Transgenomic second-quarter net loss increases to $1.1 million

Aug 13 2010

Transgenomic, Inc. (OTC Bulletin Board: TBIO) today reported financial results for the three and six months ended June 30, 2010, and provided a business update.

Six Month Financial Results

Net sales were $10.5 million for the six month periods ended June 30, 2010 and 2009.  Gross profit was $5.4 million or 51% of net sales for the 2010 period, compared with gross profit of $5.5 million or 52% of net sales for the 2009 period.  Operating expenses for the first half of 2010 were $6.8 million, which included expense from foreign currency revaluation of $0.5 million.  Operating expenses for the first half of 2009 were $7.2 million, which included expense from foreign currency revaluation of $0.4 million.

The Company reported a net loss for the six months ended June 30, 2010 of $1.5 million or $0.03 per share, compared with a net loss of $1.7 million or $0.03 per share during the comparable period of 2009.

Second Quarter Financial Results

Net sales were $5.1 million during the second quarter 2010, compared with $5.5 million during the comparable period of 2009. Gross profit was $2.5 million or 49% of net sales during the second quarter of 2010, compared with gross profit of $2.7 million or 48% of net sales during the comparable period of 2009.  Operating expenses were $3.5 million during the second quarter of 2010, which included expense from foreign currency revaluation of $0.4 million.  Operating expenses were $3.4 million during the same period of 2009, which included expense from foreign currency revaluation of $0.2 million.  Cash and cash equivalents were $5.4 million as of June 30, 2010, compared with $5.6 million as of December 31, 2009.

The net loss for the second quarter of 2010 was $1.1 million or $0.02 per share, compared with a net loss of $730,000 or $0.01 per share for the second quarter of 2009.

Comment and Outlook

Craig Tuttle, president and chief executive officer of Transgenomic, said, "We have positioned Transgenomic to play an important role in the rapidly growing field of personalized medicine.  Although companion diagnostics are of keen importance to patients, they also are important to large pharmaceutical companies as they support success in drug development owing to better patient selection, while improved efficacy and more sophisticated technology argue for appropriate drug pricing. Our COLD-PCR technology, which we licensed from Dana Farber Cancer Institute last year and continue to develop, is well-suited to this initiative as it permits mutation detection with as much as 100 times the sensitivity of currently available processes.

"Our pharmacogenomics services business is the most rapidly growing area of our business, with sales up 23% versus the second quarter of last year, albeit off a small base. In addition, revenues can be irregular and receipt of testing samples is dependent on the pace of patient recruitment in our pharmaceutical customers' clinical trials.  However, we are very pleased that the pipeline of proposals submitted to pharmaceutical companies stood at $6.0 million as of June 30, compared with $2 million as of March 31, 2010.  Clearly there is a great deal of interest in the science of biomarker discovery.

"During the quarter we sold our first K-RAS kit in Europe.  This kit uses our SURVEYOR® Nuclease technology, and we expect to complete the process of receiving a CE-IVD Mark for the kit in the third quarter.  This designation will allow wider distribution to commercial laboratories.  We continue to work on additional assays to add to a panel of kits that we are developing to test for resistance to cancer treatment with epidermal growth factor receptor inhibitors.

"We met a significant milestone with the sale of our first ARISk™ test run following the extensive technical development and validation process of this test.  ARISk determines if there is an increased risk of autism in a newborn with an autistic older biological sibling.  We plan to aggressively market the test in the coming months and expect demand for this test to be high.  In addition to performing this assay in our CLIA-certified laboratory and selling the assay through our field sales organization, we are cooperating with IntegraGen, our licensing partner, to market this test."

Commenting on second quarter instrument sales, Mr. Tuttle noted, "Our instrument business was impacted by lower consumable revenue, the decline in the euro relative to the U.S. dollar and product mix.  However, we were pleased to sell 14 WAVE® systems during the second quarter."