UPPSALA, Sweden, April 22, 2002 (PRIMEZONE) -- Pyrosequencing AB (Stockholm: PYRO A) today reported first quarter results for the period ended March 31, 2002. Erik Wallden, President and CEO of Pyrosequencing, in reviewing the Company's performance said:
"Pyrosequencing has more than doubled its installed base when compared to the same quarter last year. As a result, customer demand for reagents continues to climb. We expect this growth rate will be further enhanced by the new multiple applications system we introduced this quarter and by the new high sensitivity system we launched earlier this month. Together these products offer customers many added capabilities, expanded applications and support, and improved cost-efficiencies. We also continue to receive multiple system orders. Four more customers including Schering-Plough, Washington University and RIKEN in Japan ordered additional systems this quarter, and we believe this is a strong endorsement of our technology, products and the way we conduct our business. Finally, we achieved high gross margins again this quarter which is further evidence of the value we deliver."
First quarter 2002 highlights include:
-- Launched a new multiple applications system which provides
customers with a wide range of new capabilities and a standard data exchange format and Oracle databases
-- Received multiple orders from four existing customers bringing the
total repeat customers to more than 20
-- Opened a new sales and technical support office in CA, and added
experienced sales representatives to meet growing demand in this
major market
-- Established two new research collaborations with commercial and
academic partners to develop new applications and formats of
Pyrosequencingtm technology
-- Achieved significant progress in Genomics Collaborative partnership
in cardiovascular disease; nearing end of stage I with over 50,000
genotypes completed to date
Summary financial group data (in millions except percentages and
share data)
Three months ended
March 31
2002 2002 2001
USD** SEK SEK
20.0
Net sales 1.9 19.6
Gross profit 1.4 14.4 14.1
Gross margin, % 72.4 72.4 71.9
Operating result (3.4) (34.8) (39.0)
Results after (2.5) (25.5) (25.2)
financial items
Net results (3.1) (32.2) (23.2)
2002 2001
Weighted average shares outstanding 34,770,100 34,769,200
Weighted average shares outstanding after 35,746,378 36,473,075
full dilution
Common shares outstanding, as of March 31 34,770,100 34,770,100
As of March 31, As of December 31,
2002 2001
USD** SEK USD** SEK
Cash and short-term 18.5 191.8 21.4 222.0
investments*
Securities held as long-term
financial assets* 41.2 427.3 42.8 443.2
Other assets 17.8 184.2 17.5 181.6
Total assets 77.5 803.3 81.7 846.8
Shareholder's equity 72.6 752.7 75.7 785.0
Provisions 0.3 3.3 - -
Other liabilities 4.6 47.3 6.0 61.8
Total liabilities, provisions 77.5 803.3 81.7 846.8
and shareholder's equity
* Total cash and marketable securities = $59.7 million
** Convenience translation rate: SEK 10.363= USD
Financial Position For the three months ended March 31, 2002, the Company reported revenues of $1.9 million compared to $1.9 million for the comparable period in 2001. The first quarter of the year is traditionally the slowest, and the Company continues to experience a cautious approach to spending by pharmaceutical and biotech companies, although academic spending is steadfast. Nevertheless, Pyrosequencing has more than doubled its installed base when compared to the same quarter last year. As a result, customer demand for reagents continues to climb. Consumable sales as a percentage of revenue rose to 28.6 percent compared to 20.3 percent for the previous quarter. The Company recorded sales of 15 instruments in the first quarter of 2002 compared to 17 instruments in the same period last year.
Gross margins for the first quarter of 2002 amounted to 72.4 percent, a minor decrease from margins of 73.5 percent for the last quarter of 2001. The decrease in margins reflects an increase in the proportion of reagent sales that, during the period, had a lower margin than instrument sales.
Operating expenses were $4.8 million for the first quarter of 2002, compared to $5.1 million in2001. The decrease in operating expenses is mainly attributed to capitalization of development costs amounting to $2.3 million, partially offset by increased sales and marketing of $0.4 million and increased investment amounting to $0.6 million for intensified activities in the Molecular Diagnostics Business Unit. Operating expenses decreased to $4.8 million in the first quarter from $8.1 million in the last quarter of 2001.
As required by the Swedish Financial Accounting Standards Council, the Company adopted recommendation number 15 that prescribes the accounting for intangible assets. To comply with that recommendation, the Company will capitalize costs related to the development of new products and amortize those costs over the estimated economic life of the related products. During the three months ended March 31, 2002, $2.3 million of development cost were capitalized and are shown on the balance sheet as capitalized expenditure for development. No costs were amortized during the quarter as none of the products related to these costs entered the market. As the policy was just adopted, no costs were capitalized related to development projects in prior periods.
Pyrosequencing reported a net loss of $3.1 million, or $0.09 per share, for the first quarter of 2002 and a net loss of $13.3 million ($0.38 per share) for the 12 months ended December 31, 2001. Those results compare to a net loss of $2.2 million ($0.06 per share), and $7.5 million ($0.25 per share), respectively, for the comparable periods of 2001 and 2000.
At March 31, 2002, cash, cash equivalents and investments in high-grade debt securities, including investments with maturity dates exceeding 12 months, totaled $59.7 million as compared to $64.2 million at December 31, 2001. Pyrosequencing has no debt financing.
