EXHIBIT 99.1
ACACIA
RESEARCH
CORPORATION
CONTACTS: Rob Stewart
Investor Relations
FOR RELEASE Tel (949) 480-8300
- ----------- Fax (949) 480-8301
April 21, 2004
ACACIA RESEARCH REPORTS FIRST QUARTER RESULTS
Newport Beach, Calif. - (BUSINESS WIRE) - April 21, 2004 - Acacia
Research Corporation (Nasdaq: ACTG; CBMX) today reported results for the three
months ended March 31, 2004. Acacia Research Corporation comprises two operating
groups, the CombiMatrix group and the Acacia Technologies group.
"The CombiMatrix group reported revenues of $17,616,000 in the first
quarter, including the recognition of $17,302,000 in deferred contract revenues
from the completion of its research and development agreement in its strategic
alliance with Roche. The CombiMatrix group's first quarter revenues also
included $217,000 in contract revenue related to its development of biowarfare
detection technology under a $5.9 million contract that was awarded by the
Department of Defense in March 2004 and $97,000 in product sales and other
contract service revenues," stated CombiMatrix CEO and President, Dr. Amit
Kumar.
"During the first quarter of 2004, the CombiMatrix group announced a
number of significant accomplishments. We launched our CustomArray(TM) product
for DNA Expression Analysis in March and initiated a collaboration with Cyrano
Sciences for the development of nanotechnology based chemical sensors. We also
initiated a collaboration with Washington University in St. Louis for nanoscale
synthesis of chemical libraries, which is being funded by the National Science
Foundation. The CombiMatrix group also developed the first commercially
available microarray for "bird flu" influenza A virus and initiated research
collaborations with St. Jude Children's Research Hospital and Oklahoma State
University on "bird flu" influenza A virus. Finally, we also initiated a
collaboration with Case Western Reserve University on developing a novel
diagnostic for Alzheimer's disease using our CustomArray(TM) platform and
expanded our RNAi collaboration for HIV with the Retrovirology Laboratory
irsiCAIXA to include hepatitis C," concluded Dr. Kumar.
"The Acacia Technologies group reported revenues of $599,000 in the
first quarter of 2004 as we continued to roll out our Digital Media Transmission
technology licensing program. To date we have entered into 120 DMT technology
licensing agreements, including agreements with CinemaNow, Disney, General
Dynamics Interactive, Grupo Pegaso, LodgeNet, NXTV, Oral Roberts University, T.
Rowe Price, 24/7 University and Virgin Radio," commented Chairman and CEO, Paul
Ryan.
ACACIA RESEARCH CORPORATION CONSOLIDATED
FINANCIAL RESULTS
Consolidated revenues for the first quarter of 2004 were $18,215,000
versus $222,000 in the comparable 2003 period. First quarter 2004 revenues were
comprised of $17,302,000 in Roche Diagnostics, GmbH ("Roche") related deferred
contract revenues, $217,000 in contract revenue related to the development of
biowarfare detection technology under a $5.9 million Department of Defense
contract awarded in March 2004 and $97,000 in product sales and other contract
service revenues, all of which were recognized by the CombiMatrix group and
Digital Media Transmission ("DMT") license fee revenues totaling $599,000
recognized by the Acacia Technologies group.
In March 2004, the CombiMatrix group completed all phases of its
research and development agreement with Roche. As a result of completing all of
its obligations under this agreement and in accordance with the CombiMatrix
group's revenue recognition policies for multiple-element arrangements, the
CombiMatrix group recognized all previously deferred Roche related contract
revenues totaling $17,302,000 during the first quarter of 2004.
First quarter 2004 consolidated net income was $10,903,000 versus a
consolidated net loss of $6,667,000 in the comparable 2003 period. Included in
the first quarter 2004 consolidated net income are non-cash charges totaling
$2,371,000, comprised of non-cash stock compensation amortization charges of
$403,000, non-cash patent amortization charges of $399,000, depreciation charges
of $312,000 and $1,257,000 in current period non-cash charges related to
AR-CombiMatrix common stock issuable in connection with certain anti-dilution
provisions of the September 2002 settlement agreement with Nanogen, Inc.
Non-cash stock compensation amortization charges, non-cash patent amortization
charges and depreciation charges totaled $140,000, $400,000 and $367,000,
respectively, in the comparable 2003 period. The Company estimates that there
will be sufficient losses from operations in the current year to offset any
taxable income related to the Roche deferred revenues recognized resulting in no
significant tax liability or expense in the current period.
