Exhibit 99.1
[Letterhead of Maxygen, Inc.]
MAXYGEN REPORTS THIRD QUARTER 2004 FINANCIAL RESULTS
Redwood City, Calif., October 26, 2004 – Maxygen, Inc. (Nasdaq: MAXY) today reported financial results for the third quarter ended September 30, 2004 and provided an update on the company’s business.
On July 1, 2004 Maxygen completed the sale of its agriculture subsidiary, Verdia Inc., to DuPont for $64 million in cash. The sale reflects Maxygen’s strategy to focus on its core human therapeutics business. Receipt of the sale proceeds in the third quarter resulted in net income for the quarter although continuing operations continued to show a net loss. Also during the third quarter, Maxygen’s majority-owned chemicals subsidiary Codexis entered into a multi-year collaboration with Pfizer and received a $10 million equity investment from Pfizer.
Financial results
For the third quarter of 2004, Maxygen reported non-GAAP income applicable to common stockholders of $48.0 million, or $1.36 per share(A), compared to a non-GAAP loss applicable to common stockholders of $8.4 million, or $0.24 per share(A), in the comparable period in 2003. In both cases, these results are exclusive of stock compensation expense, amortization of intangible assets and subsidiary preferred stock accretion. Including such charges, Maxygen reported income applicable to common stockholders on a GAAP basis of $47.7 million, or $1.35 per share, for the third quarter of 2004 compared to a loss applicable to common stockholders of $9.3 million, or $0.27 per share, in the third quarter of 2003.
Excluding the proceeds from the sale of Verdia, on a GAAP basis, the loss from continuing operations for the third quarter of 2004 was $13.2 million or $0.38 per share.
Revenue from continuing operations in the third quarter of 2004 was $3.9 million compared to $5.1 million for the same period in 2003. The decrease in revenue is primarily attributable to completion of the research and development funding terms of several collaborations. Expenses relating to research and development from continuing operations increased in the third quarter of 2004 to $14.4 million from $11.0 million in the same period in 2003 as Maxygen continued to intensify its focus on development of its product candidates.
At September 30, 2004, cash, cash equivalents and marketable securities totaled $241.6 million. This includes $19.5 million held by Maxygen’s majority-owned subsidiary Codexis.
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“This quarter we continued our momentum in advancing our internal products into manufacturing,” said Russell Howard, CEO of Maxygen. “We are pleased to be on track with our clinical development timelines for our novel G-CSF and improved interferon beta programs for INDs in late 2005 or 2006. We look forward to providing updates on both of these internal development programs and our two partnered programs in the coming months.”
Next Generation G-CSF Advancing into Manufacturing
On September 9, 2004 Maxygen and Rentschler Biotechnologie GmbH announced the signing of an agreement for the scale-up and manufacture of Phase I and Phase II clinical supplies of Maxygen’s next-generation granulocyte cell stimulating factor (G-CSF) molecule.
Maxygen has developed a next-generation G-CSF that preclinical studies suggest reduces the duration of neutropenia in comparison to currently marketed products while maintaining convenient dosing. Preclinical data obtained in established neutropenia models in non-human primate, rat, and mouse suggest that Maxygen’s product candidate reduces the duration of neutropenia by clinically relevant shorter periods (approximately 25 percent shorter duration of neutropenia) when compared to currently marketed products for the treatment of neutropenia.
About Maxygen
Maxygen, Inc., headquartered in Redwood City, California, is focused on creating novel products using its integrated proprietary technologies for human therapeutics. Maxygen’s technologies bring together advances in molecular biology and protein modification to create novel biotechnology products. Maxygen has strategic collaborations with leading companies including Roche and Aventis.
Forward-Looking Statements
This news release contains forward-looking statements about our research and business prospects, including those relating to: the status of our clinical development timeline; the timing of any INDs we might file; the ability of our next-generation G-CSF product to reduce the duration of neutropenia and the dosing schedule of any G-CSF product. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Among other things these risks and uncertainties include, but are not limited to: changing research and business priorities of Maxygen and/or its collaborators; competitors producing superior and/or more cost effective products; our reliance on third-party manufacturers; and the risk that results of preclinical studies may not accurately predict the results in human clinical trials. These and other risk factors are more fully discussed in our Form 10-K for the year ended December 31, 2003, including under the caption “Risk Factors,” and in our other periodic SEC reports, all of which are available from Maxygen at www.maxygen.com. Maxygen disclaims any obligation to update or revise any forward-looking statement contained in this release as a result of new information or future events or developments. Maxygen and the Maxygen logo are trademarks of Maxygen, Inc.
