Solexa Reports First Quarter Financial Results; Conference Call Begins Today at 5:00 p.m. Eastern Time.HAYWARD Hayward, city (1990 pop. 111,498), Alameda co., W Calif.; settled 1851, inc. 1876. It is an important commercial and distribution center for farm products. Manufactures include wire, plastics, metal and paper products, textiles, machinery, and motor vehicles. , Calif. & CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , U.K. -- Solexa, Inc. (Nasdaq:SLXA) today announced financial results for the quarter ended March 31, 2006. "We are actively working to execute the commercial launch of the Solexa Genome genome: see genetics. genome all the genetic content contained within an organism. An organism's genome is made up of molecules of deoxyribonucleic acid (DNA) that form long strands that are tightly wound into chromosomes, which are found in the Analysis system and to realize the longer term opportunity we see for our technology," said John West, chief executive officer of Solexa. "In the coming months, we plan to grow our sales, marketing and manufacturing teams, including recruiting a senior executive to assemble a field organization to support the anticipated broad commercial release of our system after the initial early access phase. In manufacturing, we are implementing the steps necessary to build our capacity to produce instruments, flow cells and reagents, and we intend to recruit a senior executive to run these operations. "In our quest to broaden exposure for the Solexa Genome Analysis System and its potential to dramatically reduce the cost of genome sequencing, we are continuing our practice of making presentations at scientific conferences and industry trade shows. In March we delivered a plenary plenary adj. full, complete, covering all matters, usually referring to an order, hearing or trial. PLENARY. Full, complete. 2. talk on human sequence variation and new sequencing technologies at The Human Genome Organisation The Human Genome Organisation (HUGO) is an organization involved in the Human Genome Project, a project about mapping the human genome. HUGO was established in 1989 as an international organization, primarily to foster collaboration between genome scientists around the world. (HUGO) conference in Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , in April we participated in the 2006 Life Sciences Conference + Expo sponsored by Bio-IT World and just this week we presented at Cold Spring Harbor Laboratory's annual meeting, The Biology of Genomes. At the end of this month we expect to be at the HUGO 11th Annual Meeting in Helsinki Helsinki (hĕl`sĭngkē), Swed. Helsingfors, city (1998 pop. 546,317), capital of Finland, located in Southern Finland prov., S Finland, on the Gulf of Finland. . "We continue on track toward our major milestone of sequencing a human genome The human genome is the genome of Homo sapiens, which is composed of 24 distinct pairs of chromosomes (22 autosomal + X + Y) with a total of approximately 3 billion DNA base pairs containing an estimated 20,000–25,000 genes. by year end. Our ability to achieve this goal will be an important validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of our system and will serve as a key demonstration project for prospective customers," said Mr. West. "As previously announced, we plan to release interim results from the project throughout the year." Financial Results Solexa, Inc. is the result of a business combination between Solexa Limited and Lynx lynx, name given to several related small, ferocious members of the cat family. All have small heads, tufted ears, and heavy bodies with long legs and short tails. All are primarily terrestrial, although they are able to climb trees. Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. , Inc. Reported results of operations for the three months ended March 31, 2005 reflect those of Solexa Limited, to which the results of operations of Lynx Therapeutics, Inc. have been added following March 4, 2005, the date of the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the business combination. Revenue for the first quarter of 2006 was $768,000, compared with $605,000 for the first quarter of 2005. Revenue was derived primarily from service fees generated from the MPSS MPSS Massively Parallel Signature Sequencing MPSS Methylprednisolone Sodium Succinate MPSS Multiple Page Size Support MPSS Ministry of Public Safety and Security (Canada) MPSS Mainz Pain Staging System (TM) genomics services business that we acquired as a result of the business combination. Revenue in the first quarter of 2006 is from the MPSS genomics services business and does not yet reflect any contribution from the Solexa Genome Analysis System, Solexa's reversible-terminator chemistry and Clonal clonal referring to a clone. clonal expansion occurs, for example, when B cells, under the influence of T cell interleukins, differentiate into two separate populations and, after several transformations produce sensitized B Single Molecule Array(TM) DNA sequencing DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. platform. Total operating costs operating costs npl → gastos mpl operacionales and expenses were $11.1 million in the first quarter of 2006, up from $5.9 million in the first quarter of 2005. The increase primarily reflects the addition of the results of Solexa's U.S. operations from the date of the business combination; the expensing of stock-based compensation in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with adoption of Statement of Financial Accounting Standards No. 123R (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R), Share-Based Payment; and increased material costs for research and development, particularly spending on components for the production of instrument prototypes based on the new technology; partially offset by the absence of expenses related to execution of the business combination. Cost of service fees, which represents costs associated with providing Solexa's genomics services, was $912,000 in the first quarter of 2006. In this quarter, the Company charged certain operating costs against a forward loss contingency contingency n. an event that might not occur. for unprofitable contracts in its genomics services business; the reserve balance was $364,000 at March 31, 2006. Research and development expense in the first quarter of 2006 was $6.3 million, and selling, general and administrative expense was $3.8 million. Solexa reported an income tax benefit related to research and development tax credits recorded in the first quarter of 2006 of $411,000. The Company did not report an income tax benefit in the comparable quarter of 2005. Solexa reported a net loss attributable to common shareholders for the first quarter of 2006 of $9.3 million, or $0.27 per share. Effective January January: see month. 