Full Press Release Details
PROVIDES FINANCIAL AND BUSINESS UPDATE
Conference Call to Be Held at 5:00 PM
Omaha, Neb. (April 15, 2015) - Transgenomic, Inc.
(NASDAQ: TBIO) today provided a business update and financial review for the year ended December 31, 2014.
"In 2014, we made good progress in building a foundation
for renewed growth at Transgenomic," said Paul Kinnon, Transgenomic's President and Chief Executive Officer. "We
executed on the development of Multiplexed ICE COLD-PCR (MX-ICP) in 2014, setting the stage for validation of the product in 2015
and its launch in the second quarter. A key recent development is that we have added the capability to use MX ICP quantitatively
on sequencing platforms. This further expands the commercial potential of MX-ICP and its potential to enable the adoption of truly
personalized, or precision medicine. We also continued to make progress strengthening our designated core businesses and resolving
several infrastructure issues that have been obstacles to greater success over the past year."
Mr. Kinnon continued, "MX-ICP has the advantage that it
works with all current sequencing platforms to make possible the minimally-invasive detection and monitoring of genetic alterations
that we believe are essential to the wide adoption of personalized medicine and treatment. The ability of MX-ICP to reduce or eliminate
the need for costly and painful tissue biopsies, its ultra-high sensitivity and simplicity, and its unparalleled flexibility to
work with all types of patient samples and with all genetic analysis platforms make it the ideal enabling technology for the nascent
revolution in cancer treatment. MX-ICP will, we believe, accelerate the growth of the cancer diagnostics market, which we estimate
is currently in excess of $2.5 billion annually. The fact that MX-ICP is valuable across industry segments, including laboratory
equipment manufacturers, major biopharmaceutical firms and clinical laboratory companies, further strengthens our confidence in
our strategy of focusing on licensing and partnerships to achieve broad and rapid adoption of MX-ICP in the research and clinical
markets. Another validation of our approach was our success in recently recruiting a senior industry executive with a stellar business
development background to oversee the business development campaign for MX-ICP."
"Along with our progress in laying the groundwork for
ramping up the commercial launch of MX-ICP over the rest of the year, we also have worked to solidify the current businesses we
view as core, such as our Patient Testing business, which recorded good growth in the fourth quarter of 2014 and year-over-year.
In addition, we expect the ability to perform MX-ICP for clinical studies for our Pharma and Biotech clients is a major opportunity
for revenue generation in our Biomarker Identification business, with the aim of bringing on new clients and new projects in 2015,"
Mr. Kinnon added, "We are optimistic that the issues with
receivables we saw during the implementation of our new billing and LMS system are behind us, as our new systems are coming fully
on board. We also believe that redeploying selected non-core assets as we did with our SURVEYOR business last year makes good sense,
and we may execute additional transactions of this type going forward. We are optimistic that as we head further into 2015 we are
well positioned to capitalize on the value of the MX-ICP technology."
Review of Fourth Quarter Financial Results
Net sales for the fourth quarter of 2014 were $7.7 million compared
with $6.2 million for the same period in 2013, an increase of 24%. Sales in the Laboratory Services segment increased 73% from
the comparable period last year, primarily reflecting higher sales in our Patient Testing business, which were spurred by a number
of new products launched in late 2013. These gains were partially offset by lower sales in our Contract Laboratory services business.
In the Genetic Assays and Platforms segment, net sales in the fourth quarter of 2014 declined $0.6 million as compared to the same
period in 2013, primarily due to the sale of Transgenomic's Surveyor Kits product line during the third quarter of 2014,
which resulted in lower sales of bioconsumables.
Operating expenses were $8.4 million during the fourth quarter
of 2014, compared with $5.7 million in the prior year period. The $2.7 million increase in operating expenses was primarily due
to a higher bad debt provision in the fourth quarter of 2014 as compared to the fourth quarter of 2013, partially offset by lower
stock compensation costs.
The net loss for the fourth quarter of 2014 was $5.8 million,
or $0.77 per share, compared with a net loss of $4.0 million or $0.57 per share for the fourth quarter of 2013. Cash and cash equivalents
were approximately $1.6 million at both December 31, 2014 and December 31, 2013.
Modified EBITDA, which is a non-GAAP measure that Transgenomic
views as an appropriate and sound measure of the company's results, showed a loss of $5.2 million for the fourth quarter of 2014,
compared to a loss of $2.7 million for the same period in 2013. A reconciliation of Net Loss to Modified EBITDA is presented below.
