Monogram Biosciences 8-K 2009
MONOGRAM ANNOUNCES 2008 YEAR-END FINANCIAL RESULTS
Record Revenue for 2008; Guidance for Revenue Growth in 2009; and Plan for Achieving
Sustainable Positive Cash Flow
Conference call today at 4:30 p.m. ET
SOUTH SAN FRANCISCO, Calif., February 12, 2009 Monogram Biosciences, Inc. (Nasdaq: MGRM) today reported financial results for the quarter and year ended December 31, 2008.
The Company reported revenues of $62.2 million for the year ended December 31, 2008, 44% higher than $43.2 million for the year ended December 31, 2007. Including deferred revenue from sales of Trofile to Pfizer of $5.8 million, total revenue on this non-GAAP basis was $68.0 million, 53% higher than Non-GAAP total revenue of $44.4 million in 2007.
The Company reported revenues of $15.1 million for the fourth quarter of 2008, 10% higher than $13.7 million in the fourth quarter of 2007. Including deferred revenue from sales of Trofile related to Pfizer of $2.2 million, total revenue for the quarter on this non-GAAP basis was $17.3 million, 23% higher than Non-GAAP total revenue of $14.1 million in 2007.
In addition to the reported revenue, Monogram records as deferred revenue on the balance sheet, the sale of Trofile assays related to Pfizer for patient testing outside of the U.S. and for use in Pfizers clinical trials. This revenue was recorded as deferred revenue due to the accounting treatment for the Companys collaboration with Pfizer. With Trofile now available in over 30 countries around the world, total revenue, including assay revenue that is deferred for accounting purposes, along with our reported revenue provides a more complete reflection of the progress in our business, said William Young, Monogram chief executive officer.
Monogram previously established 2009 revenue guidance of between $66 million and $70 million and with deferred revenue related to the Pfizer collaboration of $4-5 million, non-GAAP revenue could be between $70 million and $75 million.
Three separate sources of growth are expected to drive Monograms 2009 revenues:
We are pleased to report revenues for 2008 that are substantially increased over last year and consistent with our prior guidance, added Young. We expect further revenue growth in 2009 in both HIV and oncology. Our plan for 2009 is tightly focused on those key programs and deliverables that we believe will drive the most significant stockholder value. Capitalizing on the proven strong clinical utility of Trofile and the outstanding progress in our oncology programs are important priorities, as is the close management of our cash flow.
Cash Flow Target
A key financial goal for Monogram is to achieve cash flow breakeven by the fourth quarter of 2009 and then to remain cash flow positive on a sustainable basis said Merriweather. We expect to attain this goal at the low end of our full year revenue guidance range of $66-$70 million.
We have taken a number of steps to reduce our use of cash, continued Merriweather. These include reduction of costs related to personnel, programs and overhead activities. Additional steps will be taken if necessary to achieve our goal of cash flow breakeven. Together, our cost reductions have taken over $10 million out of our planned 2009 expenses. These actions have also significantly reduced the level of revenues at which cash flow breakeven is projected from $23-25 million per quarter to less than $20 million per quarter.
Monogram had $16 million in cash at December 31, 2008. Our goal is to reduce our use of cash to approximately $6-8 million for the year, noted Merriweather.
Key accomplishments in 2008 in Monograms HIV business include:
Weve seen significant progress in our HIV franchise during 2008, commented Young. In particular, the introduction and clinical validation of our enhanced Trofile Assay has solidified Trofiles role as the only clinically validated way to select the appropriate patients for CCR5 antagonists, such as Pfizers Selzentry. Looking to the future, we believe that the CCR5 class of HIV drugs has an important role to play in HIV treatment and we anticipate increased use of Trofile for assessment of treatment-experienced patients for Selzentry therapy. Pfizers reanalysis of their earlier phase III trial in treatment-naïve patients suggests that, in time and after regulatory review and approval, Selzentry may have even broader applicability.
Key accomplishments in 2008 in Monograms oncology business include:
Preliminary results from this study, that were previously presented at the 44th ASCO Annual Meeting in Chicago, Illinois, in June 2008, indicated that HERmark was a better predictor of response to trastuzumab than FISH testing, even when conducted in a central laboratory. These results also indicated discordance between the assessments of HER2 status as measured by HERmark and FISH, such that 14% of FISH-negative patients were determined to be HER2 high expressors by HERmark and 13% of FISH-positive patients were determined to be HER2 low expressors by HERmark. The additional analyses reported at San Antonio clarify that in the specific patients where there is discordance between the two assessments of HER2 status, the HERmark result is the one that is aligned with clinical outcome.
In 2008, we established the ability of our VeraTag assays, including our first CLIA-validated product, the HERmark Breast Cancer Assay, to make reliable, accurate and quantitative measurements of a number of proteins and protein complexes in the EGFR/HER family, commented Young. As many of these markers are believed to be important to the progress of multiple cancers, this positions the VeraTag platform for an important role in patient selection and clinical development across a broad spectrum of cancer therapy.
In 2009, Monograms plans for further developing its oncology franchise include:
We are excited about the multiple opportunities for establishing VeraTag as an important tool in the development and use of targeted cancer therapies, continued Young. Clinically validating HERmark and extending it from measurements of HER2 status to a broader assessment of tumor status has the potential to make HERmark a very important tool for oncologists. Similarly, the availability of an expanded range of VeraTag assays has the potential to open up opportunities across multiple cancer types and therapies.
GAAP and Non-GAAP Results
Net Income/(Loss) and Net Income/(Loss) Per Share are shown below in accordance with GAAP and also on a Non-GAAP Basis. The Company is reporting Non-GAAP results which provide a clearer view of ongoing results by excluding the impact of non-cash valuation adjustments related to our convertible debt. Such adjustments have been and could continue to be significant and unpredictable in future quarters depending on several factors, including the level of the Companys common stock price.
