U.S. Market Share of SurePath Liquid Based Pap Test Continues to
Climb BURLINGTON, N.C., July 27 /PRNewswire-FirstCall/ -- TriPath
Imaging, Inc. (NASDAQ:TPTH) today reported first half revenues of
$48.5 million, a 20% increase from the first half of 2005, gross
profit of $33.3 million, an 18% increase from the first half of
2005, and net income of $3.4 million or $0.09 per diluted share, a
38% improvement from net income of $2.4 million or $0.06 per
diluted share reported in the first half of 2005. For the six
months ended June 30, 2006, the stock-based compensation expense
recorded in accordance with SFAS 123(R) totaled $414,000. The
Company reported second quarter revenues of $24.5 million, a 15%
increase from the second quarter of 2005, gross profit of $17.2
million, a 17% increase from the second quarter of 2005, and net
income of $1.6 million or $0.04 per diluted share, a 7% improvement
from net income of $1.5 million or $0.04 per diluted share reported
in the second quarter of 2005. For the three months ended June 30,
2006, the stock-based compensation expense recorded in accordance
with SFAS 123(R) totaled $330,000. Revenue growth in the second
quarter of 2006 was primarily driven by a 20% increase in U.S.
sales compared to the second quarter of 2005. The growth in
domestic revenues in the quarter reflected a 19% increase in
revenues generated from the sale of reagents and disposables and a
93% increase in revenues generated from sales and usage fees
associated with the FocalPoint Imaging System and the Ventana Image
Analysis System (VIAS). The number of SurePath tests sold in the
U.S. increased by 28% as a result of a 56% increase in tests sold
to the large commercial laboratories and a 10% increase in tests
sold to the Company's traditional customer base. Cash and cash
equivalents at June 30, 2006 were $24.0 million. In the second
quarter of 2006 the Company generated positive cash flow for the
eighth consecutive quarter. For the first half of 2006, total
revenues grew 20% and were primarily driven by growth in the U.S.,
where revenues generated from the sale of reagents and disposables
increased 20% and revenues generated from sales and usage fees
associated with the Company's FocalPoint and VIAS imaging systems
grew 65%, when compared to the first half of 2005. The growth in
domestic revenues accounted for 76% of overall growth in the half
as revenues generated outside the U.S. grew 17% from the first half
of 2005. In the first half of 2006, the Company's cervical cancer
screening business grew increasingly profitable as operating income
of nearly $13.0 million generated by the commercial operations
segment grew by 28% compared to the same period in 2005 on 20%
growth in total revenues associated with the Company's cervical
cancer screening products, including the SurePath Liquid Based Pap
test and the FocalPoint Imaging System. While worldwide revenues
generated from the sale and usage fees associated with its
instruments grew 45% in the first half of 2006 compared to the same
period in 2005, growth in total revenues was again primarily driven
by sales of the Company's reagents and disposables which accounted
for 77% of total revenues reported in the half. The number of
SurePath tests sold worldwide increased by 26%. In the U.S., where
the number of tests sold increased by 30%, the Company estimates
that by the end of the second quarter of 2006 the SurePath Liquid
based Pap test accounted for approximately 24% of all Pap tests
performed, compared to 22% in the first quarter of 2006 and 18% in
the second quarter of 2005. The Company estimates that at least 30%
of SurePath tests performed in the U.S. are now processed using the
FocalPoint Slide Profiler. In the second quarter of 2006, the
Company continued to expand the VIAS test menu after receiving FDA
510(k) clearance for the Ki-67 assay application. The Company
believes that VIAS now supports the most comprehensive menu of
510(k) cleared breast cancer markers offered by any imaging system
on the market today. The Company plans to continue to expand this
menu and, to this end, submitted a notification for 510(k)
clearance of an additional breast marker in the second quarter and
is currently preparing another application for submission in the
third quarter of this year. The Company introduced its ProEx C
Class I IHC for evaluation of cervical biopsies in the second
quarter. This reagent has been purchased by thirteen laboratories
since its introduction and is currently being evaluated by each of
the three large commercial laboratories in the U.S. as well as over
twenty regional, hospital and academic laboratories in the U.S. and
abroad. A number of research studies relating to the ProEx C
reagent for cervical screening were presented by the Company's
research staff and independent external investigators in the first
half of 2006. The Company expects that the results of other studies
incorporating both ProEx C and ProEx Br, its breast cancer staging
reagents, will appear in peer reviewed publications or will be
presented at major scientific meetings later in the year. The
Company reported that its clinical trial activity increased
significantly in the second quarter of 2006. Given the progress to
date, the Company continues to expect to submit data to the FDA
relating to its breast cancer staging product later this year and
the SurePath Molecular Pap test in 2007. The Company also remains
on track to submit data in support of expanded FocalPoint claims to
include the FocalPoint GS Imaging System later this year. The
Company is in discussions with the FDA regarding its submission to
expand the SurePath premarket approval to include testing for Human
Papilloma Virus (HPV) in cells collected using the SurePath test
pack and is responding to the FDA's request for information. The
Company announced that a multi-site preclinical study incorporating
its ELISA formatted Research Use Only reagents for blood based
ovarian screening and monitoring is underway. The study is
progressing rapidly and should be completed later this year as 50%
enrollment in the study has already been achieved. The Company also
reported that it has completed its evaluation of multiplexing
testing platforms for high volume blood based screening. The
Company expects to initiate adaptation of its ovarian screening
assay to a multiplexing testing platform by year-end. Paul R.
