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CORRECTING AND REPLACING Clinical Data Reports 2006 Year-End Results

Posted on: Wednesday, 5 July 2006, 21:00 CDT

Please replace the release with the following corrected version due to multiple revisions.

The corrected release reads:

CLINICAL DATA REPORTS 2006 YEAR-END RESULTS

Reflecting substantial acquisitions in fiscal year 2006, Clinical Data, Inc. (NASDAQ: CLDA) today reported financial results for the fiscal year ended March 31, 2006.

Total revenue for the year ended March 31, 2006 increased 22% to $68.8 million as compared to $56.4 million in fiscal 2005. The increase was primarily due to including the operating results of Genaissance Pharmaceuticals, Inc. and Icoria, Inc. from the dates of their acquisition. Genaissance was acquired in October 2005 and Icoria was acquired in December 2005. Product revenue in our traditional business increased 2% to $50.6 million in fiscal 2006 versus $49.8 million in fiscal 2005.

The Company reported a net loss of $50.9 million, or a net loss of $8.54 per basic and diluted share, in fiscal 2006 versus net income of $3.4 million, or net income of $0.77 per basic ($0.75 per diluted) share, in fiscal 2005. The net loss in fiscal 2006, calculated in accordance with U.S. generally accepted accounting principles, was primarily attributable to expensing $39.7 million of in-process research and development projects being conducted by Genaissance and Icoria at the time of their acquisition. The balance of the loss in fiscal 2006 was due primarily to increased operating expenses due to the inclusion of Genaissance and Icoria as Clinical Data continues to integrate these operations. Excluding the write-off of the in-process research and development expenses and amortization of other intangible assets purchased in the fiscal 2006 acquisitions, the net loss on a non-GAAP basis was $8.6 million, or a net loss of $1.44 per basic and diluted share.

On June 14, 2006, the Company announced that it entered into definitive agreements with certain institutional and other accredited investors with respect to the private placement of 1,039,783 shares of newly issued common stock, and warrants to purchase 519,889 shares of common stock, for net proceeds of approximately $17.0 million, after transaction expenses of approximately $50,000. The net proceeds from this financing will be used for general working capital purposes, executing the Company's previously announced Phase III clinical trail of vilazodone for the treatment of depression, accelerating the integration of the newly acquired operations, development of genetic markers, and commercialization and market expansion for its genetic tests including its proprietary test for Long QT, Clozapine-Induced Agranulocytosis and the warfarin response tests. At June 16, 2006, cash and cash equivalents totaled approximately $20.8 million.

Separately, the Company noted that its independent auditors issued an unqualified opinion on the Company's fiscal 2006 consolidated financial statements but included in that opinion a fourth paragraph describing a material uncertainty related to the Company's ability to continue as a going concern for a reasonable period of time. As discussed in Note 1 to the financial statements in the Company's Annual Report on Form 10-K filed with the SEC, the Company has undertaken several steps subsequent to March 31, 2006, to improve liquidity and reduce its projected uses of cash including completion of the private placement on June 13, 2006, as discussed above, and restructuring certain long-term-debt and lease obligations. In addition, on May 15, 2006, the Company separately announced its intention to spin off the vilazodone business to its shareholders in the form of a newly-created company intended to operate under the name Precigen Therapeutics Inc. Precigen will be separately financed to develop and commercialize vilazodone. Clinical Data plans to issue the new company's shares to Clinical Data shareholders in the form of a tax-free stock dividend.

Drew Fromkin, President and CEO, said, "Clinical Data made the strategic decision to move into the exciting realm of genomics from its roots in the classic diagnostics business. In so doing, we are seeking to capitalize on significant new growth opportunities within several distinct market segments of health care. Our targeted offerings meet crucial market needs for payers, providers, and patients as well as pharmaceutical, biotech, agricultural, academic, governmental and other constituents. The Company is clearly transforming itself to take advantage of these strategic assets.

"The companies we acquired in fiscal 2006 are the basis for the significant transformation of the business, and as of today, this transformation remains an ongoing process. Not surprisingly, more work remains to be done, but we have been working aggressively to better align costs with revenue and leverage our strategic assets. We believe this core financial objective is achievable through continued focus, the building of a strong management team, fiscal discipline and hard work. While we understand that some shareholders will take note of our recent financial performance, shareholders can be assured that we have identified and continue to identify the key drivers in the business that most significantly impact profit and loss in our new businesses, and we are actively executing a plan to optimize value.

