Deltagen Reports 2013 First Quarter Financial Results

  Deltagen Reports 2013 First Quarter Financial Results

Business Wire

SAN MATEO, Calif. -- October 14, 2013

Deltagen, Inc. (Pink Sheets: DGEN), a provider of drug discovery tools and
services to the biopharmaceutical industry, today reported unaudited
consolidated financial results for the three months ended March 31, 2013.

Revenues: The Company’s consolidated revenues for the three months ended March
31, 2013 totaled $0.194 million. The revenues in the first quarter of 2013
were attributable primarily to license fees associated with the provision of
knockout mice and related phenotypic data pursuant to orders placed by
customers under the Company’s DeltaOne^TM program. The consolidated revenues
for the period included $0.040 million for Xenopharm, Inc. (“Xenopharm”), a
wholly-owned subsidiary of the Company. As of the third quarter of 2012 Benten
BioServices' revenues and expenses were no longer consolidated with those of
Deltagen and its wholly-owned subsidiaries, Xenopharm and Deltagen Research
Laboratories, L.L.C. The application of the Equity Method of Accounting now
reports Benten BioServices' operating results as a single line in Deltagen's
financial statements, which reflect Deltagen's 43.8% ownership interest in
Benten BioServices. The Equity Method of Accounting is described in the
Company's Notes to Consolidated Financial Statements and Management’s
Discussion and Analysis of Financial Conditions and Results of Operations,
which are posted on the Company's website (

Expenses: Total consolidated expenses for the three months ended March 31,
2013 were $0.258 million. The expenses in the first quarter of 2013 were
attributable primarily to labor costs and other general and administrative
expenses, including $0.068 million in royalty and commission expenses. As of
March 31, 2013, the Company had incurred aggregate total royalties to Lexicon
Pharmaceuticals, Inc. (“Lexicon”) of $5.735 million to a March 2005 settlement
agreement between Lexicon and the Company. Under the settlement, the maximum
aggregate amount of royalty payments due to Lexicon is $6.00 million.
Accordingly, up to $0.265 million in contingent royalty payments remained owed
to Lexicon as of March 31, 2013.

Net Income/Losses: Consolidated net losses before provision for income taxes
for the three months ended March 31, 2013 were $0.541 million, which included
a net loss of $0.063 million from operations and a recognized net loss of
$0.478 million (43.8% of Benten BioServices' Net Operating Results) from
investments made by the Company in Benten BioServices, Inc. ("Benten
BioServices"), which was accounted for using the Equity Method of Accounting.

Cash, Cash Equivalents and Accounts Receivable: As of March 31, 2013, the
Company had $0.120 million in consolidated cash and cash equivalents and
$0.083 million in accounts receivable. The Company borrowed $0.100 million
under a secured promissory note dated December 20, 2012 in a related-party
transaction involving a trust managed by Robert Driscoll, the Company's CEO,
which note carries a 0.025% interest per annum, compounded annually. The
promissory note was paid in full on September 28, 2013.

Subsequent Events:

Benten BioServices: On May 15, 2013, due to a lack of operating capital,
Benten BioServices ceased its operations and laid off its employees. In June
2013, Benten BioServices voluntarily commenced a complete liquidation and
dissolution pursuant to Section 275 of the Delaware General Corporation Law.
The Company expects to write off completely the carrying value of Benten
BioServices in its second quarter 2013 financials.

Press Releases and Financial Disclosures: Commencing with the financial
results for the second quarter of 2013, in an effort to adopt cost-saving
measures, the Company will cease issuing on the wires press releases of its
quarterly financial results. Instead, the Company intends to post its
quarterly financial results on its website ( and issue on the
wires press releases only for its annual financials on a calendar year basis.

