Nanogen Reports 2005 Third Quarter Financial Results

Nov 02, 2005, 00:00 ET from Nanogen, Inc.

    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, 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
     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.
                  (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
     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.
                       (in thousands, except per share data)
                                    Three Months Ended   Nine Months Ended
                                      September 30,         September 30,
                                    2005        2004      2005       2004
       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

SOURCE Nanogen, Inc.