- Company Records Net Income of $13.5 Million, Earnings Per Share of $0.26 -
- Product Sales Establish New Quarterly Record of $59.6 Million -
- Company Reaffirms Financial Guidance for 2005 -
SAN DIEGO, May 4 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the first quarter
of 2005, including record product sales.
Product sales for the first quarter of 2005 were $59.6 million, compared
to $55.0 million in the prior year period, an increase of 8%. Total revenues
for the first quarter of 2005 were $68.8 million, compared to $76.5 million in
the prior year period, a decrease of 10%. Net income for the first quarter of
2005 was $13.5 million ($0.26 per share), compared to net income of
$19.7 million ($0.39 per share) in the prior year period, a decrease of 33%
per share. All per share amounts are calculated on a fully diluted basis.
In the first quarter of 2004, Gen-Probe earned unusually large royalty and
license revenues from Tosoh Corporation and Chiron Corporation that added
$13.5 million to total revenues, and $0.17 to earnings per share.
"Gen-Probe is off to a strong start in 2005, with another quarter of solid
product sales growth and excellent execution throughout our business," said
Henry L. Nordhoff, the Company's chairman, president and chief executive
officer. "First quarter growth was once again driven by the strong
performance of our major product lines. In addition, we achieved several
strategic and operational milestones, with a U.S. regulatory filing for our
Procleix(R) West Nile virus (WNV) assay for blood screening, an agreement to
enter the molecular diagnostic market for human papillomavirus (HPV), and a
successful outcome in the Bayer arbitration."
Detailed Results
Sales of the APTIMA Combo 2(R) assay, Gen-Probe's amplified nucleic acid
test (NAT) for simultaneously detecting Chlamydia trachomatis (CT) and
Neisseria gonorrhoeae (GC), continued to grow strongly in the first quarter.
This sales growth was driven by market share gains on both the semi-automated
instrument platform and on the high-throughput, fully automated TIGRIS(R)
system. The PACE(R) product line, the Company's non-amplified tests for the
same microorganisms, again showed resilience. PACE revenues declined in the
first quarter compared to the prior year period but increased slightly
compared to the fourth quarter of 2004.
Product sales also benefited from continued growth of the Procleix blood
screening assay, which is marketed worldwide by Gen-Probe's blood screening
partner, Chiron Corporation, and from early adoption of the Procleix
Ultrio(TM) assay in Europe. The original Procleix assay is an amplified NAT
that simultaneously detects HIV-1 and hepatitis C virus in donated human
blood, while the new Procleix Ultrio assay includes an additional test for
detection of the hepatitis B virus.
Product sales were, in millions:
Three Months Ended March 31,
2005 2004 Increase
Clinical diagnostics $34.2 $31.8 8%
Blood screening $25.4 $23.2 9%
Total product sales $59.6 $55.0 8%
Collaborative research revenues for the first quarter of 2005 were
$6.3 million, compared to $6.7 million in the prior year period, a decrease of
6% that resulted primarily from the completion of revenue recognition
associated with the Company's most recent National Institutes of Health grant
for development of our WNV assay.
Royalty and license revenues for the first quarter of 2005 were
$2.9 million, compared to $14.7 million in the prior year period. Royalty and
license revenue in the first quarter of 2005 benefited from $1.9 million of
revenue recognized as a result of bioMerieux exercising an option to develop
diagnostic products for certain disease targets using Gen-Probe's patented
ribosomal RNA technologies, and from royalties received from Chiron associated
with Chiron's agreement with LabCorp for plasma screening. As discussed
above, royalty and license revenues were unusually high in the prior year
period due to a $6.5 million milestone arising from the Company's contract
with Chiron and a $7 million license fee earned in connection with a
cross-licensing agreement with Tosoh.
Gross margin on product sales was 74% in the first quarter of 2005,
compared to 75% in the prior year period. Gross margin was lower in the first
quarter of 2005 due to the amortization of capitalized software costs related
to the TIGRIS system, and to the sale of TIGRIS instruments at cost to Chiron.
Research and development (R&D) expenses were $18.7 million in the first
quarter of 2005, compared to $18.4 million in the prior year period, an
increase of 2% that resulted primarily from costs related to the registration
of the Procleix Ultrio and WNV assays.
Marketing and sales expenses were $7.4 million in the first quarter of
2005, compared to $6.8 million in the prior year period, an increase of 9%
that resulted primarily from the costs of supporting the TIGRIS system and
investing in new market opportunities such as prostate cancer and HPV testing.
