Park News
28 March 2006
Solexa Reports Fourth Quarter Financial Results
HAYWARD, Calif. and Cambridge, U.K. (March 28, 2006) - Solexa, Inc. (Nasdaq: SLXA) today announced financial results for the fourth quarter and year ended December 31, 2005.
"We are proud of our track record since the business combination that formed Solexa just over a year ago in delivering on ambitious and important milestones. In December 2005 we introduced our groundbreaking Solexa Genome Analysis System, which we consider a disruptive leap forward in cost-effective DNA sequencing," said John West, chief executive officer of Solexa. "We have strengthened our team with highly experienced technical, financial and marketing professionals, including top industry thought leaders, raised funds to support product development and commercialization, demonstrated our technological capability and bolstered our intellectual property across multiple approaches to next-generation sequencing. .
"We have an equally exciting roadmap for the year ahead," he added. "Commercially, we will initially target large genome centers and other prospective customers in an early access release, and we expect to begin reporting system sales during the second quarter of 2006. On the operational side, we expect to add staff to sales, marketing and manufacturing to support broad commercial release to other categories of customers, including academic and government core labs, commercial sequencing companies and pharmaceutical and biotech companies. We intend to make both sequencing and expression profiling applications available this year. .
"Further, we plan to sequence a human genome in 2006 as an important validation for our system. We expect to release interim results from the project throughout the year," said Mr. West. .
Financial Results.
Solexa, Inc. is the result of a business combination between Solexa Limited and Lynx Therapeutics, Inc. Reported results of operations for the three months and year ended December 31, 2005 reflect those of Solexa Limited, to which the operations of Lynx Therapeutics, Inc. have been added following March 4, 2005, the date of the consummation of the business combination. Financial results in prior years and through the date of the business combination reflect the operations of Solexa Limited. .
Revenue for the fourth quarter of 2005 was $1.3 million, compared with $23,000 for the fourth quarter of 2004. Revenue was primarily derived from service fees generated from the genomics services business and is expected to vary from quarter to quarter based, in part, on the commencement of sales of the Solexa Genome Analysis System, Solexa's reversible-terminator and Clonal Single Molecule Array™ DNA sequencing platform, and deployment of this next-generation system in Solexa's genomics services business; the timing of receipt of biological samples; variability in outstanding contracts; and the presence of non-service fee revenues. The increase in revenue relates to the addition of the genomics services business as a result of the business combination. Revenue in the 2005 fourth quarter is from the MPSS™ genomics services business and does not yet reflect any contribution from the Solexa Genome Analysis System. .
Total operating costs and expenses were $8.6 million in the 2005 fourth quarter, up from $2.4 million in the prior-year fourth quarter. Most of the increase was due to the addition of the results of Solexa's U.S. operations from the date of the business combination. Cost of service fees, which represents costs associated with providing the Company's genomics services, was $900,000 in the fourth quarter of 2005. In the fourth quarter of 2005, research and development expense was $4.9 million, and selling, general and administrative expense was $2.9 million. .
The Company reported other income, net of $496,000 in the fourth quarter of 2005, which was related to sale of an equity investment in Axaron Bioscience AG that was acquired as a result of the business combination transaction. The Company also reported an income tax benefit related to research and development tax credits recorded in the fourth quarter of 2005 of $3.0 million dollars. .
Solexa reported a net loss attributable to common shareholders for the 2005 fourth quarter of $3.7 million, or $0.13 per share, compared with a net loss attributable to common shareholders of $2.2 million, or $2.08 per share, for the 2004 fourth quarter. .For the year ended December 31, 2005, revenue was $4.2 million, compared with $96,000 for the prior year. Total operating costs and expenses for 2005 were $36.7 million, up from $10.1 million in 2004. In 2005 the Company recorded within operating expenses a forward loss contingency for unprofitable contracts in its genomics services business; the amount of this reserve stood at $1.0 million at the end of 2005. In 2005 the Company also recorded a restructuring charge of approximately $333,000 that included severance and benefits. The Company reported a net loss attributable to common shareholders of $29.7 million for 2005, or $1.51 per share, compared with a net loss attributable to common shareholders of $10.0 million, or $9.68 per share, in 2004. .
As of December 31, 2005, Solexa reported cash and cash equivalents of $38.4 million. In January 2006, the Company completed the second closing of a private placement of common stock and warrants for gross proceeds of approximately $40 million, which represents the second and final closing of a $65 million private equity financing announced in November. .