Pyrosequencing AB Reports Second Quarter Results for Period Ended June 30, 2001; Installed Base Climbs to Over 100 PSQ 96 Systems for Applied Genomics.Business Editors UPPSALA, Sweden--(BUSINESS WIRE)--Aug. 7, 2001 Pyrosequencing AB (Stockholm: PYRO A) today reported second quarter results for the period ended June 30, 2001. Commenting on the results, Erik Wallden, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Pyrosequencing, said, "Pyrosequencing continues to advance its position within the field of Applied Genomics applied genomics Molecular genetics Molecular medicine The use of genetic information to diagnose, prognosticate and manage disease, based on the techniques of PCR, real time-PCR, DNA sequencing, and gene rearrangement studies for leukemia and lymphoma. having achieved sales of over 100 PSQ PSQ Political Science Quarterly (journal) PSQ Pyrosequencing PSQ Pipsqueak (gene) PSQ Patient Satisfaction Questionnaire PSQ Presidential Studies Quarterly (TM)96 Systems to date. The Company is also making significant strides in the area of Molecular Diagnostics. During the second quarter, we continued to sell PSQ 96 Systems to prestigious pharmaceutical, biotech and academic customers throughout the world, and we are particularly encouraged by the two new orders we received this quarter for our high-throughput PTP (1) See peer-to-peer. (2) (Picture Transfer Protocol) An ISO standard for transferring photos from a digital camera to a computer or photo printer. (TM) (Preferred Technology Program). Both of these PTP orders were from existing PSQ 96 customers who will now scale up their genotyping Genotyping refers to the process of determining the genotype of an individual with a biological assay. Current methods of doing this include PCR, DNA sequencing, and hybridization to DNA microarrays or beads. operations using Pyrosequencing(TM). We also established the first in what will be a series of collaborations for the development of our Molecular Diagnostics Business. These new customers and collaborators demonstrate the value of our platform technology to offer the ease-of-use and robustness required for broad applications in applied and routine genomics." Second quarter 2001 highlights include:
-- Received 20 new orders for the PSQ 96 System; 20 orders were recorded as
revenue and at June 30, 2001, there was a backlog of 10 orders
-- Signed two additional customers for the high-throughput PTP(TM)
-- Increased installed base to over 100 PSQ 96 Systems worldwide
-- Established a research collaboration with The Children's Hospital of
Philadelphia for the development of diagnostic tests
-- Launched DNA Sequence Analysis Software and Reagent Kits for the PSQ 96
System, as well as Primer Design software and Web-based access to this assay
design tool
-- Introduced a new sample preparation method to enhance our SNP and sequence
analysis solutions
-- Received U.S. patent for diagnostics and therapeutic responses in
cardiovascular disease
-- Notified that two core patents for the Pyrosequencing technology were
allowed in the U.S.
