SOURCE: Pacific Biomarkers

September 24, 2010 15:11 ET

Pacific Biomarkers Reports Operating Results for FY2010

Year-End Backlog Stands at Record $16.1 Million

SEATTLE, WA--(Marketwire - September 24, 2010) - Pacific Biomarkers, Inc. (OTCBB: PBMC), which provides specialty laboratory services to support pharmaceutical, biotechnology and laboratory diagnostic companies in the conduct of human clinical research, for use in their drug and diagnostic product development efforts, today released its financial results for FY2010.

For the twelve months ended June 30, 2010 (FY2010), revenue decreased 11% to $9,664,861, compared with record revenues of $10,881,107 in FY2009. Operating loss was $836,035, compared with an operating income of $613,430 in the fiscal year ended June 30, 2009. The Company reported FY2010 net loss of $1,382,542, or $0.08 per share, compared with a FY2009 net income of $1,235,947, or $0.07 per share basic and $0.06 per diluted share.

"As Fiscal 2010 progressed, we experienced a decrease in referrals from other central labs and a decline in testing for diabetes and rheumatoid arthritis clinical trials, particularly during the second and fourth quarters, when compared with the prior-year periods," commented Ron Helm, Chairman and Chief Executive Officer of Pacific Biomarkers, Inc. "Fourth quarter revenues firmed up, but despite that improvement, overall revenues for fiscal 2010 ended below revenues in fiscal 2009. The nature of our business continues to be subject to numerous uncertainties within the pharmaceutical industry, such as cost reductions, capital constraints for life science companies, trends toward smaller clinical trials, and the increased use of adaptive clinical trials. However, I am confident that PBI is on the right track with its focus upon traditional and novel biomarkers, which we believe will play an increasingly important role as our customers seek to reduce the cost of bringing new drugs and diagnostics to market."

"Our financial performance in fiscal 2010 showed a net loss, compared to a net profit in fiscal 2009. This was due to the decrease in revenue, and increases in expense for adding laboratory staff to perform new and more complex assays, and expenses related to the expansion of our novel biomarker services area," stated Mr. Helm. "We used $653,633 in cash from operating activities during the most recent fiscal year, or about 78% of the operating loss. In contrast, we generated cash generated from operations of over $1.1 million in fiscal 2009. However, we finished fiscal 2010 with $2.3 million in cash and short-term investments compared to $1.4 million at the end of fiscal 2009. Thus, from a balance sheet perspective, we are well-positioned to respond to an improvement in our business going forward."

"While fiscal 2010 was a challenging year, we believe that a number of positive developments will have a strong impact going forward," continued Helm. "Last year we continued to diversify our client base, adding twelve new clients during fiscal 2010 while increasing the number of active contracts to 159 at June 30, 2010, versus 137 active contracts at June 30, 2009. Our year-end backlog included several large contracts that have substantial revenue-generating potential for fiscal 2011. The primary component of our business development efforts continues to be directed towards pharmaceutical and biotech clinical drug development. During fiscal 2010 we also saw a continued increase in revenues from our work in the novel biomarkers development area, representing 10% of revenues in fiscal 2010, compared with 8% in fiscal 2009. Our focus in the novel biomarkers area will continue to be biomarker assay development and testing services, the fastest-growing segment of the clinical drug-development services market. We believe we are well positioned to leverage our scientific expertise and capture an important share of this market. We expect our novel biomarker services business to represent a larger portion of our revenues in the 2011 fiscal year."

"Other changes in our marketplace are the widespread use of so-called 'adaptive clinical trials' together with novel biomarkers. These contracts are often shorter in duration and tend to move in and out of backlog quickly. Similarly, biomarker assay development work is also of a short duration, often remaining in backlog for less than 90 days, but this has the benefit of a shorter sales cycle while revenues are realized earlier after contracts are signed. While we think backlog is still a useful metric, going forward we will be increasing our attention on amounts in backlog for the current fiscal year and the following fiscal year, and we will contemplate changing how we report backlog. We have made substantial gains in total backlog, which as of June 30, 2010 stands at $16.1 million, compared to $13.1 million a year ago. Our total active contracts stand at $34.1 million, compared to $25.1 million one year ago, reflecting the increase in the number of contracts to 159 at the end of the fiscal year," concluded Helm.

