Virologic (NASDAQ:VLGC)
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ViroLogic Announces Third Quarter 2004 Financial Results
Conference Call to Review Details at 8:30 a.m. ET Today
SOUTH SAN FRANCISCO, Calif., Nov. 15 /PRNewswire-FirstCall/ -- ViroLogic, Inc.
(NASDAQ:VLGC) today reported financial results for the third quarter and nine
months ended September 30, 2004.
Revenue for the third quarter of 2004 was $8.6 million compared to revenue of
$9.1 million for the third quarter of 2003. The Company's patient testing
business was $5.9 million in the third quarter of 2004 compared to $6.2 million
in the third quarter of 2003. As previously disclosed, the factors affecting
patient testing revenue included: a higher than expected number of tests for
which results could not be generated due to sample handling and quality prior
to submission to ViroLogic; a larger than normal backlog of in-process tests;
and lower test volume from Florida due to the hurricanes. Revenue from the
Company's pharmaceutical testing business was approximately $2.1 million in the
third quarter of 2004 compared to $2.6 million for the same period in 2003
reflecting the previously disclosed delays in the start of certain late-stage
clinical trials.
Gross margin on product revenue was 48 percent in the third quarter of 2004
compared to 50 percent reported during the same quarter last year. Operating
costs and expenses for the third quarter of 2004 were $10.2 million, compared
to $9.6 million for the same period in 2003.
For the third quarter of 2004, the net loss applicable to common stockholders
was $1.7 million, or $0.03 per common share, compared to a net loss applicable
to common stockholders of $0.8 million, or $0.02 per common share, for the same
period in 2003.
"PhenoSense GT(TM), our combination resistance test, continues to be well
received by physicians, and we are encouraged by the growing use of new assays
by our pharmaceutical company customers in their drug development programs,"
said William D. Young, CEO and Chairman of ViroLogic. "We are continuing to
implement education and field service programs to improve patient sample
collection and handling in order to systematically address the various factors
that contributed to third quarter results."
Nine Month Results
The Company reported revenue of $26.9 million for the first nine months of
2004, an increase of 12 percent over revenue of $24.0 million for the same
period of 2003. Operating costs and expenses for the first nine months of 2004
were $31.1 million, compared to $29.3 million for the same period of 2003.
Net loss for the first nine months of 2004 was $4.2 million, or $0.08 per
common share, compared to a net loss of $5.1 million, or $0.17 per common
share, for the same period in 2003.
In the first nine months of 2004, the Company recorded stock dividends to
preferred stockholders of $0.2 million. In the first nine months 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 $1.4
million, resulting in net loss applicable to common stockholders of $0.28 per
common share.
The Company had $8.1 million of cash, cash equivalents, short-term investments
and restricted cash at September 30, 2004. The Company used cash from
operations of $0.3 million and paid non-operating merger-related costs of $1.4
million related to the proposed merger with ACLARA BioSciences, Inc. (ACLARA)
during the nine months ended September 30, 2004. Cash from operations can
fluctuate from one quarter to the next depending on timing of cash receipts and
payment of costs and expenses.
Merger with ACLARA BioSciences, Inc.
"We are enthusiastic about our pending merger with ACLARA which will allow us
to create an emerging leader in individualized molecular diagnostics focused on
broader and larger markets including infectious diseases and cancer. As a
combined company, we believe we will be able to aggressively address the
sizeable opportunity for cancer testing using the model we have successfully
implemented for HIV testing," stated Young.
ViroLogic and ACLARA will convene their respective annual stockholder meetings
at 9:00 a.m., Pacific Time, on Friday, December 10, 2004. At the meetings,
stockholders will be asked to approve certain matters related to the previously
announced merger agreement between the companies, which was amended on October
18, 2004. The ViroLogic stockholders will be asked to approve, among other
things, the issuance of shares of ViroLogic common stock in the proposed
transaction, as well as an increase in the authorized common stock of
ViroLogic. The ACLARA stockholders will be asked, among other things, to
approve and adopt the amended merger agreement and approve the merger.
Recent Corporate Highlights
-- Christos J. Petropoulos, Ph.D., Virologic's Vice President of
Research and Development, presented an assessment of viral fitness,
and described the benefits of using ViroLogic's Replication Capacity
(RC) assay, an in vitro surrogate for viral fitness, as a clinical
tool for use in the management of HIV infection at the "Viral
Fitness" session of the 44th Interscience Conference on Antimicrobial
Agents and Chemotherapy (ICAAC). Viral fitness refers to the ability
of HIV to replicate and cause disease in the infected host; and,
-- Presented eight other abstracts at ICAAC focused on various
applications of the PhenoSense Entry assay, which increasingly is
utilized by drug developers to assess resistance to the new entry
inhibitor class of drugs, as well as viral tropism for chemokine co-
receptors.