"The companies we acquired had considerable assets but, in our opinion, did not leverage those assets in such a way as to achieve profitability. Upon consummation of our 2005 genomic acquisitions, we have been moving rapidly to integrate these businesses and organize them in a way that targets the appropriate business lines to the right constituents. We have already taken significant costs out of the businesses and will continue to do so in upcoming quarters. Our strategy and goal remains to create more value for each of these constituencies and to deliver these services in a profitable way. This reorganization and improvement continues, and one thing that may not be readily discernible in our financial results is the fact that we have experienced significant improvements in a broad range of key operating parameters. At the same time, however, it is important to set expectations appropriately: this realignment process will take time.

"Going forward, a key objective is to optimize vilazodone, a promising asset obtained through our acquisition of Genaissance. Vilazodone is a dual action, SSRI/5HT1A partial agonist drug candidate for depression with unique pharmacological properties, including an anti-anxiety component that has recently entered into a pivotal Phase III clinical study. We are now in the patient enrollment stage of the Phase III study, and we are very excited about the potential for this drug candidate. In addition, using the genomics expertise of our Cogenics(TM) and PGxHealth(TM) divisions, we are examining certain critical genetic biomarkers that may enable us to develop a genetic test to better target patient populations for vilazodone. This potential-associated genetic test capability is at the cutting edge of an important facet of personalized medicine that is gaining the attention of the medical community and regulators. After significant review, management collectively determined that the vilazodone asset warrants an environment where it can thrive and where it can be funded in a way that optimizes the likelihood for success. Consequently, we are moving ahead with plans to spin this asset off to shareholders through the creation and financing of a new company called Precigen Therapeutics, Inc. We are working to complete this effort as soon as possible.

"Separately, we are very excited about the strong growth of Familion(TM), our proprietary genetic test to identify inherited forms of Long QT Syndrome and Brugada Syndrome, cardiac channelopathies that create serious risks in families with these genetic mutations. The test, for which we own the underlying intellectual property, is scaling, and we are seeing growing demand for the test in North America and abroad. We believe this and the other tests in our pipeline constitute a model for the types of higher-margin, genetic tests in which our PGxHealth division will specialize. We expect to continue to build a pipeline of products that will focus on the use of genetic markers to optimize the use of therapeutics.

"In terms of our genomics businesses, we seek to leverage the biomarker know-how and substantial capital invested into our Genaissance and Icoria operations. With these assets, we have identified strong market opportunities to develop and commercialize new genetic tests, in-license and validate additional genetic markers, and establish a broader line of products in the vein of the recently announced warfarin test and our test for Clozapine-Induced Agranulocytosis. These Therapeutic Diagnostics(TM) are being developed and commercialized through PGxHealth. We will leverage our know-how, experience and HAP database and technology with the goal of building and expanding our pipeline as we grow into existing and new therapeutic disease areas. It is our belief that this new generation of tests should provide tremendous value to payers and providers seeking to improve patient clinical outcomes, while reducing the cost of care. By reducing costs while simultaneously improving therapeutic efficacy and/or safety, these products have the unique potential to achieve something the healthcare industry has sought for a long time.

"Our Cogenics division, which combines services from the Genaissance, Icoria, Lark and Genome Express acquisitions, addresses another set of constituencies as one of the world's largest independent providers of genomic, DNA and RNA services. Regulated and unregulated genomic services are marketed to pharmaceutical, biotech, agricultural, academic, governmental and other constituents. We continue to consolidate operations within the Cogenics division, with particular emphasis on better utilization of plant and related assets, while growing our business lines to set a course toward profitability. We have been aggressive in reducing costs, as we have stated previously, yet it is an ongoing process.

"Our traditional Vital Diagnostics(TM) IVD and clinical chemistry business remains a strong and significant contributor to today's revenue stream. A leader in its space, this business (on a stand-alone basis) remains profitable, driven by significant operations in the U.S. and Europe. Consistent with historical performance, Vital Diagnostics continues to function as a leading niche player in the business of bringing diagnostic products and equipment to physician office laboratories and small hospitals and clinic settings.

"In terms of management and personnel, we continue our search for a permanent chief financial officer. The company is actively interviewing candidates for the position. In addition, we are bolstering the senior management team as necessary to realign our business and execute our plans. The Company expects to announce additions to the team in the very near future.

"These past months have been transformative for Clinical Data. We believe that our substantial acquisitions have been strategically sound. The process of aligning our strategy, intellectual and physical capital, and corporate structure continues. Our management team remains committed to positioning Clinical Data as a leader in improving patient care in the US and abroad."

