66% Revenue Growth; HERmark Breast Cancer Assay launched
commercially SOUTH SAN FRANCISCO, Calif., July 29
/PRNewswire-FirstCall/ -- Monogram Biosciences, Inc. (NASDAQ:MGRM)
today reported financial results for the quarter ended June 30,
2008. The Company had revenues of $16.1 million for the second
quarter of 2008, 66% higher than $9.7 million in the second quarter
of 2007. This growth was driven by revenue from Trofile(TM) for
selecting HIV patients to be treated with Selzentry(TM), Pfizer's
CCR5 antagonist, and by revenue from use of Monogram's PhenoSense
HIV(TM) resistance test and Trofile in a phase III trial by a
pharmaceutical company customer. Revenue for the six months ended
June 30, 2008 was $31.0 million, an increase of 62% over $19.1
million in the first six months of 2007. In addition to the
reported revenue for the quarter, Monogram recorded as deferred
revenue, the sale of Trofile assays to Pfizer for patient testing
outside of the U.S. and for use in clinical trials. These deferred
revenues were $1.2 million and $2.0 million for the three and six
months ended June 30, 2008, respectively. This revenue was recorded
as deferred revenue due to the accounting for the Company's
collaboration with Pfizer. Had these sales not been accounted for
as deferred revenue, total revenue on a Non-GAAP basis, for the
three and six months ended June 30, 2008 would have been $17.3
million and $33.0 million, respectively. Monogram has performed
over 8,000 Trofile tests to date for U.S. patients and revenue from
Trofile in the quarter ended June 30, 2008 was $3.7 million.
"Revenues were again at a record level in the second quarter," said
Alfred Merriweather, Monogram's Chief Financial Officer. "Gross
margin on product revenues for the second quarter was 54%." The
Company had approximately $26.9 million in cash, cash equivalents
and short-term investments at June 30, 2008. Cash used in
operations for the first six months of 2008 was $8.4 million. HIV
Tropism and Resistance Testing Recent significant developments in
Monogram's HIV business include: -- Introduction in June of
sensitivity enhancements to Trofile enabling the identification of
X4 virus present at a level as low as 0.3% of the total viral
population, a thirty-fold increase in sensitivity. -- Presentation
in June, at the Drug Resistance Workshop in Sitges, Spain, of data
providing clinical validation of optimized patient selection with
the enhanced assay format. -- Establishment of coverage for Trofile
by New York and California state Medicaid programs. -- Announcement
of the availability August 4 of the PhenoSense Integrase assay for
assessing resistance to the integrase class of HIV drugs. --
Extension of Trofile's availability outside of the U.S. to thirteen
European countries, Canada, Brazil and Argentina. "Selecting the
right treatment regimens for HIV patients is critical, not only to
assure that each individual drug is appropriate for the individual
patient but also to make sure that the entire regimen is as robust
as possible to protect the other drugs in the patient's regimen
from unnecessary exposure to the development of resistance," said
William Young, Monogram Chief Executive Officer. "The
implementation of enhanced sensitivity in Trofile and the
introduction of our resistance test for the integrase class of HIV
drugs further extend Monogram's industry-leading portfolio of
assays for guiding HIV therapy decisions." HERmark(TM) Breast
Cancer Assay Recent significant developments for Monogram's HERmark
Breast Cancer Assay include: -- Presentation by collaborators at
ASCO in June of a study demonstrating the superiority of HERmark
over FISH as a predictor of trastuzumab response ("Total HER2 and
HER2 Homodimer Levels Predict Response to trastuzumab"). --
Commercial introduction in July of HERmark for assessment of HER2
status in patients with breast cancer -- providing a precise and
quantitative measurement of HER2 total protein and HER2 homodimer
levels by a CLIA-validated assay through Monogram's CAP-certified
clinical laboratory. -- Establishment of initial sales organization
to introduce HERmark to the oncology community. -- Introduction at
ASCO of a Collaborative Biomarker Study, designed to (i) compare
conventional IHC and FISH methods of HER2 testing with the
quantitative measurements of HER2 total protein and HER2 homodimers
provided by HERmark, and (ii) to describe the
expression/co-expression profiles identified by Monogram's HER1 and
HER3 Total Protein Assays along with HER2 total protein and
homodimer levels identified by HERmark to facilitate analyses of
how such measurements may correlate with certain laboratory and
clinical parameters, including disease progression. "Current
technologies -- IHC, FISH and CISH -- are well recognized by breast
cancer researchers and oncologists as being inadequate for the
accurate assessment of HER2 status," continued Young. "This is the
important clinical need that HERmark addresses by providing
accurate and quantitative measurements of the drug target."