Review of 2014 Full Year Financial Results
Net sales for the twelve months ended December 31, 2014 were
$27.0 million, compared with $27.5 million for the same period in 2013. The $0.5 million decline includes a 13% decrease in the
Genetic Assays and Platforms segment as a result of lower instrument sales and lower bioconsumables sales resulting from the sale
of our Surveyor Kits product line during 2014. The Company also recorded lower sales in the Laboratory Services segment of its
Contract Laboratory services business. These decreases were partially offset by a 23% increase in Patient Testing sales in 2014,
reflecting the impact of new products launched in late 2013, as well as sales increases in the core Laboratory Services business
Gross profit was $9.7 million, or 36% of net sales in 2014,
compared with gross profit of $10.8 million, or 39% of net sales for the same period in 2013. The decrease was largely attributable
to lower sales in the Contract Laboratory services business and lower revenues from instrument and bioconsumables sales in the
Genetic Assays and Platforms segment. These decreases were partially offset by increased gross profit from Patient Testing sales.
Operating expenses were $27.0 million in 2014, compared with
$26.5 million in 2013. The increase is primarily due to higher provisions for bad debt in 2014 as compared to 2013, partially offset
by decreased stock compensation and amortization costs. For the twelve months ended December 31, 2014 and 2013, non-cash income
related to warrant revaluation was $0.5 million and $0.3 million, respectively.
As previously disclosed, in July 2014, Transgenomic sold the
rights to its SURVEYOR Nuclease technology and assets for a minimum of $4.25 million in cash. During the third quarter of 2014,
the Company recorded a net gain of $4.1 million as a result of this sale. The net loss for the twelve months ended December 31,
2014 was $13.9 million or $2.01 per share, compared with a net loss of $16.0 million, or $2.30 per share, for the comparable period
As previously announced, during the first quarter of 2014, the
Company completed a financing that raised $7 million from affiliates of Third Security, LLC, a leading life sciences investment
firm. The net proceeds from this financing were used to pay down a revolving credit line and for working capital and other general
corporate purposes. During the fourth quarter of 2014, Transgenomic completed financings that raised approximately $3.1 million
in net proceeds. These proceeds were used for working capital and other general corporate purposes.
Transgenomic management will host a conference call to discuss
the business and financial update at 5:00 p.m. Eastern Time today. To access the call via telephone, please dial 866-952-1907 from
the U.S. or Canada or 785-424-1826 for international participants and enter conference ID TRANS. The call also will be broadcast
live over the Internet. To listen to the webcast, please log onto the Company's Investor Relations web page at http://www.transgenomic.com/investor-relations/quarterly-conference-calls
and follow the instructions. An archived webcast of the call will be available for 30 days. A telephone replay will be available
from 8:00 p.m. Eastern Time April 15, 2015 through 11:59 p.m. Eastern Time on April 29, 2015 by dialing 800-839-1232 (domestic)
or 402-220-0460 (international).
Transgenomic, Inc. is a
global biotechnology company advancing personalized medicine in cardiology, oncology, and inherited diseases through advanced diagnostic
technologies, such as its revolutionary ICE COLD-PCRTM and its unique genetic tests provided through its Patient Testing
business. The company also provides specialized clinical and research services to biopharmaceutical companies developing targeted
therapies and sells equipment, reagents and other consumables for applications in molecular testing and cytogenetics. Transgenomic's
diagnostic technologies are designed to improve medical diagnoses and patient outcomes.
Forward-Looking Statements
Certain statements in this press release constitute "forward-looking
statements" of Transgenomic within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known
and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results,
performance or achievements expressed or implied by such statements. Forward-looking statements include, but are not limited to,
those with respect to management's current views and estimates of future economic circumstances, industry conditions, company performance
and financial results, including the ability of the Company to grow its involvement in the diagnostic products and services markets,
expectations regarding new clients, projects and prospects, MX-ICP's ability to accelerate the Company's growth and
generate revenue, and the operation of our billing systems. The known risks, uncertainties and other factors affecting these forward-looking
statements are described from time to time in Transgenomic's filings with the Securities and Exchange Commission. Any change in
such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred
to in such statements. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995 with respect to all statements contained in this press release. All information