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Deltagen Reports 2005 Full-Year Consolidated Financial Results
 

SAN CARLOS, California, March 28, 2006 - Deltagen, Inc. (Pink Sheets: DGEN), a leading provider of drug discovery tools to the biopharmaceutical industry, today reported unaudited consolidated financial results for the year ended December 31, 2005.

Revenues and Interest Income:  The Company's consolidated revenues for the year ended December 31, 2005 totaled $6.70 million.  The revenues were primarily attributable to license fees associated with the provision of knockout mice and related phenotypic data under its DeltaOneTM program, access extension fees under its DeltaBase collaborations and amounts received under Deltagen's contract with the National Institutes of Health (NIH).  The Company booked revenues of $1.9 million in 2005 pursuant to the NIH contract. The Company had interest income of $0.31 million for the year ended December 31, 2005.

Expenses:  Total consolidated expenses for the year ended December 31, 2005 were $7.16 million.  The expenses were primarily attributable to salaries and management costs, and other general and administrative expenses, license fees and third-party royalty obligations, as well as legal fees associated with the administration of the Company's Chapter 11 bankruptcy case and patent prosecution expenses.

Net Loss:  Net loss for the year ended December 31, 2005 was $0.15 million.  Net loss per share for the year ended December 31, 2005 was approximately $0.0039. 

Cash and Cash Equivalents:  As of December 31, 2005, the Company had $11.56 million in consolidated cash and cash equivalents.

The unaudited consolidated financials, Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors have been posted on Deltagen's website (www.deltagen.com).

Year 2005 Highlights

Emergence from Chapter 11 Bankruptcy:  Deltagen filed a voluntary petition for relief under Chapter 11 of the bankruptcy court on June 27, 2003. After filing for bankruptcy, Deltagen continued to operate its business and manage its properties as a debtor-in-possession. On November 15, 2005, the bankruptcy court approved Deltagen's plan of reorganization, under which creditors claims were to be paid in their entirety and equity preserved intact. The reorganization plan became effective on November 29, 2005.

Settlement with Lexicon: Deltagen and Lexicon Genetics Incorporated reached a global settlement of their disputes, which was approved by the bankruptcy court on March 14, 2005. Under the settlement, the parties agreed to a full cure of any and all claims by means of a $4 million cash payment by Deltagen and certain deferred, contingent royalty payments based on Deltagen's receipt of net revenues after September 1, 2004 from the licensing of completed and future knockout mice. In the case of licensing revenues for completed knockouts, the maximum, aggregate amount of royalty payments due to Lexicon is $6 million.

Recovery of Deltagen Europe Investments: In Summer 2005, a sale of the parcel of land that was intended for development by Deltagen's wholly-owned subsidiary, Deltagen Europe, S.A., was consummated. In late 2005, Deltagen Europe recovered approximately $1.8 million associated with the land sale.

NIH Contract Award: In September 2005, the NIH awarded Deltagen a three-year contract under which Deltagen will provide selected knockout mouse lines and related phenotypic data to the NIH. The NIH is permitted to make the knockout mouse lines available to academic institutions for their research use. Deltagen retains exclusive rights to provide its knockout mouse materials to commercial entities. On September 30, 2005, the NIH placed an initial delivery order for 129 knockout mouse lines, for a total price of $5.16 million. The maximum revenue from the NIH contract is approximately $25 million. However, the NIH has no obligation to place any further orders under the contract.

Distribution Agreement with Charles River Laboratories: In late 2005, Deltagen entered into an arrangement with Charles River Laboratories of Wilmington, Massachusetts (NYSE: CRL). CRL became the exclusive custodian and worldwide distributor of Deltagen's repository of knockout mouse materials. Under this arrangement, CRL agreed to reduce the claim it had filed in Deltagen's Chapter 11 bankruptcy case from approximately $985,000 to $250,000.

