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Immunicon Corporation Reports Results for the Quarter and Full Year Ended December 31, 2004* Results include product revenue for 2004 of $1,127,000 of which $944,000 was recorded in the fourth quarter
HUNTINGDON VALLEY, Pa., Feb. 17 /PRNewswire-FirstCall/ -- Immunicon Corporation , a development-stage diagnostics company developing and commercializing proprietary cell-based diagnostic and research products with an initial focus on cancer, today announced its operating results for the three months and year ended December 31, 2004. The Company reported product revenue of $944,000 for the fourth quarter and $1,127,000 for the year ended December 31, 2004. No product revenue was recorded in 2003. Full year 2004 revenue from instrument sales was $965,000 and revenue from reagent sales was $162,000. Total pro forma cost of goods sold was $1,071,000 and total pro forma gross margin was $56,000. (See Exhibit I below) The Company launched its initial in vitro diagnostic products in August 2004. As of December 31, 2004, Immunicon had shipped 18 instrument systems and recorded 10 instrument system sales. It should be noted that the recognition of revenue related to instrument shipments is typically delayed for a period of several months due to final evaluation of these systems at customer locations. Total revenue for the year ended December 31, 2004 was $1,565,000 compared with approximately $3.0 million for the year ended December 31, 2003. The decrease in revenue in 2004 is due to the Company recognizing more milestone revenue in 2003 related to the completion of certain initial product development milestones through our agreement with Veridex, LLC, a Johnson & Johnson company. Research and development expenses were $23.5 million and $16.0 million for the years ended 2004 and 2003, respectively. General and administrative expenses were $6.1 million for the year ended 2004, compared with $4.5 million for the year ended 2003. These increases in research and development costs as well as general and administrative expenses are generally the result of higher costs associated with completion of the development and the launch of the Company's initial cancer diagnostic products. For the year ended December 31, 2004, the net loss was $27.9 million, or $1.70 per share, based on 16,386,135 weighted average common shares outstanding compared with a net loss of $17.6 million or $37.90 per share for the same period in 2003 based on 465,527 weighted average common shares outstanding. On December 31, 2004, the Company had cash, cash equivalents and investments of $53.6 million of which $530,000 were investments which have maturity dates of greater than one year. Total cash expenditures for 2004 were $30 million including operating expenses, capital expenditures and debt service, which is consistent with guidance provided earlier in 2004. The Company anticipates that its net cash expenditures for 2005 will be in the range of between $35 million and $38 million. The Company also anticipates that it will launch its CellTracks Analyzer II in the second quarter of this year. New placements of the existing CellSpotter(R) Analyzer and CellTracks AutoPrep(TM) System may be modest at least in the first quarter of 2005 in anticipation of the availability of the new analyzer. Edward L. Erickson, the Company's Chairman, President and Chief Executive Officer commented, "2004 was a year of extraordinary achievement for Immunicon. We obtained important regulatory clearances from the FDA; began commercialization of our technology for in vitro diagnostic use in metastatic breast cancer; received substantial recognition of the importance of our technology in the scientific and medical communities, including publication of data in breast cancer in the New England Journal of Medicine; and commenced clinical trials designed to obtain product label expansion in metastatic colorectal and prostate cancers. Additionally, we completed major financing events including our initial public offering in April 2004 and significant new credit facilities with high quality lenders." Highlights for the year ended December 31, 2004 and Quarter to Date in 2005 * As of December 31, 2004, the Company had shipped 18 complete systems
each consisting of a CellTracks AutoPrep System and CellSpotter
Analyzer. Ten systems were shipped to laboratory customers and 8
systems were shipped to affiliates of Johnson & Johnson. For the year
ended December 31, 2004 we completed ten system sales and recognized
revenue of $965,000 on these instrument sales. Seven of these sales
were to affiliates of Veridex and three were to third party customers,
including a major reference laboratory, a comprehensive cancer center
and a pharmaceutical company. The last is intended for use in the
development of pharmaceutical products. We now have instruments placed
in the USA, Europe and Japan. Note that the recognition of revenue
related to instrument shipments is typically delayed for a period of
several months due to evaluation of these systems at customer
locations.
* The August 19, 2004 issue of The New England Journal of Medicine
published results of a prospective study sponsored by us showing that
the number of circulating tumor cells in 7.5 mL of blood taken from
women with metastatic breast cancer predicts progression-free and
overall survival. This significant finding received extensive media
coverage including separate pieces in the August 19 issue of The Wall
Street Journal and the August 18 ABC News national broadcast of World
News Tonight.