Recent Events Update

-- On June 14, 2006, the Company announced that it had entered

into definitive agreements with certain institutional and

other accredited investors with respect to the private

placement of 1,039,783 shares of newly issued common stock,

and warrants to purchase 519,889 shares of common stock, for a

total purchase price of approximately $17.0 million.

-- On June 6, 2006, the Company announced that its PGxHealth(TM)

division will provide a genetic test to clinicians that is

associated with response to warfarin, a commonly prescribed

drug to treat and prevent blood clots associated with stroke,

heart attack, and other clotting disorders. When combined with

certain clinical parameters, more than 50% of the variability

in response to warfarin can now be explained. It is

anticipated that PGxHealth will make this test commercially

available by the end of calendar 2006.

-- On May 15, 2006, Clinical Data announced that it plans to spin

off the vilazodone business to its shareholders in the form of

a newly-created company intended to operate under the name

Precigen Therapeutics Inc. Precigen will be separately

financed to develop and commercialize vilazodone, a novel dual

serotonergic antidepressant compound being studied for

treatment of depression, along with a potential companion

biomarker test that will be developed by the PGxHealth

division of Clinical Data. Clinical Data plans to issue the

new company's shares to Clinical Data shareholders in the form

of a tax-free stock dividend. The spin-off is not expected to

impact the progress or timing of vilazodone's clinical

program.

-- On May 15, 2006, the Company announced a reorganization of its

management team under which Drew Fromkin, previously executive

vice president of Clinical Data and president of its PGxHealth

division, was appointed president and chief executive officer

of Clinical Data. In addition, Israel M. Stein, M.D.,

previously Clinical Data's president and chief executive

officer, was appointed Clinical Data's executive vice chairman

and interim chief financial officer.

-- On May 12, 2006, the Company announced it had entered into a

5-year research collaboration agreement with the Institute for

Genome Sciences & Policy (IGSP) at Duke University. Under

terms of the agreement, Clinical Data's PGxHealth division

will provide IGSP with non-exclusive, confidential access to

its STRENGTH studies conducted to discover genetic variants

associated with baseline lipid parameters and the response of

these parameters to statins (used to treat elevated levels of

cholesterol). In return, Clinical Data receives the right to

evaluate the commercial potential of any findings derived from

studies where either the STRENGTH clinical and/or genetic

databases are utilized in IGSP studies. Should Clinical Data

be interested in any such findings, the Company also receives

first right to negotiate a commercial license relating to any

and all of the findings. Researchers at Duke IGSP are planning

a series of studies to find and validate associations between

genetic variants and responses to drugs used for dyslipidemia

(or "hypercholesterolemia") in a family practice setting and

are also carrying out similar studies in the areas of

hypertension and asthma. Duke researchers, their staff and

named collaborators will use PGxHealth's STRENGTH data to help

plan, validate and analyze findings from these studies.

-- On May 10, 2006, the Company launched its new and improved

corporate website.

-- On May 8, 2006, Clinical Data announced it had entered into an

agreement with Maple Leaf Foods Inc. to assist with the

further development and commercialization of Maple Leaf's DNA

traceability program, a porcine traceability system to

genetically trace back any pork product to its farm of origin

by means of the Single Nucleotide Polymorphism (SNP)-based

(DNA) test. Clinical Data's Cogenics division will conduct the

work. It is anticipated that this technology will be offered

to and utilized by other companies in the broader global pork

industry. Both companies believe that the traceability system

will receive wide acceptance by virtue of the compelling food

safety and quality benefits that will be realized by producers

and consumers. The DNA traceability system operates through

parentage analysis.

-- On April 19, 2006, Clinical Data announced that its PGxHealth

division had completed the validation of a genetic marker that

will help identify patients at risk for Clozapine-Induced

Agranulocytosis (CIA), a potentially deadly blood disorder.

This gene is located in the HLA complex; an area associated

with CIA. The Company also announced that it is developing a

commercial genetic test for CIA risk using this newly

validated research. PGxHealth expects to launch this new

genetic test in 2006. In addition, Clinical Data noted that

its research team continues to work on identifying other

biomarkers related to CIA to further improve the predictive

power of this and next generation tests and further noted that

other drugs also induce agranulocytosis as well as neutropenia

(a somewhat less acute blood disorder which is often the

precursor to agranulocytosis). PGxHealth is actively

investigating these findings with respect to other drugs. It

is anticipated that PGxHealth's new clozapine test will

provide physicians, patients and their families with new,

quantifiable information about a patient's risk for CIA and

should lead to better informed treatment decisions concerning

initiating or continuing treatment of schizophrenia with

clozapine. Such a test also has the potential to expand the

use of clozapine, a highly efficacious drug, and improve its

safety profile. After the test's performance is substantiated

in clinical use, the Company believes this test may lead to a

reduction in the frequency of blood monitoring in a subset of

patients.

