Financial Highlights 2005

• Revenue increased to € 10.9 million (+16%)
• Slight decrease in net loss to € -3.5 million
• Cash position at € 34.9 million compared to € 10.7 million end ‘04

Business Highlights 2005

• Nematicide field trials succesful in 2005
• Technical milestone reached in biotech crop protection technology
• Arrhythmia program showed efficacy and safety in industry accepted animal model

Devgen NV (Euronext: DEVG), a leading European biotechnology company, today announced its financial results for the year ending December 31 st, 2005 .

2005 was a landmark year for Devgen. Devgen continued to make significant progress in its two-pronged approach of creating value in the agricultural and pharmaceutical field.

The progress of its RNAi technology exceeded expectations in providing important agricultural crops with defence capabilities against major pests. Devgen will continue to make significant investments in the development of a broader range of such crops and in the usage of Devgen’s technology for non GMO applications.

The 2005 field trials have been successfully accomplished boding well for successful regulatory trials in 2006. Devgen’s agrochemical product candidates will be tested ahead of schedule outside European markets.

The pharmaceutical drug candidates have now reached a stage where pharmaceutical companies are starting to show interest in collaborations.

With the successful conclusion of the IPO in June, Devgen has the resources to further accelerate the transition from a company which discovers and develops technology to a company that delivers valuable proprietary products.

In 2006, Devgen will focus on expanding its corporate partnerships, on advancing its own product portfolio and on laying the ground for creating market access for these products.

2005 revenues amounted to € 10.9 million, an increase of 16% compared to the previous year. Earnings before amortization, interest and taxes (EBITDA) decreased by € 0.4 million to € -2.2 million, while net loss for the year amounted to € -3.5 million, a slight improvement compared to 2004. The cash position of Devgen NV substantially increased to € 34.9 million, fuelled by the capital increase of € 33.7 million in the IPO.

Key figures 2005
€ thousand except for earnings per share

In the second half of 2005 revenue of € 4.7 million was generated, compared to € 6.2 million in the first six months and compared to € 5 million in the second half of 2004. Revenue from the FMC contract completion was fully recognized in the first half of the year, resulting in a shift of € 1.5 million from the second half of the year and € 0.4 million from Q1 2006 to the first half of the year 2005.
Financial income increased with € 0.4 million in the second half of the year, compared to € 0.1 million for the first six months.
Research and development expenses increased with € 0.6 million to € 6 million while selling, general and administrative (SG&A) expenses increased with € 0.2 million to € 1.7 million. This resulted in a loss of € 2.7 million for the period July to December, compared to € 0.7 million for the period January until June, explained to a large extent by the FMC contract as referred to above.

Details of 2005 financial results

Revenue

Devgen’s revenues in 2005 amounted to € 10.9 million, compared to € 9.4 million recorded in the same period of 2004.

Of the total revenue, € 10.4 million was generated by Devgen Crop Protection:

• Research payments (“FTE-payments”) increased from € 5.3 million in 2004 to € 5.7 million in 2005.
• Technology license fees increased from € 2.9 million in 2004 to € 3.7 million in 2005.

In Human Therapeutics revenue of € 0.55 million was generated, as compared to € 0.94 million in 2004.

Results

The net loss for 2005 was € 3.5 million, a slight improvement compared to the loss of € 3.6 million for the 12 month period in 2004. The result has been favourably impacted by the FMC contract completion as explained in the Revenue section and by sizeable technology access fees in the GMO crop protection partnerships.

Total research and development expenses in 2005 were € 11.3 million compared to € 9.9 million in the same period of 2004, an increase of 15 %, mainly due to the increase of outsourcing expenses with approximately € 1 million. These expenses relate to nematicide field trials and animal studies for the pharmaceutical programs.

SG&A expenses slightly increased to € 3.2 million in 2005.

Cash flow and cash position

A net increase of € 24.2 million in cash and cash equivalents was recorded during 2005.

The cash used in operations was € 5.6 million, as compared to € 1.3 million in 2004. This increase is mainly due to working capital differences:

• increase of grants receivable, in particular IWT grants, with € 0.7 million.
• an accrual of € 0.4 million revenue from FMC related to the contract completion is only collectible in 2006.
• a € 1.5 million decrease of the deferred income versus the previous year (income that has already been received in cash in 2004 prior to recognition in revenue in 2005) .