Marketing and Sales
This quarter the Company continued to intensify marketing and sales activities in support of planned product launches for 2002. In March the Company introduced a new multiple applications system and prepared for the launch of Pyrosequencing's new high sensitivity instrument designed to dramatically reduce genotyping costs. The multiple applications system, the PSQtm96MA System, provides customers with enhanced capabilities including new automatic multiplex genotyping of polymorphisms such as point mutations, insertion/ deletions, and single nucleotide polymorphisms (SNPs). Multiple SNPs on a short stretch of DNA and tri- and tetra- allelic polymorphisms can also be analyzed. The multi-applications system also includes a new XML-based data exchange format and Oracle databases for data security and stability.
In early April, Pyrosequencing announced the introduction of another new system equipped with a highly sensitive light detector that minimizes the amount of sample and reagent required per assay. The cost-efficient PSQtmHS 96A System is automated and can also analyze more SNP and mutation samples -- 10,000 within 24 hours. Pyrosequencing expects that these new systems, together with other products planned for market launch this year, will enable the Company to deliver and support an even wider array of applications and attract a growing number of customers in all segments of the Applied Genomics market. Pyrosequencing anticipates a growing impact on revenue from both of these product introductions, especially over the second half of the year.
During the first quarter of 2002, an additional eight systems were sold to four existing customers, a strong testament to the continued satisfaction and value of Pyrosequencing technology, products and customer support. These orders from Schering-Plough, Washington University, RIKEN and another unnamed customer bring the total repeat customers to 22 and the installed base to more than 165 systems. Customers continue to realize the many benefits of Pyrosequencing technology and to demonstrate the accuracy, robustness, and ease of use of the Company's products through numerous peer-reviewed publications. To date, there are well over 35 publications in prestigious scientific journals and a growing number of poster and scientific presentations that highlight Pyrosequencing as a viable, reliable and, in many cases, superior genotyping method.
Research and Development
The heightened R&D activities of the past year are beginning to reach the market in the form of new products including systems, software and sample preparation accessories that offer enhanced capabilities and many more applications. The introduction this quarter of the PSQtm96MA System for multiple applications was the first product launched this year, and in early April the Company announced another new system that provides greater cost efficiency and higher throughput. Pyrosequencing's aggressive R&D programs are expected to yield a number of other additions to the growing family of products throughout this year.
In accordance with the business strategy to expand Pyrosequencing technology into other market segments and to develop new product formats, the Company initiated two new research collaborations during this quarter. These projects, sponsored by the Swedish Agency for Innovation Systems (Vinnova), partner the Company with Decipher Genetics, the Royal Institute of Technology and Uppsala University for the development of forensic methods based on Pyrosequencing technology, and bring together Pyrosequencing, Amic AB and the Royal Institute of Technology for the development of miniaturized systems for sequencing by synthesis. These join a number of other research collaborations that Pyrosequencing has underway for the purposes of exploiting the Company's technology in other areas of Applied Genomics such as Molecular Diagnostics.
Molecular Diagnostics
The Company's Diagnostic Business Unit continued to work closely with several leading clinical research institutions and commercial partners to develop product applications for the clinical laboratory industry. These external collaborations in Infectious Disease, Genetic Disease and Pharmacogenetics were supported by an aggressive development effort in the Company's Uppsala and Boston-based facilities. Publication of the scientific and clinical studies performed by the collaborators is in process and release of the Company's first regulated in vitro diagnostic products is on schedule. In addition, Pyrosequencing has initiated several internal feasibility projects with first generation products intended for late 2002 or early 2003.
The Business Unit is making significant progress in its partnership with Genomics Collaborative in the area of cardiovascular disease. To date, the companies have nearly finished stage 1 of the project, having completed an impressive 50,000 genotypes. The goal of the partnership, which was established in November 2001, is to discover and validate genetic markers for cardiovascular disease.
Human Resources
At March 31, 2002, the total number of employees in the Pyrosequencing group was 152 compared to 102 at March 31, 2001, and 141 at December 31, 2001.
This report has not been subject to examination by the Company's auditors.
About Pyrosequencing AB
Pyrosequencing AB develops, manufactures and sells complete solutions for rapid applied genetic analysis based on its proprietary Pyrosequencingtm technology, a simple-to-use DNA sequencing technique. Pyrosequencing leads the global market in Applied Genomics with over 165 systems sold to major pharmaceutical and biotech companies and prestigious research institutions worldwide.
Pyrosequencing technology is broadly applicable for the analysis of single nucleotide polymorphisms (SNPs) and for the identification and quantification of short DNA sequences used in bacterial and viral typing. The Company's Molecular Diagnostics Business is establishing collaborations with industry leaders to identify new product opportunities in disease diagnosis, clinical prognosis and pharmacogenomics.
The Company's products include the bench-top PSQtm96, PSQtm96MA and PSQtmHS 96A Systems and a high-throughput 384- well system available through a Preferred Technology Program (PTPtm), all of which utilize proprietary software and reagent kits. Among Pyrosequencing's customers are AstraZeneca, GlaxoSmithKline, Merck, Schering-Plough, the NIH, the CDC, the Harvard Center for Cancer Prevention, Yale University, the Karolinska Institute, Biogen, Oxagen, NASA and DuPont Agriculture. The Company's Web address is www.pyrosequencing.com.
Certain statements in this press release are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," and "anticipate," among others. These forward- looking statements are based on Pyrosequencing's current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, Pyrosequencing notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward- looking statements. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations), variability of operating results, the commercial development of the DNA sequencing and genomics market, nucleic acid-based molecular diagnostics market, and genetic vaccination and gene therapy markets, competition, rapid or unexpected changes in technologies, fluctuations in demand for Pyrosequencing's products (including seasonal fluctuations), difficulties in successfully adapting the Company's products to integrated solutions and producing such products, and the Company's ability to identify and develop new products and to differentiate its products from competitors.
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