Meanwhile, DPII beats by a penny. Still wondering why the delays for uARCS launch. Hope to listen to this and other conference calls later this week.
>>SAN DIEGO, Oct. 22 /PRNewswire-FirstCall/ -- Discovery Partners International, Inc. (Nasdaq: DPII - News) today announced financial results for the third quarter and nine months ended September 30, 2002.
Revenues for the third quarter of 2002 were $10.5 million, an increase of 9 percent compared to $9.6 million for the third quarter of 2001 and 26 percent above the $8.4 million result in the second quarter of 2002 due to the continued production ramp-up of long term chemistry collaborations with Pfizer and Merck. Net loss for the third quarter ended September 30, 2002 was $0.8 million, or $0.03 per share, compared to a net loss of $6.4 million, or $0.27 per share, including a $4.4 million provision for obsolete inventory, in the third quarter of 2001.
For the nine months ended September 30, 2002, revenues were $29.0 million compared to $30.2 million for the same period in 2001. Net loss in the nine months ended September 30, 2002 was $11.2 million, or $0.46 per share compared to a net loss of $9.5 million, or $0.40 per share for the same period of 2001. Excluding a $5.8 million provision for discontinued products and a $1.5 million accrual for an anticipated contract loss in the second quarter of 2002 and a $4.4 million provision for obsolete inventory in the third quarter of 2001, net loss in the nine months ended September 30, 2002 was $4.0 million, or $0.16 per share compared to a net loss of $5.1 million, or $0.21 per share for the same period of 2001. The 2001 periods included amortization of goodwill; no goodwill has been amortized in 2002 as the Company has adopted FAS 142.
Cash and short-term investments at September 30, 2002 were $69.9 million, down $7.3 million from the cash balance at December 31, 2001 primarily due to an increase in work-in-process, the acquisition of license rights related to uARCS technology from Abbott Laboratories, capital expenditures, operational cash losses, and a reduction in obligations under capital leases.
"During the third quarter, Discovery Partners expanded its existing collaboration agreement with Allergan and announced a new collaboration with Inspire Pharmaceutical for the optimization of lead cardiovascular compounds in the P2Y12 antagonist program," said Riccardo Pigliucci, Chief Executive Officer of Discovery Partners. "As planned, we also entered the production phase for the multi-year chemistry collaborations with Pfizer and Merck. Our chemists successfully synthesized over 54,000 novel chemical compounds in the quarter and are now in the process of analyzing and purifying them. This is an achievement that clearly places Discovery Partners among the largest and most capable providers of drug-like compounds in the world," concluded Pigliucci.
For the fourth quarter, the Company expects revenues to be in excess of $11.0 million. Gross margin as a percent of revenues is unlikely to increase over the third quarter level due to the forecasted absence of new chemistry licensing revenues and due to potential production ramp-up inefficiencies. The Company expects to reduce R&D expenditures to 10% of revenues. SG&A is also expected to continue to decline as a percentage of sales. Although the company is still aiming to reach profitability in the fourth quarter, EPS could remain negative should significant negative manufacturing variances occur.
For 2003, the Company is anticipating a generally challenging operating environment for the pharmaceutical and biotechnology industries. As a result, Discovery Partners is planning to be EPS positive for 2003 on conservative revenue growth.
The Company continues to have authorization from the Board of Directors to execute its stock repurchase program under which Discovery Partners may acquire up to 2 million shares of its common stock in the open market or otherwise.
A conference call discussing third quarter 2002 financial results as well as financial guidance for the remainder of fiscal 2002 will be publicly available via the Company's website, at discoverypartners.com . The live web cast will begin at 11:00 am Eastern Time, on Tuesday, October 22, 2002. In addition to the live web cast, replays will be available to the public on Discovery Partners' website, discoverypartners.com and by calling (800) 428-6051, access code: 251436 through Tuesday, October 29, 2002.
About Discovery Partners
Discovery Partners International, Inc. has become a leader in drug discovery collaborations by offering integrated services and products that span the drug discovery continuum including target characterization, high throughput screening, lead generation, lead optimization, high throughput synthesis automation, and gene expression analysis. Discovery Partners is headquartered in San Diego, California and has operations in the United States and Europe. For more information on Discovery Partners International, Inc., please visit the Company's website at discoverypartners.com .