Management Changes: Pursuant to Deltagen's plan of reorganization, E. Lawrence Hill, Jr., Chief Executive Officer and Responsible Individual during Deltagen's Chapter 11 case, resigned and was replaced by Dr. Robert Driscoll, who was formerly Deltagen's Vice President, Intellectual Property & Legal Affairs. Along with the election of Dr. Driscoll as President, Chief Executive Officer and Secretary, Dr. Winston Thomas was elected Chief Operating Officer and Dr. Shera Kash was elected Vice President, Operations. Dr. Thomas was formerly the Company's Vice President, Operations and Dr. Kash was formerly the Company's Director, Operations. Mr. Daniel Ratto remains the Company's Chief Financial Officer. In addition, in December 2005, Dr. Driscoll, Mr. Hill, Dr. Philippe Chambon of New Leaf Venture Partners and Mr. Martin Hernon of Boston Millenia Partners were elected to the Board of Directors. Dr. Constantine Anagnostopoulos, Mr. Thomas Penn and Dr. William Scott remain members of the Board.

Additional detail on these and other highlights may be found in Management's Discussion and Analysis, which has been posted on the Company's website (www.deltagen.com).

Subsequent Events

In January 2006, the Company received its first installment payments under the NIH contract in an aggregate amount of $1.93 million in connection with the Company's delivery to the NIH of knockout mouse materials and related phenotypic data relating to the 129 knockout mouse lines ordered by the NIH in its initial delivery order. The remaining installment payments (total amount of $3.23 million) are expected to be received in mid-2006, assuming all data and knockout mouse materials already delivered are accepted by the NIH following inspection.

As of March 27, 2006, Deltagen's plan of reorganization has been substantially consummated, with all contested claims resolved and all assets of the estate fully administered. The Company expects its Chapter 11 case will be closed on March 31, 2006.

About Deltagen

Deltagen, Inc. is a leading provider of drug discovery tools to the biopharmaceutical industry. Deltagen offers access to its extensive inventory of knockout mouse lines and related phenotypic data, which enhance the efficiency of target validation and drug discovery. In addition, Deltagen offers target validation data in the areas of immunology and metabolic diseases. Deltagen's products and programs have been validated by customers and partners such as Eli Lilly & Co., GlaxoSmithKline, Merck & Co., Inc. and Pfizer Inc. For more information on Deltagen, visit the Company's website at www.deltagen.com.

Deltagen's website also contains the footnotes to the 2005 financial statements, Management's Discussion and Analysis and Risk Factors.

Safe Harbor Statement

This press release contains "forward-looking statements," including statements about Deltagen's future revenues and operating results, royalty and milestone revenues from its collaborations, third-party royalty obligations, discovery and development of products by collaborators, and third-party licenses and intellectual property, as well as other matters that are not historical facts or information.  These forward-looking statements are based on management's current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Deltagen's ability to achieve its operational objectives and revenue projections, receive additional orders under the NIH contract, and obtain patent protection for its discoveries, that may cause Deltagen's actual results to be materially different from any future results expressed or implied by such forward-looking statements. Information identifying such important risk factors is contained under "Information Regarding Forward-Looking Statements" and "Risk Factors Affecting Future Operating Results" in "Management's Discussion and Analysis of Financial Conditions and Results of Operations", which can be found at Deltagen's website at www.deltagen.com. Deltagen undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.


 


Consolidated Balance Sheet

 

For Fiscal Year Ending 12/31/2005 (unaudited)

 

 

 

 

(In Thousands)

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

11,557

 

Receivables

2,898

 

Prepaid expenses and other current assets

1,134

 

 

Total current assets

15,589

 

 

 

 

Property and equipment, net

139

Deposits

8

 

 

Total assets

15,735

 

 

Liabilities and Stockholders' Equity

 

Current liabilities:

 

 

Accounts payable

4,659

 

Accrued current liabilities

1,376

 

 

Total liabilities

6,035

 

 

 

 

Stockholders' equity:

 

 

Common stock

43

 

Treasury Stock

(867)

 

Additional paid-in capital

238,675

 

Retained Earnings

(227,997)

 

Current year accumulated income/(deficit)

(152)

 

 

Total stockholders' equity

9,701

 

 

 

 

 

 

Total liabilities and stockholders' equity

15,735

 

 

Consolidated Income Statement

 

For Fiscal Year Ending 12/31/2005 (unaudited)

 

 

(In Thousands)

 

 

Revenues

6,701

Operating Costs

7,162

Income From Operations

(461)

Interest Income

309

 

 

Net Income (Loss)

(152)


©2006 Deltagen, Inc. All rights reserved.