The following table sets out Net Income/(Loss) and Net Income/(Loss) Per Share on both GAAP and Non-GAAP Basis. A reconciliation of these Non-GAAP results to GAAP results is included with the Statement of Operations data attached to this release.
We believe that the foregoing presentation of these Non-GAAP financial measures will enable investors, analysts and readers of our financial statements to compare Non-GAAP measures with relevant GAAP measures in all periods presented. Any Non-GAAP financial measure used by us should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
On October 27, 2008, the Companys Board of Directors approved a 6-to-1 reverse stock split, as previously authorized and approved by the Companys stockholders at the September 19, 2007 annual meeting, which became effective on November 4, 2008. At December 31, 2008, a total of 22.9 million shares of common stock were outstanding and stock options were outstanding on 4.0 million shares of common stock. The principal amount of Pfizers $25 million convertible note, issued in May 2006, is convertible into approximately 1.5 million shares of common stock. The $30 million principal amount of our 0% Convertible Senior Unsecured Notes, issued in January 2007, is convertible into approximately 2.0 million shares of common stock. The conversion ratios of the respective convertible notes were automatically adjusted to reflect the reverse stock split.
Conference Call Details
Monogram will host a conference call today at 4:30 p.m. Eastern Time. To participate in the live teleconference please call (877) 719-9796, or (719) 325-4801 for international callers, fifteen minutes before the conference begins. Live audio of the call will be simultaneously broadcast over the Internet and will be available to members of the news media, investors and the general public. Access to live and archived audio of the conference call will be available by following the appropriate links at www.monogrambio.com and clicking on the Investor Relations link. Following the live broadcast, a replay of the call will also be available at (888) 203-1112, or (719) 457-0820 for international callers. The replay passcode is 9724774. The information provided on the teleconference is only accurate at the time of the conference call, and Monogram assumes no obligation to provide updated information except as required by law.
Monogram is advancing individualized medicine by discovering, developing and marketing innovative products to guide and improve treatment of serious infectious diseases and cancer. The Companys products are designed to help doctors optimize treatment regimens for their patients that lead to better outcomes and reduced costs. The Companys technology is also being used by numerous biopharmaceutical companies to develop new and improved anti-viral therapeutics and vaccines as well as targeted cancer therapeutics. More information about the Company and its technology can be found on its web site at www.monogrambio.com.
Forward Looking Statements
Certain statements in this press release are forward-looking, including statements regarding the demand and outlook for our products, including our Trofile and HERmark assays, our projected use of cash, our projected revenues and our plans for further developing our oncology franchise. These forward-looking statements are subject to risks and uncertainties and other factors, which may cause actual results to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. These risks and uncertainties include, but are not limited to: risks and uncertainties relating to the performance and acceptance of our products; the growth in revenues from all products, including Trofile, growth in deferred revenues; the size, timing and success or failure of any clinical trials for CCR5 inhibitors, entry inhibitors or integrase inhibitors; the risk that our VeraTag assays, including HERmark, may not predict response to particular therapeutic agents; the risk that we may not be able to obtain additional cohorts of patient samples for additional VeraTag studies, our ability to successfully conduct clinical studies and the results obtained from those studies; whether larger confirmatory clinical studies will confirm the results of initial studies; expected reliance on a few customers for the majority of our revenues; the renewal of certain customer agreements, including the Pfizer collaboration for the ex-US distribution of Trofile; the impact of competition; whether payers will authorize reimbursement for our products and services and the amount of such reimbursement that may be allowed; whether the FDA or any other agency will decide to further regulate our products or services, including Trofile; whether the draft guidance on Multivariate Index Assays issued by the FDA will be subsequently determined to apply to our current or planned products; whether we will encounter problems or delays in automating our processes; the ultimate validity and enforceability of our patent applications and patents; the possible infringement of the intellectual property of others; whether licenses to third party technology will be available; whether we are able to build brand loyalty and expand revenues; restrictions on the conduct of our business imposed by the Pfizer, G.E. and
other debt agreements; the impact of additional dilution if our convertible debt is converted to equity; and whether we will be able to raise sufficient capital in the future, if required. For a discussion of other factors that may cause actual events to differ from those projected, please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as well as other subsequent filings with the Securities and Exchange Commission. We do not undertake, and specifically disclaim any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
PhenoSense, PhenoSenseGT, Trofile, HERmark and VeraTag are trademarks of Monogram Biosciences, Inc. Herceptin is a registered trademark of Genentech, Inc. Selzentry is a trademark of Pfizer Inc.
~financials to follow~
MONOGRAM BIOSCIENCES, INC.
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(In thousands, except per share amounts)
Management believes that this non-GAAP financial data supplements the Companys GAAP consolidated financial statements by providing investors with additional information which allows them to have a clearer picture of the Companys operations, financial performance and the comparability of the Companys operating results from period to period as they exclude the effects of revaluation of the Companys convertible debt that management believes are not indicative of the Companys ongoing operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Above, management has provided a reconciliation of the non-GAAP financial information with the comparable consolidated financial information reported in accordance with GAAP.
MONOGRAM BIOSCIENCES, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA
Reconciliation of Revenue on GAAP to Non-GAAP Basis
Total revenue is shown below in accordance with GAAP and also on a Non-GAAP basis to include deferred revenue from the sale of the Companys assays related to Pfizer of $2.2 million and $0.4 million for the three months ended December 31, 2008 and 2007, respectively, and $5.8 million and $1.2 million for the twelve months ended December 31, 2008 and 2007, respectively. The Company is reporting total revenue on a Non-GAAP basis to provide a matching of revenue and expenses for product sales.