Consolidated research and development expenses, comprised solely of
costs incurred by the CombiMatrix group, decreased to $1,588,000 in the first
quarter of 2004 from $2,335,000 in the comparable 2003 period, primarily due to
the CombiMatrix group's completion of several Roche related research and
development projects during the third and fourth quarters of 2003, and final
completion of the research and development agreement with Roche in the first
quarter of 2004.
FINANCIAL CONDITION
Total consolidated assets were $90,173,000 as of March 31, 2004
compared to $90,040,000 as of December 31, 2003. Cash and cash equivalents and
short-term investments on a consolidated basis totaled $50,944,000 as of March
31, 2004 compared to $50,500,000 as of December 31, 2003.
Subsequent to March 31, 2004, Acacia Research Corporation raised net
proceeds of approximately $13,600,000 through the sale of Acacia Research -
CombiMatrix common stock in a registered direct offering. The proceeds from this
offering were allocated to the CombiMatrix group.
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
Revenues for the first quarter of 2004 were $17,616,000 versus $216,000
in the comparable 2003 period. First quarter 2004 revenues were comprised of
$17,302,000 in Roche related deferred contract revenues, $217,000 in contract
revenue related to the development of biowarfare detection technology under a
$5.9 million Department of Defense contract awarded to the CombiMatrix group in
March 2004 and $97,000 in product sales and other contract service revenues.
In March 2004, the CombiMatrix group completed all phases of its
research and development agreement with Roche. As a result of completing all of
its obligations under this agreement and in accordance with the CombiMatrix
group's revenue recognition policies for multiple-element arrangements, the
CombiMatrix group recognized all previously deferred Roche related contract
revenues totaling $17,302,000 during the first quarter of 2004.
First quarter 2004 division net income was $11,892,000 versus a
division net loss of $5,173,000 in the comparable 2003 period. Included in the
first quarter 2004 division net income are non-cash charges totaling $2,236,000,
comprised of non-cash stock compensation amortization charges of $403,000,
non-cash patent amortization charges of $274,000, depreciation charges of
$302,000 and $1,257,000 in current period non-cash charges related to
AR-CombiMatrix common stock issuable in connection with certain anti-dilution
provisions of the September 2002 settlement agreement with Nanogen, Inc.
Non-cash stock compensation amortization charges, non-cash amortization of
patents and depreciation charges totaled $140,000, $274,000 and $332,000,
respectively, in the comparable 2003 period. The CombiMatrix group estimates
that there will be sufficient losses from operations in the current year to
offset any taxable income related to the Roche deferred revenues recognized
resulting in no significant tax liability or expense in the current period.
Research and development costs incurred by the CombiMatrix group
decreased to $1,588,000 in the first quarter of 2004 from $2,335,000 in the
comparable 2003 period, primarily due to the CombiMatrix group's completion of
several Roche related research and development projects during the third and
fourth quarters of 2003, and final completion of the research and development
agreement with Roche in the first quarter of 2004.
FINANCIAL CONDITION
Total assets for the CombiMatrix group were $50,908,000 as of March 31,
2004 compared to $50,161,000 as of December 31, 2003. Cash and cash equivalents
and short-term investments totaled $18,415,000 as of March 31, 2004 compared to
$17,299,000 as of December 31, 2003.
Subsequent to March 31, 2004, Acacia Research Corporation raised net
proceeds of approximately $13,600,000 through the sale of Acacia Research -
CombiMatrix common stock in a registered direct offering. The proceeds from this
offering were allocated to the CombiMatrix group.
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
DMT license fee revenues for the first quarter of 2004 were $599,000
versus $6,000 in the comparable 2003 period. Since November 2002, the Acacia
Technologies group has entered into 120 license agreements for its DMT
technology. All of the Acacia Technologies group's material DMT license
agreements provide for recurring license fee payments to be made by the
respective licensees over the term of the licenses.
The first quarter 2004 division net loss was $989,000 versus $1,494,000
in the comparable 2003 period. Included in the first quarter 2004 division net
loss are non-cash patent amortization and depreciation charges totaling $136,000
versus $161,000 in the comparable 2003 period.
