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Sponsored Research, Sales Drive Up Nanogen s Q3 Revenues

NEW YORK, Oct 31 – Nanogen said Tuesday its third quarter revenues jumped 84 percent to $3.5 million from $1.9 million, with $545,000 stemming from sales of its NanoChip Molecular Biology Workstations and NanoChip cartridges.

In third quarter 1999, Nanogen did not post any revenues from sales of its products.

Some $2.57 million in revenue came from sponsored research in the third quarter of this year, up from $1.23 million in the year ago period. Grant revenue was down to $436,000 from $712,000 a year ago.

Operating expenses rose to $9.9 million, compared with $7.6 million in the year ago period due in part to patent litigation and higher sales and marketing expenses. Nanogen said it expects these increases to continue.

R&D held steady at $5.4 million for the quarter, while general and administrative expenditures nearly doubled to $4.0 million.

Net losses for the quarter reached $4.6 million, or 22 cents per share, compared with net losses of $5.2 million, or 29 cents a share, in third quarter 1999.

By the end of the quarter, Nanogen had sold seven of its SNP-scoring NanoChip systems, six directly to end users and one through a funded research agreement.

The company’s customers include the Mayo Clinic, the National Cancer Institute, Egea Biosciences, Aventis, and SKW Biosciences.

Also this week the company announced that it had “placed” products with the Children's Hospital of Pennsylvania and the Children's Hospital of Tokyo.

During the quarter Nanogen also penned a 10-year agreement with Hitachi to develop and manufacture instruments. Hitachi will bear the primary expense of developing future generations of instruments, while Nanogen will focus on making the NanoChip cartridge and developing applications. Hitachi also invested $2 million in the company, purchasing 74,590 shares at $26.813 per share.

The company received two grants in the third quarter, from US Army and the Space and Naval Warfare Systems Center San Diego, which will provide funding for the development of Nanogen’s products.

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