ViroLogic Announces Second Quarter 2004 Financial Results
Conference Call to Review Details at 5:00 p.m. EDT Today SOUTH SAN
FRANCISCO, Calif., Aug. 4 /PRNewswire-FirstCall/ -- ViroLogic, Inc.
(NASDAQ:VLGC) today reported financial results for the second
quarter and six months ended June 30, 2004. Revenue for the second
quarter of 2004 was $9.2 million, an increase of 16 percent over
revenue of $8.0 million for the second quarter of 2003. The
Company's patient testing business increased to $6.5 million from
$6.1 million in the second quarter of 2003 and $5.8 million in the
first quarter of 2004. The Company's pharmaceutical business
increased approximately 35 percent to $2.3 million from $1.7
million for the same period in 2003. Gross margin on product
revenue was 49 percent in the second quarter of 2004 compared to 45
percent reported during the same quarter last year. Operating costs
and expenses for the second quarter of 2004 were $10.6 million,
compared to $10.2 million for the same period in 2003. Operational
improvements, coupled with reduced expenses for leased facility
space, were partially offset by higher costs and expenses
associated with increased sample volume and research and
development activities. For the second quarter of 2004, the net
loss applicable to common stockholders was $1.4 million, or $0.03
per common share, compared to a net loss applicable to common
stockholders of $2.7 million, or $0.09 per common share, for the
same period in 2003. The Company had $10.1 million of cash, cash
equivalents, short-term investments and restricted cash at June 30,
2004. The Company generated cash from operations of $0.6 million
during the second quarter of 2004. Cash from operations can
fluctuate from one quarter to the next depending on timing of cash
receipts and payment of costs and expenses. "We experienced good
growth in the use of PhenoSense GT(TM), our combination drug
resistance assay, which helped increase our sequential patient
testing revenues by 12% over the first quarter of this year. This
is a significant improvement in our patient testing business after
two relatively flat quarters," said Bill Young, CEO and Chairman of
ViroLogic. "We continue to aggressively develop our business in all
areas and remain the partner of choice for pharmaceutical companies
developing new agents for HIV and hepatitis. The merger with
ACLARA, which we anticipate completing in the fourth quarter, will
expand our clinical testing expertise into a significantly larger
new market -- molecular diagnostics for the development of
individualized cancer therapies." Six Month Results The Company
reported revenue of $18.2 million for the first half of 2004, an
increase of 22 percent over revenue of $14.9 million for the same
period of 2003. Operating costs and expenses for the first half of
2004 were $20.9 million, compared to $19.7 million for the same
period of 2003. Net loss for the first half of 2004 was $2.6
million, or $0.05 per common share, compared to a net loss of $4.7
million, or $0.16 per common share, for the same period in 2003. In
the first half of 2004, the Company recorded a non-cash deemed
dividend to preferred stockholders of $0.1 million, resulting in
net loss applicable to common stockholders of $0.05 per common
share. In the first half of 2003, the Company recorded a non-cash
deemed dividend to preferred stockholders of $2.2 million resulting
from a warrant exchange approved by the Company's stockholders on
February 4, 2003 relating to the sale of Series C convertible
preferred stock, and recorded stock dividends to preferred
stockholders of $1.0 million, resulting in net loss applicable to
common stockholders of $0.27 per common share. Recent Achievements
* Entered into a definitive merger agreement with ACLARA
BioSciences, Inc., to create an industry-leading company to develop
and commercialize advanced molecular diagnostics for personalized
medicine focused on oncology and infectious diseases; * Signed an
expanded distribution agreement with Quest Diagnostics to become
preferred provider of HIV phenotypic resistance testing; * Received
$1.5 million phase II Small Business Innovation Research (SBIR)
grant from the National Institutes of Health (NIH) to further
assess the clinical utility of HIV replication capacity (RC), a
gauge of viral "fitness," as a predictor of the pace of progression
to clinical AIDS. This phase II grant is a continuation of a two-
year phase I grant originally awarded in July 2001 that was used to
successfully develop a rapid, reproducible assay for the assessment
of RC; and * Researchers and collaborators presented 13 studies
demonstrating the breadth and applicability of ViroLogic's
technology at the 13th International HIV Drug Resistance Workshop
held in June in the Canary Islands, Spain. Conference Call Details
ViroLogic will host a conference call today at 5:00 p.m. Eastern
Time. To access the live call, please dial 1-800-299-0433 (U.S.) or
617-801-9712 (international) fifteen minutes before the conference