* While conducting the study in metastatic breast cancer that was the
subject of the article that appeared in the August 2004 issue of NEJM,
we expanded the study to include 46 patients with non-measurable ("bone
only") disease. Analysis of the data that now included 233 patients
with extended follow-up further strengthened the importance of CTCs for
disease management of patients with metastatic breast cancer.
* On August 20, 2004, we announced the release for sale of the CellSearch
Circulating Tumor Cell Kit, CellSpotter Analyzer and CellTracks
AutoPrep System for in vitro diagnostic use in metastatic breast
cancer.
* In September 2004, we entered into an agreement with Quest Diagnostics
to purchase our CellTracks AutoPrep System and CellSpotter Analyzer to
enable Quest Diagnostics to run the CellSearch Circulating Tumor Cell
Kit.
* On September 27, 2004, we announced shipment of two CellTracks AutoPrep
Systems and two CellSpotter Analyzers to Japan, which was the first
shipment of our products to this important market.
* During 2004 we completed a number of important clinical and technology
development milestones as defined in our agreement with Veridex and
received milestone payments totaling $1,833,000.
-- In February we received $500,000 of the $1,500,000 milestone
payment pertaining to breast cancer therapy monitoring pursuant
to Veridex's receipt of 510(k) clearance from the FDA for use of
the CellSearch Circulating Tumor Cell Kit. The remaining
$1,000,000 will be payable upon successful introduction of our
CellTracks Analyzer II as determined by the joint Immunicon and
Veridex Steering Committee.
-- In June we received a $500,000 milestone payment for initiating
a multi-center clinical trial for the monitoring of metastatic
colorectal cancer.
-- In September we and Veridex agreed that Immunicon had
successfully completed three development milestones and as a
result we received payments totaling $833,000. Two milestones
were related to clinical indications in the non-metastatic
setting of prostate and lung cancer and the amounts received by
the Company from Veridex were $300,000 and $333,000,
respectively. The third was related to the completion of the
development of tumor cell profiling reagents and the amount
received for this milestone was $200,000.
* In the fourth quarter of 2004, we initiated a clinical trial intended
to extend product labeling to include metastatic prostate cancer. At
the American Association for Cancer Research (AACR) 2004 Annual Meeting
in Orlando, Florida, data were presented from a research study that
assessed the possible relationship between CTCs and survival in
prostate cancer patients. The abstract, entitled "Circulating Tumor
Cells Predict Survival in Patients with Metastatic Prostate Cancer,"
showed that patients with 5 or more CTCs in 7.5 mL of blood had a
statistically significant decreased median survival versus those with
fewer than 5 CTCs. Additionally, CTCs appear to be a better predictor
of such outcome versus prostate specific antigen, or PSA.
* In February 2005, we amended our agreement with Veridex to modify the
milestones entitled "Colorectal or Breast Cancer Adjuvant Prognosis and
Recurrence Monitoring" and "Metastatic Colorectal or Prostate Cancer
Therapy Monitoring."
The milestone entitled "Colorectal or Breast Cancer Adjuvant Prognosis
and Recurrence Monitoring" was amended to modify the basis of the
milestone and achievement requirements to the development of an assay
using our proprietary technology for analysis of tumor cells in the
bone marrow of cancer patients. In connection therewith in February
2005 we initiated a clinical research study to explore the potential
utility of an assay we are developing for detecting tumor cells in bone
marrow samples drawn from patients with solid tumor cancers. The study
also includes a control group of normal subjects.
The milestone entitled "Metastatic Colorectal or Prostate Cancer
Therapy Monitoring" was amended to provide for progress payments
triggered by certain events in the development program. A payment of
$250,000 is now payable upon accrual of an adequate number of
metastatic colorectal cancer patients to support a regulatory
submission to the U.S. Food and Drug Administration and an additional
payment of $250,000 is payable upon completion of a draft regulatory
submission that is acceptable to the Steering Committee. The
superseded milestone had provided for payment of $500,000 upon Steering
Committee approval of the final regulatory submission. Immunicon has
already received $500,000 as a result of the enrollment of the first
patient in this trial.
* In December 2004, we announced a second extension of our Research and
Development Agreement with Pfizer Inc., under which we are
collaborating with Pfizer to develop new reagents designed to detect
certain undisclosed antigens on circulating tumor cells (CTCs).
* On December 9, 2004, we announced that the CellTracks(R) Endothelial
Cell Kit has been released for sale for Research Use Only (RUO). The
CellTracks Endothelial Cell Kit is used in conjunction with our
CellTracks AutoPrep System for blood sample preparation and
CellSpotter(R) Analyzer to capture, count and characterize circulating
endothelial cells from whole blood. Endothelial cells form the lining
of blood vessels and play a key role in the development of many
diseases including cardiovascular disease and cancer. Enumeration and
characterization of such circulating endothelial cells (CECs) may
provide insights into the nature of specific disease processes and
response to treatment.
