Zwijnaarde, Belgium
March 15, 2007
Financial highlights
2006
- Revenue at EUR 9.3 million in 2006 as compared to EUR 10.9
million in 2005
- Increased investments in R&D in successful programs,
acceleration of nematicide business plan and initial steps
in hybrid and biotech rice business plan
- Cash position at EUR 23.8 million end of December
Business highlights 2006
- Positive outcome of nematicide field trials
- Validation reached in RNAi biotech crop protection
technology
- Sound basis laid for developing a rice traits and hybrid
seeds business
- Devgen's small molecules to treat inflammation showed
efficacy and safety in industry accepted therapeutic animal
models
Devgen NV (Euronext: DEVG), a leading European biotechnology
company, today announced its financial results for the year
ending December 31st, 2006.
2006 was a year of implementation, validation and acceleration
for Devgen.
- The progress of its RNAi crop protection technology led to a
one year extension of the Pioneer Overseas Corporation agreement
and a 5 year agreement with Monsanto Company (signed in February
2007 but with effect September 1st 2006).
Devgen will continue to make significant investments in the
development of a hybrid and biotech rice business, as rice is a
world food crop that requires intensive technology inputs to
secure long-term productivity and quality improvements.
- The 2006 nematicide field trials have been successfully
completed boding well for a second season of regulatory trials
in 2007. Devgen has accelerated its business plan and has
initiated field testing outside of Europe in countries such as
Japan (the biggest nematicide market), South Africa and a number
of banana plantation markets (Canary Islands, Costa Rica, the
Philippines).
- Progress in the pharmaceutical programs is on track to deliver
clinical candidates for out-licensing
With the successful conclusion of the IPO in June 2005 (EUR 33.7
million funding) and the private placement in February 2007 (EUR
31 million funding), Devgen has ample resources to further
accelerate its biotech crop protection business plan, to drive
the nematicide candidates towards commercialisation and to bring
the pharmaceutical programs towards clinical candidates and
collaborations with pharmaceutical companies.
Key figures 2006
2006 revenues amounted to EUR 9.3 million, a decrease of 8%
compared to the previous year. As was reported last year,
revenue from the FMC contract completion was fully recognized in
2005, accounting for EUR 2.6 million in 2005, including a shift
of EUR 0.4 million from Q1 2006 to 2005.
Earnings before amortization, interest and taxes (EBITDA)
decreased by EUR 6.4 million to EUR -8.7 million, while net loss
for the year amounted to EUR -9.5 million, as compared to EUR
-3.5 million in 2005. The cash position of Devgen NV was EUR
23.8 million at the end of 2006.
In the second half of 2006, revenue of EUR 4.3 million was
generated, compared to EUR 5.0 million in the first six months.
This decrease is mostly due to the extra income in the first
half of 2006 relating to the finalization of the first 2004
agreement with Monsanto Company. The new contract with Monsanto
Company has an effective date of September 1, 2006.
Details of 2006 results
Revenue
Of the total revenue, EUR 8.9 million was generated by Devgen
Crop Protection as compared to EUR 10.4 million in 2005.
In Human Therapeutics revenue of EUR 0.45 million was generated,
as compared to EUR 0.55 million in previous year.
Total government grants in 2006 increased 63% to EUR 2.5
million, compared to EUR 1.5 million in 2005. In January 2007,
Devgen was awarded a new research grant from IWT of EUR 0.9
million over 16 months, with start date in September 2006, for
the development of new targets for the treatment of obesity.
Results
The net loss for 2006 was EUR 9.5 million, compared to the EUR
3.5 million last year. This increase is mostly due to the
successful progression and acceleration of Devgen's research
programs in 2006 which has increased operating costs
substantially.
Total research and development expenses in 2006 amounted to EUR
14.8 million as compared to EUR11.4 million in the same period
of 2005, an increase of 30 %, mainly due to the increase of
outsourcing expenses by approximately EUR 2.6 million and staff
costs by approximately EUR 0.2 million. The majority of
outsourcing expenses relates to nematicide field trials. The
increase is also partly due to costs for preclinical studies in
the pharmaceutical programs, consistent with their downstream
progression.
Selling, general and administrative expenses in 2006 increased
to EUR 4.4 million as compared to EUR 3.2 million in 2005, an
increase of 38%. Staff costs increased by EUR 1.1 million partly
due to the strengthening of the team and to the increase of
share based compensation.
Cash flow and cash position
The net operating cash drain (operating loss + amortization and
depreciations + share based compensation) amounted to EUR 7.6
million as compared to EUR 2.2 million in 2005.
The cash used in operations was EUR 10.4 million, as compared to
EUR 5.6 million in 2005. This is the result of the operating
cash drain of EUR 7.6 million and EUR 2.8 million changes in
working capital, including
- increase of grant receivables of EUR 1.1 million, mainly from
IWT;
- increase of trade receivables of EUR 1.1 million, mainly from
Sumitomo and Monsanto Company;
- increase of other current assets of EUR 0.4 million, mainly
interest receivables;
- decrease of trade and other payables of EUR 0.2 million.
Cash used in investing activities amounted to EUR 0.37 million
in 2006, which is equivalent to the 2005 number.
