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Nanogen Reports 2005 Third Quarter Financial ResultsNov 2, 2005 SAN DIEGO, Nov. 2 /PRNewswire-FirstCall/ -- Nanogen, Inc. (Nasdaq: NGEN), developer of advanced diagnostic products, today reported its unaudited financial results for the quarter ended September 30, 2005. Total revenues for the third quarter of this year increased by 191 percent to $3.2 million from $1.1 million in the same period in 2004, and remained steady compared to $3.1 million in the second quarter of 2005. Product revenues for the third quarter of 2005 were $1.1 million compared to $671,000 for the third quarter of 2004 and $1.1 million in the second quarter of 2005. This past July, Nanogen invested $1.5 million in Jurilab Ltd., a Finnish discovery and pharmacogenomic testing company with a rich portfolio of unique genetic discoveries. Nanogen is considered to have substantial control of Jurilab, despite the fact it owns less than 20% of the equity, and has consolidated Jurilab's financials with those of Nanogen's beginning in the third quarter. Nanogen's research and development, and selling, general and administrative operating expenses for the third quarter of 2005 were $11.0 million compared to $9.3 million in the quarter one year ago, and $11.6 million in the second quarter of 2005. Without $700,000 in expenses related to Jurilab operations that are included in the current quarter's results, Nanogen's third quarter expenses are $1.3 million lower than the previous quarter, reflecting ongoing improvements in operating efficiencies. Nanogen's consolidated cash, cash equivalents and short-term investments balance at the end of the third quarter of 2005 was $40.7 million, compared to $31.9 million at the close of the second quarter. The third quarter cash balance includes net proceeds of $18.8 million from a registered direct stock placement that occurred in September. Cash used during the third quarter included the operating needs of Jurilab and inventory increases associated with the new product introductions. For the quarter ended September 30, 2005, Nanogen narrowed its net loss to $8.8 million or $0.18 per share, compared to a net loss of $9.4 million or $0.28 per share in the same period of 2004 and a loss of $9.7 million or $0.20 per share in the second quarter of 2005. "I am encouraged by the significant accomplishments of the third quarter," said Howard C. Birndorf, Nanogen's chairman of the board and CEO. "During the recent quarter we launched our second-generation microarray platform, the NanoChip(TM) 400, invested in Jurilab to bring novel markers and pharmacogenetic knowledge to our products, and we were able to meaningfully reduce expenses. These three accomplishments reflect our focus on improving operating results by providing innovative products that are expected to stimulate revenue growth in the future while we tightly control costs." During the third quarter, the U.S. Food and Drug Administration began review of Nanogen's congestive heart failure (CHF) product. This product remains in development and we do not expect significant, if any, revenues from the CHF product in 2005. Webcast of Today's Conference Call Nanogen management will host a conference call today to discuss the preliminary third quarter 2005 results at 4:30 p.m. Eastern Time (1:30 p.m. Pacific). Audio of management's presentation will be available via live webcast on the investor relations section of Nanogen's corporate web site 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 today, 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, 173540, 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) electronic microarray platform and a line of rapid 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 biowarfare applications. For additional information please visit Nanogen's website at www.nanogen.com. Forward-Looking Statement This press release contains forward-looking statements that are subject to risks and uncertainties, including statements regarding future financial and operating performance and projections regarding growth. These forward-looking statements are based on current expectations and speak only as of the date hereof. Actual results may differ materially from those set forth in the forward-looking statements, as a result of various factors and uncertainties, including whether Jurilab's technology will be successfully commercialized, 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, and whether unforeseen problems may impact the timing of planned product launches, 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)
As of As of
September 30, December 31,
2005 2004
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $27,670 $15,372
Short-term investments 12,989 36,562
Receivables, net 2,416 2,023
Inventories, net 3,372 1,744
Other current assets 1,850 1,741
Total current assets 48,297 57,442
Property and equipment, net 8,037 8,500
Acquired technology rights, net 10,043 11,819
Restricted cash 1,897 1,411
Other assets, net 1,928 780
Goodwill 96,178 96,072
Total assets $166,380 $176,024
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $7,274 $9,923
Deferred revenue 539 420
Common stock warrants 166 1,112
Current portion of debt obligations 727 988
Total current liabilities 8,706 12,443
Debt obligations, less current portion 774 610
Debt obligation variable interest entity 7,006 --
Other long-term liabilities 6,246 5,455
Total long-term liabilities 14,026 6,065
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.001
par value, 5,000,000 shares authorized;
no shares issued and outstanding at
September 30, 2005 and December 31, 2004 -- --
Common stock, $0.001 par value, 135,000,000
shares authorized at September 30, 2005
and December 31, 2004; 54,677,859 and
47,765,581 shares issued and 54,177,670
and 47,265,392 outstanding at
September 30, 2005 and December 31, 2004,
respectively 55 48
Additional paid-in capital 396,017 374,910
Accumulated other comprehensive loss (83) (174)
Deferred compensation (2,490) (1,184)
Capital deficit in consolidated variable
interest entity, net (6,951) --
Accumulated deficit (241,978) (215,162)
Treasury stock, at cost, 500,189 shares
at September 30, 2005 and December 31, 2004,
respectively (922) (922)
Total stockholders' equity 143,648 157,516
Total liabilities and stockholders'
equity $166,380 $ 176,024
NANOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Product sales $1,060 $671 $3,348 $2,280
License fees and
royalty income 1,748 25 5,071 214
Sponsored research -- -- -- 500
Contracts and grants 363 386 1,063 1,365
Total revenues 3,171 1,082 9,482 4,359
Costs and expenses:
Cost of product sales 799 1,298 3,073 4,150
Research and development 5,701 4,514 15,773 12,901
Selling, general
and administrative 5,326 4,811 17,703 12,626
Charge for acquired
in-process research
and development -- -- -- 3,758
Amortization of purchased
intangible assets 393 -- 1,178 --
Total costs and expenses 12,219 10,623 37,727 33,435
Loss from operations (9,048) (9,541) (28,245) (29,076)
Other income (expense):
Interest income, net 110 187 598 433
Other expense (8) (73) (118) (256)
Warrant valuation
adjustment 109 -- 946 --
Gain (loss) on foreign
currency translation (1) (15) 3 1,190
Total other income 210 99 1,429 1,367
Net loss $(8,838) $(9,442) $(26,816) $(27,709)
Net loss per share
- basic and diluted $(0.18) $(0.28) $(0.56) $(0.89)
Number of shares used
in computing net
loss per share
- basic and diluted 48,018 33,336 47,859 31,034
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