Summary financial group data (in millions except share data)
Six months ended June 30, 2001 Three months ended June 30, 2001
2001 2001 2000 2001 2001 2000
USD(a) SEK SEK USD(a) SEK SEK
Net sales 4.1 44.2 9.6 2.3 24.6 6.3
Gross profit 3.0 32.5 7.2 1.7 18.5 4.7
Gross margin, % 73.6 73.6 75.5 75.0 75.0 74.1
Operating result (7.7)(83.6) (52.9) (4.1) (44.6) (27.5)
Results after (5.7)(62.5) (51.5) (3.4) (37.3) (26.9)
financial items
Net result per (0.15)(1.67) (2.04) (0.09) (1.01) (1.07)
share
Net loss per share
after (0.13)(1.42) (1.83) (0.08) (0.86) (0.95)
full dilution
2001 2000
Weighted average shares outstanding 34,768,500 25,187,400
Weighted average shares outstanding after full 40,875,400 28,145,400
dilution
Common shares outstanding, as of June 30 34,770,100 34,767,400
As of June 30, As of December 31,
2001 2000
USD(a) SEK USD(a) SEK
Cash and short-term 3.2 34.9 35.8 389.6
investments
Other securities held as 63.9 694.9 42.0 457.1
fixed assets
Other assets 16.6 181.2 9.8 106.8
Total assets 83.7 911.0 87.6 953.5
Shareholders equity 79.4 864.3 82.9 902.4
Operating liabilities 4.3 46.7 4.7 51.1
Total liabilities and 83.7 911.0 87.6 953.5
shareholders equity
(a) Convenience translation rate: SEK 10.881= USD
Financial Position For the three months ended June 30, 2001, the Company reported revenues of $2.3 million compared to $0.58 million for the comparable period in 2000. The increase in revenue reflects sales of the PSQ 96 System and consumables. Consumable A material that is used up and needs continuous replenishment, such as paper and toner. "The low-tech end of the high-tech field!" sales as a percentage of revenue rose to 29 percent compared to 27 percent for the previous quarter. The Company had sold 20 instruments in the second quarter of 2001 compared to nine instruments in the same period last year, and reported a backlog of ten orders as of the end of the quarter. During the second quarter of 2001, Pyrosequencing also received two additional orders for its high-throughput application, PTP. Demand for Pyrosequencing's products is steadily increasing despite a number of industry-wide factors that led to fluctuations in customer-ordering patterns in the second quarter and may continue in the near term. These include industry consolidation, which has affected the decision-making process at some pharmaceutical and biotech companies; a deterioration in economic conditions, which is leading customers to manage capital expenditures more carefully; and longer than anticipated purchasing cycles. Applied genomics is a newly emerging market that continues to evolve rapidly. Pyrosequencing will continue to be vigilant and react promptly to secure our business objectives in this dynamic field. Gross margins for the second quarter of 2001 amounted to 75.0 percent, an increase from the margins of 71.9 percent for the first quarter of the year. The increase is in part due to efficiencies related to the Company's new manufacturing facility. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased to $5.8 million in the second quarter of 2001 from $4.9 million in the first quarter. The rise in operating expenses reflects costs associated with Pyrosequencing's strengthening of its worldwide sales organization and increased research and development expenditures. The increase also reflects costs associated with the growth of the Company's Molecular Diagnostics Business Unit. Pyrosequencing reported a net loss of $3.2 million, or $0.09 per share, for the quarter ended June 30, 2001, compared to a net loss of $2.5 million or $0.10 per share, for the same period last year. At June 30, 2001, cash, cash equivalents and investments in high-grade debt securities, including investments with maturity dates exceeding 12 months, totaled $67.1 million as compared to $77.8 million at December 31, 2000. Pyrosequencing has no debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and total equity amounted to $79.4 million and $82.9 million at June 30, 2001 and December 31, 2000. Marketing and Sales For large-scale genotyping, Pyrosequencing introduced a high-throughput, customized offering this year and announced the first sale in February. During the second quarter, the Company received two additional orders for the automated, high-throughput PTP from a leading academic research institution and a well-known European biotechnology company. PTP, the Company's high-throughput SNP SNP Scottish National Party Noun 1. SNP - (genetics) genetic variation in a DNA sequence that occurs when a single nucleotide in a genome is altered; SNPs are usually considered to be point mutations that have been evolutionarily (Single Nucleotide Polymorphism Noun 1. single nucleotide polymorphism - (genetics) genetic variation in a DNA sequence that occurs when a single nucleotide in a genome is altered; SNPs are usually considered to be point mutations that have been evolutionarily successful enough to recur in a ) analysis system, is based on 384-well microplates and the same patented Pyrosequencing technology. In addition to the software and reagent reagent /re·a·gent/ (re-a´jent) a substance used to produce a chemical reaction so as to detect, measure, produce, etc., other substances. re·a·gent n. kits, PTP also includes sample preparation robotics, for a fully automated, cost-efficient operation that can score up to 100,000 SNPs per day. The Company also continues to dominate the moderate-throughput market for bench-top instruments with more than100 PSQ 96 Systems sold to date and eight customers who have purchased multiple machines. New to an extensive list of customers, are leading pharmaceutical and biotech companies Abbott Laboratories Abbott Laboratories (NYSE: ABT) is a diversified pharmaceuticals and health care company. It has over 65,000 employees and operates in 130 countries. The corporate headquarters are in Abbott Park, Illinois, a neighborhood of North Chicago, Illinois. and Biogen, Inc. and research institutions such as Washington University Washington University, at St. Louis, Mo.; coeducational; est. as Eliot Seminary 1853, opened 1854, renamed 1857. It has a well-known medical school and school of social work as well as research centers for radiology, space studies, engineering computing, and the and Imperial College of Science, Technology and Medicine (education) Imperial College of Science, Technology and Medicine - (IC, ICST&M) One of the colleges of London University. The Department of Computing is the home of FOLDOC. IC Home. in London. New software and reagent kits for sequence analysis and Primer Design Software were also launched this quarter, further demonstrating the many potential applications of Pyrosequencing technology. "More than 100 systems have been sold at this point in time as a result of deliberate decisions by customers to select the PSQ 96 System over other competing technologies," stated Marten marten, name for carnivorous, largely arboreal mammals (genus Martes) of the weasel family, widely distributed in North America, Europe, and central Asia. Martens are larger, heavier-bodied animals than weasels, with thick fur and bushy tails. Winge, Vice President, World Wide Marketing, Sales and Support for Pyrosequencing. "Our global leadership in the Applied Genomics market across all major segments including pharma, biotech and academic institutions is evidence that Pyrosequencing continues to sell more instruments than any of our competitors." Pyrosequencing continued to implement an aggressive product launch plan during the quarter, further demonstrating the breadth of applications for its technology. The Company introduced new Sequence Analysis Software and Reagent Kits for the PSQ 96 System at the annual American Society of Microbiology meeting in May. A satellite symposium featured a presentation by a leading researcher on the identification and characterization of bacterial pathogens, such as H. pylori Noun 1. H. pylori - the type species of genus Heliobacter; produces urease and is associated with several gastroduodenal diseases (including gastritis and gastric ulcers and duodenal ulcers and other peptic ulcers) Heliobacter pylori using Pyrosequencing technology. In June, the Company launched new Primer Design Software designed to optimize SNP analysis using Pyrosequencing technology. This offering also provides customers with convenient and secure Web-based access to this design tool. Industry Outlook There continues to be significant interest in applied genomics as evidenced by several new initiatives recently announced by the public and private sectors. For example, Britain's Medical Research Council, the Department of Health, and the Wellcome Trust The Wellcome Trust is a United Kingdom-based charity established in 1936 to administer the fortune of the American-born pharmaceutical magnate Sir Henry Wellcome. Its income was derived from what was originally called Burroughs Wellcome & Co, later renamed in the UK as the are building what promises to be the world's biggest ethnically diverse gene database. In the U.S., the National Institutes of Health and the Whitehead Institute Founded in 1982, the Whitehead Institute for Biomedical Research is a non-profit research and teaching institution located in Cambridge, Massachusetts. The Whitehead Institute was founded as a fiscally independent entity from Massachusetts Institute of Technology, and its members Center for Genome Research Genome Research is the title of a peer-reviewed scientific journal published by Cold Spring Harbor Laboratory Press. The focus of the journal is on genome-wide studies in any organism, including single gene studies that are placed in a genomic context. have revealed plans to evaluate a number of projects including genetic databases and haplotype haplotype /hap·lo·type/ (-tip) the group of alleles of linked genes, e.g., the HLA complex, contributed by either parent; the haploid genetic constitution contributed by either parent. hap·lo·type n. maps to provide insight into SNPs and markers for commonly inherited diseases. Research and Development The list of capabilities offered by the Pyrosequencing technology is rapidly growing. During the last quarter, two important