SAN DIEGO, Aug. 9 /PRNewswire-FirstCall/ -- Nanogen, Inc. , developer of advanced diagnostic products, today reported its unaudited financial results for the quarter ended June 30, 2006.
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Total revenues for the second quarter of 2006 more than doubled to $6.3 million from $3.1 million in the same period in 2005. Product revenues for the second quarter of 2006 were $4.0 million as compared to $1.1 million for the second quarter of 2005, due largely to acquired products from Spectral and Amplimedical.
“Nanogen continues to experience significant revenue growth, in large part due to our successful acquisition strategy,” said Howard C. Birndorf, Nanogen’s chairman of the board and CEO. “We experienced world-wide sales increases across our diagnostic product lines from the second-generation microarray platform, the NanoChip(R)400, to our real-time PCR and point-of-care products. We have successfully integrated a number of companies with our acquisition strategy, and we will now focus on managing our operational and product costs to ensure the long-term success of the company.”
For the quarter ended June 30, 2006, Nanogen’s net loss was $14.1 million or $0.23 per share, compared to a net loss of $9.7 million or $0.20 per share in the same period of 2005. Nanogen’s research and development, and selling, general and administrative operating expenses for the second quarter of 2006 were $15.5 million compared to $11.6 million in the same quarter a year ago. The increased loss and the increase in expenses were primarily due to an increase of $1.3 million in non-cash share-based compensation expense and $2.9 million of expenses attributable to the inclusion of three additional businesses, Jurilab Ltd., Amplimedical and Spectral, with no comparable expenses in the second quarter of 2005. Jurilab is a Finnish genomics company in which Nanogen owns an interest and whose expenses are consolidated with Nanogen’s results.
Nanogen’s consolidated cash, cash equivalents and short-term investments balance at the end of the second quarter of 2006 decreased to $18.6 million, from $32.4 million in the first quarter of 2006. This was primarily due to working capital requirements and an additional $1.5 million in investments into Jurilab Ltd.'s equity, and the increase of $2.5 million in restricted cash to securitize a letter of credit as a part of the company’s acquisition of Amplimedical’s assets. In July of 2006 to ensure the company continues to have an appropriate amount of working capital, Nanogen issued $4.0 million of equity under its equity line of credit arrangement and subject to certain limitations and conditions, up to $21.0 million remains available under its equity line of credit.
Financial Guidance for 2006:
Nanogen expects revenue growth to continue and will focus on improving modified EBITDA, which it expects to improve between now and year-end.
Modified EBITDA failed to decline as expected in the second quarter due primarily to higher than expected product costs. Management remains committed to improving this measure of performance in future quarters.
Three months ended Three months ended March 31, June 30, 2006 2006 (Unaudited) (Unaudited) Net loss $(12,021) $(14,051) Add depreciation and amortization 1,349 1,724 EBITDA (10,672) (12,327) Add stock-based compensation 1,446 1,580 Add Jurilab net loss 1,073 1,681 Add warrant valuation adjustment 25 (88) Modified EBITDA $(8,128) $(9,154)
Management uses the non-GAAP modified EBITDA net loss for financial guidance because management does not consider non-cash stock based compensation expense, minority owned Jurilab’s results of operations, or the non-cash warrant valuation adjustments in evaluating the performance of continuing operations of the company. Management focuses on cash management and the company’s majority-owned subsidiaries as they are indicative of the success or failure of on-going business operations. Therefore, management calculates the modified EBITDA net loss provided in this earnings release and the resulting financial guidance for 2006 to enable investors to analyze further and more consistently the period-to-period financial performance of our business operations. Management believes that by providing investors with this non-GAAP measure it gives the investor additional important information to enable them to assess, in a way management assesses, the company’s current and future continuing operations. These non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP measures used by other companies.
Webcast of Conference Call
Nanogen management will host a conference call to discuss the second quarter 2006 results today at 4:30 p.m. Eastern (1:30 p.m. Pacific). Interested investors and others may participate in the conference call by dialing (877) 407-9205 for US/Canada participants and (201) 689-8054 for international participants.
Audio of management’s presentation will be available via live webcast on the investor relations section of Nanogen’s corporate website at www.nanogen.com, and will be archived for 90 days. A digital recording of the call will also be available for 48 hours, beginning two hours after the completion of the conference call on August 9, and can be accessed via telephone at (877) 660-6853 for US/Canada participants and (201) 612-7415 for international participants. The account number, 286, along with the conference ID, 210352, will be required to listen to the playback.
About Nanogen, Inc.