Use of Non-GAAP Measures

The non-GAAP financial measures presented in this press release are utilized by Clinical Data management to gain an understanding of the comparative financial performance of the Company. Management believes that the non-GAAP financial measures are useful because they exclude those non-operational activities or transactions that are not necessarily relevant to understanding the trends of the Company or the prospects of future performance such as charges related to purchased in-process research and development projects and amortization of intangibles associated with acquisitions. Management uses these measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends in the Company's business over time. The presentation of this information is not meant to be considered in isolation or as a substitute for GAAP financial measures. The following table summarizes the non-GAAP adjustments in fiscal 2006: (in thousands, except per share amounts) Net loss as reported $ (50,978) Add back non-GAAP adjustments: Purchased research and development expense 39,700 Amortization of other intangible assets purchased in the 2006 acquisitions 2,704 Net loss as adjusted $ (8,574) Basic and diluted net loss per share: As reported $(8.54) As adjusted $(1.44) Weighted average shares - basic and diluted 5,969 About Clinical Data, Inc.

Clinical Data, Inc. is a worldwide leader in providing comprehensive molecular and pharmacogenomics services as well as genetic tests to improve patient care. The Company, founded in 1972, is organized under three worldwide divisions segmented by service offerings and varying client constituents: PGxHealth(TM); Cogenics(TM); and Vital Diagnostics(TM). Clinical Data's Therapeutic Diagnostics(TM) division, PGxHealth, builds upon existing assets and know-how acquired from Genaissance Pharmaceuticals in the areas of genomics-based, genetic tests and therapeutic efficacy and safety biomarker development for drug utilization. PGxHealth plans to develop and introduce novel Therapeutic Diagnostics in some instances in combination with new and existing therapeutics. Clinical Data's Pharmacogenomics and Molecular Services(TM) division, Cogenics, consolidates the operations of Genaissance Pharmaceuticals, Inc., Lark Technologies, Inc. and Icoria, Inc., each acquired during 2005, and Genome Express SA, acquired in 2006. Cogenics provides a comprehensive range of molecular and pharmacogenomics services to pharmaceutical, biotech, academia, agricultural, and government clients. These services are offered in both research and regulated environments and have applications across the lifecycle of pharmaceutical product development including pharmacovigilance requirements post-launch. Clinical Data's Vital Diagnostics division consolidates the operations of Clinical Data Sales & Service, Inc., Vital Scientific NV, Vital Diagnostics Pty. Ltd., and Electa Lab s.r.l. This division serves the clinical laboratory in the traditional in-vitro diagnostics market worldwide with a focus on the physician's office, hospital and small-to-medium sized laboratory segments. With customers in approximately 100 countries, Vital Diagnostics has achieved a leading market share for instruments and reagents sold into moderately complex physicians' office laboratories within the United States. Clinical Data currently employs a staff of over 430. The Company is headquartered in Newton, Massachusetts with operations in Texas, Connecticut, RTP - North Carolina, Rhode Island, and California as well as internationally in the UK, France, the Netherlands, Italy and Australia. Furthermore, Clinical Data has numerous distribution, licensing, development and other collaborations with key partners.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains certain forward-looking information and statements that are intended to be covered by the safe harbor for forward looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements about our ability to successfully integrate the operations, business, technology and intellectual property obtained in our recent acquisitions; our ability to obtain regulatory approval for, and successfully introduce our new products; our ability to expand our long-term business opportunities; our ability to maintain normal terms with our customers and partners; financial projections and estimates and their underlying assumptions; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, the effects of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include, but are not limited to, whether Clinical Data will be able to develop or acquire additional products and attract new business and strategic partners; competition from pharmaceutical, biotechnology and diagnostics companies; the strength of our intellectual property rights; the effect on the Company's operations and results of significant acquisitions or divestitures made by major competitors; the Company's ability to achieve expected synergies and operating efficiencies in all of its acquisitions, and to successfully integrate its operations; and those risks discussed and identified by Clinical Data in its public filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Clinical Data does not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in Clinical Data's SEC reports, including but not limited to its Annual Report on Form 10-K for the fiscal year ended March 31, 2006, and fiscal 2005 and 2006 quarterly reports on Forms 10-QSB and 10-Q.

Internet Website: www.clda.com

Source: Business Wire

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