,” “intend” and similar expressions have been used to identify certain of the forward-looking statements. In this press release, BioVeris has based these forward-looking statements on management’s current expectations, estimates and projections and they are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various important factors, including changes in BioVeris’ strategy and business plans; BioVeris’ ability to develop and introduce new or enhanced products; BioVeris’ ability to enter into new collaborations on favorable terms, if at all; and changes in general economic, business and industry conditions. The foregoing sets forth some, but not all, of the factors that could impact upon BioVeris’ ability to achieve results described in any forward-looking statements. A more complete description of the risks applicable to BioVeris is provided in the Company’s filings with the SEC available at the SEC’s web site at http://www.sec.gov. Investors are cautioned not to place undue reliance on these forward-looking statements. Investors also should understand that it is not possible to predict or identify all risk factors and that neither this list nor the factors identified in BioVeris’ SEC filings should be considered a complete statement of all potential risks and uncertainties. BioVeris has no obligation to publicly update or release any revisions to these forward- looking statements to reflect events or circumstances after the date of this press release.
(Financial data follows.) BioVeris Corporation Consolidated Statement of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2005 2004 2005 2004 REVENUES: Product sales $5,789 $7,234 $10,369 $15,073 Royalty income 360 315 670 635 Contract fees - 302 - 388 Total 6,149 7,851 11,039 16,096 OPERATING COSTS AND EXPENSES: Product costs 2,118 3,538 4,166 8,142 Research and development 4,249 5,552 9,014 12,728 Selling, general, and administrative 6,897 8,951 12,578 18,661 Total 13,264 18,041 25,758 39,531 LOSS FROM OPERATIONS (7,115) (10,190) (14,719) (23,435) INTEREST INCOME 1,250 861 2,568 1,309 OTHER (EXPENSE) INCOME, NET (638) 362 (1,020) 308 EQUITY IN LOSS OF JOINT VENTURE - (2,751) - (2,751) LOSS ON JOINT VENTURE IMPAIRMENT - (33,900) - (33,900) NET LOSS $(6,503) $(45,618) $(13,171) $(58,469) Net loss per common share (Basic and Diluted) $(0.24) $(1.71) $(0.49) $(2.19) COMMON SHARES OUTSTANDING (Basic and Diluted) 26,808 26,728 26,768 26,728 BioVeris Corporation Consolidated Balance Sheet (In thousands) (Unaudited) September 30, March 31, 2005 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 28,026 $ 41,739 Short-term investments 53,637 53,890 Accounts receivable, net 5,846 4,483 Inventory 4,993 5,235 Other current assets 2,924 2,813 Total current assets 95,426 108,160 Equipment and leasehold improvements, net 2,772 3,636 OTHER NONCURRENT ASSETS: Note receivable 5,173 4,709 Technology licenses 16,331 17,306 Other 384 354 TOTAL ASSETS $ 120,086 $ 134,165 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 5,981 $ 6,457 Accrued wages and benefits 1,865 1,713 Other current liabilities 1,435 1,351 Total current liabilities 9,281 9,521 NONCURRENT DEFERRED LIABILITIES 1,062 1,890 Total liabilities 10,343 11,411 SERIES B PREFERRED STOCK, 1,000 shares designated, issued and outstanding 7,500 7,500 STOCKHOLDERS’ EQUITY: Preferred stock, par value $0.01 per share, 15,000,000 shares authorized, issuable in series: Series A, 600,000 shares designated, none issued - - Common stock, par value $0.001 per share, 100,000,000 shares authorized, 27,237,000 and 26,728,000 shares issued and outstanding, respectively 27 27 Additional paid-in capital 205,924 203,464 Deferred compensation (1,934) - Accumulated other comprehensive loss (1,345) (999) Accumulated deficit (100,429) (87,238) Total stockholders’ equity 102,243 115,254 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 120,086 $ 134,165
BioVeris Corporation
CONTACT: George Migausky of BioVeris Corporation, +1-301-869-9800, ext.2013; or Investors: Jonathan Fassberg of The Trout Group, +1-212-477-9007,ext. 16 or Media: Paul Caminiti or Andrew Cole of Citigate Sard Verbinnen,+1-212-687-8080, all for BioVeris Corporation
