Gene Logic Inc. (NASDAQ:GLGC) today reported financial results for
the first quarter ended March 31, 2007. Revenue Revenue for Gene
Logic�s continuing operations is derived primarily from its Genomic
Services Division. To date, no meaningful revenue for the Drug
Repositioning Division has been recorded. Total revenue for
Genomics for the first quarter of 2007 was $3.3 million compared to
$8.7 million for the first quarter of 2006, a decline of $5.5
million, largely due to lower sales for subscriptions to the
Company�s database services. This decline reflects our customers�
continuing shift in research activities from early-stage drug
discovery into later-stage development and validation efforts.
Revenue does not include approximately $1.9 million associated with
a single contract accounted for as a multi-element arrangement,
with respect to which nearly all services were performed and
delivered in the first quarter of 2007 and with respect to which
revenue is expected to be recorded later in 2007. Operating
Expenses Operating expenses from our continuing operations consist
of costs for services and adding content to the Company�s Genomics
databases, costs for developing and providing our Drug
Repositioning Division services and sales, marketing, and general
and administrative expenses associated with our continuing
operations. For the first quarter of 2007, total operating expenses
were $14.0 million compared to $17.2 million for the first quarter
of 2006, a decrease of $3.2 million, or 19%. This reduction
reflects the favorable impact of the restructuring of the Genomics
Division and lower amounts spent on adding new Genomics database
content. This decrease was partially offset by $0.9 million in
executive severance and retention benefits and $0.3 million in fees
associated with the Company�s efforts to determine strategic
alternatives for its Genomics business. Segment Operating Loss
Note: Management uses operating income to evaluate segment
performance. To arrive at operating income, the Company has
included all direct costs for providing its services and an
allocation for corporate overhead applied on a consistent and
reasonable basis. The Company has excluded the cost of income taxes
and interest income or expense and could also exclude certain
unusual or corporate related costs in the future. Segment Operating
Loss: � Three Months Ended March 31, 2007� 2006� Drug Repositioning
Division $ (4,594) $ (3,876) Genomics Division � (6,092) � (4,530)
Total operating loss $ (10,686) $ (8,406) � Drug Repositioning
Division: For the first quarter of 2007, the Company�s operating
loss for its Drug Repositioning Division was $4.6 million compared
to a loss of $3.9 million in the prior year period, an increase of
$0.7 million. This increase largely reflects the divisions�
proportional share of certain executive severance and retention
expenses. Genomics Division: For the first quarter of 2007, the
Genomics Division reported an operating loss of $6.1 million
compared to an operating loss of $4.5 million for the first quarter
of 2006, an increase of $1.6 million. The results reflect, most
significantly, $5.5 million of lower sales as discussed above
largely offset by reduced operating expenses associated with the
favorable impact of the restructuring of the Genomics Division and
lower expenses for Genomics database content. In 2006, the Company
began to explore new avenues of value for its Genomics assets. The
Company has reduced expenses while continuing to serve new and
existing Genomics customers. The Company has engaged outside
financial advisors to assist in considering strategic alternatives
for the business and recorded associated expenses of $0.3 million
in the first quarter of 2007. Net Loss For the first quarter of
2007, loss from continuing operations was $10.1 million or $0.32
per share, compared to a loss from continuing operations of $7.9
million, or $0.25 per share, for the first quarter of 2006. Loss
from continuing operations for the first quarter of 2007 reflects
primarily the impact of the revenue shortfall in the Genomics
Division. Net loss for the first quarter of 2007 was $10.1 million,
or $0.32 per share, compared to a net loss for the first quarter of
2006 of $11.8 million, or $0.37 per share. Net loss for the first
quarter of 2006 included a $3.9 million loss related to Gene Logic
Laboratories which the Company disposed of during the fourth
quarter of 2006. Liquidity As of March 31, 2007, the Company had
approximately $43.1 million in combined cash, cash equivalents and
marketable securities available-for-sale, compared to $50.1 million
as of December 31, 2006. Cash usage for the second quarter of 2007
is expected to be similar to cash usage for the first quarter of
2007. The Company does not expect the decline in cash, cash
equivalents and marketable securities available-for-sale reported
for the first half to be representative of cash usage for the
second half of 2007. Q1 Highlights Highlights for the first quarter
of 2007 included: Charles L. Dimmler, III was named Chief Executive
Officer and President The Company added Mark Gabrielson, Lloyd I.
