OMAHA, Neb.--(BUSINESS WIRE)--Transgenomic, Inc. (TBIO), (NASDAQ: TBIO) today reported financial results for the second quarter ended June 30, 2016, and provided a business update.
Second Quarter Financial Results from Continuing Operations
Net
sales for the second quarter of 2016 were $0.5 million as compared with
$0.4 million for the same period in 2015. Sales of the Company’s
contract laboratory services were flat year over year. The slight
increase in total sales for the current year reflects increased oncology
and grant revenues.
Gross profit was negative $0.1 million for both the second quarters of 2016 and 2015. A significant portion of cost of goods sold is fixed costs associated with the operation of Transgenomic’s laboratory. The Company anticipates that gross profit percentages will increase as revenues from ICE COLD-PCR (ICP)-based products and services rise.
Operating expenses were $1.8 million during the second quarter of 2016 as compared to $2.4 million in the second quarter of 2015. The $0.6 million decrease in operating expenses was due to lower stock compensation costs and franchise tax fees in the second quarter of 2016 as compared to the same period in 2015.
The net loss from continuing operations for the second quarter of 2016 was $2.2 million, or $0.10 per share, compared with a net loss from continuing operations of $2.9 million, or $0.26 per share, for the second quarter of 2015 which is a decrease of $0.7 million, or 24% for the second quarter of 2016. Modified EBITDA, which is a non-GAAP measure that Transgenomic views as an appropriate and sound measure of the Company's results, was a loss of $1.8 million for the second quarter of 2016, compared to a loss of $2.1 million for the same period in 2015. A reconciliation of net loss to Modified EBITDA is presented below.
Cash and cash equivalents were $0.4 million at both June 30, 2016 and December 31, 2015.
Paul Kinnon, Transgenomic President and Chief Executive Officer, commented, “In 2016, Transgenomic has made significant progress towards our strategic goal of becoming a focused ICE-COLD PCR-based precision medicine company. Despite challenges, we have significantly advanced our ICP commercialization strategy with the launch of multiple CLIA tests for cancer, we joined forces with a world-class distributor for our ICEme™ Kits, we conducted clinical studies further validating the utility of our ICP liquid biopsy technology, and we continued to work with our biopharmaceutical partners towards developing a scalable ICP-based services business. We have assembled and expanded our pipeline of potential partners and collaborators and are optimistic that we will begin to enter into revenue-generating collaborations in the coming months. We accomplished this while delivering on our promise to divest our non-strategic assets, thereby significantly reducing our expenses and generating some non-dilutive cash. The positive feedback we are receiving from early ICP customers and potential partners is encouraging as we move forward as a streamlined, highly focused company dedicated to successfully commercializing our unique ICE-COLD PCR technology, which we believe has the potential to increase the speed of wide adoption of genomic-based precision medicine.”
Six Month Financial Results from Continuing Operations
Net
sales for the six months ended June 30, 2016 were $0.7 million as
compared with $1.2 million for the same period in 2015. The decrease
reflects fewer sales of our contract laboratory services as a result of
fewer customers with active projects in the current year.
Gross profit was negative $0.3 million for the first half of 2016, as compared to a positive $0.3 million for the first half of 2015. The decrease in gross profit in the current year is a result of the lower revenues during the six months ended June 30, 2016 as compared to the first six months of 2015. The negative gross margin in the current year is due to lower revenues that were insufficient to cover the Company’s laboratory’s fixed direct costs.
Operating expenses were $3.8 million and $4.6 million for the six months ended June 30, 2016 and 2015, respectively. This decrease was due to lower professional fees and lower stock compensation costs in the first half of 2016 as compared to the first half of 2015.
The net loss from continuing operations for the first half of 2016 was $4.3 million or $0.20 per share, compared with a net loss from continuing operations of $5.2 million or $0.54 per share for the same period of 2015.
Recent Highlights
- VWR to Distribute Transgenomic’s ICEme Kits that Enable Liquid Biopsies – In July, signed a non-exclusive agreement with VWR for distribution of ICEme Kits to researchers and laboratories in North America. The kits are based on Multiplexed ICE COLD-PCR technology and are designed to facilitate genomics-based cancer research by providing accurate detection of mutations using any type of sample and any downstream sequencing platform.
- Transgenomic Launches First Commercially Available CLIA Test for Detection of EGFR C797S Mutations that Predict Resistance to New Kinase Therapies for Lung Cancer – In July, launched high sensitivity Multiplexed ICE COLD-PCR-based assays and panels that can use blood, serum or tissue samples to detect predictors of resistance to 3rd-generation TKI drugs in non-small cell lung cancer patients. The C797S detection test is available as a solo assay and in three EGFR panels.