Sohmer, M.D., Chairman, President and CEO of TriPath Imaging, Inc.
commented, "Thus far, 2006 has been very productive. Given on our
performance to date, we are on plan to achieve our financial,
commercial and development goals for 2006." Conference Call Details
TriPath Imaging's management will host a conference call today at
11:00 a.m. EDT to discuss the Company's second quarter financial
results, business highlights and future expectations. The call will
be available by dialing (888) 344-3716. International participants
should call (706) 634-4926. For interested parties unable to
participate during the live call, a telephone replay will be
available beginning two hours after the completion of the call
until August 3, 2006. To access this replay, U.S. participants
should call (800) 642-1687. International participants should call
(706) 645-9291. Individuals accessing the replay must enter the
conference call ID number 3254252. A live web cast and replay of
TriPath Imaging's call will also be available online at
http://www.tripathimaging.com/. TriPath Imaging, Inc.,
headquartered in Burlington, North Carolina, develops,
manufactures, markets and sells innovative solutions to improve the
clinical management of cancer, including detection, diagnosis,
staging and treatment. TriPath Oncology, a wholly owned subsidiary
of TriPath Imaging, develops molecular diagnostic products for
malignant melanoma and cancers of the cervix, breast, ovary and
prostate. Investors are cautioned that statements in this press
release that are not strictly historical statements constitute
forward-looking statements which involve risks and uncertainties
that could cause actual results and outcomes to differ materially
from what is expressed in those forward-looking statements. Such
forward-looking statements include, without limitation, those
related to our planned product introductions, product development
efforts and financial and commercial goals. Important factors that
may affect TriPath Imaging's operating results include, without
limitation: TriPath Imaging may not receive revenues when or in the
amounts anticipated; TriPath Imaging may be unable to increase
sales and revenues at its historical rates; TriPath Imaging may be
unable to increase its penetration of the large commercial
laboratory segment to the extent it expects while maintaining its
business within its traditional customer base, and may not achieve
revenues to the degree expected from the sale of reagents and
instrument systems derived from its molecular oncology development
program; TriPath Imaging's expanded sales and marketing presence
may not have the expected impact; TriPath Imaging's results and
profitability in any particular period may be impacted by the
timing of certain non-cash sales discounts that TriPath Imaging
will record in connection with the vesting of certain warrants;
expenses may exceed expectations and TriPath Imaging may not
maintain profitability; changes in general economic conditions or
the healthcare industry may occur that adversely affect TriPath
Imaging's customers' purchasing plans; competition and competitive
pricing pressures may limit TriPath Imaging's flexibility with
respect to the pricing of its products; TriPath Imaging may need to
obtain additional financing in the future; TriPath Imaging may not
be able to develop and to protect adequately its proprietary
technology; TriPath Oncology and its collaborators may not
prioritize or launch products as or when expected; TriPath Imaging
and TriPath Oncology's products may not receive FDA or other
required regulatory approval when expected, if at all; and other
risks detailed in TriPath Imaging's filings with the Securities and
Exchange Commission, including those described in TriPath Imaging's
Annual Report on Form 10-K for the year ended December 31, 2005.
Contact Stephen P. Hall Chief Financial Officer 336-290-8721
TriPath Imaging, Inc. Condensed Consolidated Statements of Income
(Unaudited) (In thousands, except per share amounts) Three months
ended Six months ended June 30, June 30, 2006 2005 2006 2005
Revenues $24,460 $21,253 $48,502 $40,580 Cost of revenues 7,282
6,514 15,187 12,293 Gross profit 17,178 14,739 33,315 28,287
Operating expenses: Research and development 2,741 3,234 6,335
6,363 Regulatory 1,679 836 2,790 1,588 Sales and marketing 7,344
5,790 13,526 10,732 General and administrative 3,912 3,521 7,476
7,416 15,676 13,381 30,127 26,099 Operating income 1,502 1,358
3,188 2,188 Interest income 265 157 499 257 Interest expense (7) -
(11) (5) Income before income taxes 1,760 1,515 3,676 2,440 Income
taxes 137 - 308 - Net income $1,623 $1,515 $3,368 $2,440 Earnings
per common share Basic $0.04 $0.04 $0.09 $0.06 Diluted $0.04 $0.04
$0.09 $0.06 Weighted average shares Basic 38,408 38,180 38,385
38,167 Diluted 39,260 39,229 39,133 39,252 TriPath Imaging, Inc.
Condensed Consolidated Balance Sheets (In thousands, except share
and per share amounts) June 30, December 31, 2006 2005 (unaudited)
(audited) Assets Current assets: Cash and cash equivalents $24,001
$22,457 Accounts and notes receivable 16,948 15,647 Net investment
in sales-type leases 1,488 828 Inventory 11,738 12,564 Other
current assets 2,352 1,676 Total current assets 56,527 53,172
Customer-use assets 8,185 8,044 Property and equipment 4,978 4,556
Other assets 2,108 2,362 Net investment in sales-type leases, net
of current portion 2,891 1,807 Intangible assets 6,585 7,027 Total
assets $81,274 $76,968 Liabilities and stockholders' equity Current
liabilities and deferred revenue $10,636 $10,911 Long-term
liabilities 137 98 Total liabilities 10,773 11,009 Stockholders'
equity: Common stock and additional paid-in capital 292,845 291,944
Accumulated other comprehensive income 284 11 Accumulated deficit
(222,547) (225,915) Treasury stock (81) (81) Total stockholders'
equity 70,501 65,959 Total liabilities and stockholders' equity
$81,274 $76,968 DATASOURCE: TriPath Imaging, Inc. CONTACT: Stephen
P. Hall, Chief Financial Officer, +1-336-290-8721 of TriPath
Imaging, Inc. Web site: http://www.tripathimaging.com/
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