Affymetrix Reports Record 2000 Results
Core Business Achieves More Than $200 Million in Total Revenues
Core Business Attains Second Consecutive Profitable Quarter Excluding Charges
SANTA CLARA, Calif., Feb. 5 /PRNewswire/ -- Affymetrix, Inc., (Nasdaq: AFFX) today reported record results for its fourth quarter and fiscal year 2000. Highlights of the year included the shipment of more than 200,000 GeneChip(R) arrays and the sale of more than 150 GeneChip systems culminating in more than $200 million in total revenue. After adjusting for the impact of acquisition related charges and Affymetrix' funding of the public mouse genome sequencing effort, Affymetrix' core operations achieved their second consecutive quarter of profitability.
"During 2000 we successfully scaled manufacturing and sustained high yields. We implemented another cycle of Moore's Law by reducing feature sizes resulting in twice the genetic information content on a single array. In addition, we grew our worldwide sales and support infrastructure which led to our customer base expanding by more than three-fold," said Stephen P.A. Fodor, Ph.D., Chairman and Chief Executive Officer of Affymetrix. "This operational growth was complemented by major strategic initiatives that will continue to allow Affymetrix to provide leading-edge whole genome products to the worldwide research community."
Fourth quarter total revenue was $59.4 million, up 70% over the fourth quarter of 1999. For the year, total revenue was $200.8 million, an increase of 84% over 1999. Product sales in the fourth quarter were $51.3 million, up 58% over the fourth quarter of 1999. For the year, product sales were $173.5 million, an increase of 77% over 1999. The increase in product sales during the fourth quarter and year ended December 31, 2000 over the comparable periods in 1999 was the result of increased sales of GeneChip probe arrays, increased placements of instruments (primarily the GeneChip system and components, the 417 Arrayer(TM) and the 428 Scanner(TM)) and increased technology access fees earned under EasyAccess(TM) contracts.
Other revenues, which include license fees, royalties and research revenue were $8.1 million for the fourth quarter and $27.3 million for the year, compared to $2.5 million and $10.9 million in the corresponding periods of 1999. The increase in other revenues was attributable primarily to the expansion of licensing initiatives.
Total costs and expenses, excluding charges resulting from the acquisitions of Genetic MicroSystems, Inc. and Neomorphic, Inc., increased to $64.8 million for the quarter from $41.7 million for the comparable period in 1999. For the year 2000, total costs and expenses, excluding acquisition related charges, increased to $221.2 million, compared to $139.3 million in 1999. The increase in operating expenses for the quarter and year compared to the respective periods in 1999, resulted primarily from the Company's expansion of commercial activities, increases in research and development activities, including those associated with Perlegen Sciences, Inc. and increased legal costs arising from ongoing patent litigation.
Excluding acquisition related charges, Affymetrix reported a net loss of $3.4 million or $0.06 per share in the fourth quarter compared to a net loss of $5.5 million, or $0.10 per share in the fourth quarter of 1999. For the year ended December 31, 2000, Affymetrix reported a net loss excluding acquisition related charges of $13.1 million or $0.24 per share compared with a net loss of $27.6 million or $0.54 per share in 1999. Excluding the one time expense of $3.5 million associated with Affymetrix' sponsorship of the public mouse genome sequencing initiative in the fourth quarter, Affymetrix earned $0.1 million, representing the Company's second consecutive profitable quarter from core operations.
In March 2000, Affymetrix acquired Genetic MicroSystems, a privately-held instrumentation company specializing in DNA array technology, in a transaction accounted for as a pooling of interests. In connection with the acquisition, Affymetrix issued approximately 1.0 million shares of common stock and approximately 0.1 million options to acquire shares, and incurred direct acquisition costs of approximately $2.4 million. Comparative 1999 results have been restated to reflect the pooling.
During the fourth quarter of 2000, Affymetrix completed its acquisition of Neomorphic, a privately held bioinformatics company, for $75.6 million. As consideration for the acquisition, Affymetrix issued approximately 1.3 million shares of Affymetrix common stock and paid cash in the amount of $2.4 million in exchange for all of the outstanding shares of Neomorphic. Affymetrix also granted options to purchase approximately 0.1 million Affymetrix shares in exchange for the assumption of all of Neomorphic's stock options.
In connection with the Neomorphic transaction, the Company recognized a $15.0 million one-time charge for in-process R&D. The Company also recorded goodwill and other intangibles of $26.8 million, which are being amortized over five and three years. For the fourth quarter, amortization of goodwill and other purchased intangibles amounted to $1.0 million. The Company also recorded $30.0 million of deferred stock compensation which will be amortized over the remaining vesting period, principally three years. In the fourth quarter, this amortization amounted to $2.1 million.