Marketing, general and administrative expenses in the first quarter of
2004 decreased to $1,006,000 from $1,323,000 in the comparable 2003 period, due
primarily to a decrease in corporate legal expenses and a general reduction in
personnel related overhead expenses. Patent related legal expenses in the first
quarter of 2004 increased to $602,000 from $262,000 in the comparable 2003
period and include increased costs related to Acacia Technologies group's
ongoing DMT patent commercialization and enforcement efforts, including
increased legal and engineering costs related to new patent claims and the
identification of additional potential licensees of our DMT technology.
FINANCIAL CONDITION
Total assets for the Acacia Technologies group were $39,477,000 as of
March 31, 2004 compared to $39,978,000 as of December 31, 2003. Cash and cash
equivalents and short-term investments totaled $32,529,000 as of March 31, 2004
compared to $33,201,000 as of December 31, 2003.
BUSINESS HIGHLIGHTS
- -------------------
Business highlights of the first quarter include:
COMBIMATRIX GROUP:
o In January 2004, the CombiMatrix group made the first
commercially available microarray designed for the H5N1
influenza A virus ("bird flu"). The World Health Organization
appealed on January 27, 2004 for technical assistance and
expert advice to help stop the threat to humans and
agriculture posed by bird flu virus. The CombiMatrix group
utilized its proprietary probe-design software and ability to
rapidly synthesize novel DNA microarrays to respond within two
days.
o In March 2004, the CombiMatrix group announced the launch of
its CustomArray(TM) DNA Microarray platform, offering
researchers the ability to order fully customizable arrays on
demand.
o In March 2004, the CombiMatrix group executed a two-year, $5.9
million contract with the Department of Defense to further the
development of the CombiMatrix group's microarray technology
for the detection of biological threat agents.
o On March 12, 2004, Acacia Research Corporation's Acacia
Research - CombiMatrix common stock began trading on the
NASDAQ National Market system. The stock had previously traded
on the NASDAQ Small Cap Market.
o During the first quarter of 2004, the CombiMatrix group
entered into the following collaborations:
Nanotechnology
--------------
- a collaboration, funded by the National Science
Foundation, with Washington University in St. Louis
to develop a system for the synthesis of libraries of
diverse, non-nucleic acid molecules. These libraries
will be synthesized using CombiMatrix's semiconductor
based microarrays and electrochemical synthetic
methods. CombiMatrix NanoArrays(TM) will be used for
the diverse chemical synthesis.
- a collaboration with Cyrano Sciences on the
development of chemical sensors which merge
CombiMatrix's microarray technology with Cyrano's
electronic nose technology.
Express Track(sm)
-----------------
- an expanded collaboration with Professor Bonaventura
Clotet, M.D., Ph.D., of the Retrovirology Laboratory
irsiCaixa, to conduct the initial efficacy screening
of pooled siRNA compounds against the hepatitis C
virus.
Diagnostics
-----------
- a collaboration with Dr. Ulrich Melcher, Department
of Biochemistry and Molecular Biology and Dr.
Alexander C. Lai, Department of Microbiology and
Molecular Genetics, from Oklahoma State University,
to utilize CombiMatrix's `Bird Flu' CustomArray(TM)
devices to characterize Bird flu viruses at the
genomic level.
- a collaboration with St. Jude Children's Research
Hospital to study the genetic variation in the H9
variant of Bird Flu.
- a collaboration with Case Western Reserve University
for work in developing a novel diagnostic for
Alzheimer's disease using the
CustomArray(TM)platform.
ACACIA TECHNOLOGIES GROUP:
o To date the Acacia Technologies group has entered into 120 DMT
technology licensing agreements, including agreements with
CinemaNow, Inc., Disney Enterprises, Inc., General Dynamics
Interactive Corporation, Grupo Pegaso, LodgeNet Entertainment
Corporation, NXTV, Inc., Oral Roberts University, T. Rowe
Price, 24/7 University, Inc. and Virgin Radio.
o In January 2004, the Acacia Technologies group was issued an
additional European patent covering 14 countries for its DMT
technology. The new patent provides additional coverage in
Great Britain, Germany, France, Italy, Spain, Switzerland,
Sweden, Denmark, Belgium, Netherlands, Monaco, Luxembourg and
Greece.
A conference call is scheduled for today at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern). Paul R. Ryan, Chairman and CEO of Acacia Research, Robert
"Chip" Harris, President, and Amit Kumar, Ph.D., CEO of CombiMatrix Corporation
will host the call.