About Pacific Biomarkers, Inc. (PBI)

Established in 1989, PBI provides specialty laboratory services to support pharmaceutical, biotechnology and laboratory diagnostic manufacturers in the conduct of human clinical research, for use in their drug and diagnostic product development efforts. Our clients include a number of the world's largest multi-national pharmaceutical, biotechnology and diagnostic companies. Our well-recognized specialty areas include Diabetes, Obesity, Cardiovascular diseases (dyslipidemia, atherosclerosis, and coronary heart disease), Rheumatology and Bone diseases, (including osteoporosis, osteoarthritis and rheumatoid arthritis). We participate in all in-human clinical trials, phases I - IV.

We also perform clinical biomarker services for novel biomarkers, as well as custom assay services for our pharmaceutical and biotechnology clients. Through our biomarker services, we provide assay development services for novel biomarkers, as well as custom assay services for immunogenicity testing and multiplex testing. The PBI laboratory is accredited by the College of American Pathologists, New York State, and the Lipid Standardization Program.

PBI is headquartered in Seattle, Washington, and its common stock trades on the OTC Bulletin Board under the symbol "PBMC". For more information about PBI, visit the company's web site at www.pacbio.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release includes forward-looking statements including, but not limited to, the following: growth in revenues and backlog; results of business development activities; financial results; future growth; and the viability and acceptance of its established and new services, including the Company's biomarker services. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, the following: the Company's ability to enter into contracts for its laboratory testing or biomarker services; client changes or early terminations of studies; variability in backlog; the success of marketing and business development efforts, and competitive factors; changes effecting the pharmaceutical and biotechnology industries; the Company's ability to manage growth; and other risks and uncertainties set forth in periodic filings with the U.S. Securities and Exchange Commission (including Form 10-K for the year ended June 30, 2010).

(Financial Highlights Follow)

                         PACIFIC BIOMARKERS, INC.
                        CONSOLIDATED BALANCE SHEETS
                              As of June 30,


                       ASSETS                         2010         2009
                                                  -----------  -----------
Current assets:
    Cash and cash equivalents                     $ 1,861,155  $ 1,365,406
    Short-term investments                            468,619            -
    Accounts receivable, net                        1,852,987    2,238,912
    Other receivable, net                               6,500        9,000
    Inventory                                         239,863      171,885
    Prepaid expenses and other assets                 229,802      230,974
                                                  -----------  -----------
          Total current assets                      4,658,926    4,016,177

Property and equipment, net                         1,309,764      813,258

          Total assets                            $ 5,968,690  $ 4,829,435
                                                  ===========  ===========

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                              $   605,944  $   678,818
    Accrued liabilities                               632,429      660,284
    Advances from customers - current portion         408,455      155,471
    Capital lease obligation - current portion        200,806       62,709
    Secured note - current portion                  1,015,603            -
                                                  -----------  -----------
          Total current liabilities                 2,863,237    1,557,282

    Advances from customers - long - term portion           -      272,032
    Capital lease obligations - long - term
     portion                                          389,820      156,309
    Secured note - long - term portion              2,676,969            -
                                                  -----------  -----------
          Total liabilities                         5,930,026    1,985,623
                                                  -----------  -----------

Commitments and contingencies                               -            -

Stockholders' equity:
    Common stock, $0.01 par value, 30,000,000
     shares authorized, 16,669,856 shares issued
     and outstanding at June 30, 2010,
     19,099,539  shares issued and outstanding
     at June 30, 2009                                 166,699      190,995
    Additional paid-in capital                     27,723,024   29,121,334
    Accumulated deficit                           (27,851,059) (26,468,517)
                                                  -----------  -----------
          Total stockholders' equity                   38,664    2,843,812

          Total liabilities and stockholders'
           equity                                 $ 5,968,690  $ 4,829,435
                                                  ===========  ===========



            The accompanying notes are an integral part of these
                   consolidated financial statements.





