MonoGen, Inc.

MonoGen, Inc.

April 02, 2007 21:42 ET

MonoGen, Inc. Announces Financial Results for the Year Ended December 31, 2006


MonoGen, Inc., formerly Oxbow Equities Corp., ("Corporation") (TSX:MOG) today announced the results of its audited consolidated financial statements for the year ended December 31, 2006. The complete financial statements, including management's discussion and analysis ("MD&A") of the results will be filed with SEDAR ( A selection of financial information, derived from the Corporation's audited consolidated financial statements for the years ended December 31, 2006 and 2005 are presented below. All amounts are reported in United States dollars.

Selected Annual Financial Information

Prior to the acquisition of the interest in MonoGen, Inc. ("MonoGen USA") of Vernon Hills, Illinois that it did not own on October 31, 2006, announced July 13, 2006, the Corporation accounted for its investment in MonoGen USA using the equity method. Beginning on November 1, 2006, the operations and balance sheet of MonoGen USA has been fully consolidated with those of the Corporation. The effect of this change was twofold. First, the revenues and expenses of MonoGen USA were added to those of the Corporation, net of intercompany expenses and revenues for that period only. Therefore, where a significant portion of the Corporation's interest income over the past several years was derived from the subordinated convertible debt investment in MonoGen USA, the consolidation of operations results in only ten months of this interest income being included in revenue. Second, expenses in the fourth quarter contain the full amount of MonGen USA's expenses for November and December 2006 whereas, prior to November 1, 2006, the Corporation only included its share of MonoGen USA's expense as its equity loss in MonoGen USA.

Year ended Year ended
December 31, December 31,
$000s except per share data 2006 2005
Revenue 2,552 2,695
Net loss (9,688) (4,366)
Basic and diluted net loss per share (0.10) (0.06)

Net working capital 21,315 14,102
Total assets 68,852 30,019
Subordinated convertible promissory
note, 2,873 -
Shareholders' equity 64,730 29,744

Overall Performance

Interest income increased from $2,102,000 to $2,552,000, notwithstanding the two month absence of interest income from MonoGen USA. The increase in interest income was due to the availability of additional funds from the disposition of Mission Medical, Inc. in 2005. These funds were mostly invested in MonoGen USA throughout the year. In addition, as a result of a private placement in November, 2006, an additional $16.3 million of capital was made available to the Corporation for the remainder of the year and generated interest income.

General and administrative expenses increased from $1,226,000 in 2005 to 2,208,000 in 2006. The addition of the MonoGen USA administrative expenses for the months of November and December account for most of the increase. General and administrative expenses in MonoGen USA are generally considerably greater than the historical general and administrative expenses of the Corporation. Also included in general and administrative expenses are stock option compensation costs recorded in the month of November reflecting the assumption of stock options by the Corporation as part of the acquisition of MonoGen USA.

Selling and marketing expenses reflect those of MonoGen USA for the months of November and December 2006. These expenses are incurred in anticipation of the commercialization of the MonoPrep Processor in 2007.

As in the case of selling and marketing expenses, research and development and regulatory expenses reflect activity in MonoGen USA for the months of November and December 2006. These expenses were incurred as part of the ongoing development, testing and meeting regulatory requirements for the Monoprep Processor. These expenses will also be incurred in future years as existing product improvements and new product development continue.

As a consequence of the acquisition of MonoGen USA, the Corporation consolidates the outstanding liabilities of MonoGen USA since October 31, 2006. As a result, approximately $36,000 of interest expense was incurred on the an outstanding MonoGen USA convertible note for the months of November and December 2006.

The equity loss in MonoGen USA was $1,264,000 higher for first ten months of 2006 over all of 2005. The increase in the equity loss is due to a number of factors including the cost of settling a secured loan through the issuance of warrants, increased interest expense due to increased borrowing through convertible notes and an increase in general and administration expenses as new personnel were added as the Corporation accelerated its activities toward commercialization of the MonoPrep Processor.