Cash used in investing activities amounted to € 0.38 million in 2005 as compared to € 0.45 million in 2004. Cash flow from financing activities amounted to € 30.8 million in 2005 as compared to € 2.4 million cash used in 2004. This is the result of the net proceeds from the IPO and other capital increases, totalling € 31.8 million, and net financial debt reimbursements of € 1 million.

Devgen’s cash and cash equivalents, including restricted cash of € 1.96 million, amounted to € 34.9 million on December 31, 2005, as compared to € 10.7 million on December 31, 2004.

Consolidated balance sheet

The balance sheet per 31 Dec 2005 remains very solid, with a solvency ratio (equity vs. total assets) of 74 % and a cash position exceeding € 34 million, allowing the company to fulfil all its existing financial obligations and to continue its research programs for the next years to come.

2005 segment reporting

The primary segment information is presented in accordance with Devgen’s dual business model.  The 2 segments are presented as Crop protection and Human Therapeutics, as such reflecting the internal management organisation and reporting structure.

Staffing

Per 31 Dec 2005, Devgen employed 104 staff. Compared to 2004, this is an increase of 10 % in headcount. Devgen has strengthened its plant transformation, insect and nematicide capabilities and invested further in chemical capacity.

For detailed financial information, click here.

Operational highlights

Corporate

• In June 2005, Devgen completed its initial public offering on Eurolist by Euronext Brussels (ticker: DEVG), with the first day of trading on June 7, 2005. On June 29, 2005 Devgen announced that it had raised an additional € 3.7 million through the exercise of the over-allotment option, bringing the total number of shares placed in the offering at 4,498,544, raising € 33.7 million for Devgen.
• In December 2005, Devgen has been informed that 2.8 Million shares held by pre-IPO shareholders had successfully been placed with new investors, thus increasing the free float from 30% to 52% which improved the liquidity of the share on the stock market.

Biotech crop protection

Devgen is on track in its biotech crop protection programs.

Devgen has reached additional proof of concept of the technology, in that further positive results have been obtained in protecting plants from pests using RNAi technology.

Devgen continues to explore ways for downstream integration of its crop protection solutions.

Devgen agro chemical

Devgen’s internal program is focussed on nematicide(2) product development.
Positive trends in nematode control with Devgen compounds have been observed in sugar beet, lettuce, celery, carrots and other selected crops. Devgen’s compounds performed equally well and in some cases better than commercial standards. Devgen expects these compounds to be competitive from an environmental perspective. Overall, the 2005 field trials demonstrated success in all relevant European nematicide markets.

Devgen is advancing the most active candidates into regulatory trials in 2006 and optimizing further the formulation of the candidate nematicides to reduce chemical usage.

Devgen is accelerating the field trials outside European markets and is initiating on field trials on non-temperate crops, such as bananas.

(2) Nematicides control nematodes which are small soil worms causing yield damage to major crops.

Devgen drug discovery

During 2005, Devgen has made significant progress in the chemistry for the kinase 1 target (Diabetes program) with characteristics close to a clinical candidate. In its arrhythmia program, Devgen has obtained more in vivo results to support the innovative concept of this novel therapy. Devgen has recently completed an animal study underscoring the potency and safety of the candidate drug to abandon atrial fibrillation in chronically failing hearts. Devgen is further completing the pre-clinical package and plans to out-license the program.

About Devgen

Devgen (Euronext Brussels: DEVG) is an innovator in biotechnology focused on discovering, developing and commercializing:

• a novel generation of biotech products to protect a wide spectrum of crops from damage incurred from pests;
• safer and more environmentally friendly agro-chemical products to protect crops from damage inflicted by plant parasitic nematodes;
• novel therapeutic concepts and preclinical drug candidates for treatment of metabolic disease (diabetes, obesity, arrhythmia).

Each of these solutions is developed on a platform of in-house designed research, development programs and technologies. Devgen has partnerships with industry leaders such as Monsanto, DuPont/Pioneer and Sumitomo.

Incorporated in 1997, Devgen has offices in Ghent ( Belgium) and Singapore, with a total workforce of over 100 people.