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Quarter Highlighted by 33% Increase in Product Sales
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
Three months ended
|Depreciation and amortization||1,889||1,803|
|Jurilab (variable interest entity)||-||801|
|Loss on extinguishment of debt||10,221||-|
|Warrant valuation adjustment||2,911||(10||)|
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 company’s 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 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 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 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
|March 31, 2007||December 31, 2007|
|Cash and cash equivalents||$||10,528||$||5,806|
|Other current assets||2,288||1,840|
|Total current assets||33,147||26,184|
|Property and equipment, net||7,245||6,662|
|Acquired technology rights, net||14,148||14,905|
|Other assets, net||1,359||2,011|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accounts payable and accrued liabilities||$||19,383||$||15,600|
|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|
|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, $0.001 par value, 135,000,000 shares authorized at March 31, 2008 and December 31, 2007, respectively; 73,353,962 and 73,218,128 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively||73||73|
|Additional paid-in capital||441,157||440,583|
|Accumulated other comprehensive gain/(loss)||3,029||2,237|
|Capital deficit in consolidated variable interest entity, net||—||—||)|
|Treasury stock, at cost, 416,027 shares at December 31, 2007 and 2006||(771||
|Total stockholders’ equity||19,909||41,504|
|Total liabilities and stockholders’ equity||$||104,355||$||98,351|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
|Three Months Ended March 31,|
|License fees and royalty income||1,762||1,241|
|Contracts and grants||852||2,328|
|Costs and expenses:|
|Cost of product sales||4,838||4,830|
|Research and development||4,186||6,512|
|Selling, general and administrative||8,727||8,853|
|Amortization of purchased intangible assets||934||767|
|Total costs and expenses||18,685||20,962|
|Loss from operations||(8,001||)||(11,309||)|
|Other income (expense):|
|Warrant valuation adjustment||(2,911||)||10|
|Loss on extinguishment of debt||(10,221||)||—|
|Gain (loss) on foreign currency transactions||
|Total other income (expense)||(14,960||)||(621||)|
|Net loss per share — basic and diluted||$||(0.31||)||$||(0.17||)|
|Number of shares used in computing net loss per share — basic and diluted||73,277||70,496|
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Nick Venuto, Chief Financial Officer, 858-410-4600
Kelly Gann, Marketing Communications, 858-410-4667
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