|
Research Triangle Park, North
Carolina
February 20, 2003
Paradigm
Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today reported
financial results for the fourth quarter and year ended December 31, 2002.
"We recognize that 2002 was an extremely difficult year for Paradigm and our
shareholders, as it was for the biotechnology industry as a whole," said
Heinrich Gugger, Ph.D., president and CEO of Paradigm Genetics. "Despite these
challenges, we have made significant tangible progress on the road to successful
commercialization of our technology, which we believe will positively position
Paradigm for the future. We continue to see opportunities to grow our ag biotech
business, which is now contributing incremental cash flow. And we will continue
to build what we believe will be a significant presence in healthcare around
predictive toxicology and proprietary biomarker discovery."
Gugger continued, "The financial results for the fourth quarter include reduced
revenues and incremental costs related to our previously announced steps to
reposition our business to create the proper foundation for us to build on. The
overall results are in line with the near-term expectations in our strategic
plan and earlier earnings guidance. We remain on track with implementation of
our strategic plan."
Financial Results
For the fourth quarter 2002, Paradigm reported:
* A net loss from continuing operations of $6.6 million or $0.21 per share
compared to a net loss from continuing operations of $3.6 million or
$0.12 per share for the same period in 2001.
* A net loss of $9.3 million, including a loss from discontinued
operations primarily related to the sale of its ParaGen business of $2.7
million or $0.09 per share.
* A decrease in total revenue of 71% to $1.9 million, compared to $6.7
million for the same period in 2001.
* A decrease in total operating expenses of 17% to $8.5 million, compared
to $10.3 million for the same period in 2001.
* An improvement in cash flow from operating activities to breakeven in
2002 from $(6.6) million in 2001.
For the twelve months ended December 31, 2002, Paradigm reported:
* A net loss from continuing operations of $20.3 million or $0.63 per
share compared to a net loss from continuing operations of $16.0 million
or $0.59 per share for the same period in 2001.
* A net loss of $23.5 million or $0.73 per share, including the loss from
discontinued operations.
* A decrease in total revenue of 30% to $17.2 million, compared to $24.5
million for the same period in 2001.
* A decrease in total operating expenses of 8% to $37.3 million, compared
to $40.4 million for the same period in 2001.
* A cash balance, comprising cash, cash equivalents and short-and long-
term investments of $21.2 million compared to a cash balance of $43.0
million at December 31, 2001.
Accomplishments
As discussed during the November 2002 earning conference call, Paradigm has
continued its progress in the implementation of its strategic plan as follows:
* Restructured the scope of its commercial arrangements with its ag
partners and invested in its operations to provide the foundation for
future profitability in its ag business.
* Sold its ParaGen plant genotyping business to DNA Landmarks in February
2003 for approximately $300,000 plus potential royalties. Any royalties
will be recognized as revenues from discontinued operations in the
Company's financial statements for the years 2003 to 2005.
* Continued to focus on its core business activities, reduce non-essential
recurring expenses and redirect expenditures away from SG&A toward
healthcare R&D activities. The significant reduction in SG&A expenses
and increasing investment in R&D will be reflected in the Company's
financial statements in upcoming quarters.
* Identified new business opportunities in both agriculture and healthcare
and made significant progress on those fronts, which the company expects
to announce in the coming months and quarters.
* Identified key strategic partners that we believe will strengthen our
collective offering and speed Paradigm's entry into the healthcare
market.
Continued Gugger, "We have 'taken the medicine' we needed to take to
reaccelerate the company, and now we are hitting the milestones we set for
ourselves. I am fully confident in the team I have in place and am pleased with
our execution on the strategy. I am greatly encouraged by our progress and look
forward to sharing future successes with you."
The company will discuss earnings guidance on its February 20 conference call.
About Paradigm Genetics
Paradigm is a biotechnology company aiming to increase R&D productivity by
focusing its integrated suite of technologies on the product development cycle,
from target discovery to subsequent enhancement of the safety and efficacy
profiles of development candidates. Paradigm chooses a systems biology approach
to understand gene function in the context of biological pathways, to develop
assays and biomarkers for molecular diagnostic solutions tailed to the needs of
our commercial and government partners. For more information, visit
www.paradigmgenetics.com.
