Ghent (Belgium), September 15, 2006 - 7 am - Devgen publishes its results for the first half year ending June 30, 2006.
Webcast audio conference presentation 2.00 pm CET at www.devgen.com.
Devgen's first half (H1) 2006 highlights include:
- Revenue amounts to EUR 5 million; - Six months burn rate increased to EUR 4.2 million, cash position EUR 28 million; - Increased R&D investments based on successful execution of ongoing programs and exploitation of novel opportunities; - Excellent performance of Devgen candidate drugs in gold standard 'animal models of disease' in three of its programs: arrhythmia, PKC-epsilon (inflammation) and Rock (inflammation), paving the way for the completion of pre-clinical packages; - Nematicide field and regulatory trials on schedule, with first preliminary data on selected crops suggesting promising results for the 2006 season of trials. Nematicide business team strengthened through hire of COO Stefan Frey; - First steps towards downstream integration in rice by starting hybrid rice breeding programs and further focussing its internal biotech trait discovery efforts on rice. - Extended partnerships with Pioneer Overseas Corporation and Sumitomo Chemical Company.
Key figures H1 2006 (EUR thousands, except net loss per share in EUR)
June 30, 2006 June 30, 2005 Revenue 5,006 6,169 EBITDA -4,082 887 Loss from operations -4,595 -575 Financial result 114 -196 Net loss for the period -4,481 -771 Basic loss per share (EUR) -0.30 -0.07 Cash and cash equivalents 28,180 38,831
Details of half year 2006 financial results
Devgen's revenues for the first six months of 2006 totalled EUR 5 million, compared to EUR 6.2 million recorded for the same period of 2005.
Of the total revenue, EUR 4.8 million was generated by Devgen Crop Protection, as compared to EUR 5.9 million in the first six months of 2005. As pointed out in the announcement related to the full year 2005 financials, H1 2005 included the exceptional event of accelerated completion of the research agreement with FMC. As a result, EUR 1.6 million of revenue was recognized in the first half of 2005 that would otherwise have been recognized in subsequent periods.
Government grant income for the first six months of 2006 totalled EUR 1.1 million, compared to EUR 0.4 million in the same period of 2005. In December 2005, Devgen was awarded a new grant from IWT which accounted for EUR 0.7 million of revenue in the first half of 2006.
Revenue in Human Therapeutics totalled EUR 0.2 million in the first half of 2006, which is slightly less than last year. All of this revenue was government grant income.
The EBITDA for H1 2006 was EUR - 4.1 million, a decrease of EUR 5 million compared to the EBITDA of EUR + 0.9 million for the first six months of 2005. The difference is due to the FMC contract completion in 2005 (see revenue section above) and to an increase of EUR 3 million in operating expenses, from EUR 6.9 million in the first half of 2005 to EUR 9.9 million in the same period of 2006.
Research and development expenses in the first half year of 2006 totalled EUR 7.3 million compared to EUR 5.4 million in the same period of 2005:
- Staff costs increased by 20% from EUR 2.6 million to EUR 3.1 million. This is mainly due to increased research staff (+ 6 FTE) and the increased share-based compensation cost; - Outsourcing expenses more than doubled, showing an increase from EUR 0.8 million to EUR 1.9 million. This is explained by the successful progression of the nematicide project.
Selling, general and administrative expenses increased to EUR 2.4 million in the first half of 2006, compared to EUR 1.5 million in the same period of 2005. This is due to Devgen's transition from a private to a public company, the strengthening of the organisation and the share-based payment compensation cost for non R&D staff.
Cash flow and cash position
A net decrease of EUR 6.7 million in cash and cash equivalents was recorded during the first half of 2006, composed of
- cash used in operations totalling EUR 6 million (EUR - 4 million EBITDA plus EUR 0.5 million non cash expenses and EUR 2.5 million additional working capital) - EUR 0.5 million used in investing activities - EUR 0.2 million cash used in financing activities.
Devgen's cash and cash equivalents totalled EUR 28.2 million on June 30, 2006.
Outlook H2 2006
Devgen will increase its research activities in selected areas in H2 '06:
- Devgen has brought the start of the development program of its nematicides outside of Europe one year forward; - It has increased investments in its RNAi technology programs, its GMO trait discovery programs and made initial investments towards accessing rice germplasm; - Based on positive results, the company has increased its investment in selected human therapeutic programs, including the inflammation program.
Devgen anticipates revenues for the full year 2006 to be close to last year's revenues. It expects to end the year with a cash position of EUR 22 to 24 million (the final figure will be influenced by working capital differences).
"We have performed a limited review of the consolidated balance sheet as of June 30 2006, the consolidated income statement and the cash flow statement (jointly the "interim financial information") of Devgen NV for the six month period ended June 30, 2006. This interim financial information has been prepared under the responsibility of the Board of Directors.
Based on our limited review, no elements or facts have come to our attention that cause us to believe that the interim financial information for the six month period ended June 30, 2006 is not prepared in accordance with legal and regulatory requirements and the recognition and measurement criteria of IFRS as adopted by the European Union."
September 14, 2006
The Statutory Auditor DELOITTE BEDRIJFSREVISOREN Represented by Gino Desmet
Complete financial statements
The complete un-audited financial statements of H1 2006 are available for downloading in the investors section of www.devgen.com.
Conference call and webcast
Devgen will conduct a conference call on Friday September 15, 2006 at 2 pm CET, which will also be simultaneously broadcast via internet. The event is open to the public and is accessible via www.devgen.com and via telephone at +32 2 290 14 11. To ask questions during the Q&A session, please join the event via telephone 10 minutes prior to the start of the conference call. A recording of the event will also be made available at www.devgen.com shortly after the call.
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 by 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) and inflammation.
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, please contact:
Thierry Bogaert Hilde Windels CEO CFO 0032 9 324 24 22 0032 9 324 24 22 firstname.lastname@example.org email@example.com
This press release may contain forward-looking statements containing the words "anticipates", "expects" , "intends", "plans", "estimates", "may" and "continues" as well as similar expressions. Such forward looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, performance or achievements of Devgen to be materially different from any future results or achievements expressed or implied by such forward-looking statements. These forward looking statements speak only as of the date of publication of this document. Devgen disclaims any obligation to update such forward looking statements in this document to reflect any change in its expectations, conditions or circumstances on which such statement is based, unless required by law or regulation.
 Trait: plant characteristic that improves its growth, resistance to pests, nutrient content or the like.
 Including restricted cash of 1,820k EUR per 30.06.06 and 1,960k EUR per 30.06.05
 For information purposes: pro forma key figures H1 '05 & '06 (i.e. situation had the FMC case been executed according to original terms of the contract)
June 30, 2006 June 30, 2005 Revenue 5,558 4,572 EBITDA -3,530 -710
 IWT : Institute for the Promotion of Innovation by Science and Technology in Flanders
 Plant germplasm is the genetic material of a plant in the form of seed or grafting/cutting material.
 2005 revenue, excluding the FMC part of H1 2006 (see revenue section above).