Clinical Data Reports 2006 Year-End Results
July 5, 2006 6:54 p.m.
NEWTON, Mass.--(BUSINESS WIRE)--July 5, 2006--
Reflecting substantial acquisitions in fiscal year 2006, Clinical Data, Inc. (NASDAQ: CLDA) today reported financial results for the fiscal year ended March 31, 2006.
Total revenue for the year ended March 31, 2006 increased 22% to $68.8 million as compared to $56.4 million in fiscal 2005. The increase was primarily due to including the operating results of Genaissance Pharmaceuticals, Inc. and Icoria, Inc. from the dates of their acquisition. Genaissance was acquired in October 2005 and Icoria was acquired in December 2005. Product revenue in our traditional business increased 2% to $50.6 million in fiscal 2006 versus $49.8 million in fiscal 2005.
The Company reported a net loss of $50.9 million, or a net loss of $8.54 per basic and diluted share, in fiscal 2006 versus net income of $3.4 million, or net income of $0.77 per basic ($0.75 per diluted) share, in fiscal 2005. The net loss in fiscal 2006, calculated in accordance with U.S. generally accepted accounting principles, was primarily attributable to expensing $39.7 million of in-process research and development projects being conducted by Genaissance and Icoria at the time of their acquisition. The balance of the loss in fiscal 2006 was due primarily to increased operating expenses due to the inclusion of Genaissance and Icoria as Clinical Data continues to integrate these operations. Excluding the write-off of the in-process research and development expenses and amortization of other intangible assets purchased in the fiscal 2006 acquisitions, the net loss on a non-GAAP basis was $8.6 million, or a net loss of $1.44 per basic and diluted share.
On June 14, 2006, the Company announced that it entered into definitive agreements with certain institutional and other accredited investors with respect to the private placement of 1,039,783 shares of newly issued common stock, and warrants to purchase 519,889 shares of common stock, for net proceeds of approximately $17.0 million, after transaction expenses of approximately $50,000. The net proceeds from this financing will be used for general working capital purposes, executing the Company's previously announced Phase III clinical trail of vilazodone for the treatment of depression, accelerating the integration of the newly acquired operations, development of genetic markers, and commercialization and market expansion for its genetic tests including its proprietary test for Long QT, Clozapine-Induced Agranulocytosis and the warfarin response tests. At June 16, 2006, cash and cash equivalents totaled approximately $20.8 million.
Separately, the Company noted that its independent auditors issued an unqualified opinion on the Company's fiscal 2006 consolidated financial statements but included in that opinion a fourth paragraph describing a material uncertainty related to the Company's ability to continue as a going concern for a reasonable period of time. As discussed in Note 1 to the financial statements in the Company's Annual Report on Form 10-K filed with the SEC, the Company has undertaken several steps subsequent to March 31, 2006, to improve liquidity and reduce its projected uses of cash including completion of the private placement on June 13, 2006, as discussed above, and restructuring certain long-term-debt and lease obligations. In addition, on May 15, 2006, the Company separately announced its intention to spin off the vilazodone business to its shareholders in the form of a newly-created company intended to operate under the name Precigen Therapeutics Inc. Precigen will be separately financed to develop and commercialize vilazodone. Clinical Data plans to issue the new company's shares to Clinical Data shareholders in the form of a tax-free stock dividend.
Drew Fromkin, President and CEO, said, "Clinical Data made the strategic decision to move into the exciting realm of genomics from its roots in the classic diagnostics business. In so doing, we are seeking to capitalize on significant new growth opportunities within several distinct market segments of health care. Our targeted offerings meet crucial market needs for payers, providers, and patients as well as pharmaceutical, biotech, agricultural, academic, governmental and other constituents. The Company is clearly transforming itself to take advantage of these strategic assets.
"The companies we acquired in fiscal 2006 are the basis for the significant transformation of the business, and as of today, this transformation remains an ongoing process. Not surprisingly, more work remains to be done, but we have been working aggressively to better align costs with revenue and leverage our strategic assets. We believe this core financial objective is achievable through continued focus, the building of a strong management team, fiscal discipline and hard work. While we understand that some shareholders will take note of our recent financial performance, shareholders can be assured that we have identified and continue to identify the key drivers in the business that most significantly impact profit and loss in our new businesses, and we are actively executing a plan to optimize value.