PARADIGM GENETICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Year Ended
Ended
December 31, December 31,
2002 2001 2002 2001
Revenues:
Collaborative research
agreements 1,632,000 $6,708,000 $16,823,000 $24,337,000
Grant revenues 284,000 -- 360,000 130,000
Total revenues 1,916,000 6,708,000 17,183,000 24,467,000
Operating expenses:
Research and
development
(includes $74,000 and
$100,000 of stock based
compensation
expense for the three
months ended December 31
2002 and December 31,
2001, respectively,
and includes $346,000
and $561,000 of stock
based compensation
expense for the
year ended December 31
2002 and
December 31 2001,
respectively) 5,674,000 7,426,000 26,386,000 28,013,000
Selling, general and
administrative (includes
$46,000 and $118,000 of
stock based
compensation expense for
the three months ended
December 31, 2002 and
December 31, 2001,
respectively, and includes
$317,000 and $510,000
of stock based compensation
expense for the year ended
December 31, 2002
and December 31, 2001,
respectively) 2,851,000 2,831,000 10,909,000 12,398,000
Total operating expenses 8,525,000 10,257,000 37,295,000 40,411,000
Loss from operations (6,609,000)(3,549,000)(20,112,000)(15,944,000)
Other Interest income
(expense), net 31,000 (69,000) (184,000) (94,000)
Net loss from continuing
operations (6,578,000)(3,618,000)(20,296,000)(15,983,000)
Discontinued operations (2,734,000) (65,000) (3,174,000) (65,000)
Net loss attributable
to common
stockholders $(9,312,000)(3,683,000)(23,470,000)(16,048,000)
Net loss per share -
basic and
diluted
Loss from continuing
operations $(0.21) $(0.12) $(0.63) $(0.59)
Loss from discontinued $(0.09) -- $(0.10) --
operations
Net loss per share $(0.29) $(0.12) $(0.73) $(0.59)
Weighted average
common shares
outstanding 32,019,000 30,260,000 31,974,000 27,264,000
Paradigm Genetics, Inc.
2002 Year End Results
Condensed Balance Sheet Data
(Unaudited)
December 31, December 31,
2002 2001
Assets:
Cash, cash equivalents, short-term $10,909,000 $10,736,000
investments
Other current assets 6,500,000 8,497,000
Total Current Assets 17,409,000 19,233,000
Long term investments 10,323,000 32,256,000
Property plant & equipment net 22,431,000 27,854,000
Other non-current assets 2,459,000 5,744,000
Total Assets $52,622,000 $85,087,000
Liabilities and Stockholders'
Equity:
Current liabilities 18,557,000 24,165,000
Long-term obligations 3,378,000 7,678,000
Stockholders' equity 30,687,000 53,244,000
Total Liabilities and Stockholders' $52,622,000 $85,087,000
Equity
PARADIGM GENETICS, INC.
SUPPLEMENTAL INFORMATION RE: INCREASE/(DECREASE) IN CASH, CASH
EQUIVALENTS, SHORT-TERM AND LONG-TERM INVESTMENTS (See Note below)
(Unaudited)
Q4 Q4 Increase/
2002 2001 (Decrease)
Cash flows from operating activities:
Net loss attributable to
common shareholders (9,312,000) (3,683,000) (5,629,000)
Adjustments to reconcile net
loss to net cash used in
operating activities 9,353,000 (2,881,000) 12,182,000
Net cash provided by (used in)
operating activities 41,000 (6,564,000) 6,605,000
Net cash (used in)
investing activities,
excluding purchases and
maturities
of short-term and long-term
investments (1,098,000) (1,071,000) (27,000)
Net cash (used in) provided by
financing activities (1,171,000) 25,005,000 (26,174,000)
Cash, cash equivalents,
short-term
investments and long-term
investments beginning of
period 23,460,000 25,622,000 (2,162,000)
Cash, cash equivalents,
short-term
investments and long-term
investments,
end of period 21,232,000 42,992,000 (21,759,000)
Net (decrease) increase
in cash,
cash equivalents,
short-term
investments and long-term
investments $(2,228,000) $17,370,000 $(19,597,000)
Note: The above presentation of the change in cash and investments is not meant
to be in accordance with generally accepted accounting principles ("GAAP") in
the U.S. GAAP requires the presentation of a statement of cash flows only (i.e.,
excluding changes in short and long-term investments). Under GAAP, cash flows
from investing activities above would be impacted by net sales of investment
securities in the amount of $3.7 million and net purchases in the amount of
$16.0 million in Q4 2002 and 2001, respectively, and, cash and cash equivalents
at the beginning and end of the period would exclude short and long-term
investments of $19.2 million and $15.3 million, and $21.0 million and $36.8
million for Q4 2002 and 2001, respectively. Cash, cash equivalents, short-term
and long-term investments exclude restricted cash.
|