1, 2006, the company began expensing stock options as required by SFAS 123R. Adoption of SFAS 123R increased the net loss for the first quarter of 2006 by approximately $846,000. The Company reported a net loss attributable to common shareholders for the first quarter of 2005 of $5.8 million, or $0.96 per share. As of March 31, 2006, Solexa reported cash and cash equivalents of $68.8 million. In January 2006, Solexa completed a private placement of common stock and warrants for gross proceeds of $40 million, which represents the second and final closing of a $65 million private equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. announced in November November: see month. 2005. Conference Call Solexa has scheduled an investor conference call to discuss financial results for the first quarter of 2006 at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) today. Individuals interested in participating in the call may do so by dialing (877) 815-7177 for domestic callers, or (706) 679-0753 for international callers. A telephone replay will be available for 48 hours following conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers, and entering reservation code 9238301. The live conference call also will be available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by visiting the Investors section of the company's Web site at www.solexa.com, and a recording of the call will be available on the company's Web site following completion of the call. About Solexa Solexa, Inc. is developing and preparing to commercialize the Solexa Genome Analysis System, which will be used to perform a range of analyses including human genome resequencing, gene expression analysis and small-RNA analysis. Solexa expects its first-generation first-gen·er·a·tion adj. 1. Of or relating to a person who has left one country and settled in another. 2. Of or relating to a person or persons whose parents are immigrants. 3. instrument, the 1G Genome Analyzer analyzer /ana·ly·zer/ (an´ah-li?zer) 1. a Nicol prism attached to a polarizing apparatus which extinguishes the ray of light polarized by the polarizer. 2. , to generate more than one billion bases of DNA sequence DNA sequence Genetics The precise order of bases–A,T,G,C–in a segment of DNA, gene, chromosome, or an entire genome. See Base pair, Base sequence analysis, Chromosome, Gene, Genome. per run and to enable human genome resequencing below $100,000 per sample, making it the first platform to reach this important milestone. Solexa's longer-term goal is to reduce the cost of human resequencing to a few thousand dollars for use in a wide range of applications from basic research through clinical diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler . For further information, please visit www.solexa.com. This press release contains "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements, including statements related to the current views of Solexa management as to future products, product development, commercialization of the Company's novel genetic analysis technology, intellectual property matters, and the expansion and success of Solexa's commercial application of its genomics technologies. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Words such as "believes," "anticipates," "plans," "predicts," "expects," "envisions," "hopes," "estimates," "intends," "will," "continue," "may," "potential," "should," "confident," "could" and similar expressions are intended to identify forward-looking statements. There can be no assurance that such expectations of any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements. There are a number of important factors that could cause the results of Solexa to differ materially from those indicated by these forward-looking statements including, among others, risks detailed from time to time in the Company's SEC reports, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005. Solexa does not undertake any obligation to update forward-looking statements.
Solexa, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months
Ended
March 31,
-----------------
2006 2005
-------- --------
Service revenue $768 $605
Operating costs and expenses:
Cost of service revenue 912 540
Research and development 6,332 2,993
Sales, general and administrative 3,817 2,333
-------- --------
Total operating costs and expenses 11,061 5,866
-------- --------
Loss from operations (10,293) (5,261)
Interest income 655 136
Interest expense (156) (132)
Other (expense), net 50 (3)
-------- --------
Loss from operations (9,744) (5,260)
Income tax benefit related to research and
development tax credit (411) --
-------- --------
Net loss $(9,333) $(5,260)
Dividends to 'A' ordinary and 'B' preferred shares -- 522
-------- --------
Net loss attributable to common shareholders $(9,333) $(5,782)
======== ========
Basic and diluted net loss per common share $(0.27) $(0.96)
======== ========
Weighted average shares used to compute basic and
diluted net loss per common share 35,113 6,007
======== ========
Solexa, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
March December
31, 31,
2006 2005
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $68,768 $38,403
Accounts receivable 160 539
Inventory 867 754
Other current assets 3,492 2,422
--------- --------
Total current assets 73,287 42,118
Property and equipment, net 3,981 4,378
Intangible assets, net 3,401 3,510
Goodwill 22,529 22,529
Other non-current assets 484 482
--------- --------
Total assets $103,682 $73,017
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,175 $2,235
Accrued compensation 2,636 2,067
Accrued professional fees 574 705
Equipment financing, current portion 28 31
Forward loss contingency 364 1,028
Deferred revenue - current portion 1,063 1,518
Deferred rent and lease obligations 866 801
Other accrued liabilities 624 529
--------- --------
Total current liabilities 8,330 8,914
Deferred revenues, net of current portion 2,395 1,905
Equipment financing, net of current portion 37 44
Deferred rent and lease obligations, net of current
portion 2,144 2,381
Stockholders' equity:
Preferred stock: $0.01 par value; 2,000 shares
authorized; no shares issued and
outstanding at March 31, 2006 and December 31,
2005
Common stock: $0.01 par value; 60,000 shares
authorized; 36,479 shares and 30,027
shares issued and outstanding at March 31, 2006
and December 31, 2005, respectively 365 300
Additional paid-in capital 149,679 109,575
Deferred compensation (275) (326)
Accumulated other comprehensive income 2,180 2,064
Accumulated deficit (61,173) (51,840)
--------- --------
Total stockholders' equity 90,776 59,773
--------- --------
Total liabilities and stockholders' equity $103,682 $73,017
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