Physicians currently use these semi-quantitative technologies to
determine HER2 status and decide whether or not to prescribe
Herceptin(R). Inaccurate measurements of HER2 may lead to
inappropriate therapy selection. Guidance recently issued jointly
by ASCO and CAP (the College of American Pathologists) indicated
that approximately 20% of HER2 determinations conducted in local
laboratories by current testing technologies may be inaccurate. "We
have correlated the HERmark assay with IHC, FISH and CISH results
obtained in central laboratories in more than one thousand
patients, and we see a high degree of concordance between the best
central laboratory tests and HERmark," said Michael Bates, M.D.,
Vice President of Clinical Research at Monogram. "However, even
when compared to the best central laboratory measurements, HERmark
identifies patients with high HER2 levels but who are HER2-negative
by other assays, as well as some patients with low HER2 levels but
who are judged positive by conventional assays. Comparisons with
local laboratory IHC or FISH results suggest significantly larger
numbers of discordant results. We believe the HERmark Assay
measures HER2 total protein and homodimer levels very accurately
and will help physicians to make treatment decisions with high
confidence." Monogram expects that as many as 15-20% of patients
determined by conventional technologies to be HER2-negative would
be reclassified by HERmark. VeraTag(TM) Oncology Platform Recent
significant developments for the VeraTag technology platform
include: -- Introduction to biopharmaceutical companies of the HER1
and HER3 Total Protein Assays for research use. -- Issuance of
three U.S. patents and one European patent covering the detection
and profiling with VeraTag technology of protein complexes,
including homodimers and heterodimers. While the HERmark Breast
Cancer Assay, which measures the expression of the HER2 protein and
the HER2:HER2 homodimer, is the first product to be developed based
on Monogram's proprietary VeraTag technology, Monogram has a
growing portfolio of VeraTag assays that measure proteins, protein
complexes and post-translational modifications such as
phosphorylation, in FFPE tumor samples. In addition to the HER1,
HER2 and HER3 total protein assays and the HER2:HER2 homodimer
assay, Monogram has assays in advanced development for the
measurement of: -- heterodimers of HER1 and HER2 (HER1:HER2) --
heterodimers of HER2 and HER3 (HER2:HER3) -- the HER3:PI3K complex,
which is related to the Akt signaling pathway for tumor cell
survival -- the truncated form of HER2, known as p95. These
activated protein complexes are believed to mediate resistance to
Herceptin(R) in patients with breast cancer and are targets of
other cancer drugs in development. "As we extend the range of
assays beyond HER2, we will be able to address not only resistance
pathways to Herceptin in breast cancer but also provide assays that
may be informative in lung, colorectal and other cancers," added
Young. "With a broad range of assays, our VeraTag platform is
intended to inform the rational design of combination therapies,
such as those for patients with resistance to Herceptin." GAAP and
Non-GAAP Proforma Results Net Loss and Net Loss Per Share is shown
below in accordance with GAAP and also on a Non-GAAP Proforma
Basis. The Company is reporting Non-GAAP Proforma results which
exclude certain items to provide a clearer view of ongoing results
without the impact of non-cash valuation adjustments related to our
convertible debt. A reconciliation of these Non-GAAP Proforma
results to GAAP results is included with the Statement of
Operations data attached to this release. Three Months Ended Six
Months Ended June 30, June 30, 2008 2007 2008 2007 Net Loss ($
Millions) GAAP Net Loss $(5.5) $(3.9) $(7.2) $(15.4) Non-GAAP
Proforma Net Loss $(5.7) (8.3) $(12.1) (18.1) Net Loss Per Share
($) GAAP Net Loss Per Share $(0.04) $(0.03) $(0.05) $(0.12)
Non-GAAP Proforma Net Loss Per Share $(0.04) $(0.06) $(0.09)
$(0.14) Non-cash "mark-to-market" adjustments to the 3% Senior
Secured Convertible Note and the 0% Convertible Senior Unsecured
Debt that were reflected in non-operating income and expense for
