NeoPath Reports Second Quarter 1997 Results
REDMOND, Wash.--(BUSINESS WIRE)--July 24, 1997--NeoPath, Inc.
(NASDAQ:NPTH) today reported results for its quarter ended June 30, 1997.
NeoPath's revenues for the second quarter were $2.2 million, representing a nine-fold
increase over second quarter 1996 revenues of $253,000. While total revenues were level
with the first quarter of 1997, domestic fee-per-use revenues increased more than 20
percent over the first quarter of 1997, and have grown at a compounded quarterly rate of
growth of more than 30 percent over the past four quarters. More than 50 percent of
second quarter revenues resulted from AutoPap(r) System sales and other revenues
associated with international product placements. Gross margin increased to 57 percent,
compared to a gross margin of 52 percent in the first quarter of 1997 and a 38 percent
gross margin for all of 1996.
Research and development expenses were $3.9 million for the quarter, compared to $2.6
million in the second quarter of 1996 and $4.4 million in the first quarter of 1997. The
Company continued to incur incremental third-party expenses for clinical studies that
support using the AutoPap System as a Pap smear primary screener, though expenditures
were at a lower rate than in the first quarter of the year.
The Company's selling, general and administrative expenses were $4.7 million in the second
quarter, representing increases of $1.9 million from the second quarter of 1996 and $1.0
million from the first quarter of 1997, due primarily to continued investments in significant
new sales and marketing initiatives.
NeoPath's net loss for the second quarter was $6.7 million, or $0.47 per share, compared
to a $4.5 million net loss, or $0.35 per share, for the comparable quarter in 1996. The $6.7
million second quarter net loss compares to a net loss of $6.2 million, or $0.45 per share, in
the first quarter of 1997.
For the six-months ended June 30, 1997, NeoPath's revenues were $4.5 million, with a
corresponding net loss of $12.9 million, compared to $0.6 million in revenues and a net loss
of $8.1 million in the comparable period in 1996. Year-to-date 1997 net loss per share was
$0.92 compared to a net loss per share of $0.65 for the comparable period in 1996,
consistent with our continuing investment in research and development, clinical studies, sales
and marketing, and the domestic fee-per-use placement program.
During the quarter, NeoPath acquired the Pathfinder(r) System from CompuCyte
Corporation for approximately $5.0 million in cash and stock, including a $500,000
short-term note payable. Certain of the NeoPath shares included in the $5.0 million
purchase price are contingent upon certain specific technology decisions to be made within
one year of closing. In accordance with accounting rules, their value is not included in the
initial purchase price allocation of $3.8 million of acquired intangible assets, which are
expected to be amortized over five years. The Pathfinder System is used to provide
improved quality assurance in the clinical cytology laboratory by computerizing the
cytotechnologists' microscopes, thereby helping to eliminate screening errors and facilitating
critical cell identification in applications such as Pap smear screening for the early detection
of cervical cancer. NeoPath intends to sell the Pathfinder System as a stand-alone product
and to evaluate a potential integration of the technology into the AutoPap System.
"During the quarter we continued to strengthen our international presence and are pleased to
report sales of AutoPap Systems to customers in Italy and Korea," said Alan C. Nelson,
Ph.D., president and chief executive officer of NeoPath, Inc. "In addition to our ongoing
activities in Japan, Nikon Corporation has agreed to serve as NeoPath's distributor in
Taiwan. Domestically, our revenues increased during the quarter, and are expected to
continue to increase as a result of our signing a national agreement with SmithKline Beecham
Clinical Laboratories, as well as an overall increase in U.S. customer interest in the AutoPap
System."
NeoPath, Inc., headquartered in Redmond, Washington, creates visual intelligence
technology to increase accuracy in medical screening programs. The Company's immediate
goal is to ensure that women worldwide receive accurate Pap smear testing to reduce the
threat of cervical cancer. NeoPath's core expertise is in the research, development and
commercialization of technologies to automate the interpretation of diagnostic medical
images.
Forward-looking statements in this press release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated. These factors include, without
limitation, market acceptance of the Company's products, marketing and sales programs;
the Company's limited marketing, sales, customer service and support capabilities; product
and manufacturing regulatory approvals; and other risks and uncertainties detailed in the
Company's filings with the Securities and Exchange Commission.
NEOPATH, INC.
BALANCE SHEETS
June 30, December 31,
1997 1996
Assets (Unaudited)
Current assets:
Cash, cash equivalents and
securities available-for-sale $ 43,138,542 $ 58,487,878
Accounts receivable 1,522,144 840,256
Inventories 8,806,045 5,641,914
Other current assets 431,895 197,726
Total current assets 53,898,626 65,167,774
Fee-per-use systems, net 6,773,628 5,994,137
Property and equipment, net 5,564,904 4,813,745
Intangible assets 3,759,917 --
Deposits and other assets 158,445 155,899
Total assets $ 70,155,520 $ 76,131,555
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other
current liabilities $ 5,991,007 $ 4,271,023
Note payable 500,000 --
Current portion of obligations
under capital leases 76,502 75,861
Total current liabilities 6,567,509 4,346,884
Obligations under capital leases,
less current portion 142,126 182,535
Shareholders' equity:
Common stock 140,840,584 136,255,746
Deferred compensation -- (74,246)
Accumulated deficit (77,394,699) (64,579,364)
Total shareholders' equity 63,445,885 71,602,136
Total liabilities and
shareholders' equity $ 70,155,520 $ 76,131,555
NEOPATH, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
June 30,
1997 1996
Revenues $ 2,240,505 $ 253,008
Cost of revenues 967,928 228,868
Gross margin 1,272,577 24,140
Operating expenses:
Research and development 3,922,646 2,591,642
Selling, general
and administrative 4,708,514 2,805,228
8,631,160 5,396,870
Loss from operations (7,358,583) (5,372,730)
Interest income 673,609 836,261
Interest expense (8,125) (11,080)
Net loss $ (6,693,099) $ (4,547,549)
Net loss per share $ (0.47) $ (0.35)
Shares used in computation of
net loss per share 14,277,067 13,063,029
Six months ended
June 30,
1997 1996
Revenues $ 4,475,057 $ 626,627
Cost of revenues 2,045,440 565,708
Gross margin 2,429,617 60,919
Operating expenses:
Research and development 8,309,502 5,283,876
Selling, general and
administrative 8,404,185 4,843,404
16,713,687 10,127,280
Loss from operations (14,284,070) (10,066,361)
Interest income 1,419,275 1,944,314
Interest expense (14,610) (27,576)
Net loss $(12,879,405) $ (8,149,623)
Net loss per share $ (0.92) $ (0.65)
Shares used in computation of
net loss per share 14,024,351 12,592,560
CONTACT: NeoPath Inc.
Stacie D. Byars, 425/556-3050
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