begins. Live audio of the conference call will be simultaneously
broadcast over the Internet and will be available to members of the
news media, investors and the general public. Access to live and
archived audio of the conference call will be available by
following the appropriate links at http://www.virologic.com/ and
clicking on the Investor Relations link. Following the live
broadcast, a replay of the call will also be available at
1-888-286-8010 or 617-801-6888 for international callers, until
August 14. The replay passcode is 81397935. The information
provided on the teleconference is only accurate at the time of the
conference call, and ViroLogic will take no responsibility for
providing updated information except as required by law. About
ViroLogic ViroLogic is a biotechnology company advancing
individualized medicine by discovering, developing and marketing
innovative products to guide and improve treatment of serious viral
diseases such as AIDS and hepatitis. The Company's products are
designed to help doctors optimize treatment regimens that lead to
better patient outcomes and reduced costs. ViroLogic's technology
is also being used by numerous biopharmaceutical companies to
develop new and improved anti-viral therapeutics and vaccines
targeted at emerging drug-resistant viruses. More information about
the Company and its technology can be found on its web site at
http://www.virologic.com/. Certain statements in this press release
are forward-looking, including statements relating to expectations
for 2004 revenues, the pipeline and timing of customer clinical
trials, and anticipated completion of the proposed merger with
ACLARA BioSciences, Inc. (ACLARA). These forward-looking statements
are subject to risks and uncertainties and other factors, which may
cause actual results to differ materially from anticipated results
or expectations and include, but are not limited to, the timing of
customer clinical trials, risks related to our pending merger with
ACLARA, including the risk that the closing conditions of the
merger may not be satisfied and the merger may not be completed,
and costs related to the proposed merger may adversely impact
ViroLogic's financial performance and/or condition, the risks that
the Company's products may not perform, whether ViroLogic
successfully introduces new products, risks related to the
implementation of the Company's distribution agreement with Quest
Diagnostics, whether others introduce competitive products, the
risk that the Company's products may not continue to be accepted or
that increased demand may not develop as anticipated, the risk that
gross margins may not increase as expected, whether payors will
authorize reimbursement for its products, whether the FDA or any
other agency will decide to regulate ViroLogic's products or
services, whether the Company will encounter problems or delays in
automating its processes, whether intellectual property underlying
the Company's technology is adequate, whether licenses to third
party technology will be available, and whether ViroLogic will be
able to raise sufficient capital when required. For a discussion of
these and other factors that may cause ViroLogic's actual events to
differ from those projected, please refer to the Company's most
recent annual report on Form 10-K, quarterly reports on Form 10-Q,
and the preliminary Joint Proxy/Prospectus related to the proposed
merger with ACLARA, as well as other subsequent filings with the
Securities and Exchange Commission. In connection with a proposed
merger with ACLARA, ViroLogic filed a registration statement on
Form S-4 with the Securities and Exchange Commission on June 30,
2004. The registration statement includes a joint proxy statement
of ACLARA and ViroLogic for a meeting of ACLARA's stockholders to
consider and vote upon the proposed merger and for a meeting of
ViroLogic's stockholders to consider and vote upon the issuance of
shares of ViroLogic in the proposed merger and an amendment to
ViroLogic's certificate of incorporation. The registration
statement when finalized and declared effective will also serve as
a prospectus of ViroLogic with respect to the shares and contingent
value rights of ViroLogic to be distributed to stockholders of
ACLARA pursuant to the merger. Investors and security holders are
advised to read the joint proxy statement/prospectus, as it may be
amended from time to time, because it contains important
information about ViroLogic, ACLARA, the merger and related
matters. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus and other documents filed by
ViroLogic and ACLARA at the Securities and Exchange Commission's
web site at http://www.sec.gov/. The joint proxy
statement/prospectus and such other documents may also be obtained,
when available, from ViroLogic by directing such request to
ViroLogic Investor Relations. The joint proxy statement/prospectus
and such other documents may also be obtained, when available, from
ACLARA by directing such request to ACLARA Investor Relations.
