Exhibit 99.1
Gene Logic Reports Third Quarter 2007 Financial Results
GAITHERSBURG, Md.--(BUSINESS WIRE)--Oct. 24, 2007--Gene Logic Inc.
(NASDAQ:GLGC) today reported financial results for the third quarter
ended September 30, 2007.
Q3 Highlights
On October 15, 2007, Gene Logic announced that it had signed an
agreement to sell its Genomics assets to Ocimum Biosolutions Ltd. for
$10 million (including $7 million in cash and a $3 million promissory
note due 18 months from closing) and the assumption, by Ocimum, of
certain liabilities and ongoing contractual obligations. The purchase
price is subject to adjustment based on certain potential revisions to
the carrying value of assets and liabilities at closing. This
transaction represents the last major step in Gene Logic's
transformation into a drug development company based on its
proprietary new indication discovery technologies. Gene Logic has
retained the exclusive, perpetual right to use its genomics databases
for drug repositioning on behalf of pharmaceutical company partners
and in its own drug development programs. The Company will also retain
the Genomics Division's molecular diagnostics assets and capabilities.
Henceforth, Gene Logic will focus its technologies, management efforts
and capital resources on drug repositioning and development. The
Ocimum transaction is subject to approval by the Company's
shareholders.
Gene Logic announced that its clinical-stage drug candidate,
GL1001, showed positive indications of efficacy in in vivo testing for
inflammatory bowel disease (IBD), an under-served clinical market
estimated to exceed $1 billion per annum worldwide. The potential
utility of GL1001 in IBD was determined using the Company's drug
repositioning platform, confirmed by data in the Company's
BioExpress(R) System database, and supported by gold standard in vivo
models. Gene Logic owns development and commercialization rights to
GL1001, and expects to file an Investigational New Drug (IND)
application for IBD and certain related indications during 2008.
Gene Logic signed agreements with both Merck Serono and Solvay
Pharmaceuticals to discover new development paths for multiple
clinical-stage drug candidates. This brings to eight the number of
Gene Logic's major pharmaceutical company drug repositioning partners.
Gene Logic announced the appointment of Stephen R. Donahue, MD, as
its Senior Vice President of Clinical Development. Dr. Donahue
previously held clinical development positions with Epix
Pharmaceuticals, Merck & Co., and Bristol-Myers Squibb.
Revenue
For the third quarter of 2007, the Company recorded revenue of
$4.5 million, an increase of $0.8 million or 22%, over the third
quarter of 2006. This increase was largely due to revenue recorded for
the Drug Repositioning Division as a result of an agreement signed at
the end of the second quarter with H. Lundbeck A/S for licensing
certain technology rights unrelated to its drug repositioning
partnership with Lundbeck. Third quarter revenue for the Genomics
Division was flat year-over-year and amounted to $3.7 million.
For the nine months ending September 30, 2007, the Company
recorded revenue of $13.2 million versus $17.2 million for the same
period of 2006. This decrease was largely due to lower sales of
subscriptions for the Company's Genomics database services, slightly
offset by $0.8 million in revenue for the Lundbeck licensing agreement
attributed to the Drug Repositioning Division.
Operating Expenses
Operating expenses consist of costs of providing Genomics Division
services and adding content to the Company's Genomics databases, costs
for developing and providing our Drug Repositioning Division services
and sales, marketing and general and administrative expenses
associated with our operations.
For the third quarter of 2007, total operating expenses were $12.9
million compared to $19.2 million for the third quarter of 2006, a
decrease of $6.3 million, or 33%. Of this decrease, $5.4 million
relates to the restructuring of the Genomics Division in the third
quarter of 2006. These lower costs for 2007 were partially offset by
increased selling, general and administrative expenses, including $0.5
million for costs associated with the Genomics sales process and
accrued employee retention benefits totaling $0.4 million meant to
stabilize our workforce during this time of transition.
