SOURCE: Lumera Corporation

May 04, 2005 16:00 ET

Lumera Reports First Quarter 2005 Results and Updates Product Development Efforts; Company Progresses in Three Important Product Areas

BOTHELL, WA -- (MARKET WIRE) -- May 4, 2005 -- Lumera Corporation, (NASDAQ: LMRA), an emerging leader in the field of nanotechnology, today reported financial results for the first quarter of 2005 and released information regarding its current product development efforts.

"We continue to make progress in our product expansion and in developing our customer base," said Lumera Chief Executive Officer Tom Mino. "Our products offer high value, disruptive solutions to several large markets and initial response from both customer prospects and opinion leaders has been positive. Our transition from a research and development company to a company with exciting commercial products is on track and we expect to see market acceptance translating to revenues late this year."

Summary Financial Discussion

Revenue for the first quarter of 2005 totaled $240,000 compared to $316,000 for the same period in 2004. A prolonged contract renewal cycle on one of Lumera's two governmental contracts resulted in a later contract start date, causing revenues for the first quarter of 2005 to be comparatively lower than the prior year's quarter. Backlog on Lumera's two governmental contracts totaled $1.1 million at March 31, 2005.

Research and development expense for the first quarter of 2005 was $1,735,000 compared to $1,794,000 for the same period in 2004. Non-cash stock based compensation costs associated with first quarter 2004 option grants at below market prices and expense associated with research endeavors between Lumera and the University of Washington declined by $237,000 in the first quarter of 2005 compared to the same period in 2004. Expenses associated with first quarter 2005 technology license and transfer activities were $94,000. Other research costs including professional fees and materials and supplies expenses were approximately $150,000 higher in the current quarter compared to 2004.

Marketing, general and administrative expense for the first quarter of 2005 was $1,384,000, compared to $920,000 for the same period in 2004. Compensation related costs in marketing and finance increased $381,000, professional fees for audit, legal and insurance costs primarily associated with being a public company increased $285,000 and general administrative and facilities costs increased approximately $115,000 during the current quarter compared to the first quarter 2004. Non-cash stock based compensation costs were $353,000 lower during the current quarter.

Interest income was $169,000 during the quarter ended March 31, 2005, with no interest income in the comparative period.

During the first quarter of 2004, the Company issued 250,000 shares of Class B mandatorily redeemable convertible preferred stock at $2 per share. The Series B shares carried a $2 per share conversion price which was deemed to be less than the then estimated fair value of the Company's Class A common shares. As a result, the Company recorded a deemed dividend to preferred shareholders of $500,000 during the period.

Lumera's net loss was $2,878,000 or $0.17 per share for the first quarter of 2005 compared to a net loss of $3,092,000 or $0.50 per share in the same period in 2004. There were approximately 10.4 million fewer shares outstanding during the quarter ending March 31, 2004.

Lumera used $2,620,000 in net cash to fund operations during the first quarter of 2005, compared to $635,000 for the first quarter of 2004. Increased operating costs led to a higher net loss in the current quarter of $286,000. Non-cash expense components of net loss decreased by $638,000 from the first quarter of 2004. Changes in certain working capital accounts reflect the use of $208,000 cash in the current quarter while the prior year quarter's change in working capital accounts generated $853,000.

As of March 31, 2005, Lumera had $27,458,000 of cash and investment securities, $987,000 of which had maturities longer than 12 months at the balance sheet date. The company invests cash not needed to fund near term operations in highly liquid investments with varying stated maturities, all of which are available for sale.

Summary Discussion of Product Development

Lumera develops proprietary polymer materials which are in turn used in products for three distinct markets: biotechnology disposables, electro-optic devices, and smart wireless antennas and systems. Lumera has not yet generated commercial sales of its products in any of these markets.

The status of Lumera's product commercialization efforts in each of these markets is summarized below:

Biotechnology Disposables

Lumera is developing various disposable biochips that are fabricated with a proprietary polymer coating and process (NanoCapture™ Arrays). These biochips enable biologists to isolate DNA and protein samples for testing. Product testing with a prospective customer produced anticipated positive results. Negotiations have begun for Lumera to provide this prospective customer with a small initial production run of biochips.

Lumera is currently developing a high-throughput, label-free detection platform in collaboration with the Institute for Systems Biology ("ISB") which may enable biologists to isolate protein samples for testing and analysis. The initial prototype device is currently undergoing testing and further development at the ISB. Lumera is developing specialized microarrays, combining its exclusive license to Helix Biopharma's Heterodimer Protein Technology (HPT) technology and Lumera's proprietary nanosurface modification chemistry which the company believes will, for the first time, allow researchers to consistently take existing DNA arrays to produce protein arrays that accurately mimic the native living cell environment of the body. Lumera expects to begin shipping products based on these technologies in 2005.

Electro-Optic Devices

Lumera recently announced a patent that covers chromophores with an increased stability towards light, also referred to as photostability, and a high level of electro-optic activity. This is a critical combination which will allow the company to offer improved product performance in the marketplace.

Samples of the new polymer material with improved electro-optic properties have been supplied to multiple government agencies and potential industrial partners. Initial test results have been positive. The next phase in the sales cycle will be to provide additional samples for further testing and validation. Once completed, Lumera expects these developments to lead to sales revenue in the latter part of the year.