General and administrative (G&A) expenses were $7.2 million in the first
quarter of 2005, compared to $7.3 million in the prior year period, a decrease
of 1% that resulted from lower legal costs.
Gen-Probe continues to have a strong balance sheet. As of March 31, 2005,
the Company had $212.8 million of cash, cash equivalents and short-term
investments, and no debt. In the first quarter of 2005, Gen-Probe generated
net cash of $24.8 million from its operating activities.
2005 Financial Guidance
"We continue to expect 2005 to be another year of strong product sales
growth, significant R&D investment and high profitability for Gen-Probe," said
Herm Rosenman, the Company's vice president of finance and chief financial
officer. Gen-Probe reiterated its previous financial guidance for 2005:
* Total revenues of $287 to $295 million, including collaborative
research revenues of $20 to $22 million and royalty and license
revenue of $16 to $17 million. As previously disclosed, the estimate
for royalty and license revenue includes a $10 million milestone the
Company expects to earn from Chiron upon U.S. regulatory approval of
the Procleix Ultrio assay on the TIGRIS system.
* Product gross margins approximating 72% to 74% of product sales.
* R&D expenses approximating 25% to 26% of total revenues for the year.
R&D expenses are expected to increase slightly on a sequential basis
in the second quarter.
* Marketing and sales expenses approximating 10% to 11% of total
revenues.
* General and administrative expenses approximating 10% to 11% of total
revenues.
* EPS of between $1.17 and $1.22, based on a fully diluted share count
of 52.8 million (slightly higher than previous estimates) for the year
and a tax rate of approximately 36%. This estimate does not include
the effect of expensing stock options. Because the Securities and
Exchange Commission recently deferred the effective date for this
accounting change, Gen-Probe intends to begin expensing stock options
at the beginning of 2006.
Recent Events
* Biologics License Application for Procleix WNV Assay. Gen-Probe
submitted this regulatory application to the U.S. Food and Drug
Administration ahead of schedule on January 27, 2005.
* HPV Agreement. Gen-Probe signed a supply and purchase agreement with
Roche under which Gen-Probe will purchase products for use in APTIMA
molecular diagnostic assays for HPV.
* Tentative Award in Bayer Arbitration. The arbitrator determined that
Gen-Probe is entitled to a co-exclusive right to distribute
qualitative TMA assays to detect the hepatitis C virus and HIV-1, and
that the collaboration agreement with Bayer should be prospectively
terminated. As a result, Gen-Probe will have the right to develop and
market future viral assays that had been previously reserved for
Bayer. Bayer also will be required to reimburse Gen-Probe $2 million
for its legal fees and expenses related to the arbitration
proceedings. Gen-Probe expects the decision to be finalized by the
arbitrator by mid-year, and expects it to remain substantially
unchanged. The final decision is subject to Bayer's right to appeal
to an arbitration appeal panel.
* APTIMA GC Approval. The FDA granted marketing clearance for the
Company's APTIMA(R) assay for Neisseria gonorrhoeae (GC), an
amplified nucleic acid test that detects, on a standalone basis, the
bacterium that causes one of the most common sexually transmitted
diseases (STDs) in the United States. In December, Gen-Probe received
clearance to market its standalone APTIMA assay for Chlamydia
trachomatis.
* APTIMA PCA3 Data. Gen-Probe's prototype urine test for PCA3 gene
expression may help improve the diagnosis of prostate cancer,
according to three early-stage studies presented as posters at the
American Association for Clinical Chemistry's 37th Annual Oak Ridge
Conference and the Annual Meeting of the American Association for
Cancer Research.
* bioMerieux Option Exercise. bioMerieux exercised an option to develop
diagnostic products for certain disease targets using Gen-Probe's
patented ribosomal RNA technologies, pursuant to terms of an agreement
first disclosed on October 6, 2004. In exchange for these rights,
bioMerieux paid Gen-Probe a $4.5 million license fee, $1.9 million of
which was recorded as license revenue in the first quarter.
* Corixa Cancer Markers. Gen-Probe licensed from Corixa the rights to
develop molecular diagnostic tests for approximately 50 potential
genetic markers in the areas of prostate, ovarian, cervical, kidney,
lung and colon cancer. The agreement is expected to broaden and
accelerate Gen-Probe's strategic move into oncology diagnostics.