The CombiMatrix Group presentation and Q&A will precede the Acacia
Technologies Group presentation and Q&A session.
To listen to the presentation by phone, dial (800) 915-4836 for
domestic callers and (973) 317-5319 for international callers. A replay of the
audio presentation will be available for 30 days at (800) 428-6051 for domestic
callers and (973) 709-2089 for international callers, both of whom will need to
enter the code 350337 when prompted.
The call is being webcast by CCBN and can be accessed at Acacia
Research Corporation's website at www.acaciaresearch.com.
ABOUT ACACIA RESEARCH CORPORATION
Acacia Research Corporation comprises two operating groups, Acacia Technologies
group and CombiMatrix group.
The Acacia Technologies Group develops, acquires, and licenses patented
technologies. Acacia's DMT technology, which is supported by 5 U.S. and 31
foreign patents, relates to audio and audio/video transmission and receiving
systems commonly known as audio-on-demand, video-on-demand, and audio/video
streaming, and is used for distributing digital content via several means
including Internet, cable, satellite and wireless systems.
The CombiMatrix group is developing a platform technology to rapidly produce
customizable active biochips, which are semiconductor-based tools for use in
identifying and determining the roles of genes, gene mutations and proteins.
CombiMatrix's technology has a wide range of applications including DNA
synthesis/diagnostics, drug discovery, and immunochemical detection.
CombiMatrix's Express Track(sm) drug discovery program is a systems biology
approach, using its technology, to target common viral diseases with siRNA
compounds.
Acacia Research-Acacia Technologies (Nasdaq: ACTG) and Acacia
Research-CombiMatrix (Nasdaq:CBMX) are both classes of common stock issued by
Acacia Research Corporation and are intended to reflect the performance of the
respective operating groups and are not issued by the operating groups.
Information about the Acacia Technologies group and the CombiMatrix group is
available at www.acaciaresearch.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS ARE BASED UPON OUR CURRENT EXPECTATIONS AND SPEAK ONLY AS
OF THE DATE HEREOF. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY AND ADVERSELY FROM
THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS
AND UNCERTAINTIES, INCLUDING THE RECENT ECONOMIC SLOWDOWN AFFECTING TECHNOLOGY
COMPANIES, OUR ABILITY TO SUCCESSFULLY DEVELOP PRODUCTS, RAPID TECHNOLOGICAL
CHANGE IN OUR MARKETS, CHANGES IN DEMAND FOR OUR FUTURE PRODUCTS, LEGISLATIVE,
REGULATORY AND COMPETITIVE DEVELOPMENTS AND GENERAL ECONOMIC CONDITIONS. OUR
ANNUAL REPORT ON FORM 10-K, RECENT AND FORTHCOMING QUARTERLY REPORTS ON FORM
10-Q, RECENT CURRENT REPORTS ON FORMS 8-K AND 8-K/A, AND OTHER SEC FILINGS
DISCUSS SOME OF THE IMPORTANT RISK FACTORS THAT MAY AFFECT OUR BUSINESS, RESULTS
OF OPERATIONS AND FINANCIAL CONDITION. WE UNDERTAKE NO OBLIGATION TO REVISE OR
UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON.