Including acquisition related charges, Affymetrix reported a net loss of $21.5 million, or $0.38 per share in the fourth quarter compared to a net loss of $5.5 million, or $0.10 per share in the fourth quarter of 1999. For the year ended December 31, 2000, including acquisition related charges, Affymetrix reported a net loss of $33.6 million or $0.61 per share compared to a net loss of $27.6 million or $0.54 per share in 1999.
During the fourth quarter of 2000 and first part of 2001, Affymetrix continued to expand the market for DNA arrays by entering into numerous GeneChip array supply agreements with pharmaceutical, biotechnology and academic customers. For the year, Affymetrix introduced 17 new products, shipped more than 200,000 arrays, more than 150 GeneChip systems, and over 375 Affymetrix Arrayers and Scanners. To date, Affymetrix has sold over 400 GeneChip systems and over 650 Affymetrix Arrayers and Scanners.
During the year, Affymetrix further encouraged widespread adoption of its technology by increasing the number of EasyAccess, AcademicAccess(TM) and BiotechAccess(TM) customers. Recently, the Company added Biogen, Inc., Pharmacia Corporation, and Byk Gulden, The Pharmaceutical Group of ALTANA AG to Affymetrix' growing list of EasyAccess Silver customers. Additionally, Affymetrix added Sumitomo Pharmaceuticals Co., Ltd. to its EasyAccess Silver customer list through an agreement with Amersham Pharmacia Biotech KK. Affymetrix also signed BiotechAccess agreements with Lexicon Genetics Incorporated, PPD Discovery, the drug discovery subsidiary of PPD, Inc., MediGene AG, Isis Pharmaceuticals, Inc., Iceland Genomics Corporation, Celgene-Signal Research Division and Sangamo BioSciences, Inc.
Also during 2000, Affymetrix accelerated its commitment to expand the DNA array field through its licensing program. Under this program, Affymetrix provides both commercial and internal use licenses to its patent estate, which includes more than 100 issued and 300 pending patents in the United States. In the fourth quarter, the Company signed licensing agreements with Genomic Solutions Inc., Tanox Pharma, B.V., a subsidiary of Tanox, Inc. and the Medical Research Council, bringing the total number of licenses granted to nearly 30.
During the year, Affymetrix also announced several strategic initiatives that will position the Company to uniquely benefit from the flood of new information arising from worldwide genome sequencing efforts. First was the acquisition of Neomorphic, a privately held computational genomics company. The acquisition will enable Affymetrix to offer scientists an integrated view of the genome on chips that are linked to databases of networked scientific information, along with powerful new tools to interpret and understand the assembled genomic sequences. The Company also formed a new genomics discovery subsidiary, Perlegen Sciences, to focus on biological and pharmaceutical research by using Affymetrix' technology to scan 50 genomes and identify the millions of genetic variations and patterns in those variations among individuals. Finally, Affymetrix joined a public-private initiative to decipher the mouse genome sequence in order to make the mouse sequence freely and broadly available to researchers worldwide.
Affymetrix is a leader in developing and commercializing systems to acquire, analyze and manage complex genetic information in order to improve the quality of life. The Company's GeneChip system consists of disposable DNA probe arrays containing gene sequences on a chip, reagents for use with the probe arrays, a scanner and other instruments to process the probe arrays and software to analyze and manage genetic information. The Company's spotted array system enables individual researchers to create and analyze custom microarrays on an easy-to-use, cost efficient platform. Additional information on Affymetrix and GeneChip technology can be found at www.affymetrix.com.
Investors may listen to Affymetrix' management discuss this announcement by dialing domestic: 800-280-2151; international: 415-904-2425; passcode: 1959 on Monday, February 5, 2001 from 2:00-3:00 p.m. PST. A replay of this call will be available until February 8, 2001 at 4:00 p.m. PST, domestic: 800-633-8284; international: 858-812-6440; reservation number: 17729416. To access a Webcast of the conference call, visit Affymetrix' Website at www.affymetrix.com.
