IGEN Reports First Quarter Results
PR NEWSWIRE - July 30, 2003 16:00
GAITHERSBURG, Md., Jul 30, 2003 /PRNewswire-FirstCall via COMTEX/ -- IGEN International, Inc. (Nasdaq: IGEN) reported today that its revenues for the first quarter ended June 30, 2003, increased 42% to $17.1 million, compared to $12.0 million in the same period last year. The increase in revenues was driven by product sales and royalty income. Product sales increased 51% to $5.4 million for the quarter and royalty income increased 43% to $11.6 million for the same period. Product sales reflect growth fueled by sales of the Company's biodefense testing products for Homeland Security and biodefense initiatives, as well as growth in the life sciences business. The growth in royalty income was driven primarily from increased sales by Roche Diagnostics of products based on the Company's ORIGEN(R) technology.
Product costs were $2.6 million for the current quarter compared to $1.3 million in the prior year's period. The increased product costs, as a percentage of product sales, were primarily attributable to third party leasing costs incurred by the Company related to instruments being used by Physician's Office Laboratory customers, which were previously paid by Roche and costs incurred by the Company in connection with the recent launch of its new M-SERIES(R) 384 instrument and upgraded detection modules for life science customers.
Research and development expenses decreased 5% to $5.5 million for the quarter from $5.8 million in the prior year's first quarter. Selling, general, and administrative expenses were $6.1 million in the first quarter, versus $5.9 million in the prior year's first quarter. This increase was primarily attributable to higher insurance costs and outside professional fees.
Costs related to IGEN's litigation with Roche increased to $3.6 million in the quarter compared to $1.1 million for the same period in fiscal 2002. The increase in litigation related expenses reflects costs incurred related to the appellate phase of the Roche litigation, patent infringement actions prepared by the Company against Roche and advisors fees associated with settlement discussions with Roche, including discussions related to the announced transaction described below.
Costs incurred by the Company for MSD joint venture activities, as recorded in "Equity in Loss Affiliate," were $5.2 million in the quarter ended June 30, 2003 compared to $4.4 million for the prior year. These costs are part of the budget for MSD previously approved by an independent committee of IGEN's Board of Directors.
For quarter ended June 30, 2003, the net loss decreased to $7.2 million ($0.30 per common share), compared to $7.4 million ($0.33 per common share) in the prior year's first quarter.
IGEN announced on July 24, 2003 that it had reached definitive agreements to resolve its long-running dispute with Roche on the rights to ORIGEN. The transaction will enable both companies to independently maximize the value of their respective technology assets and businesses.
Under the terms of the agreements, Roche will acquire IGEN, thereby securing rights to ORIGEN technology used in its Elecsys(R) diagnostics product line. For each IGEN share, IGEN shareholders will receive $47.25 in cash and one share of a newly formed public company to be spun off by IGEN in a fully taxable transaction. IGEN has 26.7 million fully diluted outstanding shares. The new company, which will be 100% owned by IGEN shareholders, will own ORIGEN technology, assume certain ongoing IGEN businesses and is expected to have approximately $155 million in working capital. This working capital will be provided primarily by Roche as part of the transaction, in addition to the $47.25 per share cash payment to be made to IGEN shareholders.
Upon completion of the acquisition, the new company to be spun-off by IGEN to its shareholders will hold IGEN's patents and assume its biodefense, life science and industrial businesses, as well as opportunities in the clinical diagnostics field. The new company will also hold IGEN's interests in the Meso Scale Diagnostics ("MSD") joint venture. The new company will be able to address the entire clinical diagnostic market, including the hospital, blood bank and reference lab markets that were previously exclusively held by Roche. The new company will also receive rights to certain improvements relating to Roche's Elecsys product line and royalty-bearing licenses to PCR, a nucleic acid amplification technology, for use in most fields. The new company, which will be named prior to closing the transaction, will be managed by IGEN's current management team and headquartered in Gaithersburg, Maryland. It is expected that the new company's shares will be listed on Nasdaq upon completion of the spin-off.
As part of the agreement, Roche has paid IGEN $18.6 million for compensatory damages as confirmed on July 9, 2003 by the U.S. Court of Appeals for the Fourth Circuit and the royalties owed to IGEN for the quarter ended June 30, 2003. Effective immediately, there will be no further royalties owed to IGEN, and Roche will pay a fixed fee of $5 million per month to IGEN for the use of ORIGEN technology pending completion of the transaction. As part of the transaction, the MSD joint venture agreement will expire although many of the new company's licenses and other arrangements with MSD and MST will continue in accordance with the existing terms with the new company standing in IGEN's place. Following the closing, the new company will make a final capital contribution of $37.5 million to MSD. Samuel J. Wohlstadter, IGEN's Chairman and Chief Executive Officer, will provide the portion of this contribution over $30 million through the purchase of a new series of preferred stock.
IGEN will host a conference call today at 4:30 p.m. EDT to discuss first quarter results and the transaction agreements with Roche. To participate in the conference call, dial 1-800-640-7899 (United States) or 1-212-346-6450 (international) ten minutes before the starting time. A replay will be available for 48 hours at 1-800-633-8284 and 1-402-977-9140. The reservation number is 21155706. Both the live call and the replay will be webcast at www.igen.com. |