* AdnaGen Immunocapture Technology. Gen-Probe licensed technology from
AdnaGen that may help increase the accuracy of molecular diagnostic
tests to detect prostate and other cancers, help determine the
aggressiveness of these malignancies, and monitor responses to
therapy.
Webcast Conference Call
A live webcast of Gen-Probe's first quarter 2005 conference call for
investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m.
Eastern Time today. The webcast will be archived for at least 90 days. A
telephone replay of the call also will be available for approximately 48
hours. The replay number is (800) 337-5619 for domestic callers and
(402) 220-9652 for international callers.
About Gen-Probe
Gen-Probe Incorporated is a global leader in the development, manufacture
and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs)
used to diagnose human diseases and screen donated human blood. Gen-Probe
markets a broad portfolio of products that use the Company's patented
technologies to detect infectious microorganisms, including those causing
sexually transmitted diseases, tuberculosis, strep throat, pneumonia and
fungal infections. The Company also developed and manufactures the only
FDA-approved blood screening assay for the simultaneous detection of HIV-1 and
HCV, which is marketed by Chiron Corporation. In addition, Gen-Probe's TIGRIS
instrument is the only fully automated, high-throughput NAT system for
diagnostics and blood screening. Gen-Probe has more than 20 years of NAT
expertise, and its products are used daily in clinical laboratories and blood
collection centers worldwide. Gen-Probe is headquartered in San Diego and
employs approximately 900 people. For more information, go to
www.gen-probe.com.
TIGRIS, APTIMA, APTIMA COMBO 2 and PACE are trademarks of Gen-Probe
Incorporated.
ULTRIO and PROCLEIX are trademarks of Chiron Corporation.
Caution Regarding Forward-Looking Statements
Any statements in this press release about our expectations, beliefs,
plans, objectives, assumptions or future events or performance, including
those under the heading "2005 Financial Guidance," are not historical facts
and are forward-looking statements. These statements are often, but not
always, made through the use of words or phrases such as "believe," "will,"
"expect," "anticipate," "estimate," "intend," "plan," and "would." For
example, statements concerning Gen-Probe's financial condition, possible or
expected future results of operations, growth opportunities, and plans and
objectives of management are all forward-looking statements. Forward-looking
statements are not guarantees of performance. They involve known and unknown
risks, uncertainties and assumptions that may cause actual results, levels of
activity, performance or achievements to differ materially from those
expressed or implied by any forward-looking statement. Some of the risks,
uncertainties and assumptions that could cause actual results to differ
materially from estimates or projections contained in the forward-looking
statements include but are not limited to: (i) the risk that we may not
achieve our expected 2005 growth, revenue or earnings targets, (ii) the risk
that Bayer may successfully appeal the arbitration decision that favored us,
(iii) the risk that we may not earn or receive milestone payments from our
collaborators, (iv) the possibility that the market for the sale of our new
products, such as our TIGRIS system, APTIMA Combo 2 assay and Procleix Ultrio
assay, may not develop as expected, (v) the enhancement of existing products
and the development of new products may not proceed as planned, (vi) the risk
that our Procleix Ultrio and WNV assays may not be approved by regulatory
authorities and commercially available in the time frames we anticipate, or at
all, (vii) we may not be able to compete effectively, (viii) we may not be
able to maintain our current corporate collaborations and enter into new
corporate collaborations or customer contracts, (ix) we are dependent on
Chiron, Bayer and other third parties for the distribution of some of our
products, (x) we are dependent on a small number of customers, contract
manufacturers and single source suppliers of raw materials, (xi) changes in
third-party reimbursement policies regarding our products could adversely
affect sales of our products, (xii) changes in government regulation affecting
our diagnostic products could harm our sales and increase our development
costs, (xiii) the risk that our intellectual property may be infringed by
third parties or invalidated, and (xiv) our involvement in patent and other
intellectual property and commercial litigation could be expensive and could
divert management's attention.
The foregoing list sets forth some, but not all, of the factors that could
affect our ability to achieve results described in any forward-looking
statements. For additional information about risks and uncertainties we face
and a discussion of our financial statements and footnotes, see documents we
have filed with the SEC, including our Report on Form 10-K for the year ended
December 31, 2004 and all our periodic filings made with the SEC. We assume
no obligation and expressly disclaim any duty to update any forward-looking
statement to reflect events or circumstances after the date of this news
release or to reflect the occurrence of subsequent events.