                         PACIFIC BIOMARKERS, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                           Years Ended June 30,



                                                    2010          2009
                                                ------------  ------------

Revenues                                        $  9,664,861  $ 10,881,107
                                                ------------  ------------

 Laboratory expenses and cost of sales             5,857,971     5,920,195
                                                ------------  ------------
        Gross profit                               3,806,890     4,960,912
                                                ------------  ------------

Operating expenses:
    Selling, general and administrative            4,642,925     4,347,482
                                                ------------  ------------

Operating income (loss)                             (836,035)      613,430
                                                ------------  ------------

Other income (expense):
  Interest expense                                  (482,746)     (158,324)
  Gain on adjustment of embedded and
   freestanding derivatives to fair value                  -       675,691
  Amortization of deferred financing costs -
   secured convertible debt                                -       (18,447)
  Amortization of discount on debt                   (62,758)            -
  Other expense                                       (1,003)      123,597
                                                ------------  ------------
        Total other income (expense)                (546,507)      622,517

Net income (loss) before tax expense              (1,382,542)    1,235,947
                                                ------------  ------------

Tax expense                                                -             -

 Net income (loss)                              $ (1,382,542) $  1,235,947
                                                ============  ============

Net income (loss) per share:
  Basic income (loss) per share                 $      (0.08) $       0.07
                                                ============  ============
  Diluted income (loss) per share               $      (0.08) $       0.06
                                                ============  ============

Weighted average common shares outstanding:
  Basic                                           17,528,746    19,012,769
                                                ============  ============
  Diluted                                         17,528,746    19,640,041
                                                ============  ============


          The accompanying notes are an integral part of these
                   consolidated financial statements.





                         PACIFIC BIOMARKERS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                           Years Ended June 30,



                                                    2010          2009
                                                ------------  ------------
Cash flows from operating activities:
  Net income (loss)                             $ (1,382,542) $  1,235,947

  Reconciliation of net income (loss) to net
   cash provided by (used in) operating
   activities:
    Depreciation and amortization                    343,716       263,756
    Accretion of fair value assigned to
     conversion feature and warrants                       -        88,134
    Amortization of deferred financing costs on
     secured convertible note                              -        18,447
    Bad debt expense                                       -        20,431
    Gain from embedded and freestanding
     derivative liabilities relating to secured
      convertible note                                     -      (675,691)
     Amortization of discount on debt                 62,758             -
    Income on deposits                                 8,975             -
    Warrant expense for equipment lease and
     financing                                             -         3,940
    Compensation expense from restricted shares
     and options                                     111,618       101,585
    Changes in assets and liabilities:
      Accounts receivable                            385,925      (113,262)
      Other receivable                                 2,500       442,291
      Inventory                                      (67,978)       25,571
      Prepaid expenses and other assets                1,172      (130,105)
      Advances from customers                        (19,048)     (215,788)
      Accounts payable                               (72,874)     (139,406)
      Accrued liabilities                            (27,855)      209,496
                                                ------------  ------------
       Net cash  provided by (used in)
        operating activities                        (653,633)    1,135,346
                                                ------------  ------------

Cash flows from investing activities:
  Purchases of capital equipment                    (308,738)      (45,387)
  Purchases of investments                          (977,594)            -
  Maturities of investments                          500,000             -
                                                ------------  ------------
    Net cash used in investing activities           (786,332)      (45,387)
                                                ------------  ------------

Cash flows from financing activities:
  Payments on notes payable                         (164,462)     (869,136)
  Proceeds from loan                               4,000,000             -
  Repurchases of common stock                     (1,674,336)            -
  Restricted stock transferred for employee
   withholding tax liability                         (65,615)            -
  Payments on capital lease obligations             (159,873)      (51,727)
                                                ------------  ------------
    Net cash provided by (used in) financing
     activities                                    1,935,714      (920,863)
                                                ------------  ------------

Net increase  in cash and cash equivalents           495,749       169,096
Cash and cash equivalents, beginning of period     1,365,406     1,196,310
                                                ------------  ------------

Cash and cash equivalents, end of period        $  1,861,155  $  1,365,406
                                                ============  ============

Supplemental Information:
Cash paid during the period for interest        $    398,641  $     72,173
Cash paid during the period for income tax      $          -  $          -


Non-cash investing and financing activities:
  Capital expenditures funded by capital lease
   borrowings                                   $    531,484  $    147,106
  Capital expenditures funded by accounts
   payable                                      $    193,463  $          -



          The accompanying notes are an integral part of these
                   consolidated financial statements.

Contact Information

  • PACIFIC BIOMARKERS, INC.

    CONTACT:
    Ron Helm
    CEO of Pacific Biomarkers, Inc.
    +1-206-298-0068