All statements in this press release that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding Affymetrix' "expectations," "beliefs," "hopes," "intentions," "strategies" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to, uncertainties relating to technological approaches, product development, manufacturing, market acceptance, personnel retention, equity dilution, uncertainties related to the ability to realize benefits from acquisitions, uncertainties related to cost and pricing of Affymetrix products, dependence on collaborative partners, uncertainties relating to sole source suppliers, uncertainties relating to FDA and other regulatory approvals, competition, risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix' Annual Report on Form 10-K for the year ended December 31, 1999 and other SEC reports, including its Quarterly Reports on Form 10-Q for subsequent quarterly periods. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix' expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based. Affymetrix, GeneChip and the Affymetrix logo are registered trademarks used by Affymetrix, Inc.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenue:
Product $51,319 $32,455 $173,546 $98,168
Research 1,051 1,323 5,780 8,059
License fees and
royalties 7,049 1,149 21,504 2,847
Total revenue 59,419 34,927 200,830 109,074
Costs and expenses:
Cost of product
revenue 19,922 13,501 69,039 42,219
Research and
development 18,494 12,396 57,384 43,524
Selling, general and
administrative 26,508 15,838 94,842 53,590
Merger related costs -- -- 2,395 --
Amortization of
deferred stock
compensation 2,118 -- 2,118 --
Amortization of
purchased intangibles 997 -- 997 --
Charge for in-process
technology 14,989 -- 14,989 --
Total costs and
expenses 83,028 41,735 241,764 139,333
Loss from operations (23,609) (6,808) (40,934) (30,259)
Interest income, net 2,717 1,259 7,976 4,755
Net loss before
income taxes and
preferred stock
dividends (20,892) (5,549) (32,958) (25,504)
Provision for
income taxes (600) -- (600) --
Net loss after
provision for
income taxes (21,492) (5,549) (33,558) (25,504)
Preferred stock
dividends -- -- -- (2,055)
Net loss attributable
to common
stockholders $(21,492) $(5,549) $(33,558) $(27,559)
Basic and diluted
net loss per
common share $(0.38) $(0.10) $(0.61) $(0.54)
Weighted-average
shares used in
computing basic and
diluted net loss
per common share 56,167 53,886 55,035 51,167
Note: Certain prior year balances have been reclassified to conform with the current year presentation.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS *
EXCLUDING ACQUISITION-RELATED CHARGES
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenue:
Product $ 51,319 $ 32,455 $ 173,546 $ 98,168
Research 1,051 1,323 5,780 8,059
License fees and
royalties 7,049 1,149 21,504 2,847
Total revenue 59,419 34,927 200,830 109,074
Costs and expenses:
Cost of product
revenue 19,922 13,501 69,039 42,219
Research and
development 18,494 12,396 57,384 43,524
Selling, general
and administrative 26,508 15,838 94,842 53,590
Total costs and
expenses 64,924 41,735 221,265 139,333
Loss from operations (5,505) (6,808) (20,435) (30,259)
Interest income, net 2,717 1,259 7,976 4,755
Net loss before
income taxes and
preferred stock
dividends (2,788) (5,549) (12,459) (25,504)
Income taxes and
preferred stock
dividends (600) -- (600) (2,055)
Net loss attributable
to common
stockholders $ (3,388) $ (5,549) $ (13,059) $ (27,559)
Basic and diluted
net loss per
common share $(0.06) $(0.10) $(0.24) $(0.54)
Weighted-average
shares used in
computing basic
and diluted
net loss per
common share 56,167 53,886 55,035 51,167
*The above Condensed Consolidated Proforma Statements of Operations are presented for illustrative purposes only and are not prepared in accordance with generally accepted accounting principles.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
Dec. 31, Dec. 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $7,263 $12,677
Available-for-sale securities 428,767 213,763
Accounts receivable 53,104 24,646
Inventories 17,234 12,792
Other current assets 2,524 4,159
Total current assets 508,892 268,037
Net property and equipment 56,245 40,775
Intangible assets 35,809 8,965
Notes receivable from employees 2,113 1,074
Other assets 16,728 7,736
$619,787 $326,587
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $50,592 $29,926
Deferred revenue 19,544 6,468
Current portion of capital lease obligation 22 261
Total current liabilities 70,158 36,655
Noncurrent portion of capital lease obligation 60 --
Obligation to Beckman Coulter, Inc. 5,000 5,000
Convertible subordinated notes 375,000 150,000
Common stock purchase rights 3,000 3,000
Stockholders' equity:
Common stock 571 543
Notes receivable from shareholders (994) --
Additional paid-in-capital 340,548 256,467
Accumulated deficit (157,761) (124,203)
Other (15,795) (875)
Total stockholders' equity 166,569 131,932
$619,787 $326,587
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