- Transgenomic Licenses Commercial Rights to Long QT Syndrome Testing Portfolio to LabCorp – In July, signed commercial license agreement with Laboratory Corporation of America® Holdings for TBIO’s portfolio of intellectual property pertaining to DNA testing for Long QT syndrome (LQTS), a congenital heart rhythm disorder. Certain medications and activities can trigger LQTS, so accurately identifying individuals at risk is important. Further details of the non-exclusive agreement were not disclosed.
- Transgenomic Study at ASCO Shows High Concordance between ICE COLD-PCR Liquid Biopsies and Conventional Tissue Biopsies – Study released at ASCO confirmed concordance of ICP-enriched and conventional PCR testing, identifying 97% of the mutations detected by standard tissue biopsy PCR. The study confirmed that ICP’s ultra-high sensitivity enables accurate use of plasma-based liquid biopsies for cancer mutation detection.
- Transgenomic Launches First Rapid Turnaround Breast Cancer Analysis Panel at AACR – Transgenomic’s new liquid biopsy test uses Multiplexed ICE COLD-PCR to detect actionable tumor mutations in genes relevant to treatment decisions with high sensitivity. Notably, results are available in 7-10 days, in contrast to turnaround times of up to four weeks for other testing methods.
Conference Call
Transgenomic management will host a
conference call to discuss second quarter 2016 financial results and
answer questions beginning at 5:00 p.m. Eastern Time today. To access
the call via telephone, dial 877-876-9177 from the U.S. or Canada or
785-424-1666 for international participants and enter conference ID
TRANS. The call also will be broadcast live over the Internet. To listen
to the webcast, log onto the Company's Investor Relations web page at www.transgenomic.com/ir/investor-information/
and follow the instructions. An archived webcast of the call will be
available for 30 days. A telephone replay will be available from 8:00
p.m. Eastern Time today through 11:59 p.m. Eastern Time August 26th
by dialing 800-839-3742 (domestic) or 402-220-2979 (international).
About Transgenomic
Transgenomic,
Inc. is a global biotechnology company advancing personalized
medicine in oncology and inherited diseases through advanced diagnostic
technologies, such as its revolutionary ICE COLD-PCR, which enables use
of liquid biopsies for mutation detection. The company also provides
specialized clinical and research services to biopharmaceutical
companies developing targeted therapies. Transgenomic’s diagnostic
technologies are designed to improve medical diagnoses and patient
outcomes.
Forward-Looking Statements
Certain statements in this
press release constitute “forward-looking statements” of Transgenomic
within the meaning of the Private Securities Litigation Reform Act of
1995, which involve known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from
any future results, performance or achievements expressed or implied by
such statements. Forward-looking statements include, but are not limited
to, those with respect to management's current views and estimates of
future economic circumstances, industry conditions, company performance
and financial results, including the ability of the Company to grow its
involvement in the diagnostic products and services markets,
expectations regarding new clients, projects and prospects, and MX-ICP’s
ability to accelerate the Company’s growth and generate revenue. The
known risks, uncertainties and other factors affecting these
forward-looking statements are described from time to time in
Transgenomic's filings with the Securities and Exchange Commission. Any
change in such factors, risks and uncertainties may cause the actual
results, events and performance to differ materially from those referred
to in such statements. Accordingly, the Company claims the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 with respect to all statements
contained in this press release. All information in this press release
is as of the date of the release and Transgenomic does not undertake any
duty to update this information, including any forward-looking
statements, unless required by law.
