Nanogen Reports Preliminary 2004 Fourth Quarter and Year-End Financial Results

Feb 23, 2005, 00:00 ET from Nanogen, Inc.

    SAN DIEGO, Feb. 23 /PRNewswire-FirstCall/ -- Nanogen, Inc. (Nasdaq:   NGEN),
 developer of advanced diagnostic products, today announced its unaudited
 financial results for the fourth quarter and year ended December 31, 2004.
     Total revenues for the quarter ended December 31, 2004 were $1.0 million
 compared to $2.1 million in the fourth quarter of 2003, and $1.1 million in
 the third quarter of 2004.  Product revenues for the fourth quarter were
 $410,000 versus $1.1 million for the fourth quarter in 2003 and $671,000 in
 the previous quarter.  For the twelve months ended December 31, 2004, total
 revenues were $5.4 million, as compared to $6.7 million for 2003.
     Nanogen's research and development, and selling, general and
 administrative operating expenses for the fourth quarter of 2004 were
 $10.8 million, as compared to $8.2 million on the fourth quarter of 2003 and
 $9.3 million in the third quarter of 2004.  For the year ended December 31,
 2004, the same expenses were $40.1 million versus $34.4 million during 2003.
 The 2004 expenses include approximately $9.4 million of operating costs
 related to the business combinations closed during 2004, including a non-cash
 charge of $3.8 million for the acquisition of in-process research and
     Nanogen's consolidated cash, cash equivalents and short-term investments
 balance at year-end 2004 was $51.9 million, a decrease of $1.2 million from
 the previous quarter.  The 2004 year-end cash balance reflects an increase of
 $22.8 million from the $29.1 million at the end of the prior year.  The year-
 end 2004 balance includes net proceeds of $39.4 million from registered direct
 stock placements in the first and second quarters of 2004 as well as
 $5.7 million in cash from Epoch Biosciences, which merged with Nanogen in mid-
 December 2004.
     For the quarter ended December 31, 2004, Nanogen reported a net loss of
 $11.2 million or $0.31 per share, compared to a net loss of $9.4 million or
 $0.28 per share in the previous quarter and a net loss of $5.9 million or
 $0.25 per share in the fourth quarter of 2003.  For the year ended
 December 31, 2004, the company reported a net loss of $38.9 million or
 $1.21 per share, compared to a net loss of $30.6 million or $1.38 per share
 for 2003.
     Nanogen completed its merger with Epoch Biosciences on December 16, 2004
 by issuing 13.4 million shares of common stock and assuming options and
 warrants convertible into 1.7 million shares of common stock.  The financial
 results of Epoch for approximately two weeks are therefore included in the
 results for the fourth quarter and year ended December 31, 2004.  The Epoch
 product line includes several real time, single analyte specific reagents that
 will complement the more complex tests available on the Nanogen microarray
 platform.  In addition, Nanogen will continue to derive revenue from Epoch's
 custom reagent products and royalty income.  As a result of the Epoch merger,
 Nanogen expects a significant increase in future revenues.
     "This was a significant year in the transformation of Nanogen.  The year
 just ended included two corporate development transactions that support and
 strengthen our business plan.  We made significant progress in our point-of-
 care market strategy with the acquisition of SynX.  Its NT-proBNP diagnostic
 product for congestive heart failure is expected this year and will provide a
 terrific entry into a market expected by analysts to top $300 million in 2005.
 The acquisition of Epoch Biosciences also provides us with an expanded library
 of analyte specific reagents as well as an ongoing, high margin revenue stream
 from multiple licensing opportunities," said Howard C. Birndorf, Nanogen's
 chairman of the board and chief executive officer.  "We expect this year to be
 marked by three major product launches and a growing product portfolio that
 will accelerate revenue growth.  At the same time, we will take the
 opportunity to realize cost efficiencies by managing expenses through
 synergies between Nanogen, SynX and Epoch," Birndorf added.
     2005 Outlook and Financial Guidance
     New product introductions together with products acquired from Epoch are
 expected to expand Nanogen's reach into the clinical laboratory and the point-
 of-care diagnostics markets during 2005.  Significant new products expected
 this year include the NanoChip(R) 400 system, Nanogen's infectious disease
 reagents that will allow customers to develop a panel to test for six common
 respiratory viruses, and SynX's NT-proBNP diagnostic product for congestive
 heart failure.  For 2005, Nanogen anticipates that total revenue will increase
 at least three-fold from 2004 levels based on its larger product portfolio and
 royalty revenues.  Operating expenses are anticipated to rise slightly during
 the year, with increases in selling and marketing expenses in support of the
 expanded product portfolio being largely offset by expected savings in general
 and administrative expenses from the integration of acquisitions.  Overall,
 excluding the impact of potential future business combinations and the effect
 of adopting the new stock option expensing rules, we expect a continuing
 improvement in operating results.
     Webcast of Today's Conference Call
     Nanogen management will host a conference call today to discuss the fourth
 quarter and year-end financial results at 4:30 p.m. Eastern Time.  Audio of
 management's presentation will be available via live webcast on the investor
 relations section of Nanogen's corporate website 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 on February 23, and can be accessed via telephone at
 (877) 519-4471 for US/Canada participants, and (973) 341-3080 for
 international participants.  The conference ID, 5663809, will be required to
 listen to the playback.
     About Nanogen, Inc.
     Nanogen's advanced diagnostics provide physicians and patients worldwide
 with sophisticated information to predict, diagnose and treat disease.
 Research and clinical reference labs use the highly accurate and reliable
 NanoChip(R) Molecular Biology Workstation, NanoChip(R) Electronic Microarray
 and broad suite of analyte specific reagents to develop tests to detect
 infectious diseases, drug toxicity and mutations associated with cancer,
 cardiovascular and genetic diseases.  The next generation instrument system,
 the NanoChip(R) 400, is expected to be available in 2005.  Nanogen's
 subsidiary SynX offers a line of point-of-care diagnostic tests and is
