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Home > Press > Nanogen Reports 2008 First Quarter Financial Results

Abstract:
Quarter Highlighted by 33% Increase in Product Sales

Nanogen Reports 2008 First Quarter Financial Results

San Diego, CA | Posted on May 12th, 2008

Nanogen, Inc. (Nasdaq: NGEN), developer of in vitro diagnostic products, today reported its unaudited financial results for the quarter ended March 31, 2008.

Product revenues for the first quarter of 2008 increased by 33% to $8.1 million from $6.1 million in the same period in 2007, and increased by 36% from the $5.9 million recorded in the fourth quarter of 2007. Total revenues for the first quarter of 2008 increased by 10% to $10.7 million from $9.7 million in the same period in 2007, and was at a similar level to the prior quarter, but with a shift from contract and grant revenue to product revenue.

Costs and expenses, including cost of sales, decreased in the first quarter of 2008 by 11% to $18.7 million from $21.0 million in the first quarter of 2007, and decreased by 10% from the $20.8 million recorded in the fourth quarter of 2007.

A substantial decrease in net loss of operations was achieved in the first quarter as the benefits of the 2007 restructuring began to take effect. The full benefit of this restructuring will be experienced beginning in the second quarter of 2008. For the quarter ended March 31, 2008, Nanogen's loss from operations was $8.0 million, compared to a net loss of $11.3 million in the first quarter of 2007, and $10.9 million in the fourth quarter of 2007.

Nanogen's consolidated cash, cash equivalents and short-term investments balance at the end of the first quarter of 2008 was approximately $10.8 million. The company secured a non-dilutive financing of $10 million through the sale of a future royalty stream in the first quarter.

"Our Q1 results clearly demonstrate that the restructuring plan, initiated in the fourth quarter, has substantially improved our financial performance. Consistent with our prior guidance, we have achieved meaningful cost reductions while at the same time have experienced a 36% increase in product revenue from the prior quarter" said Howard C. Birndorf, Nanogen's chairman of the board and CEO.

"Looking ahead, we expect continued double digit revenue growth as compared to prior year primarily from sales of our existing products. In addition, we expect to launch our whole-blood congestive heart failure product in Europe this summer" said David Ludvigson, Nanogen's president and COO. "We remain focused on achieving cash flow breakeven, as measured by modified EBITDA, late in 2008 through a combination of continued revenue growth and aggressive management and reduction of our operational costs."

Financial Guidance for 2008:

Nanogen expects total 2008 revenues to increase by approximately 25 percent from 2007 levels with a gross margin of approximately 60 percent. The anticipated growth in revenues, combined with improved gross margins and substantial operating expense reductions, should allow the company to achieve operating cash flow breakeven late in 2008 as measured by Modified EBITDA.

Modified EBITDA continued to improve during the first quarter of 2008. Modified EBITDA was negative $5.7 million for the first quarter of 2008, as compared to negative $6.1 million in the fourth quarter of 2007 and negative $7.7 million in the first quarter of 2007. Management remains committed to continuing to improve this measure of performance.

  Three months ended
March 31,
  Three months ended
March 31,
2008 2007
(Unaudited,

in thousands)

(Unaudited,

in thousands)

Net loss $ (22,961 ) $ (11,930 )
Net interest 1,574 524
Depreciation and amortization   1,889   1,803
EBITDA (19,498 ) (9,603 )
Stock-based compensation 532 1,132
Jurilab (variable interest entity) - 801
Restructuring charges 112 -
Loss on extinguishment of debt 10,221 -
Warrant valuation adjustment   2,911   (10 )
Modified EBITDA $ (5,722 ) $ (7,680 )
 
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, the non-cash warrant valuation adjustments, loss on extinguishment of debt, or restructuring charges associated with eliminating future costs and expenses 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 2008 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.

The financial results included in this press release are unaudited. The complete, audited financial statements of the company for the year ended December 31, 2007 are included in Nanogen's Annual Report on Form 10-K filed with the SEC on March 31, 2008.

Webcast of Conference Call

Nanogen management will host a conference call to discuss the first quarter 2008 results on May 12, 2008 at 4:30 p.m. Eastern (1:30 p.m. Pacific). Interested investors and others may participate in the conference call by dialing 866-700-5192 for US/Canada participants and 617-213-8833 for international participants. The conference ID will be 34946719.