the periods ended June 30, 2008 and 2007 are excluded from proforma
net loss. Favorable adjustments of $0.1 million and $4.5 million
were recorded in the three months ending June 30, 2008 and 2007,
respectively. Favorable adjustments of $4.8 million and $0.4
million were recorded in the six months ending June 30, 2008 and
2007, respectively. In addition, a favorable adjustment of $2.2
million was recorded at January 1, 2007 for the cumulative effect
of the change in accounting principle at that date. Such
adjustments could be significant and unpredictable in future
quarters depending on several factors, including the level of the
Company's common stock price. Stock-based compensation in
accordance with SFAS123(R) is recorded as expense for purposes of
both GAAP and our Non-GAAP Proforma results. Such costs were $1.2
million in the second quarter of 2008, compared to $1.1 million in
the prior year's second quarter. We believe that the foregoing
presentation of these Non-GAAP financial measures will enable
investors, analysts and readers of our financial statements to
compare Non-GAAP measures with relevant GAAP measures in all
periods presented. Any Non-GAAP financial measure used by us should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Capital Structure At
June 30, 2008, a total of 134.9 million shares of common stock were
outstanding and stock options were outstanding on 24.2 million
shares of common stock. The principal amount of Pfizer's $25
million convertible note, issued in May 2006, is convertible into
approximately 9.2 million shares of common stock. The $30 million
principal amount of our 0% Convertible Senior Unsecured Notes,
issued in January 2007, is convertible into approximately 11.9
million shares of common stock. Conference Call Details Monogram
will host a conference call today at 4:30 p.m. Eastern Time. To
participate in the live teleconference please call (877) 675-4748,
or (719) 325-4848 for international callers, fifteen minutes before
the conference begins. Live audio of the call will be
simultaneously broadcast over the Internet and will be available to
members of the news media, investors and the general public. Access
to live and archived audio of the conference call will be available
by following the appropriate links at http://www.monogrambio.com/
and clicking on the Investor Relations link. Following the live
broadcast, a replay of the call will also be available at (888)
203-1112, or (719) 457-0820 for international callers. The replay
passcode is 3249168. The information provided on the teleconference
is only accurate at the time of the conference call, and Monogram
assumes no obligation to provide updated information except as
required by law. About Monogram Monogram is advancing
individualized medicine by discovering, developing and marketing
innovative products to guide and improve treatment of serious
infectious diseases and cancer. The Company's products are designed
to help doctors optimize treatment regimens for their patients that
lead to better outcomes and reduced costs. The Company's technology
is also being used by numerous biopharmaceutical companies to
develop new and improved anti-viral therapeutics and vaccines as
well as targeted cancer therapeutics. More information about the
Company and its technology can be found on its web site at
http://www.monogrambio.com/. Forward Looking Statements Certain
statements in this press release are forward-looking. These
forward-looking statements include references to the demand and
outlook for our products, including our Trofile and HERmark assays,
the outlook for Selzentry, Pfizer's CCR5 antagonist HIV drug,
reimbursement for Trofile and HERmark, the ability of VeraTag
technology, including HERmark, to significantly improve the
information available to physicians, results of studies intended to
demonstrate clinical utility of our VeraTag technology and HERmark
products and activities related to the Pfizer collaboration. These
forward-looking statements are subject to risks and uncertainties
and other factors, which may cause actual results to differ
materially from the anticipated results or other expectations
expressed in such forward-looking statements. These risks and
