Transgenomic Reports Full Year 2015 Financial Results

Conference Call to be Held at 5:00 PM Eastern Time Today

OMAHA, Neb.--(BUSINESS WIRE)--Transgenomic, Inc. (NASDAQ: TBIO) today is reporting financial results for the year ended December 31, 2015, and providing a business update.

Business Update
2015 has been a year of change for Transgenomic as the Company has worked to realign its core activities around the commercialization of ICE COLD-PCR™ (ICP), an innovative technology that enables the use of DNA liquid biopsies for better, safer and less expansive diagnosis and treatment of many diseases. Broader commercialization of ICP is expected to provide a foundation for expansion of the licensing and partnering strategy we are pursuing in order to maximize the value of this broadly enabling technology. As a part of our focus on ICP, we have worked to exit lower growth legacy businesses.

This past year’s activities included the divestiture of and exit from businesses that comprised most of Transgenomic’s existing revenues. During the third and fourth quarters of 2015, Transgenomic announced that it had sold certain assets and liabilities of its columns separations business and that it had separately divested certain assets and liabilities of the Company's remaining Genetic Assays and Platforms business. Further in March 2016, Transgenomic announced that a review and evaluation of strategic options for its Patient Testing business resulted in a decision to suspend testing at its CLIA laboratory in New Haven, Connecticut, as the Company assesses its strategic options for this business.

These developments have had major effects on the Company's operations and financial results. The Genetic Assays and Platforms business and Patient Testing businesses have been classified as discontinued operations. Information presented for current and prior year periods in the financial statements has been modified to reflect these as discontinued operations.

Paul Kinnon, Transgenomic President and Chief Executive Officer, commented, strategically, we have been realigning our business around ICE COLD PCR. With this platform, we believe that Transgenomic can be a leader in the development of the liquid biopsy market. This required the discipline to divest legacy businesses that generated most of our revenues in the past, but these businesses were impediments to Transgenomic’s growth, and a significant drain on resources that we believe are better utilized for commercializing ICP. We have now turned our full attention to development of our ICE COLD-PCR technology, which has the potential to be a core enabling technology for the rapidly emerging liquid biopsy field. Moving away from tissue based biopsies can fundamentally change how we diagnose and treat cancer and other disorders. We are excited about near term prospects for this technology, and we look forward to continued good progress in the months ahead.

Review of 2015 Full Year Financial Results from Continuing Operations

Net sales for the twelve months ended December 31, 2015 were $1.7 million, a 33% increase compared with $1.2 million for the same period in 2014. The $0.5 million increase reflects higher sales from contract laboratory services.

Gross profit reflects a loss of $0.3 million, compared with a gross loss of $0.9 million for the same period in 2014. Gross profit increased $0.6 million on higher revenue coupled with lower costs for operating supplies in 2015 as compared to the prior year.

Operating expenses were $8.9 million in 2015 compared with $9.6 million in the prior year. The $0.7 million decrease in operating expenses included lower stock based compensation costs and lower research and development expenses as compared to 2014.

The net loss from continuing operations for the year ended December 31, 2015 was $10.1 million, or $0.93 per share, compared with a net loss of $10.8 million, or $1.59 per share, in 2014. Modified EBITDA, which is a non-GAAP measure that Transgenomic views as an appropriate and sound measure of the Company's results, was a loss of $8.1 million for 2015, compared to a loss of $9.1 million for the same period in 2014. A reconciliation of Net Loss to Modified EBITDA is presented below.

Cash and cash equivalents were $0.4 million at December 31, 2015, compared with $1.6 million at December 31, 2014. As previously announced, during the first quarter of 2016, the Company completed a financing that raised approximately $2.0 million in net proceeds.

