Conference Call to Be Held at 5:00 PM
Eastern Time Today
Transgenomic, Inc. (OTC/BB: TBIO) today reported
financial results for the fourth quarter and year ended December
31, 2013, and provided a business update.
Fourth Quarter Financial
Results
Net sales for the fourth quarter of 2013 were $6.2 million
compared with $7.3 million for the same period in 2012. The decline
in 2013 is mainly attributable to decreased volume in the
Laboratory Services segment, principally in the Neurology business,
and an unfavorable shift in mix, as a surplus of higher-priced
tests were reported in last year’s fourth quarter following a
production disruption. This decline was partially offset by a
significant increase in the Genetic Assays and Platforms segment,
which resulted from an increase in unit sales of instruments in the
U.S. and in Europe.
Gross profit was $2.6 million or 41 percent of net sales,
compared with gross profit of $3.5 million or 49 percent of net
sales for the same period in 2012. The decrease in gross profit was
mainly due to lower margins in our Laboratory Services segment,
related to the lower test volumes.
Operating expenses were $6.2 million during the fourth quarter
of 2013, compared with $6.8 million in the prior year. The decrease
in operating expenses was primarily due to reductions in our
Laboratory Services field sales force, as we adopted our new
channel strategy with partners such as PDI.
In the fourth quarter of 2013, there was a $0.3 million non-cash
expense related to warrant revaluation compared to $1.2 million of
income in the fourth quarter of 2012. The expense resulted from a
higher value being assigned to Company warrants as a result of a
rise in the Company’s stock price in the fourth quarter of 2013,
compared to a decline in the stock price in the fourth quarter of
2012.
The net loss for the fourth quarter of 2013 was $4.0 million, or
$0.05 per share, compared with a net loss of $2.3 million, or $0.03
per share, for the fourth quarter of 2012. The majority of the
increase in net loss was due to the change in non-cash warrant
revaluation.
Modified EBITDA, which is a non-GAAP measure that Transgenomic
views as an appropriate and sound measure of the Company's results,
was a loss of $2.6 million for the fourth quarter of 2013, compared
to a $2.4 million loss for the same period for 2012. A
reconciliation of net loss to modified EBITDA is presented
below.
Cash and cash equivalents were $1.6 million as of December 31,
2013, compared with $4.5 million as of December 31, 2012. On March
6, 2014, the Company announced the completion of a $7 million
placement of convertible preferred stock with affiliates of Third
Security, LLC, a life sciences investment firm founded by R.J.
Kirk. This funding, along with a debt restructuring that will defer
approximately $1.5 million of debt service payments from 2014 to
2015 provides capital that the Company will use to execute on its
business plan in 2014.
2013 Full Year Financial
Results
Net sales for the twelve months ended December 31, 2013 were
$27.5 million, compared with $31.5 million in 2012. The decrease
from 2012 was driven by reduced revenues in the Laboratory Services
segment reflecting lower test volumes, as described in the fourth
quarter commentary, partially offset by higher contract revenue
associated with a collaboration agreement.
Gross profit for the full year 2013 was $12.5 million, or 45
percent of net sales, compared with gross profit of $15.0 million,
or 48 percent of net sales, in 2012. The decrease in gross profit
was largely attributable to lower margins in our Laboratory
Services segment related to lower test volumes and an unfavorable
change in product mix.
Operating expenses were $28.3 million for the twelve months
ended December 31, 2013, compared with $24.5 million in the prior
year. The increase was due to higher costs related to our
Laboratory Services field sales force in the first half of 2013 and
a higher bad debt provision in 2013.
Income from warrant revaluation in 2013 was $1.9 million less
than in 2012. This reduction in non-cash income resulted from a
modest decline in the Company’s stock price in 2013 versus a
significant decline in the Company’s stock price in 2012.
The net loss for the twelve months ended December 31, 2013 was
$16.0 million, or $0.19 per share, compared with a net loss of $8.2
million, or $0.13 per share, during the comparable period of
2012.
“Transgenomic achieved a number of important milestones in 2013,
including our entry into multiple strategic partnerships with
world-class associates, including Amgen, PerkinElmer and PDI,” said
Paul Kinnon, President and Chief Executive Officer. “Each of these
partnerships is focused and designed to help us build and achieve
our goal of maximizing the commercial potential of our molecular
diagnostics portfolio by significantly expanding our global
commercial reach in all of our business units.”
