GAITHERSBURG, Md., Feb. 10 /PRNewswire-FirstCall/ -- BioVeris Corporation reported today the financial results for its fiscal third quarter ended December 31, 2005.
BioVeris adopted FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46), as of March 31, 2004 based on a determination that Meso Scale Diagnostics, LLC. (MSD) qualified as a variable interest entity with the Company as the primary beneficiary. Accordingly, beginning as of March 31, 2004, the Company consolidated the financial information of MSD in its financial statements. In August 2004, the Company and MSD entered into a settlement agreement that resolved litigation between the parties and constituted a reconsideration event under FIN 46. The Company has determined that it no longer meets the conditions to be designated as the primary beneficiary of MSD, as certain provisions of the settlement agreement reallocated the obligation to absorb the majority of MSD's future expected losses and beginning August 12, 2004, the Company deconsolidated the financial results of MSD. Accordingly, the statement of operations for the nine months ended December 31, 2004 includes the consolidated revenue and expenses of MSD and the quarter and nine months ended December 31, 2005 includes only the financial results of BioVeris and its wholly-owned subsidiaries.
Revenues for the three months ended December 31, 2005 increased to $5.5 million from $5.3 million in the corresponding prior year period. Revenues for the nine months ended December 31, 2005 decreased to $16.5 million from $21.4 million in the corresponding prior year period. Of this $4.9 million decrease, $4.3 million represents MSD revenues which were consolidated with BioVeris' revenues in the prior year.
Revenues include product sales, which were $5.1 million for the three months ended December 31, 2005, compared to $5.0 million in the corresponding prior year period. Product sales were $15.4 million for the nine months ended December 31, 2005, compared to $20.0 million in the corresponding prior year period. Of this $4.6 million decrease, $4.0 million represents MSD product sales which were consolidated with BioVeris' product sales in the prior year.
Sales of biodefense products for the three and nine months ended December 31, 2005 were $1.9 million and $7.2 million, respectively, compared to $1.8 million and $8.2 million in the comparable prior year periods. Sales of biodefense products in the prior year nine month period included a $1.3 million sale to the U.S. Air Force under a single order. Sales of products for the life science market for the three and nine months ended December 31, 2005 were $3.2 million and $8.2 million, respectively, compared to $3.2 million and $7.9 million in the comparable prior year periods.
Product costs were $2.5 million (49% of total product sales) for the quarter ended December 31, 2005 compared to $2.6 million (51% of total product sales) in 2004. Product costs were $6.6 million (43% of total product sales) for the nine months ended December 31, 2005 compared to $10.7 million (53% of total product sales) in 2004. The current year decrease of $4.1 million consists of $3.7 million due to the consolidation of MSD's product costs in 2004, and a $400,000 reduction in BioVeris' costs.
Research and development expenses were $4.1 million for the quarter ended December 31, 2005, compared to prior year costs of $4.5 million. Research and development expenses were $13.1 million for the nine months ended December 31, 2005, compared to prior year costs of $17.2 million. The $4.1 million decrease is due primarily to the consolidation of MSD's research and development expenses in 2004. Research and development expenses primarily relate to ongoing development costs and product enhancements associated with the M-SERIES family of products, development of new assays and research and development of new systems and technologies, including point-of-care products.
Selling, general and administrative expenses were $6.2 million in the quarter ended December 31, 2005, compared to prior year costs of $7.1 million. Selling, general and administrative expenses were $18.8 million in the nine months ended December 31, 2005, compared to prior year costs of $25.7 million. Of this $6.9 million decrease, $4.5 million represents MSD's selling, general and administrative expenses in 2004. BioVeris' decrease in selling, general and administrative costs in the quarter and nine months ended December 31, 2005 was primarily attributable to lower professional fees in the current year. Professional fees in the prior year included costs associated with the Company's litigation and settlement with MSD.
Interest income was $100,000 and $900,000 in the quarters ended December 31, 2005 and 2004, respectively, and was $2.7 million and $2.2 million in the nine months ended December 31, 2005 and 2004, respectively. Interest income in the quarter and nine months ended December 31, 2005 includes approximately $400,000 and $1.2 million, respectively, from the accretion of income related to the note receivable from MSD. During the three months ended December 31, 2005, we recorded a charge against interest income of approximately $158,000 to reflect amortization of the purchase price premium of short-term investments. In addition, during the three and nine months ended December 31, 2005, we recorded an out of period adjustment of $894,000 and $615,000, respectively, to reduce accumulated other comprehensive loss and interest income in order to reflect the amortization related to prior periods of the purchase priced premium of short-term investments. The impact of this adjustment on the quarter and nine months ended December 31, 2005 and on prior interim and annual periods was not material, as the adjustment was comprised of relatively small amounts related to each of the quarterly reporting periods dating back to the quarter ended June 30, 2004. For all periods, comprehensive loss was not impacted by the adjustment.