ViroLogic, ACLARA and their respective executive officers and
directors may be deemed to be participants in the solicitation of
proxies from stockholders of ViroLogic and ACLARA with respect to
the transactions contemplated by the merger agreement. A
description of any interests that ViroLogic's or ACLARA's directors
and executive officers have in the proposed merger will be
available in the joint proxy statement/prospectus. Information
regarding ViroLogic officers and directors is included in
ViroLogic's 10-K/A filed with the Securities and Exchange
Commission on April 23, 2004. Information regarding ACLARA's
officers and directors is included in ACLARA's 10-K/A filed with
the Securities and Exchange Commission on April 29, 2004. These
materials are available free of charge at the Securities and
Exchange Commission's web site and from ViroLogic and ACLARA.
VIROLOGIC, INC. SELECTED FINANCIAL DATA (In thousands, except per
share amounts) Three months ended Six months ended June 30, June
30, 2004 2003 2004 2003 (Unaudited) (Unaudited) Statement of
Operations Data: Revenue: Product revenue $8,734 $7,786 $17,374
$14,337 Contract revenue (a) 493 167 875 584 ------- -------
-------- ------- Total revenue $9,227 $7,953 $18,249 $14,921
Operating costs and expenses: Cost of product revenue 4,475 4,268
8,891 8,087 Research and development 1,600 1,089 2,993 2,435
General and administrative 1,750 2,375 3,830 4,841 Sales and
marketing 2,784 2,469 4,742 4,311 Lease termination charge -- --
433 -- ------- ------- -------- ------- Total operating costs and
expenses 10,609 10,201 20,889 19,674 ------- ------- --------
------- Operating loss (1,382) (2,248) (2,640) (4,753) Interest
income 19 26 40 63 Interest expense (8) (36) (19) (88) Other income
-- 52 -- 104 ------- -------- -------- -------- Net loss (1,371)
(2,206) (2,619) (4,674) Deemed dividend to preferred stockholders
-- -- -- (2,155) Preferred stock dividend (77) (506) (145) (973)
------- ------- -------- ------- Net loss applicable to common
stockholders $(1,448) $(2,712) $(2,764) $(7,802) ==== ==== =====
==== Basic and diluted amounts per common share: Net loss $(0.03)
$(0.07) $(0.05) $(0.16) Dividends to preferred stockholders --
(0.02) -- (0.11) ------- ------- -------- ------- Net loss
applicable to common stockholders $(0.03) $(0.09) $(0.05) $(0.27)
==== ==== ===== ==== Weighted average shares used in computing
basic and diluted net loss per common share 53,494 29,643 53,376
29,001 June 30, December 31, 2004 2003 (b) (Unaudited) Balance
Sheet Data Cash, cash equivalents and short-term investments $9,466
$9,430 Accounts receivable, net 5,858 6,165 Working capital 10,162
13,038 Restricted cash 676 776 Total assets 28,420 28,378 Long term
obligations, less current portion 43 87 Redeemable convertible
preferred stock 1,994 1,994 Total stockholders' equity $18,355
$20,587 (a) Contract revenue consists of NIH grant, commercial
development and other revenue. The expenses associated with
contract revenue for the three and six months ended June 30, 2004
totaled $493,000 and $875,000, respectively, compared to $145,000
and $335,000, respectively, for the corresponding periods in 2003,
and are included in research and development expenses. (b) The
balance sheet data is derived from audited financial statements for
the year ended December 31, 2003, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission. DATASOURCE: ViroLogic, Inc. CONTACT: Karen Wilson, CFO
of ViroLogic, Inc., +1-650-624-4164, or Web site:
http://www.virologic.com/
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