TORONTO, Nov. 7 /PRNewswire-FirstCall/ - Tm Bioscience Corporation , a leader in the commercial genetic testing market, today announced its financial and operational results for the third quarter ended September 30, 2005.
"There is a great feeling of energy and confidence at Tm Bioscience. We have entrenched Tm as the dominant supplier for the cystic fibrosis (CF) screening market by developing the only CF test cleared by the FDA and by signing supply agreements for our CF products with U.S. giants LabCorp and Genzyme," said Mr. Greg Hines, President and CEO of Tm Bioscience. "At the same time, our other products in human genetics and our menu of pharmacogenomic tests continue to gain market traction. The commercialization engine we have created to bring our products from concept to market has allowed us to form partnerships for the development and manufacture of novel tests, adding to our growth potential. Now we are focused on taking hold of the next wave of opportunities that have emerged for gene-based tests. Our new upper respiratory viral panel, which detects all major respiratory viruses including Avian flu, is a prime example of how we our leveraging our technology to tackle a major clinical challenge and enormous opportunity."
"To ensure that this momentum continues unabated, we recognize our need for additional capital over the next year and are actively working to address this requirement. The focus of our activities is refinancing the debenture, which is due and payable in May of 2006, and financing of working capital needs. Currently, we are assessing various opportunities in order to optimize shareholder value."
Financial Results
For the third quarter of 2005, Tm Bioscience generated revenue of $2.2 million compared to $1.1 million for the third quarter of the previous year, an increase of 104%. For the first nine months of 2005, the Company generated revenue of $5.3 million compared to $2.5 million for the first nine months of the previous year.
Excluding period expenses due to production scale-up activities, standard reagent product margins for the third quarter of 2005 were 63% compared to 61% for the previous quarter. Standard reagent product margin is calculated by subtracting standard reagent cost of goods sold and genetic content royalty costs from reagent product sales. The result is then divided by reagent product sales for the period.
For the third quarter of 2005, total expenses were $4.5 million compared with $4.0 million for the third quarter of the previous year. For the first nine months of 2005, total expenses were $13.3 million compared with $10.6 million for the first nine months of the previous year. On a functional basis for the third quarter of 2005: cost of goods sold represented $1.1 million (24% of total expenses) compared to $0.9 million for the same period in 2004; SG&A represented $2.7 million (61%) compared to $1.9 million for the same period in 2004; and R&D represented $0.7 million (15%) compared to $1.2 million for the same period in 2004. The increase in expenses is a result of increased investment in the commercialization of the Company's business in accordance with its business plan. Specifically, the Company has added headcount across the marketing and business development, finance and administration, technical support, and medical and regulatory functions since the third quarter of 2004. Most significantly, the Company is now experiencing the annualized cost of its direct sales force established in 2004. The third quarter of 2005 also included Scientific Research and Experimental Development (SR&ED) tax credits of approximately $363,000 which offset R&D expenses.
Interest expense from long-term debt increased to $0.7 million for the third quarter of 2005 compared to $0.2 million for the third quarter of 2004 due to increased debt levels incurred in the fourth quarter of 2004.
For the third quarter of 2005, the Company reported a net loss of $3.1 million or ($0.07) per share, compared to a net loss of $3.0 million or ($0.09) per share for the third quarter of 2004. For the first nine months of 2005, the Company reported a net loss of $10.2 million or ($0.26) per share, compared to a net loss of $8.5 million or ($0.25) per share for the first nine months of 2004. In conjunction with the third quarter 2005 loss, increases in inventory balances comprised a material portion of the year-to-date working capital reduction with inventory growing to $3.1 million at the end of the third quarter from $1.9 million at December 31, 2004.
Working capital as at September 30, 2005 was $0.7 million including cash, cash equivalents and short-term investments of $8.6 million compared with $6.1 million and $5.0 million respectively at December 31, 2004. Working capital decreased by $4.7 million from the second quarter of 2005, primarily due to cash consumed by operations and to the acquisition of certain intellectual property rights from Abbott. The current portion of long-term debt was $7.7 million at the end of the third quarter of 2005 compared to nil at the end of 2004. Long-term debt at the end of the third quarter of 2005 was $1.5 million compared to $8.1 million at the end of 2004.