uncertainties include, but are not limited to: the risk that
physicians may not use a molecular diagnostic for patient selection
for Selzentry or other HIV drugs; risks related to the
implementation of the collaboration with Pfizer; risks related to
our ability to recognize revenue from activities under the
collaboration with Pfizer; risks and uncertainties relating to the
performance of our products; the growth in revenues; the size,
timing and success or failure of any clinical trials for CCR5
inhibitors, entry inhibitors or integrase inhibitors; the risk that
our Trofile Assay may not be utilized for patient use with
Selzentry and other CCR5 inhibitors; the risk that our VeraTag
assays, including HERmark, may not predict response to particular
therapeutic agents; the risk that we may not be able to obtain
additional cohorts of patient samples for additional VeraTag
studies, our ability to successfully conduct clinical studies and
the results obtained from those studies; whether larger
confirmatory clinical studies will confirm the results of initial
studies; our ability to establish reliable, high-volume operations
at commercially reasonable costs; expected reliance on a few
customers for the majority of our revenues; the annual renewal of
certain customer agreements; actual market acceptance of our
products and adoption of our technological approach and products by
pharmaceutical and biotechnology companies; our estimate of the
size of our markets; our estimates of the levels of demand for our
products; the impact of competition; the timing and ultimate size
of pharmaceutical company clinical trials; whether payers will
authorize reimbursement for our products and services and the
amount of such reimbursement that may be allowed; whether the FDA
or any other agency will decide to further regulate our products or
services, including Trofile; whether existing levels of
reimbursement will be reviewed and reduced by third party payers,
including Medicare; whether the draft guidance on Multivariate
Index Assays issued by FDA will be subsequently determined to apply
to our current or planned products; whether we will encounter
problems or delays in automating our processes; the ultimate
validity and enforceability of our patent applications and patents;
the possible infringement of the intellectual property of others;
whether licenses to third party technology will be available;
whether we are able to build brand loyalty and expand revenues;
restrictions on the conduct of our business imposed by the Pfizer,
G.E. and other debt agreements; the impact of additional dilution
if our convertible debt is converted to equity; and whether we will
be able to raise sufficient capital in the future, if required. For
a discussion of other factors that may cause actual events to
differ from those projected, please refer to our most recent annual
report on Form 10-K and quarterly reports on Form 10-Q, as well as
other subsequent filings with the Securities and Exchange
Commission. We do not undertake, and specifically disclaim any
obligation, to revise any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances
after the date of such statements. PhenoSense, PhenoSenseGT,
Trofile, HERmark and VeraTag are trademarks of Monogram
Biosciences, Inc. Herceptin is a registered trademark of Genentech,
Inc. Selzentry is a trademark of Pfizer Inc. MONOGRAM BIOSCIENCES,
INC. SELECTED STATEMENT OF OPERATIONS DATA (In thousands, except
per share amounts) (Unaudited) Three Months Ended Six Months Ended
June 30, June 30, 2008 2007 2008 2007 Revenue: Product revenue
$15,440 $8,907 $29,447 $18,006 Contract revenue 687 485 1,506 803
License revenue 5 300 15 300 Total revenue 16,132 9,692 30,968
19,109 Operating costs and expenses: Cost of product revenue 7,124
5,327 13,488 11,032 Research and development 6,244 5,176 12,268
10,507 Sales and marketing 4,133 4,159 8,485 8,102 General and
administrative 4,163 3,629 8,729 7,857 Total operating costs and
expenses 21,664 18,291 42,970 37,498 Operating loss (5,532) (8,599)
(12,002) (18,389) Convertible debt valuation adjustment and
interest income/(expense), net (58) 4,727 4,684 717 Contingent
Value Rights valuation adjustment 72 - 72 - Net loss before
