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>>CHICAGO, Aug. 8 /PRNewswire/ -- MediChem Life Sciences, Inc. (Nasdaq: MCLS - news) a Chicago-based drug discovery technology and services company, announced today its financial results for the second quarter. For the quarter ended June 30, 2001, total revenues were unchanged at $5.0 million when compared to the same period in 2000. Total contract revenues were $4.8 million for the second quarter of 2001 compared to $4.7 million for the second quarter of 2000, an increase of 1%. Contract revenue -- related party was $0.5 million for the second quarter of 2001 compared to $0.6 million for the second quarter of 2000, a decrease of 27%. Gross profit as a percentage of total contract revenue was 34% for the second quarter of 2001 compared to 52% for the second quarter of 2000, a decrease of 18%. Contract revenue -- related party gross profit was $0.2 million for the second quarter of 2001 compared to $0.4 million for the second quarter of 2000, a decrease of 48%. Milestone and royalty revenues were unchanged at $0.2 million when compared to the same period a year earlier, of which all was third party.
The Company reported a net loss to common stockholders of $3.6 million, or a negative $0.14 per share, for the second quarter of 2001, compared to a net loss to common stockholders of $0.8 million, or a negative $0.09 per share, for the second quarter of 2000. Contributing to the net loss for the second quarter of 2001 was an increase in selling, general and administrative expenses and research and development expenses. For the quarter, EBITDA was a negative $2.8 million versus a positive $0.4 million in the same period in 2000. During the second quarter of 2001, the Company recognized the positive effects of a tax benefit of $1.3 million.
Total revenues for the six months ended June 30, 2001 were $11.1 million, which represents an 18% increase over total revenues of $9.5 million for the same period last year. Total contract revenues for the six months ended June 30, 2001 increased to $10.8 million or 21% more than the $8.9 million for the same period in 2000. Contract revenue -- related party was $2.7 million for the six months ended June 30, 2001 compared to $1.4 million for the six months ended June 30, 2000, an increase of 101%. Gross profit as a percentage of total contract revenue was 41% for the six months ended June 30, 2001 compared to 50% for the six months ended June 30, 2000, a decrease of 9%. Contract revenue -- related party gross profit was $1.8 million for the six months ended June 30, 2001 compared to $0.8 million for the six months ended June 30, 2000, an increase of 138%. Milestone and royalty revenue decreased 34% to $0.4 million for the six months ended June 30, 2001, from $0.6 million for the same period a year earlier. All of this revenue for 2001 was third party. Net loss to common stockholders was $5.7 million, or a negative $0.22 per share, for the first six months of 2001, compared to a net loss to common stockholders of $3.0 million, or a negative $0.36 per share for the same period a year earlier. For the six months ended June 30, 2001, EBITDA was a negative $4.4 million versus a positive $0.9 million in the same period in 2000. For the six months ended June 30, 2001, the Company recognized the positive effects of a tax benefit of $2.5 million.
MediChem will provide further information at its conference call scheduled for Thursday, August 9, 2001, at 10 a.m. EST. The conference call dial in number is 800-360-9865. A live web cast will be available at www.medichem.com , by clicking on the Investor Relations Link. The replay broadcast of the conference call will be available at our web site for 30 days after the call.
``There were two key drivers behind the Company's second quarter performance,'' said Michael T. Flavin, Ph.D., president and CEO of MediChem. ``One factor is the lengthening of the sales cycle that we are experiencing due to our efforts in negotiating more complex customer agreements. These are multi-year agreements that contain elements such as milestones and royalties. The other driver is an overall slowdown of the final decision-making process, mainly by large pharmaceutical companies.''
In the first six months of 2001, MediChem invested heavily in its structural proteomics platform and world-class research team, particularly in the area of GPCR crystallization and structural determination. MediChem has made advances in pursuit of its own GPCR targets as well as those partnered with biotechnology companies.
MediChem combines structural proteomics and medicinal chemistry that accelerates the validation and delivery of important drug targets and small molecule lead candidates.
GPCRs may be the most abundant source of new drug targets currently being studied. It is estimated that there are over 1,000 GPCRs with potential human therapeutic value, yet only 50 are currently being utilized as drug targets. MediChem's advancements and leadership in GPCR structure determination is represented by Neurocrine Biosciences' recent commitment to a two-year collaboration to solve their primary GPCR target, CRF-1. The Company is also in discussions with other partners for strategic partnerships in GPCR structure determination programs.
MediChem's Emerald BioStructures division has made significant advancements in the Company's proprietary cancer research efforts surrounding topoisomerase I. Topoisomerase I is considered one of the most important anti-cancer targets. There are currently two FDA approved cancer compounds active against topoisomerase I with combined sales of over $580 million in the year 2000.