Mr. Kinnon continued: “We maintained this forward momentum in
early 2014 by securing an important new patent relating to our ICE
COLD-PCR technology platform, which further strengthens our ICE
COLD-PCR intellectual property. In parallel, we’ve successfully
completed an important financing on favorable terms by raising $7
million via a convertible preferred stock placement with affiliates
of Third Security. We are optimistic that, collectively, these
efforts and our keen focus on commercialization of the Company’s
substantial assets will provide us with a stronger corporate
foundation for value creation for all of our stakeholders.”
Recent Highlights
- Transgenomic Files Application for
NASDAQ Stock Market Listing and Board Approves Reverse Stock
Split: In December 2013, the Company filed documents with the
US Securities and Exchange Commission to propose a 1-for-12 reverse
split of its issued and outstanding shares of common stock. The
action was approved by the Company’s shareholders and the reverse
stock split took effect at the start of trading on January 28,
2014. Concurrently, the Company filed an application for listing
its common shares on The NASDAQ Stock Market. The proposed
uplisting is expected to benefit the Company through greater
visibility, access to capital, and increased share liquidity.
- Stephen R. Miller Appointed to Head
Patient Testing Business Unit: In November 2013, Transgenomic
appointed Stephen R. Miller as Senior Vice President and General
Manager of the Patient Testing Business Unit. Mr. Miller brings
over 22 years of experience in the diagnostics and biotechnology
industries to Transgenomic, with a proven track record of
commercializing molecular diagnostic tests on a global basis. With
expertise covering sales, marketing, and business development, Mr.
Miller also brings in-depth experience in developing and
implementing strategic commercialization and reimbursement
plans.
Conference Call
Transgenomic management will host a conference call to discuss
fourth quarter and full year 2013 financial results and answer
questions beginning at 5:00 p.m. Eastern Time today. To access the
call via telephone, please dial 866-952-1906 from the U.S. or
Canada or 785-424-1825 for international participants and enter
conference ID TRANS. The call also will be broadcast live over the
Internet. To listen to the webcast, please log onto the Company's
Investor Relations web page at
http://www.transgenomic.com/calendar/2014/03/fourth-quarter-financial-results-conference-call-march-12-2014
and follow the instructions. An archived webcast of the call will
be available for 60 days. A telephone replay will be available from
8:00 p.m. Eastern Time on March 12, 2014 through 11:59 p.m. Eastern
Time on March 26, 2014 by dialing 800-677-7085 (domestic) or
402-220-0665 (international).
About Transgenomic
Transgenomic, Inc. (www.transgenomic.com) is a global
biotechnology company advancing personalized medicine in
cardiology, oncology, and inherited diseases. The Company has three
complementary business divisions: Patient Testing, Biomarker
Identification, and Genetic Assays and Platforms, which provide
specialized diagnostic tests, contract research services for drug
development, and equipment, reagents and other consumables for
clinical and research applications in molecular testing and
cytogenetics.
Forward-Looking
Statements
Certain statements in this press release constitute
“forward-looking statements” of Transgenomic within the meaning of
the Private Securities Litigation Reform Act of 1995, which involve
known and unknown risks, uncertainties and other factors that may
cause actual results to be materially different from any future
results, performance or achievements expressed or implied by such
statements. Forward-looking statements include, but are not limited
to, those with respect to the Company’s ability to execute on its
plan for 2014, the Company’s proposed listing on the Nasdaq Stock
Market, the anticipated benefits of the Company’s multiple
strategic partnerships, management's current views and estimates of
future economic circumstances, industry conditions and company
performance and financial results. The known risks, uncertainties
and other factors affecting these forward-looking statements are
described from time to time in Transgenomic's filings with the
Securities and Exchange Commission, which are available free of
charge on the SEC's website at http://www.sec.gov. Any change in
such factors, risks and uncertainties may cause the actual results,
events and performance to differ materially from those referred to
in such statements. Accordingly, the Company claims the protection
of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 with respect to
all statements contained in this press release. All information in
this press release is as of the date of the release and
Transgenomic does not undertake any duty to update this
information, including any forward-looking statements, unless
required by law.