"The companies we acquired had considerable assets but, in our opinion, did not leverage those assets in such a way as to achieve profitability. Upon consummation of our 2005 genomic acquisitions, we have been moving rapidly to integrate these businesses and organize them in a way that targets the appropriate business lines to the right constituents. We have already taken significant costs out of the businesses and will continue to do so in upcoming quarters. Our strategy and goal remains to create more value for each of these constituencies and to deliver these services in a profitable way. This reorganization and improvement continues, and one thing that may not be readily discernible in our financial results is the fact that we have experienced significant improvements in a broad range of key operating parameters. At the same time, however, it is important to set expectations appropriately: this realignment process will take time.
"Going forward, a key objective is to optimize vilazodone, a promising asset obtained through our acquisition of Genaissance. Vilazodone is a dual action, SSRI/5HT1A partial agonist drug candidate for depression with unique pharmacological properties, including an anti-anxiety component that has recently entered into a pivotal Phase III clinical study. We are now in the patient enrollment stage of the Phase III study, and we are very excited about the potential for this drug candidate. In addition, using the genomics expertise of our Cogenics(TM) and PGxHealth(TM) divisions, we are examining certain critical genetic biomarkers that may enable us to develop a genetic test to better target patient populations for vilazodone. This potential-associated genetic test capability is at the cutting edge of an important facet of personalized medicine that is gaining the attention of the medical community and regulators. After significant review, management collectively determined that the vilazodone asset warrants an environment where it can thrive and where it can be funded in a way that optimizes the likelihood for success. Consequently, we are moving ahead with plans to spin this asset off to shareholders through the creation and financing of a new company called Precigen Therapeutics, Inc. We are working to complete this effort as soon as possible.
"Separately, we are very excited about the strong growth of Familion(TM), our proprietary genetic test to identify inherited forms of Long QT Syndrome and Brugada Syndrome, cardiac channelopathies that create serious risks in families with these genetic mutations. The test, for which we own the underlying intellectual property, is scaling, and we are seeing growing demand for the test in North America and abroad. We believe this and the other tests in our pipeline constitute a model for the types of higher-margin, genetic tests in which our PGxHealth division will specialize. We expect to continue to build a pipeline of products that will focus on the use of genetic markers to optimize the use of therapeutics.
"In terms of our genomics businesses, we seek to leverage the biomarker know-how and substantial capital invested into our Genaissance and Icoria operations. With these assets, we have identified strong market opportunities to develop and commercialize new genetic tests, in-license and validate additional genetic markers, and establish a broader line of products in the vein of the recently announced warfarin test and our test for Clozapine-Induced Agranulocytosis. These Therapeutic Diagnostics(TM) are being developed and commercialized through PGxHealth. We will leverage our know-how, experience and HAP database and technology with the goal of building and expanding our pipeline as we grow into existing and new therapeutic disease areas. It is our belief that this new generation of tests should provide tremendous value to payers and providers seeking to improve patient clinical outcomes, while reducing the cost of care. By reducing costs while simultaneously improving therapeutic efficacy and/or safety, these products have the unique potential to achieve something the healthcare industry has sought for a long time.
"Our Cogenics division, which combines services from the Genaissance, Icoria, Lark and Genome Express acquisitions, addresses another set of constituencies as one of the world's largest independent providers of genomic, DNA and RNA services. Regulated and unregulated genomic services are marketed to pharmaceutical, biotech, agricultural, academic, governmental and other constituents. We continue to consolidate operations within the Cogenics division, with particular emphasis on better utilization of plant and related assets, while growing our business lines to set a course toward profitability. We have been aggressive in reducing costs, as we have stated previously, yet it is an ongoing process.
"Our traditional Vital Diagnostics(TM) IVD and clinical chemistry business remains a strong and significant contributor to today's revenue stream. A leader in its space, this business (on a stand-alone basis) remains profitable, driven by significant operations in the U.S. and Europe. Consistent with historical performance, Vital Diagnostics continues to function as a leading niche player in the business of bringing diagnostic products and equipment to physician office laboratories and small hospitals and clinic settings.
"In terms of management and personnel, we continue our search for a permanent chief financial officer. The company is actively interviewing candidates for the position. In addition, we are bolstering the senior management team as necessary to realign our business and execute our plans. The Company expects to announce additions to the team in the very near future.
"These past months have been transformative for Clinical Data. We believe that our substantial acquisitions have been strategically sound. The process of aligning our strategy, intellectual and physical capital, and corporate structure continues. Our management team remains committed to positioning Clinical Data as a leader in improving patient care in the US and abroad." |