Future Prospects


This year will see the MonoPrep® Processor and its first accompanying test, the FDA-approved MonoPrep Pap Test, introduced into the U.S. market. We are currently working together with our distributor Cardinal Health in developing and implementing the commercialization plan. We expect that product placements will occur gradually throughout the year at an increasing pace, starting in earnest in the second half of 2007. This staged launch plan will enable MonoGen to review and adapt our commercialization infrastructure and processes as we accelerate sales throughout the year. During the first half of this year we are focusing on incorporating the final improvements to our products and ensuring their reliability; the ramp up of our manufacturing plant and the building of initial inventory levels to meet anticipated market demand; and recruiting, training and deploying an effective, efficient and responsive client services team.

In order to ensure a successful market launch and ongoing commercialization of our products we have strengthened our executive suite by hiring professional managers with solid, successful track records. More specifically, Mr. Ted Geiselman, previously with Cytyc Corporation, joined us as Senior Vice President and Chief Operating Officer and Mr. Jim Cureton, formerly with the Abbott Diagnostics division of Abbott Laboratories, joined us as Vice President, Sales and Marketing. Additional hires to complement the management team will be made in the coming months.

Product Pipeline

We are currently deploying significant efforts on the development of an imaging platform and have already filed initial patent applications to this effect. Our goal is to develop a state-of-the-art imaging platform leapfrogging existing commercially available cytopathology imaging systems. However, we are too early in this product development phase to estimate a market introduction date. We are also moving forward on product definition and development plans for our molecular diagnostics program to bring automated sample preparation capabilities to potential strategic partners.

Regulatory and Intellectual Property

We will be seeking during the year U.S. Food and Drug Administration (FDA) approval to use our MonoPrep Pap Test specimen preparation with the Digene hc2 test, the current standard of care in testing for and detecting human papillomavirus (HPV). As part of the MonoPrep Pap Test clinical trial, we processed over 3,000 samples on the Digene h2c test. We believe that the data obtained from this study demonstrates the suitability of our MonoPrep Pap Test sample preparation for use with the Digene hc2 test. We are currently actively engaged in the process of preparing an FDA submission for such HPV claim which we anticipate to file with the FDA in the first half of 2007. We anticipate approval later in the year, contemporaneously with the ramp up of the early phase of commercialization of our MonoPrep Pap Test.

Financial Situation

We have entered 2007 with a comfortable net cash position of approximately US$20 million. Based upon our currently anticipated burn rate, we believe that our cash position will be sufficient to fund our business well into 2008. Obviously, this outlook will necessarily change if our revenue projections are not attained and if we were to decide to accelerate expenditures beyond their currently planned levels, such as by accelerating the development of the MonoPrep imaging system. As additional capital will be required until we become cash flow positive, we intend to be responsive to financing opportunities as may present themselves at any point in time throughout 2007 by raising additional capital.

Forward-Looking Statements

This press release contains forward-looking statements. Statements preceded by the words believe, expect, anticipate, plan, intend, continue, estimate, may, will, and similar expressions are forward-looking statements. Forward-looking statements are based on the Corporation's beliefs and assumptions based on information available at the time the assumption was made. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments, relating to the Corporation. By its nature, forward-looking information is subject to various risks and uncertainties which could cause the Corporation's actual results and experience to differ materially from the anticipated results or other expectations expressed. Those risks and uncertainties include, but are not limited to, the Corporation's ability to raise additional capital, the Corporation's ability to execute its business plan while maintaining at all times its various regulatory approvals, the performance of its strategic partners including the performance of Cardinal Health, Inc. in the commercialization of the Corporation's products in the marketplace and the competitive response from existing and potential competitors. Readers should consult the risk factors as disclosed in the Corporation's Annual Information Form dated March 30, 2007 filed with SEDAR ( Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this press release, and the Corporation undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Conference Call to Review Results and Business Outlook

MonoGen, Inc. will host a teleconference/audio web cast to discuss
year-end 2006 results as well as its business outlook.

TIME: 4:00 pm ET on Wednesday April 4, 2007

To participate, please call the following at least 15 minutes prior
to the start of the event.

North America: 1-866-564-7444
International: 719-234-0008

Access at

Replay: (Available for one week after the conference call)
North America: 1-888-203-1112
International: 719-457-0820 Passcode: 4831506

Contact Information

  • MonoGen, Inc.
    Mr. Andre Denis
    Executive Chairman and Interim Chief Financial Officer
    514-286-0999, ext. 224
    514-286-3777 (FAX)