Emerald has solved the highest resolution crystal structure ever described for any topoisomerase as well as the crystal structure of the topoisomerase target bound to the commercial drug candidates. MediChem's scientists are using this information to develop The Company's own portfolio of cancer drugs and are also exploring opportunities for strategic partnerships.
Financial Guidance:
The Company's decision to transition its business model from the traditional fee-for-service model has slowed sales growth in the near term. Therefore, the Company has reduced both its contract revenue and milestone revenue projections for the remainder of this year and 2002.
For the third quarter of 2001, MediChem expects to achieve contract revenue in the range of $4.0 to $4.2 million. Milestone revenue for the quarter is expected to remain at approximately $200,000 for the third quarter of 2001. Based on those assumptions, the Company believes its EBITDA loss will increase in the third quarter of 2001 to approximately $3.5 million versus the second quarter 2001 loss of $2.8 million.
For the fourth quarter of 2001, MediChem expects contract revenue to grow to an approximate $4.4 to $4.6 million. Milestone revenue is expected to remain at third quarter levels. The Company expects to decrease its EBITDA loss by $500,000 to a loss of approximately $3.0 million for the three-month period.
The Company's plans call for continued revenue growth in 2002. We expect contract revenue to be in the range of $22 to $24 million. As the Company begins to realize the positive effects of the business model shift, it expects milestone revenues to grow to $1.5 million. This anticipated growth reflects approximately $800,000 of technology access fees from our current collaborations. MediChem's quarterly EBITDA loss is expected to continue to decrease from present levels. The EBITDA loss for the full year 2002 is expected to be in the range of $9.0 to $9.5 million.
Cash and marketable securities on hand on June 30, 2001 was $10.8 million. Although the Company believes it has sufficient cash on hand to meet its near-term working capital requirements, MediChem needs to address its long-term liquidity requirements. MediChem has engaged the services of two investment-banking firms to evaluate potential strategic alternatives.
Company Highlights:
-- In June, MediChem and Elitra Pharmaceuticals entered into a three-year
medicinal chemistry collaboration to discover new antimicrobial drugs.
The antimicrobial drug market is one of the largest therapeutic
markets in the world with more than $30 billion in sales in 2000.
Elitra will reimburse MediChem for research conducted by MediChem
scientists in the collaboration. Elitra may purchase MediChem's
rights to drug candidates resulting from the collaboration in exchange
for milestone payments and royalties on sales of products based on
those drug candidates.
-- MediChem recently signed an agreement with the R.W. Johnson
Pharmaceutical Research Institute, a Johnson & Johnson company, to
provide access to MediChem's Emerald structural proteomics
technologies and services.
-- Also in June, MediChem and Neurocrine Biosciences entered into a
two-year collaborative agreement in structural proteomics to develop
new drugs around Neurocrine's GPCR target, CRF-1. CRF-1 is
Neurocrine's primary drug target in Phase I clinical trials for
depression and anxiety. Neurocrine gains access to MediChem's
proprietary GPCR crystallization technology to solve the CRF-1
structure and co-crystal structures. MediChem will receive
technology access fees, FTE funding, and potential milestone payments.
-- MediChem moved an important Boehringer Ingelheim Pharmaceuticals
intermediate into large-scale production through its strategic
alliance with Degussa during the quarter. The company will receive
royalty payments from Degussa based on fine chemical product sales as
a result of our strategic research and production alliance with
Degussa.
-- MediChem renewed its collaboration with Bristol-Myers Squibb Company.
Under the terms of the agreement, MediChem's medicinal chemistry
scientists will continue to use its BLOCKbuilder(TM) program to
provide Bristol-Myers Squibb's parallel synthesis teams in
Wallingford, Conn., and Princeton, N.J., with unique building blocks,
monomers and scaffolds.
-- MediChem added Jasbir Singh, Ph.D. as vice president of medicinal
chemistry. Dr. Singh brings over 20 years of pharmaceutical
experience in the design, synthesis and development of novel
therapeutic agents. Singh will lead multi-disciplinary drug discovery
teams of scientists to transform structural proteomics information
into viable lead candidates to be considered for pre-clinical
development and investigational new drug (IND) filing.
-- MediChem also hired three research directors to its Emerald
BioStructures structural proteomics unit. Joining Emerald in these
key positions are: Alex Burgin Jr., Ph.D., director of biochemistry,
Robin Clark, Ph.D., director of protein research, and G. Sridhar
Prasad, Ph.D., director of crystallography. These three new
scientists will position the Company to continue to develop cutting
edge structural proteomics technologies to add more value in
structural proteomics partnering opportunities.
-- MediChem's Emerald BioStructures structural proteomics division, was
awarded a Phase II SBIR grant from the National Institutes of Health.
The grant is entitled "Crystallization Tools for Structural Genomics,"
and facilitates MediChem's development of tools that dramatically
accelerate the protein crystallization process.<<
Cheers, Tuck |
