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Press Release Source: deCODE genetics
deCODE genetics Announces Third Quarter 2003 Financial Results
Wednesday October 29, 4:03 pm ET
Higher Revenues, Streamlined Cost Structure Drive Positive Cashflow From Operations; Strengthened Cash Position Bolsters Resources for Product Development
REYKJAVIK, Iceland, Oct. 29 /PRNewswire-FirstCall/ -- deCODE genetics (Nasdaq: DCGN, Nasdaq Europe: DCGN) today reported consolidated financial results for the quarter ended September 30, 2003. A conference call to discuss the quarter's results will be webcast live tomorrow, Thursday, October 30, at 8am EST/1pm GMT (details below).
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Revenue for the third quarter, ended September 30, 2003, was $12.8 million, a 42% increase compared to the $9.0 million for the same period a year ago. This growth reflects the performance of deCODE's product development and service businesses, as well as milestone revenue achieved under the company's corporate alliances. For the first nine months of 2003, revenue was $35.1 million, an increase of 48% versus the $23.7 million for the first nine months of 2002. At the close of the third quarter the company had $13.5 million in deferred revenue, which will be recognized over future reporting periods.
Net loss for the third quarter 2003 was $1.3 million. Net loss for the third quarter of 2002 was $85.4 million, including $64.8 million of impairment, employee termination costs and other charges. Excluding these items, net loss for the third quarter 2002 was $20.6 million. Compared to this figure, net loss for the third quarter 2003 decreased by 94% versus the year ago period. For the first nine months of 2003 net loss decreased by 56% to $24.6 million compared to the $56.2 million for the first nine months of 2002, which is also exclusive of the charges in the latter period. Higher revenues and the introduction of significant operational efficiencies in the latter half of last year were the principal factors in these reductions.
Basic and diluted net loss per share decreased to $0.03 for the third quarter 2003 from $1.68 for the same quarter last year. Basic and diluted net loss per share for the first nine months of 2003 was $0.48, versus $2.50 for the first nine months of 2002. At the close of the third quarter the company had approximately 53.8 million shares outstanding.
Research and development expenses during the third quarter were $11.1 million, including a one-time, non-cash reversal of accrued license fees amounting to $3.2 million. Excluding this reversal, R&D expenses for the third quarter were $14.3 million, 40% lower than the $23.9 million in the third quarter 2002. For the first nine months of 2003, R&D expenses were $47.5 million. Excluding the one-time reversal in the third quarter, R&D expenses for the first nine months of this year were $50.7 million compared to $66.6 million for the 2002 period, a 24% decrease. These reductions are the result principally of the company's efforts over the past year to take advantage of investments in automation in its gene research programs and to focus resources on product development.
Selling, general and administrative expenses for the third quarter decreased by 31% versus last year, to $4.0 million for the period in 2003 from $5.8 million for the period in 2002. SG&A expenses for the first nine months of 2003 were $12.0 million, compared to $14.2 million for the first nine months of 2002, representing a decrease of 16%. These decreases are principally due to the streamlining of the company's operations undertaken last year.
At the close of the third quarter, the company had $78.4 million in cash and cash equivalents, including $6 million in restricted cash. This is $1.8 million more than at the close of the second quarter, an increase resulting mainly from the significantly lower net loss for the quarter and the collection of receivables.
"Our strong results for the quarter are the fruit of our efforts to accelerate our target discovery work and to channel our resources directly into product development. By maintaining our focus on increasing revenue while driving down costs, we have achieved positive cashflow from our current operations for the quarter and have in hand the resources necessary to bring our lead therapeutic and diagnostic products into the clinic," said Dr. Kari Stefansson, President and Chief Executive Officer of deCODE. "In recent weeks we have announced several examples of how our genetics work is yielding exciting new targets for both drug and diagnostic development. The coming months promise to be an important period in deCODE's growth and I look forward to sharing with you our progress in advancing our product pipeline. Our successes this year have positioned us well to take a leading role in applying the new genetics to improve the diagnosis, treatment and prevention of many of the most common diseases in our society."
Recent company highlights include:
Research and Development
* Obesity. deCODE announced the achievement of a milestone under its
alliance with Merck to develop novel treatments for obesity. Through
genotypic analysis involving more than 1000 women participants in its
obesity program, deCODE scientists isolated a gene which in one form
predisposes to obesity and in another form predisposes to thinness.
The companies are using this information in their drug discovery
program.
* Myocardial infarction. deCODE and Roche Diagnostics announced a
landmark discovery under their alliance to develop DNA-based diagnostic
tests for common diseases. deCODE scientists identified forms of a
gene that confer approximately twice the average risk of myocardial
infarction, or heart attack. The companies plan to use this
information in the development of a DNA-based test to identify
individuals who are at elevated risk, thereby facilitating the
implementation of preventive measures that can help to minimize the
risk of these individuals ever suffering a heart attack. The two
at-risk haplotypes, or forms of the gene, each delineated by only 6
SNPs, are both common and were found to confer significant risk of
heart attack in the Icelandic population. These haplotypes confer
risks equal to or greater than those conferred by other well-known risk
factors such as smoking, high blood pressure, high cholesterol or
diabetes.