Statements in this press release that are not strictly historical are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a high degree of risk and uncertainty. Discovery Partners' actual results may differ materially from those projected in the forward looking statements due to risks and uncertainties that exist in Discovery Partners' operations, development efforts and business environment, including integration of acquired businesses, the trend toward consolidation of the pharmaceutical industry, quarterly sales variability, technological advances by competitors, and other risks and uncertainties more fully described in Discovery Partners' annual report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission and Discovery Partners' other SEC reports.
DISCOVERY PARTNERS INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share amounts)
Consolidated Statement of
Operations data (Unaudited):
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenue $10,544 $9,640 $28,960 $30,215
Cost of revenue 6,976 4,972 19,159 14,931
Provision for obsolete
inventory and
discontinued products -- 4,397 5,781 4,397
Anticipated contract loss -- -- 1,485 --
Gross margin 3,568 271 2,535 10,887
Operating expenses:
Research and
development 1,301 3,088 5,148 9,956
Selling, general and
administrative 3,524 2,664 9,833 8,178
Amortization of
deferred
compensation 138 244 510 844
Amortization of
goodwill -- 1,472 -- 4,377
Total operating
expenses 4,963 7,468 15,491 23,355
Loss from operations (1,395) (7,197) (12,956) (12,468)
Interest income, net 515 717 1,496 2,700
Foreign currency gains
(losses) (26) (3) (89) 60
Minority interest in
Structural Proteomics,
Inc. 97 61 313 197
Net loss $(809) $(6,422) $(11,236) $(9,511)
Net loss per share,
basic and diluted $(0.03) $(0.27) $(0.46) $(0.40)
Weighted average shares
outstanding, basic
and diluted 24,328 24,135 24,307 23,969
Summary Balance Sheet: September 30, December 31,
2002 2001
(Unaudited)
Cash and cash equivalents $10,560 $50,915
Short-term investments 59,383 26,350
Accounts receivable, net 9,932 10,144
Inventories 4,639 8,175
Prepaid and other current assets 1,591 1,402
Total current assets 86,104 96,986
Property and equipment, net 10,057 10,642
Restricted cash 899 861
Patent, license rights and other
intangible assets, net 7,637 6,400
Goodwill, net 50,918 50,918
Other long term assets, net 1,229 1,215
Total assets $156,844 $167,022
Accounts payable and accrued expenses $4,182 $3,816
Current portion of long-term debt 912 738
Contract loss accrual 1,427 --
Deferred revenue 2,833 3,881
Total current liabilities 9,354 8,435
Other liabilities 421 1,082
Deferred rent 105 95
Minority interest 55 368
Common stock 24 24
Treasury stock (119) (119)
Preferred stock -- --
Additional paid-in-capital 200,686 200,534
Deferred compensation (372) (883)
Note receivable from stockholder (240) (240)
Accumulated other comprehensive income 743 303
Accumulated deficit (53,813) (42,577)
Total stockholders' equity 146,909 157,042
Total liabilities and stockholders' equity $156,844 $167,022
Statements of Cash Flows
Nine months ended Three months ended
September 30, 2002 September 30, 2002
(Unaudited) (Unaudited)
Net loss $(11,236) $(809)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 3,846 1,176
Amortization of deferred compensation 510 138
Provision for discontinued products 5,781 --
Anticipated contract loss 1,485 --
Minority interest in
Structural Proteomics, Inc. (313) (97)
Change in operating assets and
liabilities:
Accounts receivable (268) (2,860)
Inventories (2,244) (1,531)
Other current assets (175) (116)
Accounts payable, accrued expenses and
contract loss accrual 233 807
Deferred revenue (1,107) (191)
Deferred rent 10 2
Restricted cash -- --
Net cash used in operating activities (3,478) (3,481)
Investing activities
Purchases of property and equipment (1,990) (76)
Other assets 63 (117)
Purchase of patents, license rights and
other intangible assets (2,081) (10)
Purchases of short-term investments (33,033) (14,044)
Net cash used in investing activities (37,041) (14,247)
Financing activities
Proceeds from borrowings (principal
payments) on capital leases, equipment
notes payable, line of credit (634) (457)
Issuance of common stock, net of purchases 152 8
Net cash provided by (used in) financing
activities (482) (449)
Effect of exchange rate changes 646 (42)
Net decrease in cash and cash
equivalents (40,355) (18,219)
Cash and cash equivalents at beginning
of period 50,915 28,779
Cash and cash equivalents at end
of period 10,560 10,560
Cheers, Tuck |