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
(UNAUDITED)
CONSOLIDATED BALANCE SHEET INFORMATION
MARCH 31, DECEMBER 31,
2004 2003
---- ----
Total Assets $ 90,173 $ 90,040
========== ==========
Total Liabilities $ 12,811 $ 28,513
========== ==========
Minority Interests $ 1,127 $ 1,127
========== ==========
Total Stockholders' Equity $ 76,235 $ 60,400
========== ==========
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
-------------------------------
MARCH 31, MARCH 31,
2004 2003
------------- -------------
Revenues:
Research and development contract .................................... $ 17,302 $ --
License fees ......................................................... 599 6
Government contract .................................................. 217 --
Service contracts .................................................... 81 7
Products ............................................................. 16 209
------------- -------------
Total revenues ..................................................... 18,215 222
------------- -------------
Operating expenses:
Cost of sales ........................................................ 4 77
Research and development expenses .................................... 1,588 2,335
Non-cash stock compensation amortization - research and development .. 69 2
Marketing, general and administrative expenses ....................... 3,886 4,255
Non-cash stock compensation amortization - marketing,
general and administrative ......................................... 334 138
Amortization of patents .............................................. 399 400
Legal settlement charges ............................................. 1,257 --
------------- -------------
Total operating expenses ........................................... 7,537 7,207
------------- -------------
Operating income (loss) ............................................ 10,678 (6,985)
------------- -------------
Other income (expenses) .................................................... 158 252
------------- -------------
Income (loss) from operations before income taxes and minority interests ... 10,836 (6,733)
Benefit for income taxes ................................................... 67 60
------------- -------------
Income (loss) from operations before minority interests .................... 10,903 (6,673)
Minority interests ......................................................... -- 6
------------- -------------
Net income (loss) .......................................................... $ 10,903 $ (6,667)
============= =============
Earnings (loss) per common share:
Attributable to the Acacia Technologies group:
Net income (loss) ....................................................... $ (989) $ (1,494)
Basic and diluted loss per share ........................................ (0.05) (0.08)
Attributable to the CombiMatrix group:
Basic
Net income (loss) ....................................................... $ 11,892 $ (5,173)
Basic net income (loss) per share ....................................... 0.44 (0.23)
Diluted
Net income (loss) ....................................................... $ 11,892 $ (5,173)
Diluted net income (loss) per share ..................................... 0.41 (0.23)
Weighted average shares:
Acacia Research - Acacia Technologies stock:
Basic and diluted .................................................... 19,752,335 19,640,808
============= =============
Acacia Research - CombiMatrix stock:
Basic ................................................................ 27,274,627 22,983,278
============= =============
Diluted .............................................................. 29,233,817 22,983,278
============= =============
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
MARCH 31, DECEMBER 31,
2004 2003
---- ----
Total Assets $ 50,908 $ 50,161
========== ==========
Total Liabilities $ 8,278 $ 24,424
========== ==========
Minority Interests $ -- $ --
========== ==========
Total Stockholders' Equity $ 42,630 $ 25,737
========== ==========
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
----------------------------
MARCH 31, MARCH 31,
2004 2003
------------ ------------
Revenues:
Research and development contract .............................. $ 17,302 $ --
Government contract ............................................ 217 --
Service contracts .............................................. 81 7
Products ....................................................... 16 209
------------ ------------
Total revenues .............................................. 17,616 216
------------ ------------
Operating expenses:
Cost of sales .................................................. 4 77
Research and development expenses .............................. 1,588 2,335
Non-cash compensation amortization - research and development .. 69 2
Marketing, general and administrative expenses ................. 2,278 2,670
Non-cash compensation amortization - marketing, general
and administrative ........................................... 334 138
Amortization of patents ........................................ 274 274
Legal settlement charges ....................................... 1,257 --
------------ ------------
Total operating expenses .................................... 5,804 5,496
------------ ------------
Operating income (loss) ..................................... 11,812 (5,280)
------------ ------------
Other income ...................................................... 46 67
------------ ------------
Income (loss) from operations before income taxes
and minority interests .......................................... 11,858 (5,213)
Benefit for income taxes .......................................... 34 34
------------ ------------
Income (loss) from operations before minority interests ........... 11,892 (5,179)
Minority interests ................................................ -- 6
------------ ------------
Division net income (loss) ........................................ $ 11,892 $ (5,173)
============ ============
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
MARCH 31, DECEMBER 31,
2004 2003
---- ----
Total Assets $ 39,477 $ 39,978
========== ==========
Total Liabilities $ 4,745 $ 4,188
========== ==========
Minority Interests $ 1,127 $ 1,127
========== ==========
Total Stockholders' Equity $ 33,605 $ 34,663
========== ==========
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
---------------------------------
MARCH 31, MARCH 31,
2004 2003
-------------- --------------
Revenues:
License fees .................................... $ 599 $ 6
-------------- --------------
Total revenues ............................... 599 6
-------------- --------------
Operating expenses:
Marketing, general and administrative expenses .. 1,006 1,323
Legal expenses - patents ........................ 602 262
Amortization of patents ......................... 125 126
-------------- --------------
Total operating expenses ..................... 1,733 1,711
-------------- --------------
Operating income (loss) ...................... (1,134) (1,705)
-------------- --------------
Other income (expenses) ............................ 112 185
-------------- --------------
Income (loss) from operations before
income taxes ..................................... (1,022) (1,520)
Benefit for income taxes ........................... 33 26
-------------- --------------
Division net income (loss) ......................... $ (989) $ (1,494)
============== ==============