In October 2005, the Company received reimbursement for claims submitted under its investment agreement with the Technology Partnership Canada program. The reimbursement of $1.2 million brings the program current to March 2005. The Company expects to submit claims for the second and third quarters of 2005 prior to year end.
The Company is actively working to resolve its capital requirements which are the re-financing of its debenture which is due and payable in May of 2006 and the financing of working capital needs. Although the Company expects revenue and margins from its existing products to continue to grow significantly quarter over quarter, working capital funds would focus on accelerating the revenue streams associated with its pharmacogenetic and infectious disease portfolios as well as retaining its product introduction velocity.
Notice of Conference Call
Tm Bioscience will be holding a conference call on November 7, 2005 at 8:30 am (EST) where Mr. Greg Hines, President and CEO, and Mr. Jim Pelot, CFO will discuss the Company's third quarter 2005 results. A live audio webcast of the call will be available at www.tmbioscience.com. Webcast attendees are welcome to listen to the conference in real-time or on-demand at their convenience. A replay of the call will be archived at those sites for 90 days.
About Tm Bioscience - Putting the Human Genome to Work(TM)
Tm Bioscience is a DNA-based diagnostics company developing a suite of genetic tests. Tm Bioscience's product pipeline includes tests for genetic disorders, drug metabolism, and infectious diseases. Tm Bioscience is located in Toronto, Ontario. Additional information about Tm Bioscience can be found at www.tmbioscience.com.
Summary Financial Statements attached: The TSX Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Tm Bioscience Corporation Interim Report (Unaudited) CONSOLIDATED BALANCE SHEETS (see basis of presentation - note 1) As at As at September 30, December 31, 2005 2004 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 537,768 1,333,228 Short-term investments 8,055,764 3,679,932 Trade accounts receivable 1,863,286 1,020,966 Other accounts receivable 382,084 120,872 Inventory Prepaid expenses 3,120,660 1,855,456 108,815 84,381 ------------------------------------------------------------------------- Total current assets 14,068,377 8,094,835 ------------------------------------------------------------------------- Capital assets, net 3,459,208 3,434,821 Intangible assets, net 2,945,924 699,495 Deferred financing costs, net 241,309 535,405 ------------------------------------------------------------------------- Total assets 20,714,818 12,764,556 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 5,440,883 1,875,583 Current portion of deferred revenue 119,544 79,243 Current portion of long-term debt 7,737,561 - Income taxes payable 54,007 21,000 ------------------------------------------------------------------------- Total current liabilities 13,351,995 1,975,826 ------------------------------------------------------------------------- Deferred leasehold inducement 364,216 240,913 Deferred revenue 124,096 144,127 Deferred share units 252,575 127,896 Long-term debt 1,551,589 8,126,057 ------------------------------------------------------------------------- Total liabilities 15,644,471 10,614,819 ------------------------------------------------------------------------- Shareholders' equity Capital stock 57,934,006 43,265,955 Contributed surplus 6,665,573 8,202,511 Deficit (59,529,232) (49,318,729) ------------------------------------------------------------------------- Total shareholders' equity 5,070,347 2,149,737 ------------------------------------------------------------------------- Total liabilities and shareholders' equity 20,714,818 12,764,556 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Tm Bioscience Corporation Interim Report (Unaudited) CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT Three Months Ended Nine Months Ended September 30, September 30, --------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ ------------------------------------------------------------------------- Revenue 2,207,652 1,098,954 5,272,841 2,480,028 ------------------------------------------------------------------------- Expenses Cost of goods sold 1,085,810 924,102 2,850,021 1,740,791 Research and development 661,963 1,168,241 2,795,853 3,024,196 Sales, general and administrative 2,731,423 1,886,827 7,617,374 5,806,469 ------------------------------------------------------------------------- 4,479,196 3,979,170 13,263,248 10,571,456 ------------------------------------------------------------------------- Loss before