Contact: | ||
Jeannine Medeiros | ||
Investor & Public Relations | ||
Maxygen, Inc. | ||
p. | 650-298-5853 | |
f. | 650-298-5877 |
Selected Consolidated Financial Information
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenues: | ||||||||||||||||
Collaborative research and development revenue | $ | 3,451 | $ | 4,633 | $ | 11,087 | $ | 15,846 | ||||||||
Grant revenue | 474 | 419 | 1,267 | 1,578 | ||||||||||||
Total revenues | 3,925 | 5,052 | 12,354 | 17,424 | ||||||||||||
Expenses: | ||||||||||||||||
Research and development | 14,428 | 10,974 | 37,041 | 32,442 | ||||||||||||
General and administrative | 3,670 | 2,412 | 9,950 | 8,156 | ||||||||||||
Stock compensation expense | 65 | 404 | 347 | 1,865 | ||||||||||||
Amortization of intangible assets | — | 126 | — | 698 | ||||||||||||
Total operating expenses | 18,163 | 13,916 | 47,338 | 43,161 | ||||||||||||
Loss from operations | (14,238 | ) | (8,864 | ) | (34,984 | ) | (25,737 | ) | ||||||||
Interest income, net | 1,015 | 1,029 | 2,286 | 3,789 | ||||||||||||
Equity in losses of minority investee | — | (231 | ) | (1,000 | ) | (231 | ) | |||||||||
Loss from continuing operations | (13,223 | ) | (8,066 | ) | (33,698 | ) | (22,179 | ) | ||||||||
Net income (loss) from discontinued operations | 61,197 | (871 | ) | 58,428 | (699 | ) | ||||||||||
Net income (loss) | $ | 47,974 | $ | (8,937 | ) | $ | 24,730 | $ | (22,878 | ) | ||||||
Net income (loss) | $ | 47,974 | $ | (8,937 | ) | $ | 24,730 | $ | (22,878 | ) | ||||||
Subsidiary preferred stock accretion | (250 | ) | (319 | ) | (750 | ) | (957 | ) | ||||||||
Income (loss) applicable to common stockholders | $ | 47,724 | $ | (9,256 | ) | $ | 23,980 | $ | (23,835 | ) | ||||||
Basic and diluted earnings (loss) per common share: | ||||||||||||||||
Continuing operations | $ | (0.38 | ) | $ | (0.23 | ) | $ | (0.96 | ) | $ | (0.65 | ) | ||||
Discontinued operations | $ | 1.74 | $ | (0.03 | ) | $ | 1.67 | $ | (0.02 | ) | ||||||
Applicable to common stockholders | $ | 1.35 | $ | (0.27 | ) | $ | 0.68 | $ | (0.69 | ) | ||||||
Shares used in computing basic and diluted earnings (loss) per common share | 35,236 | 34,667 | 35,082 | 34,338 | ||||||||||||
Non-GAAP income (loss) applicable to common stockholders excluding stock compensation expense, amortization of intangible assets and subsidiary preferred stock accretion(A) | $ | 48,039 | $ | (8,407 | ) | $ | 25,077 | $ | (20,315 | ) | ||||||
Non-GAAP basic and diluted earnings (loss) applicable per common share excluding stock compensation expense, amortization of intangible assets and subsidiary preferred stock accretion(A) | $ | 1.36 | $ | (0.24 | ) | $ | 0.71 | $ | (0.59 | ) |
Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2004 | December 31, 2003 | |||||
(unaudited) | (See note 1) | |||||
Cash, cash equivalents and marketable securities | $ | 241,558 | $ | 191,868 | ||
Other current assets | 9,201 | 9,838 | ||||
Assets of discontinued operations | — | 7,316 | ||||
Property and equipment, net | 8,908 | 11,509 | ||||
Goodwill and other intangibles, net | 12,192 | 12,192 | ||||
Other assets | 2,501 | 1,346 | ||||
Total assets | $ | 274,360 | $ | 234,069 | ||
Current liabilities | $ | 14,119 | $ | 10,773 | ||
Liabilities of discontinued operations | — | 3,126 | ||||
Non-current deferred revenue | 1,500 | 695 | ||||
Long-term obligations | 1,522 | 41 | ||||
Minority Interest | 31,932 | 21,210 | ||||
Stockholders’ equity | 225,287 | 198,224 | ||||
Total liabilities and stockholders’ equity | $ | 274,360 | $ | 234,069 | ||
Note 1: Derived from consolidated audited financial statements as of December 31, 2003.
Footnotes
(A) Reconciliation of GAAP and non-GAAP income (loss) applicable to common stockholders and earnings (loss) applicable per common share (in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||
(unaudited) | (unaudited) | |||||||||||||
Income (loss) applicable to common stockholders | $ | 47,724 | $ | (9,256 | ) | $ | 23,980 | $ | (23,835 | ) | ||||
Stock compensation expense | 65 | 404 | 347 | 1,865 | ||||||||||
Amortization of intangible assets | — | 126 | — | 698 | ||||||||||
Subsidiary preferred stock accretion | 250 | 319 | 750 | 957 | ||||||||||
Non-GAAP income (loss) applicable to common stockholders | $ | 48,039 | $ | (8,407 | ) | $ | 25,077 | $ | (20,315 | ) | ||||
Shares used in computing basic and diluted earnings (loss) applicable per common share | 35,236 | 34,667 | 35,082 | 34,338 | ||||||||||
Non-GAAP basic and diluted earnings (loss) applicable per common share | $ | 1.36 | $ | (0.24 | ) | $ | 0.71 | $ | (0.59 | ) |