WaferGen third quarter revenue increases to $633,000

WaferGen Biosystems, Inc. (OTC Bulletin Board: WGBS), a leading developer of state-of-the-art genomic analysis systems, today reported financial results for the three and nine months ended September 30, 2010.

"SmartChip system and chip sales drove our results to a third straight quarter of increased revenue," said Alnoor Shivji, chairman and CEO.  "During the quarter, we continued to ramp up the commercialization of the SmartChip system, launched in August, to position it as a superior solution to the growing needs of next generation sequencing where more efficient and effective biomarker identification and validation are needed.  To help with this effort, we recently added Gary P. Schroth, Ph.D., as a new SVP, Genomics Research and Applications.   We also strengthened our business earlier in the quarter with the addition of Donald D. Huffman as our new Chief Financial Officer."

Revenue

Revenue for the third quarter ended September 30, 2010 grew to $633,000 compared to $79,000 for the third quarter ended September 30, 2009.  Revenue for the nine months ended September 30, 2010 grew to $1.5 million compared to $190,000 for the nine months ended September 30, 2009.  The majority of the revenue was from sales of a combination of one or more of the company's SmartChip systems, SmartChips, and/or SmartChip Gene Expression Profiling Services. The company's revenue growth for SmartChip system for the third quarter increased approximately 44 percent over the second quarter 2010.  The company's revenue growth for the full year 2010 is on track to meet or exceed the $1.5 to $2.0 million guidance range previously provided.

Net Income/Loss

WaferGen reported a net loss of $5.2 million, or $(0.14) per share (basic and diluted), for the third quarter of 2010 compared to a net loss of $3.0 million or $(0.11) per share (basic and diluted), for the same period in 2009.  The company reported a net loss of $9.0 million, or $(0.27) per share (basic and diluted), for the first nine months ended September 30, 2010 compared to a net loss of $7.6 million, or $(0.29) per share (basic and diluted), from the same period in 2009.

The net loss for the three months ended September 30, 2010 and the net loss for the first nine months of 2010 increased primarily due to increased operating expenses associated with the commercialization of the SmartChip system of $3.9 million for the three months ended September 30, 2010 compared to $2.5 million in the same period of 2009; and $9.9 million for the first nine months of 2010 compared to $7.1 million for the first nine months of 2009.

Net loss for the three and nine months ended September 30, 2010, was impacted by warrant derivative revaluations.  Net losses from warrant derivative revaluations for the three months ended September 30, 2010 were $1.7 million, compared to a net loss of $548,000 for the three months ended September 30, 2009; and a net gain for the nine months ended September 30, 2010 of $15,000 compared to a loss of $500,000 for the nine months ended September 30, 2009.  These non-cash losses and gains are attributed to revaluations of outstanding warrants and result primarily from a fluctuation in the company's stock price in the period – increase in company stock price results in losses and vice versa.

Operating Expenses

For the three months ended September 30, 2010, research and development expenses increased to $2.0 million as compared to $1.3 million for the three months ended September 30, 2009.  For the nine months ended September 30, 2010, research and development expenses increased to $5.1 million, as compared to the $3.4 million for the nine months ended September 30, 2009. The increase in research and development expenses for the three and nine months ended September 30, 2010 occurred primarily from expenses associated with SmartChip system development and expansion in facilities costs.  

For the three months ended September 30, 2010, sales and marketing expenses increased to $653,000, as compared to $136,000 for the three months ended September 30, 2009.  For the nine months ended September 30, 2010, sales and marketing expenses increased to $1.4 million, as compared to $452,000 for the nine months ended September 30, 2009.  The increase in sales and marketing expenses in both the third quarter and nine months ended September 30, 2010 resulted primarily from increases in additional staff and promotional activities in conjunction with the commercialization and early-access sales of SmartChip systems and services.

For the three months ended September 30, 2010, general and administrative expenses increased to $1.2 million, as compared to $1.1 million for the three months ended September 30, 2009.  For the nine months ended September 30, 2010, general and administrative expenses increased to $3.5 million as compared to $3.2 million for the nine months ended September 30, 2009.  General and administrative expenses increased modestly for the three and nine months ended September 30, 2010 due primarily to higher personnel costs.

Assets

WaferGen ended the third quarter 2010 with approximately $5.9 million in total current assets, including $4.4 million in cash and cash equivalents. The company ended 2009 with approximately $6.4 million in total current assets, including $6.0 million in cash and cash equivalents. WaferGen raised $7.2 million in a registered direct offering that closed on July 8, 2010.

SOURCE WaferGen Biosystems, Inc.