Miller, III, and David Urdal, Ph.D. as Directors Thomas Barnes,
Ph.D. was promoted to Senior Vice President, Discovery for the
Company�s Drug Repositioning Division Conference Call and Webcast
Gene Logic will host a conference call and webcast on April 27,
2007 at 10:00 a.m. Eastern to discuss the results for the first
quarter of 2007. To listen to the live call and be able to ask
questions, dial (800)573-4752 in the U.S.A. or (617)224-4324
internationally and use the pass code Gene Logic; alternatively, a
webcast of the live call will be accessible from the Investors
section of the Company�s website at www.genelogic.com. A replay of
the call will be available beginning April 27, 2007 through May 11,
2007. To hear the replay, dial (888)286-8010 in the U.S.A. or
(617)801-6888 internationally and use the passcode 90544565. An
archived webcast of the conference call will also be available
under the Investors section of the Company�s website at
www.genelogic.com. Gene Logic Overview Gene Logic is transforming
into a pharmaceutical development company through partnerships with
pharmaceutical companies. Our partners provide Gene Logic with
access to their drug candidates that have been assessed as safe in
human clinical trials but discontinued for other reasons. Gene
Logic applies its drug indication platform to find new therapeutic
uses for the drug candidates. Gene Logic expects to receive
milestone payments and royalties on drug candidates that our
partners choose to develop based on the indications we find or, if
the partner elects not to pursue such new indications, Gene Logic
may receive ownership and development rights. Gene Logic has also
developed proprietary genomics databases and services to enable
customers worldwide to discover and prioritize drug targets,
identify biomarkers, predict toxicity and understand mechanisms of
toxicity, and obtain insights into the efficacy of specific
compounds. We continue to offer customers these services and
licenses to the databases. Such databases, services and expertise
are also a vital part of our drug indication platform. We are now
seeking strategic alternatives to also use our Genomics assets
capabilities and expertise for molecular diagnostics. Founded in
1994, Gene Logic is headquartered in Gaithersburg, Md., with
additional research and development facilities in Cambridge, Mass.
The Company currently has about 150 employees worldwide. For more
information, visit www.genelogic.com or call toll-free �
1/800/GENELOGIC. Safe Harbor Statement This press release contains
�forward-looking statements,� as such term is used in the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements include the Company�s ability to identify strategies for
making its businesses successful and the impact of such strategies
on our business and financial performance and on shareholder value.
Forward-looking statements typically include the words �expect,�
�anticipate,� �believe,� �estimate,� �intend,� �may,� �will,� and
similar expressions as they relate to Gene Logic or its management.
Forward-looking statements are based on our current expectations
and assumptions, which are subject to risks and uncertainties. They
are not guarantees of our future performance or results. Our actual
performance and results could differ materially from what we
project in forward-looking statements for a variety of reasons and
circumstances, including particularly such risks and uncertainties
that may affect the Company�s operations, financial condition and
financial results and that are discussed in detail in the Company�s
Annual Report on Form 10-K and our other subsequent filings with
the Securities and Exchange Commission. They include, but are not
limited to: whether we will be able to identify and successfully
implement strategies, on favorable terms or at all, for improving
the performance and value of our Genomics business, whether
repositioned compounds are successfully returned to our customers�
pipelines and generate sales, resulting in milestone payments and
royalties for the Company or whether we acquire on acceptable terms
rights to repositioned compounds that our partners decline to
develop and are able to derive revenue from these compounds through
licensing or otherwise, whether we can enter into agreements to
develop sufficient compounds to fulfill our plans for the Drug
Repositioning Division; whether there will be any claims associated
with the sale of the Pre-Clinical Division, whether we will be able
successfully to manage our existing cash and have access to
financing on sufficiently favorable terms to maintain our
businesses and effect our strategies, including development of
repositioned compounds; whether we will be able to recruit and
retain qualified personnel, particularly in light of our
restructuring efforts; potential negative effects on our operations
and financial results from workforce reductions, other
restructuring activities, and the evaluation of strategic options;
the potential loss of significant customers; the possibility of
further write-down of the value of certain intangible assets of the
Company, including goodwill associated with the Genomics Division;
and the possibility of delisting from NASDAQ Global Markets, which
could have an adverse effect on the value of our stock. Gene Logic
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Financial tables follow. � Gene Logic Inc.
