Pharmacopeia Announces Update on Timing of Proposed `Spin-Off' of
Pharmacopeia Drug Discovery
Company Also Comments on First Quarter 2004, and Provides Full-Year Financial
Guidance
PRINCETON, N.J., April 7 /PRNewswire-FirstCall/ -- Pharmacopeia, Inc. today
announced that the proposed spin-off of its Pharmacopeia Drug Discovery, Inc. (PDD) unit is expected to occur by the end of April 2004. The Pharmacopeia Board
of Directors intends to meet next week to consider final approvalof the pro
rata distribution to stockholders of 100% of the common stock of PDD. Subject
to final Nasdaq approval, PDD common stock will trade under the symbol "PCOP"
upon completion of the spin-off. Pharmacopeia will continue to trade under the
symbol "ACCL" after the distribution and, subject to stockholder approval at its
upcoming annual meeting, the company will change its name to "Accelrys" to
better reflect its focus on the scientific software business. The transaction
remains subject to Pharmacopeia's receipt of regulatory approvals and a
favorable tax opinion, market conditions and final approval by the Pharmacopeia
Board.
The Company also announced that consolidated revenue for the quarter ended March
31, 2004 was approximately 34% lower than in the first quarter of 2003. In
addition to the anticipated negative effect on revenue of the new subscription
software license offered in the first quarter, Accelrys revenue in the quarter
was impacted by a 22% decrease in orders as compared to the 2003 first quarter.
The Company attributed the shortfall at Accelrys to, among other issues,
confusion regarding the change to the new subscription licensing contracts and
some disruption associated with the planned spin-off of PDD. PDD revenue for
the quarter ended March 31, 2004 decreased approximately 28% as compared to the
2003 first quarter, due principally to lower milestone revenue and reduced third
party collaborative research funding.
In spite of lower revenue and orders at Accelrys in the first quarter, total
deferred revenue, which includes unbilled orders, in the software unit grew to
more than $47 million at March 31, 2004, a 19% increase over the level at March
31, 2003. Further, on a consolidated basis, the benefits from recent and
continuing cost containment initiatives were reflected in the Company's improved
cash position at the end of the 2004 first quarter. The Company's cash and cash
equivalents at March 31, 2004 grew to more than $141 million, over a $7 million
increase from its December 31, 2003 level.
With regard to financial guidance, John Hanlon, Pharmacopeia's Chief Financial
Officer, said, "As we have stated in our previous releases and conference calls,
we do not believe the first calendar quarter is a good indicator of the
Company's actual performance over the balance of the year. Consistent with this
view, we expect Accelrys orders for the period beginning April 1, 2004 and
ending March 31, 2005 (the software division's 2005 fiscal year) to increase
modestly over orders for the twelve months ended March 31, 2004. We anticipate
a market environment in fiscal 2005 that will continue to improve gradually,
which we believe will help us drive new sales and continue to build our deferred
revenue base. Further, we see revenue potential from the activities of our
Business Development Group, recently established by Accelrys to pursue
in-licensing, out-licensing and merger and acquisition opportunities. Due to
the accounting for Accelrys' new subscription license offering, we expect
revenue recorded for fiscal 2005 will be from 12% to 15% lower than in the
comparable twelve month period ended March 31, 2004. We expect cash flow from
operations to be higher in fiscal 2005 than in the twelve months ended March 31,
2004. We believe this improvement in cash flow at Accelrys will be a product of
both its lower operating expense base and its customers' adoption of the new
subscription license offering on payment terms consistent with historical
practice." "We intend to increase our level of internal, self-funded research at PDD over
the remainder of 2004, as we believe such proprietary programs have the
potential to generate higher future returns for PDD than are typical in the drug
discovery unit's standard collaborative agreements. Notwithstanding this
enhanced investment in PDD's own programs, however, we do not expect PDD's net
utilization of cash during the remainder of calendar year 2004 to exceed $5.0
million." "Consistent with our previousguidance, the Company will record one-time charges
in the quarter ended March 31, 2004 estimated at between $11 million and $12
million in total. These charges primarily reflect costs incurred in connection
with the spin-off, the consolidation of facilities at PDD and the reduction of
staff implemented in January 2004 at Accelrys." Pharmacopeia (http://www.pharmacopeia.com/) is a leader in enabling science and
technology that accelerates and improves the drug discovery and chemical
development processes. Pharmacopeia's Drug Discovery business (PDD) integrates
proprietary small molecule combinatorial and medicinal chemistry,
high-throughput screening, in-vitro pharmacology, computational methods and
informatics to discover and optimize lead compounds. Pharmacopeia's software
subsidiary, Accelrys, develops and commercializes molecular modeling and
simulation software for the life sciences and materials research markets,
cheminformatics and decision support systems, and bioinformatics tools including
gene sequence analysis. Pharmacopeia is headquartered in Princeton, New
Jersey.
Contact:
John J. Hanlon
Chief Financial Officer
(609) 452-3600
When used anywhere in this document, the words "expects," "believes,"
"anticipates,""estimates" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements herein may include
statements addressing future financial and operating results of Pharmacopeia. Pharmacopeia has based these forward-looking statements on its current
expectations about future events. Such statements are subject to risks and
uncertainties including, but not limited to, the successful implementation of
Pharmacopeia's strategic plans, the acceptance of new products, the obsolescence
of existing products, the resolution of existing and potential future patent
issues, additional competition, changes in economic conditions, completion of
the spin-off of PDD and other risks described in documents Pharmacopeia has
filed with the Securities and Exchange Commission, including its most recent
report on Form 10-K and subsequent reports on Form 10-Q. All forward-looking
statements in this document are qualified entirely by the cautionary statements
included in this document and such filings. These risks and uncertainties could
cause actual results to differ materially from results expressed or implied by
forward-looking statements contained in this document. These forward-looking
statements speak only as of the date of this document. Pharmacopeia disclaims
any undertaking to publicly update or revise any forward-looking statements
contained herein to reflect any change in its expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based. DATASOURCE: Pharmacopeia, Inc.
CONTACT: John J. Hanlon, Chief Financial Officer, Pharmacopeia, +1-609-452-3600, Web site: http://www.pharmacopeia.com/
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