the undernoted (2,271,544) (2,880,216) (7,990,407) (8,091,428) Interest expense from long-term debt (692,055) (172,624) (1,938,698) (520,856) Other financial (expense) income, net (90,878) 13,393 (227,707) 65,178 ------------------------------------------------------------------------- Loss before income taxes (3,054,477) (3,039,447) (10,156,812) (8,547,106) Income tax expense (34,691) - (53,691) - ------------------------------------------------------------------------- Net loss for the period (3,089,168) (3,039,447) (10,210,503) (8,547,106) Deficit, beginning of period (56,440,064) (42,987,890) (49,318,729) (37,480,231) ------------------------------------------------------------------------- Deficit, end of period (59,529,232) (46,027,337) (59,529,232) (46,027,337) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss Per common share (0.07) (0.09) (0.26) (0.25) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding Basic and diluted 40,212,064 34,694,035 39,903,417 34,694,035 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Tm Bioscience Corporation Interim Report (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Nine Months Ended September 30, September 30, --------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (3,089,168) (3,039,447) (10,210,503) (8,547,106) Add (deduct) items not involving cash: Depreciation and amortization 312,778 252,911 891,679 674,371 Amortization of deferred leasehold inducement (15,684) (14,126) (45,377) (42,378) Amortization of loan discount 362,084 58,631 967,757 201,489 Amortization of deferred financing costs 99,109 7,162 294,096 21,330 Stock option compensation expense and deferred share units 127,216 112,951 513,415 377,076 Government loan interest accrual 68,595 29,876 195,336 51,443 (Loss) gain on foreign exchange (47,664) 9,383 (36,485) (14,481) ------------------------------------------------------------------------- (2,182,734) (2,582,659) (7,430,082) (7,278,256) Change in non-cash working capital balances related to operations: Increase in trade accounts receivable (118,210) (634,478) (842,320) (95,070) (Increase) decrease in other accounts receivable (203,468) 210,698 (261,212) 152,826 (Increase) decrease in inventory (962,524) 220,535 (1,265,204) (818,458) Decrease (increase) in prepaid expenses 65,246 60,510 (24,434) (6,215) Decrease (increase) in deferred revenue 42,944 (45,833) 20,270 (45,833) Increase in accounts payable and accrued liabilities 490,684 776,062 1,216,414 419,639 Increase in income taxes payable 14,007 - 33,007 - ------------------------------------------------------------------------- Cash used in operating activities (2,854,055) (1,995,165) (8,553,561) (7,671,367) ------------------------------------------------------------------------- INVESTING ACTIVITIES Purchase of capital assets (124,691) (552,374) (775,805) (1,462,667) Purchase of intangible assets - (19,146) (40,890) (266,594) Purchase of short-term investments (7,296,456) - (28,417,685) - Sale of short-term investments 8,926,697 2,772,092 24,041,853 6,036,367 ------------------------------------------------------------------------- Cash provided by (used in) investing activities 1,505,550 2,200,572 (5,192,527) 4,307,106 ------------------------------------------------------------------------- FINANCING ACTIVITIES Increase in deferred leasehold inducement 168,680 168,680 Proceeds from long-term debt - 247,828 - 939,258 Repayment of long-term debt - (384,625) - (1,121,088) Share issuance costs - - (772,542) - Increase (decrease) in contributed surplus 55,468 - (1,886,103) 948,907 Issuance of common shares - - 15,440,593 - ------------------------------------------------------------------------- Cash provided by (used in) financing activities 224,148 (136,797) 12,950,628 767,077 ------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents during the period (1,124,357) 68,610 (795,460) (2,597,184) Cash and cash equivalents, beginning of period 1,662,125 67,000 1,333,228 2,732,794 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 537,768 135,610 537,768 135,610 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information Income taxes paid - - - - Interest paid 261,378 77,849 775,607 266,333 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Tm BioscienceCONTACT: INVESTOR RELATIONS: Tm Bioscience - Canada: James Smith, TheEquicom Group, Tel.: (416) 815-0700, Email: jsmith@equicomgroup.com; TmBioscience - U.S.: Sharon Weinstein, Account Supervisor, Euro RSCG LifeNRP, Tel.: (212) 845-4271, Email: sharon.weinstein@eurorscg.com; To requesta free copy of this organization's annual report, please go tohttp://www.newswire.ca and click on Tools for Investors.
