WaferGen Biosystems, Inc. (OTC Bulletin Board: WGBS), a leading developer of state-of-the-art genomic analysis systems, today reported financial results for the three months and year ended December 31, 2010.
"We were pleased to see strong revenue growth in 2010 to a total of $2.2 million for the year. This revenue exceeded our guidance of $1.5 to $2 million for the year," said Alnoor Shivji, Chairman and CEO. "We have made great progress over the past year to position the SmartChip System as the product of choice for genomic analysis in high-growth markets such as next-generation sequencing. We launched the 5,184 (5K) nanowell system in August 2010, and have subsequently added additional products to broaden the platform's applicability. We have enhanced our distribution capability to Europe, Japan and China and grown our Management team, Board of Directors and Scientific Advisory Board to sustain our growth. We anticipate that 2011 will be a year of strong growth and broader commercial adoption for the company, with new products, applications and additional customers."
Revenue
Revenue for the fourth quarter ended December 31, 2010, grew to $712,000 compared to $190,000 for the fourth quarter ended December 31, 2009. Revenue for the 12 months ended December 31, 2010, grew to $2.2 million compared to $379,000 for the 12 months ended December 31, 2009. The majority of the revenue was from sales of a combination of one or more of WaferGen's SmartChip Systems, SmartChip Panels (disposable gene chips) and/or SmartChip Gene Expression Profiling Services.
The 2010 revenue growth is primarily the result of favorable market acceptance of the Company's SmartChip Real-Time PCR System, launched in August 2010. By the end of 2010, WaferGen had a total of 27 customers and/or collaborators, primarily leading academic institutions, that have purchased or used SmartChip products and/or services in their research projects. The company sold 9 SmartChip Systems to customers in the United States, Europe and the Far East.
Net Income/Loss
WaferGen reported a net loss of $3.1 million, or $(0.08) per share (basic and diluted), for the fourth quarter of 2010 compared to a net loss of $3.0 million or $(0.10) per share (basic and diluted), for the same period in 2009. The company reported a net loss of $12.1 million, or $(0.35) per share (basic and diluted), for the year ended December 31, 2010, compared to a net loss of $10.6 million, or $(0.39) per share (basic and diluted), from 2009.
The net loss for the three months and year ended December 31, 2010 increased primarily due to higher operating expenses associated with the commercialization of the SmartChip System. Operating expenses were $4.0 million for the three months ended December 31, 2010 compared to $3.1 million in the same period of 2009; and were $13.9 million for 2010 compared to $10.1 million for 2009.
Net loss for the three and 12 months ended December 31, 2010, was impacted by warrant derivative revaluations. Net gains from warrant derivative revaluations for the three months ended December 31, 2010, were $541,000, compared to a net loss of $64,000 for the three months ended December 31, 2009; and a net gain for the 12 months ended December 31, 2010, of $555,000 compared to a net loss of $564,000 for 2009. These non-cash losses and gains are attributed to revaluations of outstanding warrants and result primarily from a fluctuation in the company's stock price in the period – an increase in company stock price results in losses and vice versa.
Operating Expenses
For the three months ended December 31, 2010, research and development expenses decreased to $1.6 million as compared to $1.7 million for the three months ended December 31, 2009. For the 12 months ended December 31, 2010, research and development expenses increased to $6.7 million, as compared to $5.1 million for 2009. The increase in research and development expenses for the 12 months ended December 31, 2010, occurred primarily from expenses associated with the development of SmartChip products and services.
For the three months ended December 31, 2010, sales and marketing expenses increased to $694,000, as compared to $149,000 for the three months ended December 31, 2009. For the 12 months ended December 31, 2010, sales and marketing expenses increased to $2.1 million, as compared to $601,000 for 2009. The increase in sales and marketing expenses in both the fourth quarter and 12 months ended December 31, 2010, resulted primarily from additional staff and promotional activities in conjunction with the commercialization and sales of SmartChip Systems and services.
For the three months ended December 31, 2010, general and administrative expenses increased to $1.6 million, as compared to $1.2 million for the three months ended December 31, 2009. For the 12 months ended December 31, 2010, general and administrative expenses increased to $5.1 million as compared to $4.4 million for 2009. General and administrative expenses increased due primarily to additional staff and consulting expenses.
Assets
WaferGen ended 2010 with $2.2 million in unrestricted cash and cash equivalents, and $4.3 million of total current assets. These figures do not include $5 million in proceeds from the financing with a strategic investor, Malaysian Technology Development Corporation Sdn. Bhd. that was announced in December 2010 and funded in 2011. The company ended 2009 with approximately $6.4 million in total current assets, including $6.0 million in cash and cash equivalents.
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