Consolidated Statements of Operations (in thousands, except per
share amounts) � � Three Months Ended March 31, 2007� 2006�
(unaudited) Revenue: Genomics services $ 3,269� $ 8,748� Drug
repositioning services � -� � 20� Total revenue 3,269� 8,768� �
Expenses: Database production 5,298� 7,795� Research and
development 2,436� 2,440� Selling, general and administrative �
6,221� � 6,939� Total expenses 13,955� 17,174� Loss from operations
(10,686) (8,406) Interest (income), net (615) (773) Other (income)
expense 35� (3) Write-down of equity investment � -� � 275� Loss
from continuing operations (10,106) (7,905) Loss from discontinued
operations � -� � (3,892) Net loss $ (10,106) $ (11,797) Basic and
diluted net loss per share: Loss from continuing operations $
(0.32) $ (0.25) Loss from discontinued operations � -� � (0.12) Net
loss $ (0.32) $ (0.37) Shares used in computing basic and diluted
net loss per share � 31,837� � 31,788� � � Gene Logic Inc.
Consolidated Condensed Balance Sheets (in thousands) � � March 31,
December 31, 2007� 2006� � ASSETS (unaudited) Current assets: Cash
and cash equivalents $ 27,405� $ 25,700� Marketable securities
available-for-sale 15,681� 24,410� Accounts receivable, net of
allowance of $45 as of March 31, 2007 and December 31, 2006 943�
3,327� Unbilled services 764� 589� Inventory, net 2,022� 2,180�
Prepaid expenses 1,446� 1,260� Other current assets � 2,681� �
3,551� Total current assets 50,942� 61,017� Property and equipment,
net 12,345� 12,829� Long-term investments 2,964� 2,964� Goodwill
2,677� 2,677� Other intangibles, net 8,978� 10,060� Other assets �
665� � 726� Total assets $ 78,571� $ 90,273� � LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,334�
$ 3,703� Payable to Bridge Pharmaceuticals 666� 1,727� Accrued
compensation and employee benefits 3,803� 2,883� Other accrued
expenses 2,986� 3,751� Accrued restructuring costs 1,342� 1,941�
Current portion of long-term debt 500� 499� Deferred revenue �
4,626� � 3,299� Total current liabilities 16,257� 17,803� Deferred
revenue -� 228� Long-term debt, net of current portion 66� 78�
Deferred rent � 1,010� � 1,074� Total liabilities � 17,333� �
19,183� Stockholders' equity: Preferred stock, $.01 par value;
10,000,000 shares authorized; and no shares issued and outstanding
as of March 31, 2007 and December 31, 2006 -� -� Common stock, $0.1
par value; 60,000,000 shares authorized; 31,983,139 and 31,820,273
shares issued and outstanding as of March 31, 2007 and December 31,
2006, respectively 320� 318� Additional paid-in capital 386,762�
386,530� Accumulated other comprehensive loss (58) (78) Accumulated
deficit � (325,786) � (315,680) Total stockholders' equity �
61,238� � 71,090� Total liabilities and stockholders' equity $
78,571� $ 90,273� �
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