SANGSTAT MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
94-3076-069
(State of incorporation)
(IRS Employer Identification No.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File Number: 0-22890 |
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SANGSTAT MEDICAL CORPORATION |
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(Exact name of registrant as specified in its charter) |
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Delaware |
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94-3076-069 |
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(State of incorporation) |
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(IRS Employer Identification No.) |
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6300 Dumbarton Circle |
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(Address of principal executive office, Zip Code) |
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Registrant’s telephone number, including area code: 510-789-4300 |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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x Yes |
o No |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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x Yes |
o No |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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CLASS |
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NUMBER OF SHARES |
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Common Stock |
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26,474,774* |
* As of July 31, 2003
SANGSTAT MEDICAL CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
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Page |
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ITEM 1. |
Financial Statements |
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Condensed Consolidated Balance Sheets June 30, 2003 and December 31, 2002 |
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Condensed Consolidated Statements of Operations Three and Six Months Ended June 30, 2003 and 2002 |
4 |
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4 |
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Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2003 and 2002 |
5 |
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6 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
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ITEM 3. |
36 |
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ITEM 4. |
36 |
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ITEM 1. |
36 |
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ITEM 2. |
39 |
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ITEM 3. |
39 |
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ITEM 4. |
39 |
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ITEM 5. |
40 |
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ITEM 6. |
40 |
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44 |
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2
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
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June 30, |
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December 31, |
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(unaudited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
80,051 |
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$ |
85,412 |
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Short-term investments |
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17,338 |
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12,100 |
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Accounts receivable (net of allowances of $4,255 in 2003 and $4,150 in 2002) |
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26,016 |
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22,847 |
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Other receivables |
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1,728 |
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1,948 |
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Inventories |
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26,345 |
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27,161 |
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Prepaid expenses and other current assets |
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5,545 |
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7,501 |
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Total current assets |
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157,023 |
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156,969 |
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PROPERTY AND EQUIPMENT – net |
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5,521 |
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5,824 |
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INVESTMENT IN AFFILIATE |
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2,179 |
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3,036 |
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INTANGIBLE ASSETS (net of accumulated amortization of $4,750 in 2003 and $4,250 in 2002) |
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7,142 |
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7,642 |
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OTHER ASSETS |
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18,833 |
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18,966 |
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TOTAL |
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$ |
190,698 |
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$ |
192,437 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
19,010 |
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$ |
22,447 |
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Accrued liabilities |
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13,444 |
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13,485 |
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Capital lease obligations – current portion |
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264 |
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235 |
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Deferred revenue – current portion |
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3,158 |
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3,158 |
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Notes payable – current portion |
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11,912 |
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4,114 |
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Total current liabilities |
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47,788 |
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43,439 |
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CAPITAL LEASE OBLIGATIONS |
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356 |
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448 |
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DEFERRED REVENUE |
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1,579 |
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3,158 |
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NOTES PAYABLE |
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5,560 |
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15,472 |
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STOCKHOLDERS’ EQUITY: |
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Preferred stock, $.001 par value 5,000 shares authorized; none outstanding |
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— |
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— |
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Common stock. $.001 par value, 40,000 shares authorized; outstanding: 2003, 26,469 shares; 2002, 26,443 shares |
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310,672 |
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310,495 |
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Accumulated deficit |
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(177,067 |
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(180,666 |
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Accumulated other comprehensive income |
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1,810 |
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91 |
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Total stockholders’ equity |
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135,415 |
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129,920 |
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TOTAL |
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$ |
190,698 |
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$ |
192,437 |
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(1) Derived from the Company's audited consolidated financial statements at December 31, 2002.
See notes to Condensed Consolidated Financial Statements.
3
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2003 |
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2002 |
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2003 |
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2002 |
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REVENUES: |
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Net product sales |
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$ |
32,608 |
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$ |
30,127 |
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$ |
61,346 |
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$ |
53,482 |
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Revenue from collaborative agreements |
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814 |
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790 |
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1,604 |
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1,579 |
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Total revenues |
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33,422 |
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30,917 |
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62,950 |
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55,061 |
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COSTS AND OPERATING EXPENSES: |
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Cost of product sales |
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14,389 |
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15,266 |
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28,073 |
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25,889 |
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Research and development |
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6,200 |
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5,110 |
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10,626 |
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9,428 |
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Selling, general & administrative |
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9,776 |
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8,677 |
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19,028 |
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16,630 |
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Amortization of intangible assets |
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250 |
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250 |
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500 |
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500 |
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Total costs and operating expenses |
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30,615 |
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29,303 |
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58,227 |
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52,447 |
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Income from operations |
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2,807 |
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1,614 |
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4,723 |
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2,614 |
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OTHER INCOME (EXPENSE) - NET |
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(140 |
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763 |
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594 |
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874 |
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Equity in net loss of affiliate |
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(453 |
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— |
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(857 |
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— |
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INCOME BEFORE INCOME TAXES |
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2,214 |
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2,377 |
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4,460 |
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3,488 |
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INCOME TAX PROVISION |
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(439 |
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(569 |
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(861 |
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(1,002 |
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NET INCOME |
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$ |
1,775 |
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$ |
1,808 |
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$ |
3,599 |
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$ |
2,486 |
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NET INCOME PER SHARE - BASIC |
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$ |
0.07 |
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$ |
0.07 |
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$ |
0.14 |
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$ |
0.10 |
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NET INCOME PER SHARE - DILUTED |
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$ |
0.07 |
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$ |
0.07 |
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$ |
0.13 |
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$ |
0.10 |
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Shares Used in Per Share Computations - Basic |
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26,465 |
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26,376 |
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26,455 |
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25,210 |
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Shares Used in Per Share Computations - Diluted |
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26,925 |
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27,305 |
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26,692 |
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26,034 |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2003 |
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2002 |
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2003 |
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2002 |
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Net income |
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$ |
1,775 |
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$ |
1,808 |
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$ |
3,599 |
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$ |
2,486 |
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Unrealized gains and losses on marketable securities classified as available for sale in the current period |
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(6 |
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(42 |
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30 |
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(42 |
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Foreign currency translation adjustments |
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994 |
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1,396 |
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1,689 |
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1,285 |
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Total comprehensive income |
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$ |
2,763 |
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$ |
3,162 |
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$ |
5,318 |
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$ |
3,729 |
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See notes to Condensed Consolidated Financial Statements.
4
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Six Months Ended June 30, |
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2003 |
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2002 |
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OPERATING ACTIVITIES: |
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Net income |
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$ |
3,599 |
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$ |
2,486 |
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Adjustments to reconcile net income to net cash: |
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Depreciation and amortization |
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1,385 |
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1,302 |
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Non-cash interest expense |
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180 |
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370 |
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Equity in net loss of affiliate |
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857 |
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— |
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Loss on disposal of property and equipment |
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50 |
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7 |
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Changes in | |||||||