Year-to-date total operating expenses were $40.7 million compared
to $51.4 million for the comparable period in 2006, a decrease of
$10.7 million or 21%. This decrease is partially due to $5.4 million
in restructuring costs for the Genomics Division recorded in the third
quarter of 2006. In addition, year-to-date results for 2007 reflect
the favorable impact of the restructuring, partially offset by $3.3
million in increased selling, general and administrative expenses
including costs associated with the Genomics sales process ($1.0
million), executive severance costs ($0.9 million) and accrued
employee retention benefits ($1.4 million).
Segment Operating Loss
Note: Management uses operating income to evaluate segment
performance. To arrive at operating income, the Company has included
all direct costs for providing its services and an allocation for
corporate overhead applied on a consistent and reasonable basis. The
Company has excluded the cost of income taxes and interest income or
expense and could also exclude certain unusual or corporate related
costs in the future. On October 15, 2007, Gene Logic announced that it
had signed an agreement to sell certain of its assets attributed to
its Genomics Division, subject to shareholder approval. The Genomics
Division will not be classified as a "Discontinued Operation" until
the requisite shareholder approval has been obtained.
Segment Operating Loss:
- ---------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2007 2006 2007 2006
--------- ---------- ---------- ----------
Drug Repositioning Division $ (3,487) $ (3,711) $ (12,652) $ (11,241)
Genomics Division (4,850) (11,832) (14,781) (23,042)
--------- ---------- ---------- ----------
Total operating loss $ (8,337) $ (15,543) $ (27,433) $ (34,283)
--------- ---------- ---------- ----------
Drug Repositioning Division:
For the third quarter of 2007, the Drug Repositioning Division
reported an operating loss of $3.5 million compared to a loss of $3.7
million in the prior year period, a decrease of $0.2 million. This
decrease largely reflects the impact of $0.8 million in additional
revenue associated with the Lundbeck agreement offset by increased
research and development expenses, including those associated with the
Company's lead compound GL1001. The year-to-date operating loss for
the Drug Repositioning Division was $12.7 million compared to $11.2
million in the prior year period, an increase of $1.5 million. The
increased loss includes higher employee costs, increased expenses for
in vivo validation of alternative therapeutic hypotheses, including
those associated with GL1001, and the division's proportional share of
certain executive severance and retention expenses. These increased
costs were partially offset by $0.8 million in additional revenue.
Genomics Division:
For the third quarter of 2007, the Genomics Division reported an
operating loss of $4.8 million compared to an operating loss of $11.8
million for the third quarter of 2006, a decrease of $7.0 million.
Results for the third quarter of 2006 included restructuring costs
totaling $5.4 million. 2007 costs are lower due primarily to the
impact of the restructuring, including $0.9 million in reduced
employee-related database production and research and development
expenses, partially offset by increased selling, general and
administrative expenses, including $0.5 million related to the
Genomics sales process. The year-to-date operating loss for the
Genomics Division was $14.8 million compared to $23.0 million in the
prior year period, a decrease of $8.2 million. This decrease again
reflects 2006 restructuring costs totaling $5.4 million and, for 2007,
reduced operating expenses due to the restructuring of the Genomics
Division, including lower employee-related expenses of $3.5 million
and lower facility and depreciation and amortization costs of $2.1
million for database production and research and development. These
improvements were partially offset by lower revenue and increased
selling, general and administrative expenses, including $1.0 million
in expenses associated with the Genomics sales process.
Net Loss
For the third quarter of 2007, loss from continuing operations was
$7.9 million or $0.25 per share, compared to a loss from continuing
operations of $14.9 million, or $0.47 per share, for the third quarter
of 2006. The decrease in the loss from continuing operations for the
third quarter of 2007 as compared to 2006 reflects primarily the
restructuring of the Genomics Division in the third quarter of 2006.
Year-to-date net loss from continuing operations for 2007 was $25.9
million, or $0.81 per share, compared to a loss from continuing
operations for the comparable period of 2006 of $32.4 million, or
$1.02 per share. Net loss for each of the third quarter and
year-to-date 2006 was $26.7 million, or $0.84 per share, and $49.7
million, or $1.56 per share, respectively.
Liquidity
As of September 30, 2007, the Company had approximately $31.6
million in combined cash, cash equivalents and marketable securities
available-for-sale, compared to $36.7 million as of June 30, 2007. The
Company expects cash usage for the fourth quarter of 2007 to be lower
than the third quarter of 2007.