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TRANSGENOMIC, INC. AND SUBSIDIARY |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| NET SALES | $ | 505 | $ | 442 | $ | 741 | $ | 1,192 | ||||||||
| COST OF GOODS SOLD: | 542 | 465 | 1,047 | 930 | ||||||||||||
| Gross profit | (37 | ) | (23 | ) | (306 | ) | 262 | |||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling, general and administrative | 1,436 | 1,908 | 3,140 | 3,712 | ||||||||||||
| Research and development | 402 | 468 | 672 | 919 | ||||||||||||
| 1,838 | 2,376 | 3,812 | 4,631 | |||||||||||||
| OPERATING LOSS FROM CONTINUING OPERATIONS | (1,875 | ) | (2,399 | ) | (4,118 | ) | (4,369 | ) | ||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Interest expense, net | (328 | ) | (186 | ) | (497 | ) | (376 | ) | ||||||||
| Warrant revaluation | 24 | (270 | ) | 345 | (415 | ) | ||||||||||
| Other, net | — | — | — | (13 | ) | |||||||||||
| (304 | ) | (456 | ) | (152 | ) | (804 | ) | |||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (2,179 | ) | (2,855 | ) | (4,270 | ) | (5,173 | ) | ||||||||
| INCOME TAX BENEFIT | — | (1 | ) | — | (1 | ) | ||||||||||
| LOSS FROM CONTINUING OPERATIONS | (2,179 | ) | (2,854 | ) | (4,270 | ) | (5,172 | ) | ||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES | 1,182 | (421 | ) | 9 | (1,144 | ) | ||||||||||
| NET LOSS | (997 | ) | (3,275 | ) | (4,261 | ) | (6,316 | ) | ||||||||
| PREFERRED STOCK DIVIDENDS | — | (331 | ) | (21 | ) | (662 | ) | |||||||||
| NET LOSS FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS | (2,179 | ) | (3,185 | ) | (4,291 | ) | (5,834 | ) | ||||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS | 1,182 | (421 | ) | 9 | (1,144 | ) | ||||||||||
| NET LOSS AVAILABLE TO COMMON STOCKHOLDERS | $ | (997 | ) | $ | (3,606 | ) | $ | (4,282 | ) | $ | (6,978 | ) | ||||
| BASIC AND DILUTED LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | (0.10 | ) | $ | (0.26 | ) | $ | (0.20 | ) | $ | (0.54 | ) | ||||
| BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | $ | 0.05 | $ | (0.03 | ) | $ | — | $ | (0.11 | ) | ||||||
| BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.05 | ) | $ | (0.30 | ) | $ | (0.20 | ) | $ | (0.65 | ) | ||||
| BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING | 21,797,442 | 12,149,632 | 21,060,387 | 10,778,857 | ||||||||||||
Transgenomic, Inc.
Summary Financial Results
Proforma
Modified EBITDA
(dollars in thousands)
Management uses Modified EBITDA, a non-GAAP measure, to measure the Company's financial performance and to internally manage its businesses. Management believes that Modified EBITDA provides useful information to investors as a measure of comparison with peer and other companies. Modified EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. Modified EBITDA calculations may vary from company to company. Accordingly, our computation of Modified EBITDA may not be comparable with a similarly-titled measure of another company.
The following sets forth the reconciliation of Net Loss to Modified EBITDA for the periods indicated:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | $ | (2,179 | ) | $ | (2,854 | ) | $ | (4,270 | ) | $ | (5,172 | ) | ||||
| INTEREST EXPENSE | 328 | 186 | 497 | 376 | ||||||||||||
| INCOME TAX BENEFIT | — | (1 | ) | — | (1 | ) | ||||||||||
| DEPRECIATION AND AMORTIZATION | 106 | 115 | 189 | 156 | ||||||||||||
| CHANGE IN FAIR VALUE OF WARRANTS | (24 | ) | 270 | (345 | ) | 415 | ||||||||||
| STOCK COMPENSATION EXPENSE | 9 | 208 | 119 | 322 | ||||||||||||
| MODIFIED EBITDA | $ | (1,760 | ) | $ | (2,076 | ) | $ | (3,810 | ) | $ |
(3,904 |
) | ||||
|
TRANSGENOMIC, INC. AND SUBSIDIARY |
||||||||
| (unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 421 | $ | 444 | ||||
| Accounts receivable, net | 328 | 264 | ||||||
| Inventories, net | 39 | 50 | ||||||
| Other current assets | 325 | 537 | ||||||
| Assets held for sale | 690 | 1,987 | ||||||
| Total current assets | 1,803 | 3,282 | ||||||
| PROPERTY AND EQUIPMENT, NET | 204 | 259 | ||||||
| OTHER ASSETS: | ||||||||
| Intangibles, net | 1,029 | 1,170 | ||||||
| Other assets | 58 | 105 | ||||||
| $ | 3,094 | $ | 4,816 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current liabilities | $ | 17,719 | $ | 16,717 | ||||
| Liabilities held for sale | — | 264 | ||||||
| Total current liabilities | 17,719 | 16,981 | ||||||
| OTHER LIABILITIES: | ||||||||
| Common stock warrant liability | 1,442 | 350 | ||||||
| Other long-term liabilities | 223 | 305 | ||||||
| Total liabilities | 19,384 | 17,636 | ||||||
| STOCKHOLDERS’ (DEFICIT) EQUITY | (16,290 | ) | (12,820 | ) | ||||
| $ | 3,094 | $ | 4,816 | |||||
