Lumera Reports 2004 Results and Updates Product Development Efforts

Mar 02, 2005, 00:00 ET from Lumera Corporation

    BOTHELL, Wash., March 2 /PRNewswire-FirstCall/ -- Lumera Corporation,
 (Nasdaq:   LMRA), an emerging leader in the field of nanotechnology, today
 reported financial results for the fourth quarter and full year of 2004 and
 released information regarding its current product development efforts.
     "We are pleased with the product development progress we made in 2004 and
 believe that 2005 can be a turning point for the company," said Lumera Chief
 Executive Officer Tom Mino.  "Over the last twelve months we have created one
 of the world's fastest electro-optic polymer modulators and have entered into
 partnerships with the potential to dramatically alter the proteomic
 marketplace.  Our technical progress and strategic partnering position Lumera
 for significant sales opportunities in substantial growth markets including
 bio-science and proteomic research, pharmaceuticals, electro-optic components,
 optical interconnects and wireless antennas."
     "Lumera's investments in 2004 have put us in an excellent position to
 attack multiple markets with high value, disruptive solutions," continued
 Mino.  "We have an exceptional group of scientists, valuable intellectual
 property and several valuable strategic partnerships that are now in place and
 we have the resources to execute on our business plan.  We believe that we
 have positioned the company for a break out year in 2005."
                          Summary Financial Discussion
     Revenue for the fourth quarter of 2004 totaled $93,000 compared to
 $284,000 for the same period in 2003.  Revenue for the full year of 2004 was
 $989,000 compared to $1,725,000 for 2003.  Fourth quarter revenues were lower
 in 2004 as work ceased on both Lumera government contracts early in the
 quarter as they reached renewal phase.  Both contracts, together projected to
 generate $1.4 million in revenue in 2005, have been renewed for work to be
 performed through the third quarter of 2005.  Revenues for 2004 were lower
 primarily due to a government sub-contract awarded during 2003 that was not
 renewed due to shifting defense spending priorities and to our decision to
 shift research resources away from government contracts and toward
 commercializing our products.
     Research and development expense for the fourth quarter of 2004 was
 $1,898,000 compared to $1,674,000 for the same period in 2003 as research
 resources were redeployed from contract research agreements to internal
 projects during the current period.  R&D expense for the full year of 2004 was
 $4,561,000 compared to $7,602,000 for 2003, declining primarily due to reduced
 expenses in 2004 associated with research endeavors between Lumera and the
 University of Washington, which were $4.2 million lower in 2004, partially
 offset by higher expenses associated with non-cash stock-based compensation
 costs and higher spending on internal development projects.
     Marketing, general and administrative expense for the fourth quarter of
 2004 was $1,176,000, compared to $383,000 for the same period in 2003 and was
 $4,588,000 for the full year of 2004 compared to $1,270,000 for 2003.
 Marketing, general and administrative expense increased in 2004 due primarily
 to non-cash stock based compensation cost generated by options granted in 2003
 and 2004 at below deemed fair market value, and the added costs of being a
 public company, including such related costs as expense of additional finance
 and marketing headcount, and significantly higher auditing and legal fees.
     Our net loss was $2,923,000 or $0.18 per share for the fourth quarter of
 2004 compared to a net loss of $2,029,000 or $0.33 per share in the same
 period in 2003.  For the full year of 2004, our net loss was $9,423,000 or
 $0.89 per share compared to $8,083,000 or $1.31 per share for 2003.
 At December 31, 2004, we had $30,181,000 of cash and securities
                   Summary Discussion of Product Development
     Lumera develops proprietary polymer materials and has built a number of
 products based on these materials for a broad range of applications.  To date,
 substantially all of Lumera's revenues have come from contracts to develop
 custom-made electro-optic materials and devices for government agencies.  In
 2004, Lumera made a strategic decision to transition most of its efforts from
 government contracts to developing commercial applications of its technology.