BioVeris' net loss for the quarter ended December 31, 2005 was $7.5 million ($0.28 per common share), compared to a net loss of $12.0 million ($0.45 per common share) in 2004. The net loss for the nine months ended December 31, 2005 was $20.7 million ($0.77 per common share), compared to a net loss of $70.4 million ($2.64 per common share) in 2004.
At December 31, 2005, the Company had cash, cash equivalents and short- term investments of $72.8 million.
BioVeris Corporation is a global integrated health care company developing proprietary technologies in diagnostics and vaccinology. The Company is dedicated to the commercialization of innovative products and services for healthcare providers, their patients and their communities. BioVeris is headquartered in Gaithersburg, Maryland. More information about the Company can be found at http://www.bioveris.com/.
This press release contains forward-looking statements within the meaning of the federal securities laws that relate to future events or BioVeris' future financial performance. All statements in this press release that are not historical facts, including any statements about consolidation of future financial information and future financial or operational plans are hereby identified as "forward-looking statements." The words "may," "should," "will," "expect," "could," "anticipate," "believe," "estimate," "plan," "intend" and similar expressions have been used to identify certain of the forward-looking statements. In this press release, BioVeris has based these forward-looking statements on management's current expectations, estimates and projections and they are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various important factors, including changes in BioVeris' strategy and business plans; BioVeris' ability to develop and introduce new or enhanced products; BioVeris' ability to enter into new collaborations on favorable terms, if at all; and changes in general economic, business and industry conditions. The foregoing sets forth some, but not all, of the factors that could impact upon BioVeris' ability to achieve results described in any forward-looking statements. A more complete description of the risks applicable to BioVeris is provided in the Company's filings with the SEC available at the SEC's web site at http://www.sec.gov/. Investors are cautioned not to place undue reliance on these forward-looking statements. Investors also should understand that it is not possible to predict or identify all risk factors and that neither this list nor the factors identified in BioVeris' SEC filings should be considered a complete statement of all potential risks and uncertainties. BioVeris has no obligation to publicly update or release any revisions to these forward- looking statements to reflect events or circumstances after the date of this press release.
(Financial data follows.)
BioVeris Corporation
Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2005 2004 2005 2004
REVENUES:
Product sales $5,051 $4,971 $15,420 $20,044
Royalty income 414 328 1,084 963
Contract fees - - - 388
Total 5,465 5,299 16,504 21,395
OPERATING COSTS AND EXPENSES:
Product costs 2,459 2,559 6,625 10,701
Research and
development 4,122 4,467 13,136 17,195
Selling, general, and
administrative 6,238 7,057 18,816 25,718
Total 12,819 14,083 38,577 53,614
LOSS FROM OPERATIONS (7,354) (8,784) (22,073) (32,219)
INTEREST INCOME 116 885 2,684 2,194
OTHER (EXPENSE)
INCOME, NET (272) 172 (1,292) 480
EQUITY IN LOSS OF
JOINT VENTURE - (1,037) - (3,788)
LOSS ON JOINT VENTURE
IMPAIRMENT - (3,210) - (37,110)
NET LOSS $(7,510) $(11,974) $(20,681) $(70,443)
Net loss per common
share (Basic and
Diluted) $(0.28) $(0.45) $(0.77) $(2.64)
COMMON SHARES
OUTSTANDING (Basic and
Diluted) 26,841 26,728 26,793 26,728
BioVeris Corporation
Consolidated Balance Sheet
(In thousands)
(Unaudited)
December 31, March 31,
2005 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 24,331 $ 41,739
Short-term investments 48,489 53,890
Accounts receivable, net 7,206 4,483
Inventory 5,209 5,235
Other current assets 2,312 2,813
Total current assets 87,547 108,160
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET 3,033 3,636
OTHER NONCURRENT ASSETS:
Note receivable 5,317 4,709
Technology licenses 15,844 17,306
Other 337 354
TOTAL ASSETS $ 112,078 $ 134,165
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 4,992 $ 6,457
Accrued wages and benefits 1,552 1,713
Other current liabilities 1,351 1,351
Total current liabilities 7,895 9,521
NONCURRENT DEFERRED
LIABILITIES 788 1,890
Total liabilities 8,683 11,411
SERIES B PREFERRED STOCK,
1,000 shares designated,
issued and outstanding 7,500 7,500
STOCKHOLDERS' EQUITY:
Preferred stock, par value
$0.01 per share, 15,000,000
shares authorized,
issuable in series:
Series A, 600,000 shares
designated, none issued - -
Common stock, par value
$0.001 per share, 100,000,000
shares authorized,
27,238,000 and 26,728,000
shares issued and outstanding
as of December 31 and March
31, respectively 27 27
Additional paid-in capital 205,952 203,464
Deferred compensation (1,811) -
Accumulated other
comprehensive loss (317) (999)
Accumulated deficit (107,956) (87,238)
Total stockholders' equity 95,895 115,254
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 112,078 $ 134,165