* Stroke. deCODE's study identifying the first gene ever linked to
common forms of stroke was published in the October edition of Nature
Genetics, in a paper entitled "The Phosphodiesterase 4D gene confers
risk to ischemic stroke." The deCODE team identified the PDE4D gene
and significant haplotypes by analyzing detailed genotypic data from
1800 participants in the company's stroke program, both patients and
unaffected relatives, from across Iceland. The study demonstrates that
variations in the PDE4D gene are significantly associated with ischemic
stroke. Within this gene, the deCODE team identified haplotypes, or
specific sets of genetic markers, that correspond both to significantly
increased risk of stroke and to significantly decreased risk. deCODE
and its drug development partner in this program, Roche, have initiated
medicinal chemistry work on compounds they have identified as active
against targets in the PDE4D pathway. deCODE is also developing a
DNA-based diagnostic test based upon the at-risk and protective
haplotypes within the PDE4D gene.
Finance
* Cash position. At the close of the quarter ended September 30, 2003,
the company had $78.4 million in cash and cash equivalents, including
$6 million in restricted cash. This is $1.8 million more than at the
close of the second quarter, an increase resulting mainly from the
significantly lower net loss for the quarter and the collection of
receivables.
About deCODE
deCODE is using population genetics to create a new paradigm for healthcare. With its uniquely comprehensive population data, deCODE is turning research on the genetic causes of common diseases into a growing range of products and services -- in gene and drug discovery, DNA-based diagnostics, pharmacogenomics, bioinformatics, and clinical trials. deCODE's pharmaceuticals group, based in Chicago, and deCODE's biostructures group, based in Seattle, conduct downstream development work on targets derived from deCODE's proprietary research in human genetics as well as contract service work for pharmaceutical and biotechnology companies. deCODE is delivering on the promise of the new genetics(SM). Visit us on the web at www.decode.com.
Conference Call Information
A conference call, during which deCODE President and CEO Kari Stefansson and Executive Vice President and Senior Business Officer Hannes Smarason will discuss financial results and operating highlights from the quarter, will be webcast tomorrow, Thursday, October 30, at 8am EST/1pm GMT. The webcast can be accessed via the Investors section of deCODE's website, www.decode.com, through www.streetevents.com, or, for non-subscribers to StreetEvents, on www.companyboardroom.com. A replay of the call will be available on these websites for the following week. A digitized telephone replay of the call can be accessed for the week following the call by dialing 1 800 475 6701 from the US, or +1 320 365 3844 from outside the US. The access code is 703702.
Any statements contained in this presentation that relate to future plans, events or performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, and the timing of events, to differ materially from those described in the forward-looking statements. These risks and uncertainties include, among others, those relating to technology and product development, integration of acquired businesses, market acceptance, government regulation and regulatory approval processes, intellectual property rights and litigation, dependence on collaborative relationships, ability to obtain financing, competitive products, industry trends and other risks identified in deCODE's filings with the Securities and Exchange Commission. deCODE undertakes no obligation to update or alter these forward-looking statements as a result of new information, future events or otherwise.
Condensed Consolidated Statements of Operations (unaudited)
For the three months For the nine months
ended September 30, ended September 30,
2003 2002 2003 2002
(in thousands, except share and per share amounts)
Revenue $ 12,763 $ 8,982 $ 35,141 $ 23,682
OPERATING EXPENSES
Research and
development, including
cost of revenue 11,068 23,856 47,516 66,634
Selling, general and
administrative 3,989 5,753 11,975 14,235
Impairment, employee
termination costs and
other charges 115 64,790 906 64,790
Total operating
expense 15,172 94,399 60,397 145,659
Operating loss (2,409) (85,417) (25,256) (121,977)
Interest income 243 711 897 2,269
Interest expense (826) (589) (2,603) (2,199)
Other non-operating income
and (expense), net 1,706 (144) 2,402 560
Net loss before cumulative
effect of change in
accounting principle (1,286) (85,439) (24,560) (121,347)
Cumulative effect of change
in milestone recognition
method 0 0 0 333
Net loss $ (1,286) $ (85,439)$ (24,560)$ (121,014)
Basic and diluted net loss
per share:
Net loss before
cumulative effect of
change in accounting
principle $ (0.03) $ (1.68)$ (0.48)$ (2.51)
Cumulative effect of
change in milestone
revenue recognition
method $ -- $ -- $ -- $ 0.01
Net loss $ (0.03) $ (1.68)$ (0.48)$ (2.50)
Shares used in computing
basic and diluted net
loss per share 51,399,816 50,958,332 51,262,995 48,425,673
Contact:
deCODE genetics
Joy Bessenger Edward Farmer
+354 570-1951 +354 570 1900
+1 (212) 481-3891 info@decode.is
ir@decode.is
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Source: deCODE genetics
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