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Deltagen Reports 2006 Second Quarter Financial Results
 

SAN CARLOS, California, September 29, 2006 - Deltagen, Inc. (Pink Sheets: DGEN), a leading provider of drug discovery tools to the biopharmaceutical industry, today reported financial results for the three months ended June 30, 2006.

Revenues:  The Company's consolidated revenues for the three months ended June 30, 2006 totaled $3.749 million, compared to $1.882 million in the first quarter of 2006.  The second quarter revenues were attributable primarily to revenue received from our NIH contract, under which we recognized approximately $3.2 million in the second quarter of 2006.  Of this amount, approximately $1.3 million was received during the second quarter and approximately $1.9 million was received early in the third quarter of 2006.  No new delivery orders were placed by the NIH in the second quarter of 2006 and there are no assurances that the NIH will place any additional delivery orders.  The decrease in non-NIH-related revenues was attributable primarily to the fact that the Company did not recognize any access extension fees under its DeltaBase collaboration agreements during the second quarter of 2006.  The Company recognized $0.500 million in extended access fees in the first quarter of 2006.

Interest Income:  The Company had interest income of $0.087 million for the three months ended June 30, 2006.

Expenses:  Total consolidated expenses for the three months ended June 30, 2006 were $2.015 million, of which $1.125 million were attributable to third-party royalty and commission obligations and $0.123 million were attributable to a non-cash stock-based compensation expense relating to stock options granted by the Company on March 30, 2006 in accordance with Statement of Financial Standards (SFAS 123R).  Other operating expenses, which totaled $0.767 million for the three months ended June 30, 2006, were attributable primarily to salaries and other general and administrative expenses, and patent prosecution expenses.  Total consolidated expenses for the first quarter of 2006 were $1.555 million, of which $0.493 million were attributable to third-party royalty and commission obligations.  Other operating expenses totaled $1.062 million in the first quarter of 2006.  The increase in third-party royalty and commission obligations in the second quarter over the first quarter was due to the increase in revenues in the second quarter, which increased 100% over the first quarter.  The decrease in other operating expenses was due to a decrease in patent prosecution expenses and the cessation of legal expenses associated with the administration of the Company's bankruptcy case.  Legal and administrative fees associated with prosecution of the Company's patent portfolio were $0.201 million for the three months ended June 30, 2006, compared to $0.373 million in the first quarter of 2006.

Net Income:  Net income before provision for income taxes for the three months ended June 30, 2006 was $1.821 million.  Net income after provision for income taxes for such three-month period was $1.483 million.  

Cash, Cash Equivalents and Accounts Receivable:  As of June 30, 2006, the Company had $10.789 million in consolidated cash and cash equivalents and $3.380 million in accounts receivable.

The unaudited consolidated financial statements for the second quarter of 2006, accompanying notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations for such period will be posted on Deltagen's website (www.deltagen.com). 

The balance sheet for 2005 has been audited and the audited consolidated balance sheet will be posted on the Company's website, together with the auditors' report and notes to the financials for such period.

The consolidated financial results for the second quarter of 2006 reflect certain adjustments to the 2005 and first quarter 2006 financials made in connection with the audit.  The adjustments are discussed in the notes to the financials for the second quarter of 2006, which will be made available on Deltagen's website.

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. 

Safe Harbor Statement

This press release contains "forward-looking statements," including statements about Deltagen's future revenues and operating results, royalty and milestone revenues, third-party royalty obligations 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 and to 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 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

 

 

 

and Quarters ending 3/31/06 & 6/30/06

Audited

Unaudited

Unaudited

 

 

(In Thousands)

12/31/05

03/31/06

06/30/06

 

 

 

Consolidated

Consolidated

Consolidated

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

            11,557

            10,434

            10,789

 

Accounts receivable, net

              2,487

              1,561

              3,380

 

Prepaids, Deposits and Tax Assets

              1,503

                 490

                 640

 

 

Total current assets

            15,547

            12,485

            14,809

 

 

 

 

 

 

Property and equipment, net

                 139

                   84

                   73

 

 

 

 

 

 

Non-current portion of deferred tax assets

              1,000

                 848

                 400

 

 

 

 

 

 

 

 

Total assets

            16,686

            13,417

            15,282

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

              4,296

              1,539

              1,591

 

Accrued expenses

                 876

                 80

                 143

 

 

Total liabilities

              5,172

              1,619

              1,734

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Common stock

                   39

                   39

                   39

 

Treasury Stock

               (867)

               (867)

               (867)

 

Additional paid-in capital

          238,648

          238,648

          217,223

 

Additional paid-in capital - Stock-based compensation

                  -

                  -

21,548

 

Retained Earnings

        (226,306)

        (226,089)

        (224,606)

 

Foreign currency translation adjustment

 -

                   67

                 211

 

 

Total stockholders' equity

            11,514

            11,798

            13,548

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

            16,686

            13,417

            15,282

 

 


 

Consolidated Income Statement and

Statement of Retained Earnings

For Quarters ending 3/31/06 & 6/30/06

 

 

 

 

 

Unaudited

Unaudited

(In Thousands)

03/31/06

06/30/06

 

Consolidated

Consolidated

 

 

 

Revenue

              1,882

              3,749

Royalty and Commission Costs

                 493

              1,125

Stock-Based Compensation Expense

-

123

Other Operating Costs

              1,062

                 767

 

 

 

Income From Operations

                 327

              1,734

 

 

 

Interest Income

                 97

                   87

Loss on disposal of assets

                 (44)

                    -  

 

 

 

Total Other Income

                   53

                   87

 

 

 

Income before provision for income taxes

                 380

              1,821

 

 

 

Provision for income taxes

 

 

   Current income tax expense

                   11

                   39

   Deferred income tax expense

                 152

                 817

   Adjustment for valuation allowance

                    -  

               (518)

 

 

 

Total income tax expense

                 163

                 338

 

 

 

Net Income (Loss)

                 217

              1,483

 

 

 

Retained earnings at beginning of period

        (226,306)

        (226,089)

 

 

 

Retained earnings at end of period

        (226,089)

        (224,606)

 


 

 

Consolidated Cash Flow

 

 

For Quarters ending 3/31/06 & 6/30/06

 

 

 

 

 

Unaudited

Unaudited

(In Thousands)

03/31/06

06/30/06

 

Consolidated

Consolidated

 

 

 

Cash flows from operating activities:

 

 

 

 

 

   Net Income

                 217

              1,483

 

 

 

Adjustments to reconcile net income to net cash

 

used by operating activities

 

 

     Depreciation

                   11

                   11

     Loss on disposal of fixed assets

                   44

                    -  

     Stock-based compensation expense

-

123

 

 

 

(Increase) / Decrease in operating assets

 

 

     Accounts receivable

                 926

            (1,819)

     Prepaids, deposits and tax assets

              1,165

               298

 

 

 

Increase / (Decrease) in operating liabilities

 

 

     Accounts payable

            (2,757)

52

     Accrued Expenses

               (796)

                 63

 

 

 

Net Increase (Decrease) in cash

            (1,190)

                 211

 

 

 

Effect of foreign exchange rate change on cash

                   67

                 144

 

 

 

Cash at beginning of period

            11,557

            10,434

 

 

 

Cash at end of period

            10,434

            10,789

 


©2006 Deltagen, Inc. All rights reserved.