products were finalized and launched into the marketplace and the Company provided customers with the capabilities for multiplexing multiplexing, in communication, technique whereby two or more independent messages, or information-bearing signals, are carried by a single common medium, or channel. and haplotyping capabilities. Multiplexing allows customers to reduce their cost per sample and increase genotyping capacity, while haplotyping offers enhanced genetic information. An alternate method for sample preparation was also developed to give customers a process that requires little or no optimization and is easily automated. Pyrosequencing's R&D programs are on track to introduce a number of major additions to the current product portfolio over the next twelve months. Two of the original patent applications describing the basic Pyrosequencing technology were allowed in the U.S. during the quarter. "Our strong intellectual property position is further enhanced and enables us to continue product development without compromise," said Bjorn Ekstrom, Executive Vice President, Chief Scientific Officer of Pyrosequencing. "These patents provide significant protection for our reagent business and allow us to license 'sequencing by synthesis' to our customers." Molecular Diagnostics Pyrosequencing's recently launched Molecular Diagnostics Business Unit continues to advance its position in the emerging market for routine genetic tests. Central to the Company's entree into molecular diagnostics, Pyrosequencing announced in the second quarter the receipt of a key patent for diagnostic and therapeutic responses in cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease . The patent covers a method for assessing cardiovascular status, including myocardial infarction myocardial infarction: see under infarction. and stroke and involves patterns of SNPs in genes associated with cardiovascular disease. The patent also covers the use of these SNP patterns to predict responses to cardiovascular drugs such as anti-hypertensives. The Molecular Diagnostics Business Unit also made significant progress toward establishing research collaborations for the development of diagnostic tests. This quarter, the Company initiated a sponsored research agreement with The Children's Hospital of Philadelphia The Children's Hospital of Philadelphia is one of the largest and oldest children's hospitals in the world. "CHOP" has been ranked as the best children's hospital in the United States by U.S. News & World Report and Child Magazine in recent years. to analyze genes linked to hearing loss and to develop diagnostic tests using Pyrosequencing technology. Recently the Company announced a collaboration in the area of infectious diseases infectious diseases: see communicable diseases. and expects to announce a series of additional agreements in the coming months. One of the goals for these collaborations is to expand Pyrosequencing's intellectual property portfolio as it relates to molecular diagnostics. Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. At June 30, 2001, the total number of employees in the Pyrosequencing group was 121 compared to 65 at June 30, 2000, and 86 at December 31, 2000. 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 applied genetic analysis based on its proprietary Pyrosequencing(TM) technology, a simple-to-use DNA sequencing DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. technique. In the post-genome era, Pyrosequencing's technology has established the Company as one of the leading suppliers of solutions for accurate, consistent DNA analysis DNA analysis Any technique used to analyze genes and DNA. See Chromosome walking, DNA fingerprinting, Footprinting, In situ hybridization, Jeffries' probe, Jumping libraries, PCR, RFLP analysis, Southern blot hybridization. in research institutions and pharmaceutical, genomics and agbiotech companies. For the analysis of single nucleotide polymorphisms (SNPs), the PSQ(TM)96 System with SNP Software and Reagent Kits is used by customers such as AstraZeneca, GlaxoSmithKline, the Harvard Center for Cancer Prevention, the National Institutes of Health (NIH "Not invented here." See digispeak. NIH - The United States National Institutes of Health. ), the Karolinska Institute and DuPont Agriculture. The Company's Sequence Analysis Software and Reagent Kits together with the PSQ 96 System are used for the identification of gene-specific DNA sequences for applications such as bacterial and viral typing where speed and ease of use are essential. The Company is headquartered in Uppsala, Sweden with North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. located in Westborough, Massachusetts For other uses of "Westborough", see Westborough (disambiguation).
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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " 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 Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. (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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