Lumera is currently working on two government contracts to produce polymer-based modulators for use in defense communications systems and phased array radar. Backlog on both of these contracts totaled $1.1 million at March 31, 2005.

Wireless Antennas and Systems

Lumera's smart antenna features a polymer-based technology that provides electronic beam steering without moving parts. Lumera has developed and delivered a smart antenna for customer specific applications for potential use in the fast growing market of WiMAX wireless broadband services. Lumera has delivered smart antennas for a customer specific WiMAX application for testing and evaluation. The company has not yet begun commercial production of smart antennas.

Conference Call

Lumera will host a conference call to discuss its fourth quarter and 2004 financial results at 4:30 p.m. EST today. The call will be broadcast over the Internet and can be accessed from the company's web site at www.lumera.com. Additionally, U.S. participants may join the conference call by dialing 800.573.4842 ten minutes prior to the start of the conference. International participants can dial 617.224.4327. The conference passcode number is 73674991. A telephone replay of the call will be available through May 18, 2005, and can be accessed by dialing 888-286-8010 (for U.S. participants) or 617-801-6888 (for international participants. The replay passcode is 52833082. A replay of the conference call will be available on the company's web site.

About Lumera

Lumera is an emerging leader in the field of nanotechnology. The company designs proprietary molecular structures and polymer compounds for a broad range of bioscience, electro-optic, and specialty nanotechnology applications. The company also has developed proprietary processes for fabricating such devices. For more information, please visit http://www.lumera.com/.

Forward-Looking Statements Disclaimer

Certain statements contained in this release are forward-looking statements that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from those projected in the company's forward-looking statements include the following: market acceptance of our technologies and products; our ability to obtain financing; our financial and technical resources relative to those of our competitors; our ability to keep up with rapid technological change; government regulation of our technologies; our ability to enforce our intellectual property rights and protect our proprietary technologies; the ability to obtain additional contract awards and to develop partnership opportunities; the timing of commercial product launches; sales and revenues; the ability to achieve key technical milestones in key products; and other risk factors identified from time to time in the company's SEC reports, including its Annual Report on Form 10-K, and its Quarterly Reports on Form 10-Q.

                           Lumera Corporation
                        Condensed Balance Sheets
                             (In thousands)
                              (Unaudited)

                                               March 31,      December 31,
Assets                                            2005            2004
                                              ------------    ------------
Current assets
   Cash and cash equivalents                  $      2,901    $      3,505
   Investment securities, available-for-sale,
    current                                         23,570          15,460
   Accounts receivable                                  91              32
   Costs and estimated earnings in excess
    of billings on uncompleted contracts               111               3
   Other current assets                                546             623
                                              ------------    ------------
      Total current assets                          27,219          19,623

Investment securities, available-for-sale,
 long-term                                             987          11,216
Property and equipment, net                          1,873           2,047
                                              ------------    ------------
     Total assets                             $     30,079    $     32,886
                                              ============    ============

Liabilities and Shareholders' equity

Current liabilities
   Accounts payable                           $        344    $        416
   Current portion of research liability                50             101
   Accrued liabilities                                 914             976
                                              ------------    ------------
        Total current liabilities                    1,308           1,493

Commitments and contingencies

Shareholders' equity
    Common stock at par value                           16              16
    Additional paid-in capital                      70,555          70,435
    Deferred stock-based compensation                 (503)           (666)
    Accumulated other comprehensive loss              (172)           (145)
    Accumulated deficit                            (41,125)        (38,247)
                                              ------------    ------------
      Total shareholders' equity                    28,771          31,393
                                              ------------    ------------
Total liabilities and shareholders' equity    $     30,079    $     32,886
                                              ============    ============



                           Lumera Corporation
                   Condensed Statements of Operations
        (In thousands, except earnings per share and share data)
                              (Unaudited)

                                              Three months ended March 31,
                                                  2005            2004
                                              ------------    ------------
Revenue                                       $        240    $        316
Cost of revenue                                        168             194
                                              ------------    ------------
Gross profit                                            72             122
                                              ------------    ------------

Research and development expense                     1,735           1,794
Marketing, general and administrative
 expense                                             1,384             920
                                              ------------    ------------
        Total operating expenses                     3,119           2,714
                                              ------------    ------------

Loss from operations                                (3,047)         (2,592)

Interest income                                        169               -
                                              ------------    ------------
Net loss                                      $     (2,878)   $     (2,592)

Deemed dividend upon issuance of mandatorily
 redeemable convertible preferred stock                  -            (500)
                                              ------------    ------------
Net loss available to common shareholders     $     (2,878)   $     (3,092)
                                              ============    ============

Net loss per share - basic and diluted        $      (0.17)   $      (0.50)
                                              ============    ============

Weighted-average shares outstanding -
  basic and diluted                             16,565,403       6,172,000
                                              ============    ============

Contact Information

  • CONTACT:

    Lumera Corporation

    Todd Wolfenbarger
    (media)
    801-595-1155

    Hélène Jaillet
    (investors)
    425-398-6546