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Epitope Announces Second Quarter Operating Results

    BEAVERTON, Ore., May 15 /PRNewswire/ -- Epitope, Inc. (Nasdaq: EPTO) today
reported its second quarter operating results for fiscal 1997.  Revenues for
the quarter ended March 31, 1997 and first six months of fiscal 1997 were
$2.6 million and $5.2 million, respectively, as compared to revenues of
$1.5 million and $2.8 million, respectively, for the comparable periods in
1996.  The Company reported a net loss of $10.2 million for the second
quarter, or $0.74 a share, compared with a net loss of $1.8 million, or
$0.14 a share, in the second quarter of fiscal 1996.  For the six months ended
March 31, 1997, Epitope reported a net loss of $14.6 million (including a loss
of $8.4 million from discontinued operations), or $1.08 per share, as compared
to a loss of $3.5 million, or $0.28 per share for the first six months of
fiscal 1996.
    The net loss from continuing operations for the current quarter amounted
to $1.8 million, or $0.13 per share, as compared to $1.8 million, or $0.14 per
share for the second quarter of fiscal 1996.  For the six months ended
March 31, 1997, the Company reported a net loss from continuing operations of
$6.3 million (including first quarter non-recurring charges of $3.1 million),
or $0.47 per share, as compared to a loss of $3.5 million, or $0.28 per share
in the first six months of the preceding fiscal year.

    Epitope Medical Products
    Epitope Medical Products (EMP) recorded a net loss of $1.0 million on
revenues of $2.3 million in the second quarter of fiscal 1997, as compared to
a loss of $1.4 million on revenues of $1.2 million in the quarter ended
March 31, 1996.  As compared to the second quarter of fiscal 1996, EMP product
sales doubled in the second quarter of 1997 to a level of $2.2 million.  Sales
of Western blot HIV-1 confirmatory tests increased 18% over second quarter
1996 sales to $0.5 million, reflecting higher sales volumes.  Sales of EMP's
oral specimen collection device were $1.7 million, representing an increase of
$1.0 million over the levels achieved in the prior year second quarter.  The
increase is attributable to increased use of the device for insurance testing
purposes.  The increased sales volume of oral specimen collection devices also
had a favorable impact on gross margins which improved in 1997 to 61% of
sales, from 35 % in the second quarter of fiscal 1996.  EMP currently has firm
orders totaling $1.7 million for oral specimen collection devices and
$0.4 million for HIV-1 confirmatory tests to be delivered in the third quarter
of 1997.

    Agritope
    Agritope incurred a loss from continuing operations of $0.8 million in the
current quarter as compared to a loss of $0.4 million in the second quarter of
fiscal 1996.  For the six months ended March 31, 1997, Agritope reported a
loss from continuing operations of $4.9 million as compared to a loss from
continuing operations of $1.0 million in the first six months of fiscal 1996.
The six month results for 1997 include non-cash first quarter charges of
$3.1 million arising from conversion of certain notes to common stock and a
permanent impairment in the value of investments in affiliated companies.  Six
month results include expenses of $0.4 million related to Vinifera, Inc. which
was not a part of the Agritope group in 1996 and $0.3 million related to
development of a proposal, currently undergoing further study, to create a
second class of common stock targeted to operations of the Agritope group and
re-designating the current common stock to track the result of operations of
the Epitope Medical Products group.

    Discontinued Operations
    Prior period operating results have been restated to reflect the operating
results of Andrew & Williamson Sales, Co. (A&W) in discontinued operations as
a result of the Company's previously reported agreement to rescind its
December 1996 business combination with A&W.  The second quarter results
include losses of $8.3 million attributable to A&W.  The non-cash portion of
the estimated loss on disposal is $7.8 million.  Under terms of the agreement
to rescind the A&W transaction, the former shareholders of A&W agreed to
return 520,000 shares of Epitope common stock in exchange for the A&W common
stock Epitope received in the December transaction.  Epitope will also receive
two series of A&W nonvoting preferred stock with a $5.7 million liquidation
preference over A&W common stock, various redemption features and a share of
dividends equal to those paid on common stock.  As a result of the rescission,
the merger, originally accounted for as a pooling-of-interests, is now
required to be accounted for as a purchase transaction.  Discontinued
operations for the current quarter include a charge of $8.4 million for the
estimated loss on disposal of A&W including the reduction in the market price
of Epitope common stock to be returned by the A&W former shareholders,
discounting the present value of A&W preferred stock to be issued to Epitope
and accrual of certain estimated costs of disposition.
    A tabulation of operating highlights and balance sheet data follows (in
thousands, except per share data):

                                     Three Months Ended     Six Months Ended
                                     3/31/97    3/31/96    3/31/97    3/31/96
    Operating Highlights:
    Epitope Medical Products

    Revenues                          $2,336    $ 1,207    $ 4,977    $ 2,432
    Loss from operations              (1,238)    (1,612)    (1,849)    (2,898)
    Loss from continuing operations   (1,029)    (1,394)    (1,410)    (2,455)
    Net loss                          (1,029)    (1,394)    (1,410)    (2,455)
    Agritope
    Revenues                            $226       $263       $252      $ 349
    Loss from operations                (911)      (428)    (2,058)    (1,016)
    Loss from continuing operations     (809)      (423)    (4,935)    (1,014)
    Net loss                          (9,138)      (423)   (13,141)    (1,014)

    Epitope, Inc. and Subsidiaries
    Revenues                          $2,562     $1,470    $ 5,229    $ 2,781
    Loss from operations              (2,149)    (2,040)    (3,907)    (3,914)
    Loss from continuing operations,  (1,838)    (1,817)    (6,344)    (3,469)
    Net loss                         (10,166)    (1,817)   (14,551)    (3,469)
    Per share:
    Loss from continuing operations   $ (.13)    $ (.14)    $ (.47)    $ (.28)
    Net loss                          $ (.74)    $ (.14)    $(1.08)     $(.28)

    Selected Balance Sheet Data:
    Epitope, Inc. and Subsidiaries              3/31/97    9/30/96
    Cash and marketable securities             $ 12,995    $24,517
    Working capital                              13,288     21,630
    Shareholders' equity                         25,242     27,967

    Epitope, Inc. is an Oregon corporation utilizing biotechnology to develop
and market medical diagnostic products through its Epitope Medical Products
group and superior new plants and related products through its Agritope group.

Source: EPITOPE Inc.


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