SOURCE: Devgen

March 15, 2007 02:12 ET

Devgen announces 2006 financial results in line with expectations and meets targets of business plan

ZWIJNAARDE, BELGIUM -- (MARKET WIRE) -- March 15, 2007 --



Financial highlights 2006

- Revenue at EUR 9.3 million in 2006 as compared to EUR 10.9  million
in 2005
-  Increased investments in R&D in successful programs,  acceleration
of nematicide business plan and  initial steps in hybrid and  biotech
rice business plan
-  Cash position at EUR 23.8 million end of December
Business highlights 2006

-  Positive outcome of nematicide field trials
-  Validation reached in RNAi biotech crop protection technology
-  Sound  basis laid for  developing a rice  traits and hybrid  seeds
business
-  Devgen's small molecules to treat inflammation showed efficacy and
safety in industry accepted therapeutic animal models

Zwijnaarde, March 15, 2007 - Devgen NV (Euronext: DEVG), a leading European biotechnology company, today announced its financial results for the year ending December 31st, 2006.

2006 was a year of implementation, validation and acceleration for Devgen.

- The progress of its RNAi crop protection technology led to a one year extension of the Pioneer Overseas Corporation agreement and a 5 year agreement with Monsanto Company (signed in February 2007 but with effect September 1st 2006). Devgen will continue to make significant investments in the development of a hybrid and biotech rice business, as rice is a world food crop that requires intensive technology inputs to secure long-term productivity and quality improvements.

- The 2006 nematicide field trials have been successfully completed boding well for a second season of regulatory trials in 2007. Devgen has accelerated its business plan and has initiated field testing outside of Europe in countries such as Japan (the biggest nematicide market), South Africa and a number of banana plantation markets (Canary Islands, Costa Rica, the Philippines).

- Progress in the pharmaceutical programs is on track to deliver clinical candidates for out-licensing

With the successful conclusion of the IPO in June 2005 (EUR 33.7 million funding) and the private placement in February 2007 (EUR 31 million funding), Devgen has ample resources to further accelerate its biotech crop protection business plan, to drive the nematicide candidates towards commercialisation and to bring the pharmaceutical programs towards clinical candidates and collaborations with pharmaceutical companies.


* * * * * * * * * *

Key figures 2006



+-------------------------------------------------------------------+
|  EUR   000   (except    for | H1 2006 | H2 2006 | Y 2006 | Y 2005 |
| earnings per share)         |         |         |        |        |
|-----------------------------+---------+---------+--------+--------|
| Revenue                     |  5,006  |  4,301  | 9,307  | 10,917 |
|-----------------------------+---------+---------+--------+--------|
| EBITDA                      | -4,082  | -4,589  | -8,671 | -2,244 |
|-----------------------------+---------+---------+--------+--------|
| Loss from operations        | -4,595  | -5,135  | -9,730 | -3,381 |
|-----------------------------+---------+---------+--------+--------|
| Net      of       financial |   114   |   126   |  240   |  -111  |
| income/cost                 |         |         |        |        |
|-----------------------------+---------+---------+--------+--------|
| Net loss                    | -4,481  | -5,009  | -9,490 | -3,492 |
|-----------------------------+---------+---------+--------+--------|
| Basic  earnings  per  share |  -0,30  |  -0,34  | -0,64  | -0.28  |
| (EUR)                       |         |         |        |        |
|-----------------------------+---------+---------+--------+--------|
| Cash        and        cash | 28,180  | 23,780  | 23,780 | 34,878 |
| equivalents[1]              |         |         |        |        |
+-------------------------------------------------------------------+


2006 revenues amounted to EUR 9.3 million, a decrease of 8% compared to the previous year. As was reported last year, revenue from the FMC contract completion was fully recognized in 2005, accounting for EUR 2.6 million in 2005, including a shift of EUR 0.4 million from Q1 2006 to 2005. Earnings before amortization, interest and taxes (EBITDA) decreased by EUR 6.4 million to EUR -8.7 million, while net loss for the year amounted to EUR -9.5 million, as compared to EUR -3.5 million in 2005. The cash position of Devgen NV was EUR 23.8 million at the end of 2006.

In the second half of 2006, revenue of EUR 4.3 million was generated, compared to EUR 5.0 million in the first six months. This decrease is mostly due to the extra income in the first half of 2006 relating to the finalization of the first 2004 agreement with Monsanto Company. The new contract with Monsanto Company has an effective date of September 1, 2006.


Details of 2006 results

Revenue

Of the total revenue, EUR 8.9 million was generated by Devgen Crop Protection as compared to EUR 10.4 million in 2005.

In Human Therapeutics revenue of EUR 0.45 million was generated, as compared to EUR 0.55 million in previous year.

Total government grants in 2006 increased 63% to EUR 2.5 million, compared to EUR 1.5 million in 2005. In January 2007, Devgen was awarded a new research grant from IWT of EUR 0.9 million over 16 months, with start date in September 2006, for the development of new targets for the treatment of obesity.