Conference Call and Webcast
Gene Logic will host a conference call and webcast on October 24,
2007 at 10:00 a.m. Eastern to discuss the results for the third
quarter of 2007. To listen to the live call and be able to ask
questions, dial (866)831-6272 in the U.S.A. or (617)213-8859
internationally and use the pass code Gene Logic; alternatively, a
webcast of the live call will be accessible from the Investors section
of the Company's website at www.genelogic.com.
A replay of the call will be available beginning October 24, 2007
through November 7, 2007. To hear the replay, dial (888)286-8010 in
the U.S.A. or (617)801-6888 internationally and use the passcode
69464110. An archived webcast of the conference call will also be
available under the Investors section of the Company's website at
www.genelogic.com.
Gene Logic Overview
Gene Logic's indication discovery technologies are currently
applied at the Company's facilities in Cambridge, Massachusetts, on
behalf of a number of top pharmaceutical companies and for the benefit
of its own proprietary portfolio. The Company's partners have provided
compounds that have failed advanced clinical studies for reasons other
than safety. Headquartered in Gaithersburg, Maryland, the Company
operates a rediscovery and development facility in Cambridge,
Massachusetts.
Safe Harbor Statement
This press release contains "forward-looking statements," as such
term is used in the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include the Company's ability to identify
strategies for making its businesses successful and the impact of such
strategies on our business and financial performance and on
shareholder value. Forward-looking statements typically include the
words "expect," "anticipate," "believe," "estimate," "intend," "may,"
"will," and similar expressions as they relate to Gene Logic or its
management. Forward-looking statements are based on our current
expectations and assumptions, which are subject to risks and
uncertainties. They are not guarantees of our future performance or
results. Our actual performance and results could differ materially
from what we project in forward-looking statements for a variety of
reasons and circumstances, including particularly such risks and
uncertainties that may affect the Company's operations, financial
condition and financial results and that are discussed in detail in
the Company's Annual Report on Form 10-K and our other subsequent
filings with the Securities and Exchange Commission. They include, but
are not limited to: whether we will be able to identify and
successfully implement strategies, on favorable terms or at all, for
realizing the value of our Genomics business, including through a sale
of all or part of the Company's Genomics business, whether
repositioned compounds are successfully returned to our customers'
pipelines and generate sales, resulting in milestone payments and
royalties for the Company or whether we acquire on acceptable terms
rights to repositioned compounds that our partners decline to develop
and are able to derive revenue from these compounds through licensing
or otherwise, whether we can enter into agreements to develop
sufficient compounds to fulfill our plans for the Drug Repositioning
Division; whether there will be any claims associated with the sale of
the Pre-Clinical Division, whether we will be able successfully to
manage our existing cash and have access to financing on sufficiently
favorable terms to maintain our businesses and effect our strategies,
including development of repositioned compounds; whether we will be
able to recruit and retain qualified personnel, particularly in light
of our restructuring efforts; potential negative effects on our
operations and financial results from workforce reductions, other
restructuring activities, and the evaluation of strategic options; the
potential loss of significant customers; the possibility of further
write-down of the value of certain intangible assets of the Company,
including goodwill associated with the Genomics Division; and the
possibility of delisting from NASDAQ Global Markets, which could have
an adverse effect on the value of our stock. Gene Logic undertakes no
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Gene Logic Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2007 2006 2007 2006
-------- --------- --------- ---------
Revenue:
Genomics services $ 3,684 $ 3,698 $ 12,356 $ 17,129
Drug repositioning services 841 6 879 36
-------- --------- --------- ---------
Total revenue 4,525 3,704 13,235 17,165
Expenses:
Database production 5,067 6,029 15,765 21,453
Research and development 2,749 2,618 7,859 7,599
Selling, general and
administrative 5,046 5,223 17,044 17,019
Restructuring - 5,377 - 5,377
-------- --------- --------- ---------
Total expenses 12,862 19,247 40,668 51,448
Loss from operations (8,337) (15,543) (27,433) (34,283)
Interest (income), net (463) (633) (1,594) (2,162)
Other (income) expense 32 (66) 46 35
Write-down of equity investment - - - 275
-------- --------- --------- ---------
Loss from continuing
operations (7,906) (14,844) (25,885) (32,431)
Loss from discontinued
operations - (11,811) - (17,307)
-------- --------- --------- ---------
Net loss $(7,906) $(26,655) $(25,885) $(49,738)
======== ========= ========= =========
Basic and diluted net loss per
share:
Loss from continuing
operations $ (0.25) $ (0.47) $ (0.81) $ (1.02)
Loss from discontinued
operations - (0.37) - (0.54)
-------- --------- --------- ---------
Net loss $ (0.25) $ (0.84) $ (0.81) $ (1.56)
======== ========= ========= =========
Shares used in computing basic
and diluted net loss per share 31,894 31,810 31,865 31,802
======== ========= ========= =========
Gene Logic Inc.