cumulative effect of change in accounting principle (5,518) (3,872)
(7,246) (17,672) Cumulative effect of change in accounting
principle - - - 2,242 Net loss after cumulative effect of change in
accounting principle $(5,518) $(3,872) $(7,246) $(15,430) Basic and
diluted net loss per common share before cumulative effect of
change in accounting principle $(0.04) $(0.03) $(0.05) $(0.13)
Cumulative effect per share of change in accounting principle $- $-
$- $0.01 Basic and diluted net loss per common share after
cumulative effect of change in accounting principle $(0.04) $(0.03)
$(0.05) $(0.12) Weighted-average shares used in computing basic net
loss per common share 134,553 132,026 134,372 131,805
Reconciliation of Non-GAAP Proforma Results to GAAP Net loss after
cumulative effect of change in accounting principle $(5,518)
$(3,872) $(7,246) $(15,430) Adjustments for certain non-cash items:
Cumulative effect of change in accounting principle - - - (2,242)
Contingent Value Rights valuation adjustment (72) - (72) -
Convertible debt valuation adjustment (66) (4,463) (4,802) (408)
Non-GAAP Proforma net loss (5,656) (8,335) (12,120) (18,080)
Non-GAAP Proforma net loss per common share, basic $(0.04) $(0.06)
$(0.09) $(0.14) Management believes that this Non-GAAP proforma
financial data supplements the Company's GAAP financial statements
by providing investors with additional information which allows
them to have a clearer picture of the Company's operations,
financial performance and the comparability of the Company's
operating results from period to period as they exclude the effects
of revaluation of the Company's convertible debt that management
believes are not indicative of the Company's ongoing operations.
The presentation of this additional information is not meant to be
considered in isolation or as a substitute for results prepared in
accordance with GAAP. Above, management has provided a
reconciliation of the Non-GAAP proforma financial information with
the comparable financial information reported in accordance with
GAAP. MONOGRAM BIOSCIENCES, INC. SELECTED BALANCE SHEET DATA (In
thousands) (Unaudited) June 30, December 31, 2008 2007(1) ASSETS
Current assets: Cash and cash equivalents $21,943 $18,762
Short-term investments 4,984 11,828 Accounts receivable, net 13,731
9,100 Prepaid expenses 1,164 1,279 Inventory 1,761 1,250 Other
current assets 1,249 917 Total current assets 44,832 43,136
Property and equipment, net 7,913 7,665 Goodwill 9,927 9,927
Deferred costs 12,675 8,043 Other assets 94 540 Total assets
$75,441 $69,311 LIABILITIES AND STOCKHOLDERS' DEFICIT Current
liabilities: Accounts payable $1,765 $2,116 Accrued compensation
5,402 3,324 Accrued liabilities 4,708 3,818 Current portion of
restructuring costs 610 610 Deferred revenue, current portion 727
605 Current portion of loans payable and capital lease obligations
10,175 4,469 Contingent value rights 2,060 2,119 Total current
liabilities 25,447 17,061 Long-term 3% convertible promissory note
19,678 20,786 Long-term 0% convertible promissory note 14,817
18,511 Long-term portion of restructuring costs - 289 Long-term
deferred revenue 20,248 13,622 Other long-term liabilities 661 282
Total liabilities 80,851 70,551 Stockholders' deficit: Common stock
135 134 Additional paid-in capital 289,243 286,196 Accumulated
other comprehensive loss (3) (31) Accumulated deficit (294,785)
(287,539) Total stockholders' deficit (5,410) (1,240) Total
liabilities and stockholders' deficit $75,441 $69,311 (1) The
balance sheet data at December 31, 2007 is derived from audited
financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2007 filed with the
Securities and Exchange Commission. contacts: Alfred G.
Merriweather Jeremiah Hall Chief Financial Officer Feinstein Kean
Healthcare Tel: 650 624 4576 Tel: 415 677 2700 amerriweather@
jeremiah.hall@ monogrambio.com fkhealth.com DATASOURCE: Monogram
Biosciences, Inc. CONTACT: Alfred G. Merriweather, Chief Financial
Officer of Monogram Biosciences, Inc., +1-650-624-4576, , or
Jeremiah Hall of Feinstein Kean Healthcare, +1-415-677-2700, , for
Monogram Biosciences, Inc. Web site: http://www.monogrambio.com/
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