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 one year. A digital recording of the call will also be available for 48 hours, beginning two hours after the completion of the conference call on May 12, 2008, and can be accessed via telephone at 888-286-8010 for US/Canada participants and 617-801-6888 for international participants. The conference ID, 87071430, will be required to listen to the playback.

####

About Nanogen, Inc.
Nanogen, Inc., develops diagnostic products that enable physicians to deliver improved patient care. Its products allow faster and easier diagnosis, treatment and monitoring of cardiovascular disease and a range of infectious diseases. The companyís products include molecular diagnostic kits and reagents, and kits for rapid point-of-care testing. Nanogen has pioneered the development of biomarkers, molecular biology technologies and nanotechnology to bring better results to diagnostics and healthcare. For additional information please visit Nanogenís 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 cash flow breakeven can be achieved, whether revenues will continue to increase and expenses continue to decrease, 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 Nanogenís 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.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

 
March 31, 2007 December 31, 2007
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,528 $ 5,806
Short-term investments 300 1,450
Receivables, net 17,384 14,821
Inventories, net 2,647 2,267
Other current assets   2,288   1,840
Total current assets 33,147 26,184
 
Property and equipment, net 7,245 6,662
Acquired technology rights, net 14,148 14,905
Restricted cash 9,437 9,626
Other assets, net 1,359 2,011
Goodwill   39,019   38,963
Total assets $ 104,355 $ 98,351
 
 
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 19,383 $ 15,600
Deferred revenue 6,586 663
Short-term assigned royalty interests obligation 2,868
Common stock warrants 3,194 1,708
Conversion feature of convertible debt 4,201 664
Current portion of debt obligations   6,083   4,868
Total current liabilities 39,447 26,371
 
Debt obligations, less current portion 14,785 8,139
Sponsored research payable 4,848 4,848
Long-term assigned royalty interests obligation 14,711
Long-term deferred revenue 22,492
Other long-term liabilities   2,874   2,778
Total long-term liabilities 44,999 30,476
 
Commitments and contingencies
 
Stockholders equity:
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized at March 31, 2008 and December 31, 2007; no shares issued and outstanding at March 31, 2007 and December 31, 2007
Common stock, $0.001 par value, 135,000,000 shares authorized at March 31, 2008 and December 31, 2007, respectively; 73,353,962 and 73,218,128 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively 73 73
Additional paid-in capital 441,157 440,583
Accumulated other comprehensive gain/(loss) 3,029 2,237
Capital deficit in consolidated variable interest entity, net )
Accumulated deficit (423,579 ) (400,618 )
Treasury stock, at cost, 416,027 shares at December 31, 2007 and 2006   (771

)

  (771

)

Total stockholders equity   19,909   41,504
Total liabilities and stockholders equity $ 104,355 $ 98,351
 
 

NANOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 
Three Months Ended March 31,
2008 2007
Revenues:
Product sales $ 8,070 $ 6,084
License fees and royalty income 1,762 1,241
Contracts and grants   852   2,328
Total revenues 10,684 9,653
 
Costs and expenses:
Cost of product sales 4,838 4,830
Research and development 4,186 6,512
Selling, general and administrative 8,727 8,853
Amortization of purchased intangible assets   934   767
Total costs and expenses   18,685   20,962
 
Loss from operations (8,001 ) (11,309 )
 
Other income (expense):
Interest income 336 538
Interest expense (1,910 ) (1,143 )
Other expense (228 ) (28 )
Warrant valuation adjustment (2,911 ) 10
Loss on extinguishment of debt (10,221 )
Gain (loss) on foreign currency transactions

 

  (26

)

  2
Total other income (expense)   (14,960 )   (621 )
 
Net loss $ (22,961 ) $ (11,930 )
 
Net loss per share basic and diluted $ (0.31 ) $ (0.17 )
 
Number of shares used in computing net loss per share basic and diluted   73,277   70,496

For more information, please click here

Contacts:
Nanogen, Inc.
Nick Venuto, Chief Financial Officer, 858-410-4600
or
Kelly Gann, Marketing Communications, 858-410-4667

Copyright © Business Wire 2008

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