Results

The net loss for 2006 was EUR 9.5 million, compared to the EUR 3.5 million last year. This increase is mostly due to the successful progression and acceleration of Devgen's research programs in 2006 which has increased operating costs substantially.

Total research and development expenses in 2006 amounted to EUR 14.8 million as compared to EUR11.4 million in the same period of 2005, an increase of 30 %, mainly due to the increase of outsourcing expenses by approximately EUR 2.6 million and staff costs by approximately EUR 0.2 million. The majority of outsourcing expenses relates to nematicide field trials. The increase is also partly due to costs for preclinical studies in the pharmaceutical programs, consistent with their downstream progression.

Selling, general and administrative expenses in 2006 increased to EUR 4.4 million as compared to EUR 3.2 million in 2005, an increase of 38%. Staff costs increased by EUR 1.1 million partly due to the strengthening of the team and to the increase of share based compensation.

Cash flow and cash position

The net operating cash drain (operating loss + amortization and depreciations + share based compensation) amounted to EUR 7.6 million as compared to EUR 2.2 million in 2005.

The cash used in operations was EUR 10.4 million, as compared to EUR 5.6 million in 2005. This is the result of the operating cash drain of EUR 7.6 million and EUR 2.8 million changes in working capital, including

- increase of grant receivables of EUR 1.1 million, mainly from IWT;
- increase  of trade  receivables  of EUR  1.1 million,  mainly  from
Sumitomo and Monsanto Company;
- increase  of  other  current  assets of  EUR  0.4  million,  mainly
interest receivables;
- decrease of trade and other payables of EUR 0.2 million.
Cash used in investing activities amounted to EUR 0.37 million in 2006, which is equivalent to the 2005 number.

Cash flow from financing activities amounted to EUR 0.2 million in 2006 as compared to EUR 30.8 million in 2005. The cash flow in 2005 included the net proceeds from the IPO and capital increases linked to exercise of warrants of EUR 31.8 million as compared to EUR 0.8 million in 2006, and net financial debt payments of EUR 1 million in 2005 as compared to EUR 0.6 million in 2006.

Devgen's cash and cash equivalents, including restricted cash of EUR 1.82 million, amounted to EUR 23.8 million on December 31, 2006, as compared to EUR 34.9 million on December 31, 2005.

Consolidated balance sheet

The balance sheet at 31 Dec 2006 remains very solid, with a solvency ratio (equity vs. total assets) of 70 % and a cash position of EUR 23.8 million, allowing the company to fulfil all its existing financial obligations and to continue its research programs.

2006 segment reporting

The primary segment information is presented in accordance with Devgen's dual business model. Since 2005 the 2 segments are presented as Crop protection and Human Therapeutics, as such reflecting the internal management organisation and reporting structure.


+-------------------------------------------------------------------+
| BUSINESS     |    Revenue     |      Costs      |    Operating    |
| UNIT         |                |                 |     result      |
|--------------+----------------+-----------------+-----------------|
| in '000 EUR  |   FY   |  FY   |   FY   |   FY   |   FY   |   FY   |
|              |  2005  | 2006  |  2005  |  2006  |  2005  |  2006  |
|--------------+--------+-------+--------+--------+--------+--------|
| Human        |  551   |  448  | 4,549  | 5,580  | -3,998 | -5,132 |
| Therapeutics |        |       |        |        |        |        |
|--------------+--------+-------+--------+--------+--------+--------|
| Crop         | 10,366 | 8,859 | 6,824  | 9,463  | 3,542  |  -605  |
| protection   |        |       |        |        |        |        |
|--------------+--------+-------+--------+--------+--------+--------|
| Not          |        |       | 2,925  | 3,993  | -2,925 | -3,993 |
| allocated    |        |       |        |        |        |        |
|--------------+--------+-------+--------+--------+--------+--------|
| Total        | 10,917 | 9,307 | 14,298 | 19,036 | -3,381 | -9,730 |
+-------------------------------------------------------------------+

Staffing

Per 31 Dec 2006, Devgen employed 108 staff. Compared to 2005, this is an increase of 3 % in headcount. Devgen has been successful in attracting 2 additional experienced senior people as head of the respective business units nematicides and human therapeutics. It has also strengthened the team with a senior corporate lawyer in January 2006.


Complete financial statements

The complete financial statements of 2006 are available for downloading in the investor section of www.devgen.com.