The unaudited consolidated financial statements for the first quarter of 2013,
accompanying notes, and Management’s Discussion and Analysis of Financial
Conditions and Results of Operations for such period will be posted on
Deltagen’s website (

About Deltagen

Deltagen, Inc. is a provider of drug discovery tools to the biopharmaceutical
industry, and offers access to its inventory of knockout mouse lines and
related phenotypic data to enhance the efficiency of target validation and
drug discovery. In addition, Deltagen offers target validation data in the
areas of immunology and metabolic diseases. Deltagen's products and programs
have been validated by customers and partners such as Eli Lilly & Co.,
GlaxoSmithKline, Merck & Co., Inc. and Pfizer Inc. For more information on
Deltagen, visit the Company's website at

Safe Harbor Statement

This press release contains “forward-looking statements,” including statements
about Deltagen’s future revenues, cash flows and operating results,
first-party royalty obligations and first-party licenses and intellectual
property, as well as other matters that are not historical facts or
information. These forward-looking statements are based on management’s
current assumptions and expectations and involve risks, uncertainties and
other important factors, specifically including those relating to Deltagen’s
ability to achieve its operational objectives and revenue projections, that
may cause Deltagen’s actual results to be materially different from any future
results expressed or implied by such forward-looking statements. Information
identifying such important risk factors is contained in the Company's annual
financial disclosure's “Management’s Discussion and Analysis of Financial
Conditions and Results of Operations”, which can be found at Deltagen’s
website at Deltagen undertakes no obligation to update or
revise any such forward-looking statements, whether as a result of new
information, future events or otherwise.


Consolidated Balance Sheet
As of 3/31/13
(In Thousands)                                                    3/31/13
Current assets:
Cash and cash equivalents                                         $ 120
Accounts receivable, net                                            83
Prepaid expenses, deposits and deferred tax assets                 35       
Total current assets                                              $ 238
Property and equipment, net                                         23
Investment in Benten BioServices, Inc. accounted for using the      3,989
Equity Method
Goodwill                                                            -
Non-current portion of deferred tax assets                         1,586    
Total assets                                                      $ 5,836    
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                  $ 258
Accrued expenses                                                   31       
Total liabilities                                                 $ 289
Non-Current liabilities:
Deferred rent                                                     $ -
Note payable                                                       100      
Total long-term liabilities                                       $ 100
Stockholders' equity:
Common stock                                                        39
Treasury Stock                                                      (867     )
Additional paid-in capital                                          230,638
Retained Earnings                                                   (224,765 )
Foreign currency translation adjustment                            402      
Total stockholders' equity                                        $ 5,447    
Total liabilities and stockholders' equity                        $ 5,836    



Consolidated Income Statements and

Statements of Retained Earnings
For Quarter ended 3/31/13
(In Thousands)                                                    3/31/13
Revenue                                                           $ 194
Royalty and Commission Costs                                        68
Other Operating Costs                                              190      
Income From Operations                                            $ (63      )
Income (Loss) from Benten BioServices, Inc. accounted for using     (541     )
the Equity Method
Interest Income                                                     -
Loss on disposal of assets                                         -        
Total Other Income (Loss)                                          (541     )
Income before provision for income taxes                          $ (604     )
Provision for income taxes
Current income tax expense                                          -
Deferred income tax expense                                         -
Adjustment for valuation allowance                                 -        
Total income tax expense                                            -
Net Income (Loss)                                                 $ (604     )
Retained earnings at beginning of period                           (224,160 )
Retained earnings at end of period                                $ (225,765 )



Consolidated Cash Flows
For Quarter ended 3/31/13                                        Unaudited
(In Thousands)                                                    Consolidated
Cash flows from operating activities:
Net Income (Loss)                                                 $   (604  )
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation                                                          3
Stock-based compensation expense                                      -
Effect of equity method investments                                   541
(Increase)/Decrease in operating assets
Accounts receivable                                                   80
Prepaid expenses, deposits and tax assets                             18
Purchase of assets                                                    -
Deferred tax assets                                                   -
Deferred rent                                                         -
Increase/(Decrease) in operating liabilities
Accounts payable                                                      (17   )
Accrued expenses                                                     4     
Change in goodwill                                                    -
Benten stock issuance                                                 -
Issuance of convertible note                                          -
Dividends paid                                                       0     
Net Increase/(Decrease) in cash                                   $   25
Effect of foreign exchange rate change on cash and cash               -
Cash and cash equivalents, at beginning of period                    95    
Cash and cash equivalents, at end of period                          120   


Deltagen, Inc.
Robert J. Driscoll, 650-345-7601
President & CEO
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