-- ViroLogic is scheduled to present at the First Annual Lazard's Life
Sciences Conference, Tuesday, November 30, 2004, 8:30 a.m. ET, at the
Mandarin Oriental Hotel (Grand Salon), in New York.
Conference Call Details
ViroLogic will host a conference call today at 8:30 a.m. Eastern Time. To
access the live call, please dial 1-866-800-8652 (U.S.) or 617-614-2705
(international) fifteen minutes before the conference begins. The participant
code is 22871658. 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
(888) 286-8010 or 617-801-6888 for international callers, until November 26,
2004. The replay passcode is 39389010.
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 the acceptance of the Company's PhenoSense GT(TM) our
combination resistance test and the growing use of the Company's assays by
pharmaceutical company customers, the pipeline and timing of customer clinical
trials, the potential impact of education and field service programs on patient
sample collection and handling, and anticipated completion of and benefits from
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 risk that the
Company's products may not continue to be accepted or that increased demand may
not develop as anticipated, 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 a national laboratory, whether others introduce competitive
products, 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 Joint
Proxy/Prospectus related to the proposed merger with ACLARA, as well as other
subsequent filings with the Securities and Exchange Commission.
ADDITIONAL INFORMATION
ViroLogic, Inc. has filed with the Securities and Exchange Commission a
registration statement on Form S-4 (File No. 333-120211) that includes an
amended joint proxy statement/prospectus of ViroLogic and ACLARA and other
relevant documents in connection with the proposed transaction. Investors and
security holders of ViroLogic and ACLARA are advised to read the amended joint
proxy statement/prospectus, and other documents filed by ViroLogic and ACLARA,
because they will contain important information about ViroLogic, ACLARA and the
proposed transaction. Investors and security holders may obtain a free copy of
the amended 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 amended joint proxy statement/prospectus and such
other documents may also be obtained from ViroLogic by directing such request
to ViroLogic, Inc., 345 Oyster Point Blvd; South San Francisco, California
94080, Attention: Investor Relations. The amended joint proxy
statement/prospectus and such other documents may also be obtained from ACLARA
by directing such request to ACLARA BioSciences, Inc., 1288 Pear Avenue,
California 94043, Attention: 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 amended merger agreement. A
description of any interests that ViroLogic's or ACLARA's directors and
executive officers have in the proposed merger is included in the amended 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 at
http://www.sec.gov/ and from ViroLogic and ACLARA.
VIROLOGIC, INC.
SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
Statement of
Operations Data:
Revenue
Product revenue $7,977 $8,759 $25,351 $23,096
Contract revenue(a) 645 366 1,520 950
------- ------- -------- -------
Total revenue $8,622 $9,125 $26,871 $24,046
------- ------- -------- --------
Operating costs
and expenses:
Cost of product
revenue 4,186 4,403 13,077 12,490
Research and
development 1,618 1,090 4,611 3,525
General and
administrative 2,019 2,113 5,849 6,954
Sales and marketing 2,406 1,990 7,148 6,301
Lease termination
charge -- -- 433 --
------- ------- -------- ---------
Total operating costs
and expenses 10,229 9,596 31,118 29,270
------- ------- -------- --------
Operating loss (1,607) (471) (4,247) (5,224)
Interest income 24 22 64 85
Interest expense (5) (32) (24) (120)
Other income -- 52 -- 156
------- -------- -------- --------
Net loss (1,588) (429) (4,207) (5,103)
Deemed dividend
to preferred
stockholders -- -- -- (2,155)
Preferred stock
dividend (91) (413) (236) (1,386)
------- ------- -------- --------
Net loss applicable to
common stockholders $(1,679) $(842) $(4,443) $(8,644)
==== ==== ===== =====
Basic and diluted
amounts per common
share:
Net loss $(0.03) $(0.01) $(0.08) $(0.17)
Dividends to preferred
stockholders -- (0.01) -- (0.11)
------- ------- -------- -------
Net loss applicable to
common stockholders $(0.03) $(0.02) $(0.08) $(0.28)
==== ==== ===== ====
Weighted average
shares used in
computing basic and
diluted net loss per
common share 53,672 34,365 53,435 30,809
September 30, December 31,
2004 2003(b)
(Unaudited)
Balance Sheet Data:
Cash, cash equivalents and
short-term investments $7,390 $9,430
Accounts receivable, net 5,515 6,165
Working capital 8,764 13,038
Restricted cash 676 776
Total assets 26,447 28,378
Long term obligations,
less current portion 39 87
Redeemable convertible preferred
stock 1,994 1,994
Total stockholders' equity $16,843 $20,587
(a) Contract revenue consists of NIH grant, commercial development and
other revenue. The expenses associated with contract revenue for the
three and nine months ended September 30, 2004 totaled $0.6 million
and $1.5 million, respectively, compared to $0.4 million and $0.8
million, 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: Investor Relations - +1-650-635-1100 for ViroLogic, Inc.
Web site: http://www.virologic.com/