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Nanogen Posts Q1 Revenue Increase of 10.3 Percent; Loss Rises on Charges

This article has been updated to include comments from a conference call and a stock quote.
 
NEW YORK (GenomeWeb News) – Nanogen reported after the close of the market on Monday that its first-quarter revenues rose 10.3 percent but its net loss nearly doubled on a charge related to the extinguishment of debt.
 
The San Diego-based molecular diagnostics firm brought in total revenues of $10.7 million for the three-month period ended March 31, compared to revenues of $9.7 million in the first quarter of 2007. Its product sales increased 32.8 percent to $8.1 million from $6.1 million year over year, while license fees and royalty income increased to $1.8 million from $1.2 million. Its contracts and grant revenue dropped to $852,000 from $2.3 million.
 
Nanogen’s net loss for the quarter was $23 million, or $.31 per share, compared to a net loss of $11.9 million, or $.17 per share, for the first quarter of 2007. The most recent quarter’s results include a $2.9 million charge for a “warrant valuation adjustment” and a $10.2 million charge related to the extinguishment of certain debt.
 
The firm’s R&D costs declined 26.2 percent to $4.2 million from $6.5 million, while its SG&A expenses fell 5.6 percent to $8.7 million from $8.9 million.
 
"Our Q1 results clearly demonstrate that the restructuring plan, initiated in the fourth quarter, has substantially improved our financial performance,“ Nanogen Chairman and CEO Howard Birndorf said in a statement. “Consistent with our prior guidance, we have achieved meaningful cost reductions while at the same time have experienced a 36 percent increase in product revenue from the prior quarter."
 
Nanogen said in September that it would sell its microarray business in an effort to focus on building its RT-PCR and point-of-care testing businesses and more rapidly achieve profitability. The firm began shutting down the microarray business in November.
 
“We will require additional financing to reach profitability and are currently working on financing alternatives,” Birndorf said during Nanogen's conference call Monday.

He also said that the firm is discussing with Nasdaq a potential move from the Nasdaq Global Market to the Nasdaq Capital Market, which has less stringent listing requirements. “If approved this would provide additional time for our stock price to regain compliance with the $1 per share threshold without the need for a reverse split.”
In early December, Nasdaq notified Nanogen that it may delist the company’s stock from the market due to failure to maintain a minimum bid price for 30 days. At the time, Nanogen said that if its stock is delisted in May, it may transfer to the Nasdaq Capital Market, at which time it will receive another 180 days to comply with the minimum bid rule.

Birndorf said Monday that Nanogen can't assure that Nasdaq will approve the switch, and if it doesn’t the firm may have to reconsider a reverse split of its stock.

Nanogen's shares were up 5.5 percent at $.42 per share in early Tuesday trade. The firm's stock has not closed a trading session above $1 since September.

It recently retained investment firm Cowen and Co. to assist it in reviewing options for its business, Birndorf noted.
Nanogen said that it expects its 2008 revenues to increase around 25 percent over its 2007 revenues of $38.2 million.