Cash flow from financing activities amounted to EUR 0.2 million
in 2006 as compared to EUR 30.8 million in 2005. The cash flow
in 2005 included the net proceeds from the IPO and capital
increases linked to exercise of warrants of EUR 31.8 million as
compared to EUR 0.8 million in 2006, and net financial debt
payments of EUR 1 million in 2005 as compared to EUR 0.6 million
in 2006.
Devgen's cash and cash equivalents, including restricted cash of
EUR 1.82 million, amounted to EUR 23.8 million on December 31,
2006, as compared to EUR 34.9 million on December 31, 2005.
Consolidated balance sheet
The balance sheet at 31 Dec 2006 remains very solid, with a
solvency ratio (equity vs. total assets) of 70 % and a cash
position of EUR 23.8 million, allowing the company to fulfil all
its existing financial obligations and to continue its research
programs.
2006 segment reporting
The primary segment information is presented in accordance with
Devgen's dual business model. Since 2005 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 2006, Devgen employed 108 staff. Compared to 2005,
this is an increase of 3 % in headcount. Devgen has been
successful in attracting 2 additional experienced senior people
as head of the respective business units nematicides and human
therapeutics. It has also strengthened the team with a senior
corporate lawyer in January 2006.
The complete financial statements of 2006 are available for
downloading in the investor section of
www.devgen.com.
Operational highlights
Corporate
- In April 2006, Devgen was informed that 1,4 million shares
held by pre-IPO shareholders had successfully been placed with
new investors, thus increasing the free float from 60% to 70%,
which improved the liquidity of the shares on the stock market.
- Subsequent event: Devgen successfully raised EUR 31 million in
a private placement in February 2007 to fund its rice business
plan. Also, the company was informed that, on the same date, 2.2
million shares held by pre-IPO shareholders were replaced,
increasing the free float from 70% to 85%.
Biotech crop protection
Devgen has a dual strategy
in biotech crop protection:
1) It out- licences its technology to obtain market access
in the major biotech row/cash crops.
- Devgen's research collaboration with Pioneer Overseas
Corporation expired at the end of 2006 whereas the licensing
agreement is still in place.
- On February 6, 2007, Devgen and Monsanto Company have
entered into a five-year research and development (R&D)
agreement and a five-year technology exchange agreement,
with effect September 1st 2006. The new R&D agreement
commits additional funding from Monsanto for Devgen's
research and is coupled with an agreement which will broaden
the relationship so that both companies can explore
technology applications in their crop areas of interest.
Devgen will leverage Monsanto's technology for use in rice
and small cereal grains, especially in Asia. Monsanto
intends to initially leverage Devgen's technologies to its
core crops of interest such as corn, cotton and soybeans.
2) Devgen aims to become a "traits[2], germplasm[3] and
seed" provider in rice.
- traits
Through the technology exchange agreement with Monsanto
Company, Devgen has access to Monsanto technology for
application in rice. This complements Devgen's crop
protection technologies and enables Devgen to create a
complete and highly competitive portfolio of biotech traits
for rice.
- germplasm
Devgen has developed and implemented a breeding strategy
with world class staff & advisors. Devgen has also
established field stations for accelerated breeding in Kenya
and successfully completed an initial breeding season in
2006. In 2007 Devgen intends to expand its breeding base to
India and make significant investment in its classical and
molecular breeding programs infrastructure.
- seed
Devgen is exploring options to secure market access for
hybrid rice seed through a joint venture or acquisition of a
rice seed business in India.
Devgen agrochemical
The promising 2005 results
were confirmed by regulatory field trials performed in the
course of 2006. To date, over 120 trials have been run in
Northern Europe and Mediterranean countries on key agronomic
European crops (including sugar beet, potato, carrot,
tomato, cucumber, melons and others) and on bananas.
The results in Europe confirmed that Devgen's candidate
nematicide products decrease crop injury and enhance crop
yield.
The 2006 trial reports will form a substantial part of the
data package required by regulatory authorities for market
approval applications.
In 2007, a second year of regulatory trials will be
conducted in Europe, while the number of exploratory field
trials outside Europe will be significantly expanded. First
efficacy results on bananas are due in Q2 2007.
Devgen human therapeutics
Based on interesting results from the diabetes program in 2006,
Devgen identified related targets for inflammatory diseases,
such as rheumatoid arthritis (RA) and inflammatory bowel disease
(IBD). Encouraging results in several models of inflammation
were achieved and will be investigated further in 2007.
In its cardiac arrhythmia program, Devgen compounds have
performed well in a number of "gold standard" cellular and in
vivo disease and safety models. In 2006, the compound series
were further optimized and broadened and in 2007 additional
efficacy studies are planned. The aim is to develop a
chronically administered oral compound for the treatment of
atrial fibrillation.
Devgen 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;
- innovative hybrid rice germplasm and traits focused in Indian
farmers needs
- 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), inflammation
and 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 in biotechnology and agro
chemistry. Incorporated in 1997, Devgen has offices in Ghent
(Belgium) and Singapore, with a total work force of over 100
people. For more information on Devgen visit the company's web
site www.devgen.com.
[1] Including restricted cash of € 1.82 million per 31.12.06 and
€ 1.96 million per 31.12.05
[2] Trait: plant characteristic that improves its growth,
resistance to pests, nutrient content or the like.
[3] Plant germplasm is the genetic material of a plant in the
form of seed or grafting/cutting material
Devgen financial results 2006:
http://hugin.info/135721/R/1111893/201991.pdf
|
|