* On October 26, 2004 we announced that we had extended our existing
equipment lines of credit with Silicon Valley Bank and with General
Electric Capital Life Science and Technology group for an aggregate of
$17 million additional funding. The credit facility with Silicon Valley
Bank represents a $12 million extension to an existing line of credit.
The $5 million GE credit facility is also an extension of an existing
line of credit. Immunicon can use the funds to finance the manufacture
of the Company's cellular analysis platforms (CellTracks Analyzer and
the CellTracks AutoPrep System) for placement with customers and for
general corporate purposes.
* On October 13, 2004 we reached the end of the 180-day period of
restriction from sale for substantially all common shares that was
established at the time of our IPO. The total number of shares
outstanding as of December 31, 2004 is 23,165,741. Sales of shares held
by Officers, Directors and other affiliated entities are subject to the
legal restrictions outlined by the Securities and Exchange Commission
and by the NASDAQ.
* On October 12, 2004 we appointed Byron D. Hewett to the newly created
position of Chief Operating Officer (COO) and General Manager, Cancer
Products. In this capacity, Hewett will be responsible for day-to-day
management of the Company's cancer diagnostics and research products
business in addition to line responsibility for operations, marketing
and regulatory affairs. He will also play a major role in guiding the
development of new products and indications in cancer. Hewett reports
directly to Chairman, President and Chief Executive Officer Edward L.
Erickson.
Conference Call
Edward L. Erickson, Chairman, President and CEO, and other members senior management will provide a Company update and discuss results via Web cast and conference call on Thursday February 17, 2005 at 9:00 AM Eastern Time. To participate in the live call by telephone, please dial 800-289-0493 (USA only) or 913-981-5510, reservation number 8110479. Those interested in listening to the conference call live via the Internet may do so by visiting the Company's Web site at http://www.immunicon.com/. To listen to the live call, please go to the Web site 15 minutes prior to its start to register, download, and install the necessary audio software. A replay will be available on the Company's Web site for 30 days beginning February 17 to March 18, 2005. In addition, a telephone replay will be available through Friday February 25 11:59 p.m. Eastern Time by dialing 888- 203-1112 or 719-457-0820, reservation number 8110479. About Immunicon Corporation Immunicon Corporation is developing and commercializing proprietary cell- based research and human diagnostic products with an initial focus on cancer disease management. The Company has developed platform technologies for selection and analysis of rare cells in blood, such as circulating tumor cells. Immunicon's products and underlying technology platforms also have application in the clinical development of cancer drugs and in cancer research and may have applications in other fields of medicine, such as cardiovascular and infectious diseases. The information contained in this press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often preceded by words such as "hope," "may," "believe," "anticipate," "plan," "expect," "intend," "assume," "will" and similar expressions. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date of this press release, reflect management's current expectations and involve certain factors, such as risks and uncertainties that may cause actual results to be far different from those suggested by the Company's forward-looking statements. These factors include, but are not limited to, risks associated with: the Company's dependence on Veridex; the Company's capital and financing needs; research and development and clinical trial expenditures; commercialization of the Company's product candidates; the Company's ability to use licensed products and to obtain new licenses from third parties; the Company's ability to manage its growth; obtaining necessary regulatory approvals; reliance on third party manufacturers and suppliers; reimbursement by third party payors to the Company's customers for the Company's products; compliance with applicable manufacturing standards; the ability to earn license and milestone payments under the Company's agreement with Veridex; retaining key management or scientific personnel; delays in the development of new products or to planned improvements to the Company's products; effectiveness and reliability of the Company's products both in absolute terms and compared to competitors' products; protection of the Company's intellectual property and other proprietary rights; conflicts with the intellectual property of third parties; product liability lawsuits that may be brought against the Company; labor, contract or technical difficulties; and competitive pressures in the Company's industry. These factors are discussed in more detail in the Company's filings with the Securities and Exchange Commission. Contact Information: Investors/Media:
James G. Murphy The Ruth Group
SVP of Finance & Administration, CFO John Quirk (investors) 646-536-7029