* * * * * * * * * *

Operational highlights

Corporate

- In April 2006, Devgen was informed that 1,4 million shares held  by
pre-IPO shareholders had successfully been placed with new investors,
thus increasing the free  float from 60% to  70%, which improved  the
liquidity of the shares on the stock market.
- Subsequent event: Devgen  successfully raised EUR  31 million in  a
private placement in February  2007 to fund  its rice business  plan.
Also, the company was  informed that, on the  same date, 2.2  million
shares held  by pre-IPO  shareholders were  replaced, increasing  the
free float from 70% to 85%.
Biotech crop protection

Devgen has a dual strategy in biotech crop protection:

1) It out-  licences its technology  to obtain market  access in  the
major biotech row/cash crops.
- Devgen's research collaboration  with Pioneer Overseas  Corporation
expired at the end of 2006  whereas the licensing agreement is  still
in place.
- On February 6, 2007, Devgen and Monsanto Company have entered  into
a five-year research and development (R&D) agreement and a  five-year
technology exchange agreement,  with effect September  1st 2006.  The
new R&D  agreement  commits  additional  funding  from  Monsanto  for
Devgen's research and is coupled with an agreement which will broaden
the relationship  so  that  both  companies  can  explore  technology
applications in their  crop areas of  interest. Devgen will  leverage
Monsanto's technology  for  use  in rice  and  small  cereal  grains,
especially in Asia. Monsanto  intends to initially leverage  Devgen's
technologies to its core crops of  interest such as corn, cotton  and
soybeans.

2) Devgen  aims  to  become  a  "traits[2],  germplasm[3]  and  seed"
provider in rice.
- traits
Through the  technology  exchange agreement  with  Monsanto  Company,
Devgen has access  to Monsanto  technology for  application in  rice.
This complements Devgen's  crop protection  technologies and  enables
Devgen to  create  a complete  and  highly competitive  portfolio  of
biotech traits for rice.

- germplasm
Devgen has developed and implemented  a breeding strategy with  world
class staff &  advisors. Devgen has  also established field  stations
for accelerated  breeding  in  Kenya and  successfully  completed  an
initial breeding season in 2006. In 2007 Devgen intends to expand its
breeding base  to  India  and  make  significant  investment  in  its
classical and molecular breeding programs infrastructure.

- seed
Devgen is exploring options to  secure market access for hybrid  rice
seed through a joint venture or  acquisition of a rice seed  business
in India.
Devgen agrochemical

The promising 2005 results were confirmed by regulatory field trials performed in the course of 2006. To date, over 120 trials have been run in Northern Europe and Mediterranean countries on key agronomic European crops (including sugar beet, potato, carrot, tomato, cucumber, melons and others) and on bananas.

The results in Europe confirmed that Devgen's candidate nematicide products decrease crop injury and enhance crop yield. The 2006 trial reports will form a substantial part of the data package required by regulatory authorities for market approval applications.

In 2007, a second year of regulatory trials will be conducted in Europe, while the number of exploratory field trials outside Europe will be significantly expanded. First efficacy results on bananas are due in Q2 2007.

Devgen human therapeutics

Based on interesting results from the diabetes program in 2006, Devgen identified related targets for inflammatory diseases, such as rheumatoid arthritis (RA) and inflammatory bowel disease (IBD). Encouraging results in several models of inflammation were achieved and will be investigated further in 2007.

In its cardiac arrhythmia program, Devgen compounds have performed well in a number of "gold standard" cellular and in vivo disease and safety models. In 2006, the compound series were further optimized and broadened and in 2007 additional efficacy studies are planned. The aim is to develop a chronically administered oral compound for the treatment of atrial fibrillation.


* * * * * * * * * *


Conference call

Devgen will conduct a conference call on Thursday March 15, 2007 at 11am 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 (0)2 290 14 07. 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.

Financial calendar


+-------------------------------------------------------------------+
| May 10, 2007       | Interim business update H1 2007              |
|--------------------+----------------------------------------------|
| June 1, 2007       | Annual  Shareholders'  Meeting  in  Devgen's |
|                    | offices                                      |
|--------------------+----------------------------------------------|
| September 14, 2007 | H1 2007 Results                              |
|--------------------+----------------------------------------------|
| November 15, 2007  | Interim business update H2 2007              |
+-------------------------------------------------------------------+



Auditor's report

The auditor has confirmed that he has accomplished substantially all of the audit work and that, as a result of the audit, no meaningful corrections need to be applied to the financial information as included in this press release.


The Statutory Auditor
DELOITTE BEDRIJFSREVISOREN
Represented by Gino Desmet


About Devgen

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 incurred from pests;
- innovative  hybrid  rice germplasm  and  traits focused  in  Indian
farmers needs
- 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), inflammation  and
arrhythmia.
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 on Devgen visit the company's web site www.devgen.com.


For more information, please contact:

Hilde Windels, CFO
0032 9 324 24 24
Hilde.windels@devgen.com


[1] Including restricted cash of EUR  1.82 million per 31.12.06 and EUR
1.96 million per 31.12.05
[2] Trait: plant characteristic that improves its growth,  resistance
to pests, nutrient content or the like.
[3] Plant germplasm is the genetic material of a plant in the form of
seed or grafting/cutting material




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