Genaissance Pharmaceuticals Reports Third Quarter and Nine Month Results
NEW HAVEN, Conn., Nov. 12 /PRNewswire-FirstCall/ -- Genaissance Pharmaceuticals, Inc. (Nasdaq: GNSC - News) today reported its financial results for the third quarter and nine months ended September 30, 2002.
For the quarter ended September 30, 2002, revenue increased 62% to $1.8 million from $1.1 million for the third quarter of 2001. Operating expenses for the quarter were $6.7 million, of which $4.8 million were attributable to research and development. This reduction in operating expenses represents a 57% decrease compared to the same period last year and a 27% decrease compared to the second quarter, excluding the second quarter charge related to the impairment of certain fixed assets. The continued decrease in expenditures reflects the implementation of the Company's cost savings and restructuring program announced in August.
Genaissance reported a net loss for the quarter of $5.2 million or $0.23 per share compared to a net loss of $11.8 million or $0.52 per share for the third quarter last year.
Revenue for the nine months ended September 30, 2002 increased 76% to $5.5 million from $3.1 million for the same period last year. Operating expenses for the first nine months of 2002, decreased 25% to $32.6 million from $43.3 million for the same period last year; this includes a non-recurring charge of $6 million related to the impairment of certain fixed assets in the second quarter of 2002. Operating expenses for the first nine months, before the non-recurring charge, were $26.6 million, a 39% decrease from the same period last year. Research and development expenses for the nine months ended September 30, 2002 were $19.6 million, a 43% decrease compared to research and development expenses of $34.0 million for the nine months ended September 30, 2001. The decrease in research and development expenses is primarily due to decreased spending on clinical trials, reagents, payroll and other general expenditures, resulting from the Company's cost savings and restructuring program.
Genaissance reported a net loss, including the non-recurring charge, for the nine months ended September 30, 2002 of $27.7 million or $1.22 per share as compared to a net loss of $36.2 million or $1.59 per share for the same period in 2001. The net loss for the nine months ended September 30, 2002, before the non-recurring charge, was $21.7 million or $0.95 per share.
As of September 30, 2002, Genaissance had cash, cash equivalents and marketable securities totaling $36.4 million.
Cost Savings and Restructuring
On August 5, 2002, the Company announced a restructuring program, including the promotion of Kevin Rakin to President and CEO; the reduction of its workforce by 20%, mainly in DNA sequencing and related informatics support; and a decision to seek partners for all internal product development programs. Genaissance has also taken steps to develop additional business opportunities for its technology, including the recruitment of sales personnel; leveraging its existing infrastructure to attract additional business and new corporate partners; and the refinement of its marketing message. In his new role as Chief Scientific Officer, Gualberto Ruano, M.D., Ph.D., is focusing on developing new markets for Genaissance technology, including bio-defense and other government-sponsored initiatives.
"We believe that our level of expenses, our management focus and our cash resources are now aligned with our core expertise of associating gene variation with drug response in order to improve drug efficacy and safety," said Kevin Rakin, President and Chief Executive Officer of Genaissance Pharmaceuticals. "In addition, the recent announcement about the International HapMap Project reinforces our approach in using haplotypes. Our experience in generating meaningful associations for the development of novel therapeutic and diagnostic products provides us with a strong leadership position that we fully intend to leverage."
Genaissance will host a conference call to review the matters discussed in this press release. The conference call will take place today at 11:00 am, Eastern Standard Time. The dial-in number for the third quarter conference call is (913) 981-5522, and the confirmation code is 716060. A replay of the call will be available from 2:00 pm, Eastern Standard Time, today through midnight Monday, November 18th. The replay can be accessed by dialing (719) 457-0820, confirmation code 716060.
Genaissance Pharmaceuticals, Inc. is a world leader in the discovery and use of human gene variation for the development of personalized medicines. The Company markets its technology and clinical development skills to the pharmaceutical industry as a complete solution for improving the development, marketing and prescribing of drugs. Genaissance currently has agreements with three of the top five pharmaceutical companies as well as one of the premier biopharmaceutical companies: AstraZeneca, Biogen, Johnson & Johnson and Pfizer. Genaissance is located in Science Park in New Haven, Connecticut.
This press release contains forward-looking statements, including statements about the ability of Genaissance to decrease expenses, align costs with its revised business plan, apply its technologies to the development, marketing and prescribing of drugs and leverage its existing infrastructure to attract additional business and new corporate partners. Such statements are subject to certain factors, risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to in such statements, including, but not limited to, the extent to which genetic markers (haplotypes) are predictive of drug efficacy and safety, the attraction of new business and strategic partners, the adoption of our technologies by the pharmaceutical industry, the timing and success of clinical trials, competition from pharmaceutical, biotechnology and diagnostics companies, the strength of our intellectual property rights and those risks identified in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2002 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 filed with the Securities and Exchange Commission on August 14, 2002. The forward-looking statements contained herein represent the judgment of Genaissance as of the date of this release. Genaissance disclaims any obligation to update any forward-looking statement.
Contact:
Kevin Rakin Joseph Keyes
President & Chief Executive Officer Chief Financial Officer
Genaissance Pharmaceuticals, Inc. Genaissance Pharmaceuticals, Inc.
203.786.3404 203.786.3674
k.rakin@genaissance.com j.keyes@genaissance.com
Rhonda Chiger (investors)
Rx Communications
917.322.2569
rchiger@RxIR.com
GENAISSANCE PHARMACEUTICALS, INC.
Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
License and service
revenue $1,754 $1,083 $5,539 $3,149
Operating Expenses:
Research and
development 4,767 12,637 19,557 34,046
General and
administrative 2,001 2,896 6,930 8,901
Stock based
compensation (100) 96 107 381
Impairment of fixed
assets -- -- 6,000 --
Total operating
expenses 6,668 15,629 32,594 43,328
Loss from operations (4,914) (14,546) (27,055) (40,179)
Interest income
(expense), net (268) 171 (651) 1,403
Income tax (expense)/
benefit (28) 2,574 (28) 2,574
Net loss attributable to
common stockholders $(5,210) $(11,801) (27,734) (36,202)
Net loss per common
share, basic and
diluted $(0.23) $(0.52) (1.22) (1.59)
Weighted average shares
used in computing
Net loss per
common share 22,827 22,773 22,802 22,746
Balance Sheet Data
(in thousands)
(unaudited)
Sept. 30, Dec. 31,
2002 2001
Cash, cash equivalents and marketable
securities $36,355 $59,673
Working capital 24,879 47,775
Total assets 54,669 92,277
Long & Short Term debt and capital leases 16,603 22,194
Stockholders' equity 31,310 58,979
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