Nanogen’s advanced technologies provide researchers, clinicians and physicians worldwide with improved methods and tools to predict, diagnose, and ultimately help treat disease. The company’s products include real-time PCR reagents, the NanoChip(R)400 electronic microarray platform and a line of rapid, point-of-care diagnostic tests. Nanogen’s ten years of pioneering research involving nanotechnology holds the promise of miniaturization and continues to be supported for its potential for diagnostic and biodefense applications. For additional information please visit Nanogen’s website at www.nanogen.com.
Nanogen Forward-Looking Statement
This press release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including whether patents owned or licensed by Nanogen will be developed into products, whether the patents owned by Nanogen offer any protection against competitors with competing technologies, whether products under development can be successfully developed and commercialized, whether results reported by our customers or partners can be identically replicated, and other risks and uncertainties discussed under the caption “Factors That May Affect Results” and elsewhere in Nanogen’s Form 10-K or Form 10-Q most recently filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Nanogen disclaims any intent or obligation to update these forward-looking statements.
NANOGEN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value and share data) June 30, December 31, 2006 2005 (unaudited) ASSETS Current assets: Cash and cash equivalents $7,893 $6,194 Short-term investments 10,725 26,185 Receivables, net 4,828 2,141 Inventories, net 6,935 3,724 Other current assets 2,051 1,457 Total current assets 32,432 39,701 Property and equipment, net 9,790 7,590 Acquired technology rights, net 19,307 9,604 Restricted cash 4,140 1,794 Other assets 2,115 2,214 Goodwill 39,078 37,178 Total assets $106,862 $98,081 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $10,489 $7,728 Acquisition payable, secured by letter of credit 2,570 -- Deferred revenue 676 535 Common stock warrants 22 86 Current portion of debt obligations 645 701 Total current liabilities 14,402 9,050 Debt obligations, less current portion 460 643 Debt obligation of variable interest entity 6,366 7,245 Other long-term liabilities 7,666 6,648 Commitments and contingencies Stockholders’ equity: Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized at June 30, 2006 and December 31, 2006; no shares issued and outstanding at June 30, 2006 and December 31, 2005 -- -- Common stock, $0.001 par value, 135,000,000 shares authorized at June 30, 2006 and December 31, 2005; 64,503,446 and 54,794,648 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively 65 55 Additional paid-in capital 422,027 396,297 Accumulated other comprehensive loss (584) (189) Deferred compensation (35) (2,218) Initial capital deficit of consolidated variable interest entity, net (4,839) (6,856) Accumulated deficit (337,728) (311,656) Treasury stock, at cost, 505,830 shares at June 30, 2006 and December 31, 2005 (938) (938) Total stockholders’ equity 77,968 74,495 Total liabilities and stockholders’ equity $106,862 $98,081 NANOGEN, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenues: Product sales $4,016 $1,078 $6,138 $2,288 License fees 1,814 1,623 3,628 3,323 Contracts and grants 481 434 897 700 Total revenues 6,311 3,135 10,663 6,311 Costs and expenses (1): Cost of product sales 4,023 1,128 6,262 2,274 Research and development 6,552 5,160 12,812 10,072 Selling, general and administrative 8,928 6,410 16,297 12,377 Amortization of purchased intangible assets 730 392 1,290 785 Total costs and expenses 20,233 13,090 36,661 25,508 Loss from operations (13,922) (9,955) (25,998) (19,197) Other income (expense): Interest income, net 98 309 278 488 Other expense (300) (22) (397) (110) Warrant valuation adjustment 88 (44) 63 837 Gain (loss) on foreign currency translation (15) (9) (18) 4 Total other income (loss) (129) 234 (74) 1,219 Net loss $(14,051) $(9,721) $(26,072) $(17,978) Net loss per share -- basic and diluted $(0.23) $(0.20) $(0.50) $(0.38) Number of shares used in computing net loss per share -- basic and diluted 61,477 47,783 51,917 47,778 (1) The effect of share based payments and the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share Based Payment” (123R) on loss from operations is as follows: Cost of product sales $73 $-- $135 $-- Research and development 478 -- 878 -- Selling, general and administrative 1,029 313 2,013 612 Amortization of purchased intangible assets -- -- -- -- Total stock-based compensation expense $1,580 $313 $3,026 $612
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CONTACT: Robert Saltmarsh, Chief Financial Officer, +1-858-410-4600, orSuzanne Clancy, Corporate Communications, +1-858-410-4688,sclancy@nanogen.com, both of Nanogen, Inc.; or Media & Investor Relations,Carolyn Hawley of Porter Novelli Life Sciences, +1-619-849-5375,chawley@pnlifesciences.com, for Nanogen, Inc.
Web site: http://www.nanogen.com/