215-830-0777 ext. 121 jquirk@theruthgroup.com
jmurphy@immunicon.com Greg Tiberend (media) 646-536-7005
gtiberend@theruthgroup.com
IMMUNICON CORPORATION AND SUBSIDIARIES
(A Development-Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, December 31,
2004 2003
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $27,552 $30,601
Short-term investments 25,551 -
Inventory 1,076 -
Accounts receivable 504 -
Prepaid expenses and other current assets 1,100 487
55,783 31,088
Property and equipment, net 4,380 3,561
Long term investments 530 -
Assets related to financing activities - 674
Other assets 371 412
TOTAL ASSETS $61,064 $35,735
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $3,012 $3,360
Accounts payable 940 1,008
Accrued expenses 3,392 2,787
Current portion of deferred revenue 1,398 97
Total current liabilities 8,742 7,252
Long-term debt 2,587 3,792
Deferred revenue 897 25
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Convertible preferred stock
(liquidation value of $0 as of
December 31, 2004 and $87,756 as
of December 31, 2003, respectively) - 85,115
Common stock, $.001 par
value-100,000,000 authorized,
23,165,741 and 485,820 shares
issued and outstanding as of
December 31, 2004 and December 31,
2003, respectively 23 1
Additional paid-in capital 142,683 7,033
Deferred compensation (2,358) (3,858)
Currency translation adjustment 29
Loan for stock options - (19)
Deficit accumulated during the development
stage (91,539) (63,606)
Total stockholders' equity 48,838 24,666
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $61,064 $35,735
IMMUNICON CORPORATION AND SUBSIDIARIES
(A Development-Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 2004 COMPARED TO DECEMBER 31, 2003 Period from
August 25,
(in thousands, except for per share and per share data) 1983
UNAUDITED (inception
date) to
December
Three Months Ended Fiscal Year Ended 31,
December 31, December 31,
2004 2003 2004 2003 2004
Product revenue $944 $- $1,127 $- $1,127
Milestone, license
and other revenue 249 934 438 2,974 8,352
Total revenue 1,193 934 1,565 2,974 9,479
Operating expenses:
Research & Development 6,403 4,578 23,545 16,032 78,217
General & administrative 856 1,328 6,064 4,512 24,489
Total operating
expenses 7,259 5,906 29,609 20,544 102,589
Operating income (loss) (6,066) (4,972) (28,044) (17,570) (93,110)
Other income from related
party - - - 250 250
Other income (expense)
Interest Income 273 77 732 247
Interest Expense (137) (161) (621) (570)
Total other income
(expense) 136 (84) 111 (323) 1,321
Net Loss $(5,930) $(5,056) $(27,933) $(17,643) $(91,539)
Net loss per common
share - basic and
diluted $(0.26) $(10.46) $(1.70) $(37.90)
Weighted average
common shares
oustanding-
basic and diluted
(unaudited) 23,091,872 483,197 16,386,135 465,527
Pro forma net loss
per common share-
basic and diluted
(unaudited) $(0.26) $(1.22)
Pro form weighted
average common
shares
outstanding-basic
and diluted
(unaudited) 23,091,872 22,966,563
Exhibit I
IMMUNICON CORPORATION AND SUBSIDIARIES
(A Development-Stage Company)
Pro forma reconciliation of product revenue and cost of goods sold
to product revenue as reported (1)
For the year ended December 31, 2004
UNAUDITED
Pro forma Revenue & pro forma
Actual adjustments costs of goods sold
Product revenue as reported $1,127
Revenue and pro forma costs of goods sold by product category
Reagents
Revenue from related party 143 143
Other reagent revenue 19 19
Total reagent revenue 162 162
Pro forma cost of goods sold - 43 43
Pro forma gross margin - reagents - 119
Instruments
Revenue from related party 726 726
Other instrument revenue 239 239
Total instrument revenue 965 965
Pro forma cost of goods sold - 1,028 1,028
Pro forma gross margin -
instruments - (63)
Total product revenue 1,127 - 1,127
Pro forma cost of goods sold - 1,071 (1) 1,071
Pro forma gross margin - - $56
(1) Prior to the fourth quarter of 2004 Immunicon was engaged in research
and development activities as well as activities related to
commercial product launch, including manufacturing activities. We
officially launched our initial commercial products on August 20,
2004. Effective October 1, 2004 Immunicon adopted a policy for
recognition of inventory and cost of sales. Prior to October 1, 2004
costs related to the manufacture of inventory were recorded as
research and development costs. Since the costs of the units sold in
2004 had been expensed as part of research and development in periods
prior to the fourth quarter of 2004, there are no costs of sales
recorded related to the sales in the accompanying statement of
operations. The table above reflects the pro forma costs of the
items sold in 2004 as if those costs had not been expensed in prior
periods. Immunicon management believes that this information is
useful for the readers in order to provide a more representative
illustration of our anticipated gross margins in future periods.
However the Company has a limited history of commercial sales and we
therefore expect that these results will fluctuate for the
foreseeable future. There can be no assurance that these pro forma
results will be reflective of results in future periods.
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