Contact:
Michael Watts
Sr. director, investor relations and
corporate communications
858-410-8673
Gen-Probe Incorporated
Consolidated Balance Sheets
(In thousands, except share and per share data)
March 31, December 31,
2005 2004
(unaudited)
Assets
Current assets:
Cash and cash equivalents $32,332 $25,498
Short-term investments 180,498 168,328
Trade accounts receivable,
net of allowance for doubtful accounts
of $730 at March 31, 2005 and $664 at
December 31, 2004, respectively 26,751 21,990
Accounts receivable - other 475 3,136
Inventories 28,132 27,308
Deferred income taxes 8,188 7,725
Prepaid expenses 17,269 11,910
Other current assets 2,493 2,054
Total current assets 296,138 267,949
Property, plant and equipment, net 82,998 76,651
Capitalized software 22,837 23,466
Goodwill 18,621 18,621
Other assets 25,121 24,395
Total assets $445,715 $411,082
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $12,694 $6,729
Accrued salaries and employee benefits 11,659 11,912
Other accrued expenses 3,939 4,451
Income tax payable 4,021 1,188
Deferred revenue 11,930 9,467
Total current liabilities 44,243 33,747
Deferred income taxes 9,187 9,187
Deferred revenue 4,833 5,000
Deferred rent 299 309
Minority interest 1,776 1,810
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.0001 par value
per share, 20,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $.0001 par value per share;
200,000,000 shares authorized,
50,442,131 and 50,035,490 shares issued
and outstanding at March 31, 2005
and December 31, 2004, respectively 5 5
Additional paid-in capital 260,198 248,767
Deferred compensation (1,014) (1,104)
Accumulated other comprehensive income 173 807
Retained earnings 126,015 112,554
Total stockholders' equity 385,377 361,029
Total liabilities and stockholders' equity $445,715 $411,082
Gen-Probe Incorporated
Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended
March 31,
2005 2004
(unaudited)
Revenues:
Product sales $59,579 $55,030
Collaborative research revenue 6,344 6,731
Royalty and license revenue 2,905 14,725
Total revenues 68,828 76,486
Operating expenses:
Cost of product sales 15,498 13,864
Research and development 18,683 18,419
Marketing and sales 7,426 6,812
General and administrative 7,191 7,283
Total operating expenses 48,798 46,378
Income from operations 20,030 30,108
Total other income, net 1,081 677
Income before income taxes 21,111 30,785
Income tax expense 7,650 11,057
Net income $13,461 $19,728
Net income per share:
Basic $0.27 $0.40
Diluted $0.26 $0.39
Weighted average shares outstanding:
Basic 50,282 48,904
Diluted 52,367 50,998
Gen-Probe Incorporated
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
March 31,
2005 2004
(unaudited)
Operating activities:
Net income $13,461 $19,728
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,413 3,930
Stock compensation charges 125 109
Loss on disposal of property and equipment 39 9
Deferred rent (10) (6)
Stock option income tax benefits 4,692 1,585
Deferred revenue 2,296 (16)
Deferred income taxes (465) 1,071
Minority interest (58) (47)
Changes in assets and liabilities:
Accounts receivable (1,504) (7,778)
Inventories (822) (3,318)
Prepaid expenses (5,359) (2,526)
Other current assets (439) 419
Accounts payable 5,963 1,605
Accrued salaries and employee benefits (253) (2,020)
Other accrued expenses (1,091) (8)
Income tax payable 2,827 8,135
Net cash provided by operating activities 24,815 20,872
Investing activities:
Proceeds from sales and maturities of
short-term investments 20,790 34,311
Purchases of short-term investments (32,900) (45,544)
Purchases of property, plant and equipment (10,228) (4,509)
Capitalization of intangible assets (1,643) (345)
Other assets (791) (373)
Net cash used in investing activities (24,772) (16,460)
Financing activities:
Proceeds from issuance of common stock 6,705 5,358
Net cash provided by financing activities 6,705 5,358
Effect of exchange rate changes on
cash and cash equivalents 86 692
Net increase in cash and cash equivalents 6,834 10,462
Cash and cash equivalents at the beginning
of the period 25,498 35,973
Cash and cash equivalents at the end
of the period $32,332 $46,435
Supplemental disclosure of cash flow information:
Cash paid for:
Income taxes $78 $658
SOURCE
Gen-Probe Incorporated
05/04/2005
CONTACT:
Michael Watts, Sr. director,
investor relations and
corporate communications of Gen-Probe Incorporated,
1-858-410-8673
Web site: http://www.gen-probe.com
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