Consolidated Condensed Balance Sheets
(in thousands)
September 30, December 31,
2007 2006
------------- ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 22,640 $ 25,700
Marketable securities available-for-sale 8,917 24,410
Accounts receivable, net of allowance of
$49 and $45 as of September 30, 2007 and
December 31, 2006, respectively 615 3,327
Unbilled services 602 589
Inventory, net 1,156 2,180
Prepaid expenses 1,592 1,260
Other current assets 2,610 3,551
------------- ------------
Total current assets 38,132 61,017
Property and equipment, net 10,415 12,829
Long-term investments 2,964 2,964
Goodwill 2,677 2,677
Other intangibles, net 7,122 10,060
Other assets 483 726
------------- ------------
Total assets $ 61,793 $ 90,273
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,383 $ 3,703
Payable to Bridge Pharmaceuticals 119 1,727
Accrued compensation and employee
benefits 4,169 2,883
Other accrued expenses 2,406 3,751
Accrued restructuring costs 309 1,941
Current portion of long-term debt 501 499
Deferred revenue 5,018 3,299
------------- ------------
Total current liabilities 14,905 17,803
Deferred revenue 137 228
Long-term debt, net of current portion 40 78
Deferred rent 882 1,074
------------- ------------
Total liabilities 15,964 19,183
------------- ------------
Stockholders' equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized; and no
shares issued and outstanding as of
September 30, 2007 and December 31, 2006 - -
Common stock, $0.1 par value; 60,000,000
shares authorized; 32,172,588 and
31,820,273 shares issued and outstanding
as of September 30, 2007 and December
31, 2006, respectively 322 318
Additional paid-in capital 387,109 386,530
Accumulated other comprehensive loss (37) (78)
Accumulated deficit (341,565) (315,680)
------------- ------------
Total stockholders' equity 45,829 71,090
------------- ------------
Total liabilities and stockholders'
equity $ 61,793 $ 90,273
============= ============
ADDITIONAL INFORMATION ABOUT THE GENOMICS BUSINESS TRANSACTION
The Company will file a proxy statement and other documents regarding the
proposed sale of assets related to its Genomics Services Business with the U.S.
Securities and Exchange Commission ("SEC"). The definitive proxy statement will
be sent to stockholders, seeking their approval of the sale pursuant to an Asset
Purchase Agreement at a special meeting of stockholders. Stockholders are urged
to read the proxy statement and any other relevant documents filed with the SEC
when they become available because they will contain important information. A
proxy statement will be available free of charge at the SEC's website at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the proxy statement and other documents filed with the SEC, when they become
available, by contacting the Company.
The Company and its respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the stockholders
of the Company in connection with the transaction. Information about the Company
and its respective directors and executive officers is set forth in its proxy
statement and Annual Reports on Form 10-K, which can be found at www.sec.gov.
Additional information regarding the interests of those persons may be obtained
by reading the proxy statement when it becomes available.
CONTACT: Gene Logic Inc.
Philip L. Rohrer, Jr. (investors)
Chief Financial Officer
301-987-1700
prohrer@genelogic.com
or
Christopher Culotta (investors and media)
Senior Director, Strategic Communications
301-987-1752
cculotta@genelogic.com