Deltagen Reports 2011 Fourth Quarter and Full-Year Financial Results
Deltagen, Inc. (Pink Sheets: DGEN), a leading provider of drug discovery tools and services to the biopharmaceutical industry, today reported unaudited consolidated financial results for the three months and year ended December 31, 2011.
Revenues: The Company’s consolidated revenues for the three months and year ended December 31, 2011 totaled $0.200 million and $0.902 million, respectively. The revenues in the fourth quarter and in 2011 were attributable to license fees associated with the provision of knockout mice and related phenotypic data pursuant to orders placed by customers under the Company’s DeltaOneTM program. The Company’s consolidated revenues for the three months and year ended December 31, 2011 included $0.064 million and $0.118 million, respectively, in revenues of Xenopharm, Inc. (“Xenopharm”), a wholly owned subsidiary of the Company. Since it had not commenced commercial operations during 2011 there was no revenue from the Company’s wholly owned subsidiary, Benten BioServices, Inc. (“Benten BioServices”).
Expenses: Total consolidated expenses for the three months and year ended December 31, 2011 were $1.514 million and $3.748 million, respectively. The expenses in the fourth quarter (and full-year 2011) were attributable primarily to labor costs and other general and administrative expenses, including expenses of $1.237 million ($2.522 million) relating to the operation of its wholly owned subsidiary, Benten BioServices (“Benten Expenses”), $0.031 million ($0.238 million) in royalty and commission expenses, and non-recurring expenses of $0.004 million ($0.039 million) associated with the prosecution and issuance of patents licensed exclusively to Xenopharm. As of December 31, 2011, the Company had accrued aggregate total royalties to Lexicon Pharmaceuticals, Inc. (“Lexicon”) of $5.51 million in royalty payments pursuant to a March 2005 settlement agreement between Lexicon and the Company. Under the settlement, the maximum aggregate amount of royalty payments due to Lexicon is $6 million. Accordingly, up to $0.449 million in contingent royalty payments remained owed to Lexicon as of December 31, 2011.
Net Income/Losses: Consolidated net losses before provision for income taxes for the three months and year ended December 31, 2011 were $1.314 million and $2.843 million, respectively. Excluding Benten Expenses, net losses before provision for income taxes for the three months and year ended December 31, 2011 would have been $0.177 million and $0.321 million, respectively.
Cash, Cash Equivalents and Accounts Receivable: As of December 31, 2011, the Company had $1.409 million in consolidated cash and cash equivalents (compared to $3.530 million as of December 31, 2010) and $0.076 million in accounts receivable (compared to $0.288 million as of December 31, 2010). The consolidated cash and cash equivalents amount includes $1.275 million in secured bridge loan financing for Benten BioServices received on December 22, 2011. The change in cash and cash equivalents during 2011 was due primarily to the investment in Benten BioServices’ Malvern, Pennsylvania facility, including expenditures for capital equipment, as well as losses for the period.
Major Events during 2011 and Subsequent Events:
Benten BioServices: During the third and fourth quarters of 2011, Benten BioServices completed facility commissioning, and validation of equipment, systems and numerous assays critical for its commercial operations. However, due to unanticipated facility issues necessitating repair, commercial operations were delayed until January 2012. Accordingly, the Company negotiated a lease amendment with the landlord of Benten BioServices' Malvern, Pennsylvania facility with respect to the amount of base rent and the commencement date for monthly rent payments. Under the lease amendment, the rent commencement date was changed from October 1, 2011 to March 1, 2012. Deltagen is the guarantor on a lease guaranty in favor of the landlord that guarantees payments under the lease during the first four years rent is payable. This liability of Deltagen under the guaranty is capped at $3,800,000. In January 2012, Deltagen BioServices, Inc. was renamed Benten BioServices, Inc. Benten BioServices commenced commercial operations in January 2012. As of February 27, 2012, Benten BioServices had 16 full-time employees and 1 part-time employee.
Bridge Funding of Benten BioServices: As part of its fund-raising efforts, Benten BioServices received $1.275 million in secured bridge loan financing on December 22, 2011. The financing was led by Life Sciences Green House of Central Pennsylvania. Benten BioServices will require additional capital by the start of the second quarter of 2012 in order to continue to fund its operations in accordance with its business plan.
The unaudited consolidated financial statements for the fourth quarter and year of 2011, accompanying notes, and Management’s Discussion and Analysis of Financial Conditions and Results of Operations for such period will be posted on Deltagen’s website (www.deltagen.com).
Deltagen, Inc. is a leading provider of drug discovery tools to the biopharmaceutical industry. Deltagen offers access to its extensive inventory of knockout mouse lines and related phenotypic data, which enhance the efficiency of target validation and drug discovery. In addition, Deltagen offers target validation data in the areas of immunology and metabolic diseases. Deltagen's products and programs have been validated by customers and partners such as Eli Lilly & Co., GlaxoSmithKline, Merck & Co., Inc. and Pfizer Inc. Benten BioServices, Inc., a wholly-owned subsidiary of Deltagen based in Malvern, Pennsylvania, offers regulatory-compliant services to support the development and commercialization of biopharmaceutical products. Benten BioServices' services are designed to address specific requirements for critical stages in product development, including biosafety testing, raw materials testing, assay and process validation services, cell banking and characterization services, and technology platform-specific R&D support and consulting services. For more information on Deltagen, visit the Company's website at www.deltagen.com. For more information on Benten, visit Benten's website at www.bentenbio.com.
Safe Harbor Statement
This press release contains “forward-looking statements,” including statements about Deltagen’s future revenues, cash flows and operating results, first-party royalty obligations and first-party licenses and intellectual property, fund-raising efforts, Benten BioServices' business plans, as well as other matters that are not historical facts or information. These forward-looking statements are based on management’s current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Deltagen’s ability to achieve its operational objectives and revenue projections, that may cause Deltagen’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. There are no assurances that the Company will declare any future dividends. Information identifying such important risk factors is contained in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”, which can be found at Deltagen’s website at www.deltagen.com.Deltagen undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.
Robert J. Driscoll, 650-345-7601
President & CEO
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