Company Press Release
SOURCE: Affymetrix, Inc.
Affymetrix Reports Second Quarter Results
Product Sales Increase 150% Over 1998 Levels
SANTA CLARA, Calif., July 28 /PRNewswire/ -- Affymetrix, Inc., (Nasdaq: AFFX - news) today reported results for the second quarter of 1999. For the quarter ended June 30, 1999, revenue increased 96% to $21.7 million, up from revenue of $11.1 million for the quarter ended June 30, 1998. For the first six months of 1999, revenue increased 90% to $39.5 million, up from revenue of $20.8 million for the first six months of 1998. Product sales increased 150% to $19.4 million for the quarter ended June 30, 1999 and 142% to $34.5 million for the first six months ended June 30, 1999 up from $7.8 million and $14.3 million in the respective periods of 1998. The increase in product sales during the quarter and six months of 1999 compared to the same periods in 1998, resulted from the growth in placements of GeneChip® systems together with the accompanying sales of GeneChip probe arrays and related products and subscription fees. Research revenue decreased 43% to $1.8 million for the quarter ended June 30, 1999 and 31% to $4.2 million for the six months ended June 30, 1999, down from $3.2 million and $6.1 million in the corresponding periods of 1998. The decrease was principally due to lower pricing of custom array design fees under EasyAccess(TM) agreements and customer trends to purchase more standard array products.
Total costs and expenses increased to $30.0 million for the quarter ended June 30, 1999, compared to $18.3 million for the same period in 1998. For the first six months of 1999, total costs and expenses increased to $55.1 million, compared to $35.0 million for the same period in 1998. The increase in operating expenses for the quarter, compared to the respective period in 1998, resulted primarily from the Company's expansion of commercial activities as well as increased legal costs arising from the Company's ongoing patent lawsuits.
The Company reported a net loss attributable to Common Stockholders of $7.8 million, or $0.32 per diluted share for the quarter ended June 30, 1999, compared to a net loss attributable to Common Stockholders of $6.6 million, or $0.29 per diluted share, for the same period in 1998. The Company's future financial results may fluctuate significantly due to the demand for the Company's products, the timing of research, license fees, and royalty revenues and increases in spending, including expenses related to the Company's ongoing lawsuits.
As of June 30, 1999, the Company had cash, cash equivalents and short-term investments of $89.3 million.
During the second quarter, Affymetrix entered into several GeneChip array supply agreements with pharmaceutical, biotechnology and academic customers, further growing its installed base and demonstrating the continued demand from the genomics community for the Company's technology. Most notable during the quarter were the supply agreements announced with SmithKline Beecham Corporation and Metabolex, Inc. and the AcademicAccess(TM) agreements entered into with the University of California system and Stanford University. At the end of the quarter, Affymetrix had a worldwide installed base of more than 170 GeneChip systems and was backordered for GeneChip arrays. The Company is currently expanding its manufacturing facilities and expects to begin shipping arrays manufactured at its new Sacramento manufacturing facility beginning in September 1999.
Also notable during the second quarter was the growing recognition of the importance of the Company's intellectual property for DNA array-based research as evidenced by the expansion of Affymetrix' internal use licensing program. During the quarter, the Company granted internal use licenses to SmithKline Beecham, Takeda Chemical Industries, Ltd. and the University of Tokyo to allow them to make and use nucleic acid arrays fabricated with non-light directed methods for gene expression monitoring in their internal research efforts. These companies join other Affymetrix licensees including Beckman Coulter, Inc., Eos Biotechnology, Inc., Molecular Dynamics (now part of Amersham Pharmacia Biotech Inc.) and Rosetta Inpharmatics Inc. currently enabled by Affymetrix' intellectual property portfolio. Affymetrix plans to continue to grant licenses to companies desiring freedom to make and use non-light directed arrays for their internal research needs.
Affymetrix has developed and intends to establish its GeneChip system as the platform of choice for acquiring, analyzing and managing complex genetic information in order to improve the diagnosis, monitoring and treatment of disease. The Company's GeneChip system consists of disposable DNA probe arrays containing gene sequences on a chip, reagents for use with the probe arrays, a scanner and other instruments to process the probe arrays and software to analyze and manage genetic information. Additional information on Affymetrix and GeneChip technology can be found at www.affymetrix.com.
All statements in this press release that are not historical are forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to, uncertainties relating to technological approaches, product development, manufacturing, and market acceptance, uncertainties related to cost and pricing of Affymetrix products, dependence on collaborative partners, uncertainties relating to sole source suppliers, uncertainties relating to FDA and other regulatory approvals, competition, risks relating to intellectual property of others and the uncertainties of patent protection. These and other risk factors are discussed in Affymetrix' Annual Report on Form 10-K for the year ended December 31, 1998, Form 10-Q for the quarter ended March 31, 1999 and Form S-3 filed July 12, 1999. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in Affymetrix' expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based. Affymetrix, GeneChip and the Affymetrix logo are registered trademarks used by Affymetrix, Inc.
Affymetrix, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenue:
Product $19,372 $7,764 $34,535 $14,294
Research 1,799 3,157 4,243 6,154
License fees and royalties 539 150 736 375
Total revenue 21,710 11,071 39,514 20,823
Costs and expenses:
Cost of product revenue 8,894 3,432 13,987 5,925
Research and development 9,375 7,941 19,742 16,452
Selling, general and
administrative 11,698 6,934 21,356 12,643
Total costs and expenses 29,967 18,307 55,085 35,020
Loss from operations (8,257) (7,236) (15,571)
(14,197)
Interest income, net 1,278 1,312 2,328 2,371
Net loss (6,979) (5,924) (13,243)
(11,826)
Preferred Stock dividends (813) (695) (1,626) (695)
Net loss attributable to
Common Stockholders $(7,792) $(6,619) $(14,869)$(12,521)
Basic and diluted net loss
per common share $(0.32) $(0.29) $(0.63) $(0.55)
Shares used to calculate
basic and diluted net loss
per common share 24,200 22,887 23,744 22,859
Note: Certain prior year balances have been reclassified to conform with
the current year presentations.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
June 30, December 31,
1999 1998
(Unaudited) (Note)
ASSETS
Current Assets:
Cash, cash equivalents and
short-term investments $89,261 $80,568
Accounts receivable 16,208 8,919
Inventories and other current assets 7,687 5,460
Total current assets 113,156 94,947
Net property and equipment 34,623 30,865
Acquired technology rights 9,295 9,625
Other assets 1,111 991
$158,185 $136,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $18,080 $14,560
Obligation to Beckman Coulter, Inc. 5,000 5,000
Other liabilities 135 261
Convertible redeemable preferred stock 49,857 49,857
Stockholders' equity:
Common stock 243 230
Additional paid-in-capital 192,830 159,147
Accumulated deficit (107,589) (92,720)
Other (371) 93
Total stockholders' equity 85,113 66,750
$158,185 $136,428
Note: The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
SOURCE: Affymetrix, Inc.
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