 Lumera is developing products for three distinct markets that we believe
 provide significant market opportunities, including biotechnology disposables,
 electro-optic devices and wireless antennas and systems.  Lumera has not yet
 generated commercial sales of its products in any of these markets.
     The status of Lumera's product commercialization efforts in each of these
 markets is summarized below:
     Biotechnology Disposables
     Lumera is developing various disposable biochips that are fabricated with
 a proprietary polymer coating and process (NanoCapture(TM) Arrays).  These
 biochips enable biologists to isolate DNA and protein samples for testing.
 Lumera recently announced that it has acquired the exclusive rights to Helix
 Biopharma's (HBP.TO) Heterodimer Protein Technology (HPT).  The combination of
 the Helix's HPT technology and Lumera's proprietary nanosurface modification
 chemistry will, for the first time, allow researchers to consistently utilize
 existing DNA arrays to produce protein arrays that accurately mimic the native
 living cell environment of the body.
     Lumera also announced a collaboration agreement with the Institute for
 Systems Biology to collaborate in the development of a high-throughput,
 label-free detection platform.  The technology platform consists of Lumera's
 ProteomicProcessor(TM) and NanoCapture(TM) Array technology.  The
 ProteomicProcessor(TM) tool reads Lumera's high density NanoCapture(TM)
 Microarrays in real-time, without the use of molecular labels.  By combining
 these technologies, researchers will be able to isolate, compile and process
 vast amounts of data at high-speeds to accelerate proteomic research.
     As proteins are identified and associated with certain diseases, drug
 companies will be able to utilize our technology to improve the effectiveness
 and speed of the drug discovery process.  To date, the main bottleneck in
 protein analysis has been low sample throughput as well as the need for using
 molecular labels.  Our technology solves both of these complex problems.  A
 Global Industry Analysts, Inc. report states that the addressable world-wide
 market for proteomic research will surpass $1.2 billion in 2005, and is
 growing at a nearly 24 percent compound annual rate.  We believe that there is
 a substantial market opportunity within this broader market for our tools and
     Electro-Optic Devices
     Samples of our new polymer material with improved electro-optic properties
 have been supplied to multiple government agencies and potential industrial
 partners. Lumera has delivered high speed, low power modulators and polymer
 materials to a number of potential commercial and research entities and a
 government agency for testing.  Once this material has been tested, we intend
 to develop or license to third parties the right to develop various products
 based on our proprietary polymer materials, including electro-optic components
 such as modulators and ring oscillators, polymer electronics such as high
 performance diodes and transistors, and optical interconnects for high speed
 (greater than 20 billion cycles per second) inter and intra semiconductor chip
     Wireless Antennas and Systems
     Our smart antenna features a polymer-based technology that provides
 electronic beam steering without moving parts which we expect will improve its
 accuracy and durability compared to antennas that use mechanical beam
 steering.  We are developing a smart antenna for customer specific
 applications for potential use in WiMAX wireless broadband services.  We have
 not yet begun commercial production of smart antennas.
     Conference Call
     Lumera will host a conference call to discuss its fourth quarter and 2004
 financial results at 4:30 p.m. EST today.  The call will be broadcast over the
 Internet and can be accessed from the company's web site at
 Additionally, U.S. participants may join the conference call by dialing
 800-901-5259 ten minutes prior to the start of the conference.  International
 participants can dial 617-786-4514.  The conference passcode number is
 43175628.  A telephone replay of the call will be available through
 March 9, 2005, and can be accessed by dialing 888-286-8010 (for U.S.
 participants) or 617-801-6888 (for international participants. The replay
 passcode is 49893318.  A replay of the conference call will be available on
 the company's web site.
     About Lumera
     Lumera is an emerging leader in the field of nanotechnology.  The company
 designs proprietary molecular structures and polymer compounds for a broad
 range of bioscience, electro-optic, and specialty nanotechnology applications.