TRANSGENOMIC, INC. AND SUBSIDIARY CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands
except per share data) Three Months
Ended Twelve Months Ended December
31, December 31, 2013 2012
2013 2012 NET SALES: Laboratory
Services $ 2,840 $ 4,803 $ 15,391 $ 19,329 Diagnostic Tools
3,378 2,490 12,153 12,151
6,218 7,293 27,544 31,480
COST OF GOODS SOLD
3,664 3,748 15,048 16,470
GROSS PROFIT 2,554 3,545 12,496 15,010
OPERATING
EXPENSES: Selling, general and administrative 5,260 6,192
25,043 22,023 Research and development 905 620
3,212 2,491 6,165
6,812 28,255 24,514
LOSS FROM OPERATIONS (3,611 ) (3,267 ) (15,759 ) (9,504 )
OTHER INCOME (EXPENSE): Interest expense, net (182 ) (175 )
(642 ) (888 ) Change in fair value of warrants (300 ) 1,200 300
2,200 Other, net 6 (12 ) 60
11 (476 ) 1,013 (282 )
1,323
LOSS BEFORE INCOME TAXES (4,087 ) (2,254
) (16,041 ) (8,181 )
INCOME TAX EXPENSE (BENEFIT)
(105 ) 59 (54 ) 146
NET
INCOME (LOSS) $ (3,982 ) $ (2,313 ) $ (15,987 ) $ (8,327 )
PREFERRED STOCK DIVIDENDS AND ACCRETION (181 )
(165 ) (726 ) (660 )
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (4,163 ) $ (2,478 ) $ (16,713 ) $ (8,987
)
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.05 ) $ (0.03
) $ (0.19 ) $ (0.13 )
BASIC AND DILUTED WEIGHTED AVERAGE SHARES
OF COMMON STOCK OUTSTANDING 88,245,725
71,645,725 87,199,698 69,417,419
Transgenomic, Inc. Summary Financial
Results Proforma Modified EBITDA (dollars in
thousands)
Management uses Modified EBITDA, a
non-GAAP measure, to measure the Company's financial performance
and to internally manage its businesses. Management believes that
Modified EBITDA provides useful information to investors as a
measure of comparison with peer and other companies. Modified
EBITDA should not be considered an alternative to, or more
meaningful than, net income or cash flow as determined in
accordance with generally accepted accounting principles. Modified
EBITDA calculations may vary from company to company. Accordingly,
our computation of Modified EBITDA may not be comparable with a
similarly-titled measure of another company.
The following sets forth the
reconciliation of Net Loss to Modified EBITDA for the periods
indicated:
Three Months Ended
Twelve Months Ended December 31, December 31,
2013 2012 2013
2012 NET LOSS $ (3,982
) $ (2,313 )
$ (15,987 )
$ (8,327 ) INTEREST EXPENSE
182 175 642 887 INCOME TAX
EXPENSE (BENEFIT) (105 ) 59 (54
) 146 DEPRECIATION AND AMORTIZATION
702 708 2,804 2,278 CHANGE IN
FAIR VALUE OF WARRANTS 300 (1,200 )
(300
) (2,200 ) STOCK OPTION EXPENSE
294 175 462 731
MODIFIED EBITDA $ (2,609 )
$ (2,396 )
$ (12,433 ) $
(6,485 ) TRANSGENOMIC, INC. AND
SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share data)
December 31, December 31, 2013
2012 ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 1,626
$
4,497
Accounts receivable, net 5,314 8,081 Inventories, net 3,957 5,092
Other current assets 938 1,047 Total current assets
11,835 18,717
PROPERTY AND EQUIPMENT, NET 2,003 2,190
OTHER ASSETS: Goodwill 6,918 6,918 Intangibles 9,195 10,764
Other assets 327 202 $ 30,278 $ 38,791
LIABILITIES
AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES $ 9,838 $
15,268
OTHER LIABILITIES: Long term debt less current
maturities 5,105 — Common stock warrant liability 600 900 Preferred
stock dividend payable 1,986 1,260 Other long-term liabilities
1,303 1,089 Total liabilities 18,832 18,517
STOCKHOLDERS’
EQUITY 11,446 20,274 $ 30,278 $ 38,791
Investor Contact:Argot PartnersDavid Pitts,
212-600-1902david@argotpartners.comorCompany
Contact:Transgenomic, Inc.Investor Relations,
402-452-5416investorrelations@transgenomic.com
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