 building expertise in cardiac related health conditions.  Nanogen's ten years
 of pioneering research involving nanotechnology may also have future
 applications in medical diagnostics, biowarfare and other industries.  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 results, estimates of operating expenses and projections of revenue
 increases.  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 any benefits expected from
 mergers and acquisitions are achieved, 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.
     Additionally, the information contained in this press release reflects
 preliminary financial results, as Nanogen's 2004 audit has not yet been
 completed.  Under Section 404 of the Sarbanes-Oxley Act of 2002, new
 integrated audit requirements will not be met until Nanogen has completed all
 of the steps necessary to file its 2004 audited financial statements with the
 Securities and Exchange Commission.
                                 NANOGEN, INC.
                          CONSOLIDATED BALANCE SHEETS
                (in thousands, except par value and share data)
                                                         As of December 31,
                                                        2004           2003
                        ASSETS                      (unaudited)     (audited)
       Current assets:
       Cash and cash equivalents                      $15,372         $8,550
       Short-term investments                          36,562         20,564
       Receivables, net                                 2,023          1,415
       Inventories, net                                 1,744          4,774
       Other current assets                             1,741          1,590
          Total current assets                         57,442         36,893
      Property and equipment, net                       8,500          4,276
      Acquired technology rights, net                  11,819          2,508
      Restricted cash                                   1,411             14
      Other assets, net                                   780            158
      Goodwill                                         96,072             --
          Total assets                               $176,024        $43,849
      Current liabilities:
       Accounts payable and accrued liabilities        $9,923         $4,809
       Deferred revenue                                   420            469
       Common stock warrants                            1,112             --
       Current portion of debt obligations                988            743
          Total current liabilities                    12,443          6,021
      Debt obligations, less current portion              397            586
      Other long-term liabilities                       5,668          4,419
          Total long-term liabilities                   6,065          5,005
      Commitments and contingencies
      Stockholders' equity:
       Convertible preferred stock, $0.001 par value,
        5,000,000 shares authorized at December 31,
        2004 and 2003; no shares issued and outstanding
        at December 31, 2004 and 2003                      --             --
       Common stock, $0.001 par value, 135,000,0000 and
        50,000,000 shares authorized at December 31,
        2004 and 2003, respectively; 47,765,581 and
        24,867,325 shares issued and outstanding at
        December 31, 2004 and 2003, respectively           48             25
       Additional paid-in capital                     374,910        209,014
       Accumulated other comprehensive income           (174)         1,136
       Deferred compensation                          (1,184)          (175)
       Accumulated deficit                          (215,162)      (176,255)
       Treasury stock, at cost, 500,189 shares at
        December 31, 2004 and 2003, respectively        (922)          (922)
          Total stockholders' equity                  157,516         32,823
          Total liabilities and stockholders'
           equity                                    $176,024        $43,849
                                 NANOGEN, INC.
                     (in thousands, except per share data)
                               For the Three Months     For the Twelve Months
                                ended December 31,        ended December 31,
                                2004        2003        2004         2003
                             (unaudited) (unaudited) (unaudited)   (audited)
       Product sales           $410       $1,120       $2,690       $2,762
       License fees              38           38          252           84
       Sponsored research        --          375          500        1,500
       Contract and grant       567          545        1,932        2,367
      Total revenues          1,015        2,078        5,374        6,713
      Costs and expenses:
       Cost of product sales  1,492        1,008        5,642        3,176
       Research and
        development           5,216        4,541       18,117       18,014
       Selling, general and
        administrative        5,606        3,638       18,232       15,319
       Charge for acquired
        in-process research
        and development          --           --        3,758           --
       Impairment of acquired
        technology rights        --           --           --        1,024
      Total costs and
       expenses              12,314        9,187       45,749       37,533
      Total operating loss  (11,299)      (7,109)     (40,375)     (30,820)
      Other income (expense):
       Interest income, net      84           84          517          489
       Other expense            (12)          (8)        (221)        (141)
       Warrant valuation
        adjustment              (74)          --          (74)          --
       Gain (loss) on sale
        of investments           --          865          (47)      (1,925)
       Gain (loss) on foreign
        currency translation    103            1        1,293          (16)
       Minority interest in
        loss of consolidated
        subsidiary               --          223           --        1,817
      Total other income        101        1,165        1,468          224
      Net loss             $(11,198)     $(5,944)     $(38,907)    $(30,596)
      Net loss per share
       - basic and diluted   $(0.31)      $(0.25)       $(1.21)      $(1.38)
      Number of shares
       used in computing
       net loss per share -
       basic and diluted     35,673       23,959       32,203       22,244

SOURCE Nanogen, Inc.