 The company also has developed proprietary processes for fabricating such
 devices. For more information, please visit
     Forward-Looking Statements Disclaimer
     Certain statements contained in this release are forward-looking
 statements that involve substantial risks and uncertainties.  Factors that
 could cause actual results to differ materially from those projected in the
 company's forward-looking statements include the following: our ability to
 achieve substantial commercial revenues and to achieve profitability, market
 acceptance of our technologies and products; our ability to obtain financing;
 our financial and technical resources relative to those of our competitors;
 our ability to keep up with rapid technological change; government regulation
 of our technologies; our ability to enforce our intellectual property rights
 and protect our proprietary technologies; the ability to obtain additional
 contract awards and to develop partnership opportunities; the timing of
 commercial product launches; the ability to achieve key technical milestones
 in key products; and other risk factors identified from time to time in
 Lumera's SEC reports, including in its registration statement on Form S-1,
 dated July 22, 2004 and its Quarterly Reports on Form 10-Q.
                           Consolidated Balance Sheet
                                 (In thousands)
                                                  December 31,   December 31,
      Assets                                          2004           2003
      Current assets
       Cash and cash equivalents                     $3,505           $560
       Investment securities,
         available-for-sale, current                 15,460             --
       Accounts receivable, net of allowances            32            151
       Costs and estimated earnings in
        excess of billings on
        uncompleted contracts                             3            166
       Prepaid stock-based research costs                --            159
       Other current assets                             623             55
         Total current assets                        19,623          1,091
      Investment securities,
        available-for-sale, long-term                11,216             --
      Property and equipment, net                     2,047          2,867
      Other assets                                       --            100
         Total assets                               $32,886         $4,058
      Liabilities, mandatorily
        redeemable convertible preferred stock
        and shareholders' equity (deficit)
      Current liabilities
       Accounts payable                                $416           $159
       Payable to related party                          --             42
       Current portion of research liability            101             --
       Accrued liabilities                              976            576
         Total current liabilities                    1,493            777
      Research liability                                 --          1,948
      Other long-term liabilities                        --             16
         Total liabilities                            1,493          2,741
      Commitments and contingencies                      --             --
      Mandatorily redeemable convertible
       preferred stock                                   --         27,206
      Shareholders' deficit
       Common stock at par value                     70,451             --
       Class A Common stock at par value                 --          3,361
       Class B Common stock at par value                 --            105
       Deferred stock-based compensation               (666)           (31)
       Accumulated other comprehensive gain (loss)     (145)            --
       Accumulated deficit                          (38,247)       (29,324)
         Total shareholders' equity (deficit)        31,393        (25,889)
      Total liabilities, mandatorily redeemable
       convertible preferred stock
       and shareholders' equity (deficit)           $32,886         $4,058
                               Lumera Corporation
                      Consolidated Statement of Operations
                 (In thousands, except earnings per share data)
                                      Three months ended  Twelve months ended
                                         December 31,          December 31,
                                       2004       2003        2004      2003
      Revenue                          $93        $284        $989    $1,725
      Cost of revenue                  105         258         651     1,014
      Gross Profit                     (12)         26         338       711
      Research and development
       expense                       1,898       1,674       4,561     7,602
      Marketing, general and
       administrative expense        1,176         383       4,588     1,270
         Total operating expenses    3,074       2,057       9,149     8,872
      Loss from operations          (3,086)     (2,031)     (8,811)   (8,161)
      Interest income                  167           2         237        39
      Interest expense                  (4)         --        (349)
      Realized gain on sale
       of investment securities         --          --          --        39
      Net loss                     $(2,923)    $(2,029)    $(8,923)  $(8,083)
      Deemed dividend upon
       issuance of mandatorily
       redeemable convertible
       preferred stock                                        (500)
  Net loss available to
   common shareholders             $(2,923)    $(2,029)    $(9,423)  $(8,083)
      Net loss per share --
       basic and diluted            $(0.18)     $(0.33)     $(0.89)   $(1.31)
      Weighted-average shares
       outstanding --
       basic and diluted        16,527,271   6,172,400  10,613,606 6,172,400

SOURCE Lumera Corporation