2015 and Recent Highlights

• Announced Data Presentation Confirming Utility of ICP Liquid Biopsy Technology at AACR
  • Includes first systematic data confirming concordance of ICP liquid and tissue biopsy results
• Launched 1^st Commercially Available Assay for Ultra Low Level Detection of EGFR C797S Mutations for Lung Cancer, New MX-ICP Liquid Biopsy Tests for Detection of Colorectal and Melanoma Tumor Mutations, and New MX-ICP Panels for Liquid Biopsy Detection of RAS and PIK3CA Tumor Mutations
  • Launched multiple important new ICE COLD-PCR liquid biopsy cancer tests in late 2015/early 2016
• Awarded NIH Grant to Augment Multiplexing Capabilities of ICP Technology in Collaboration with Dana-Farber Cancer Institute
  • Two-year Small Business Technology Transfer grant will fund a collaborative project
• Launched Expanded MX-ICP Lung Cancer Analysis Panel for Liquid Biopsy Detection of Key Actionable Mutations
  • New comprehensive panel is the latest liquid biopsy CLIA test that leverages exceptional sensitivity of Multiplexed ICE COLD-PCR; Conforms to ASCO and NCCN testing recommendations.
• Presented Study Highlighting Joint Project to Detect Actionable Mutations in Colorectal Cancer
  • Multi-year study presented at CAP ’15 conducted with Amgen identified mutations in KRAS / NRAS (RAS) exons in metastatic colorectal cancer patients using Sanger sequencing.
• Divested Genetic Assays & Platforms Business Unit
  • Divesting GAP Business Unit to ADSTEC Corporation--expected to reduce costs and enable strategic focus on accelerating commercialization of MX-ICP.

• Awarded First License for Commercial Rights to Transgenomic's Liquid Biopsy Technology
  • Granted exclusive license to University of Melbourne to use Multiplexed ICE COLD-PCR™ technology for research and clinical applications in Australia. Transgenomic sells EGFR kits to University and receives royalties.
• Sold Ion Chromatography Product Line and Assets to Edge Biosystems
  • $2.1 million sale continues strategy of selectively monetizing legacy assets, generating non-dilutive cash and allowing focus on molecular diagnostics and personalized medicine.
• Launched New Liquid Biopsy MX-ICP Panel for Lung Cancer that Accurately Detects Key EGFR Mutations in Blood
  • New Transgenomic CLIA test that leverages outstanding sensitivity of Multiplexed ICE COLD-PCR™ to enable liquid biopsies, Conforms to ASCO and NCCN testing recommendations
• Initiated Study of Multiplexed ICE COLD-PCR™ Liquid Biopsies with Leading Biopharma Firms
  • Four leading firms joined pilot program aiming to validate accuracy and utility of MX-ICP-based liquid biopsies to guide and monitor cancer clinical trials.
• Launched Ultra-High Sensitive ICEme™ Mutation Enrichment Kits for Cancer Researchers
  • Launched Multiplexed ICE COLD-PCR™ kits commercially to researchers worldwide. Customizable kits work on all platforms and menu includes multiple clinically actionable mutations for use as single tests or in combination.
• Launched EGFR CLIA Test That Accurately Detects Key Mutations In Solid And Liquid Patient Samples
  • At 2015 ASCO Annual Meeting, announced launch of EGFR test for lung and colon cancer tests leveraging MX ICP’s accuracy and sensitivity and ability to work with multiple sample types.

• Expanded License Agreement with Exiqon to Support Global Commercialization of Multiplexed Ice Cold-PCR^TM for Cancer Liquid Biopsies
  • Announced amended license with Exiqon A/S for expansion of rights to their Locked Nucleic Acid (LNA™) oligonucleotides, which offer dramatically improved sensitivity and specificity compared to traditional DNA chemistries.

• Announced Launch of Multiplexed Ice Cold-PCR to Enable Liquid Biopsies and Precision Medicine
  • MX-ICP technology enables ultra-sensitive detection of all cancer mutations in a single assay using blood-based or tissue biopsies, and it can be easily implemented into current workflows on any sequencing platform.

Conference Call
Transgenomic management will host a conference call to discuss full year 2015 financial results and answer questions beginning at 5:00 PM ET today. To access the call via telephone, dial 866-632-3381 from the U.S. or Canada or 785-424-1678 for international participants, and enter conference ID TRANS. The call also will be webcast live and can be accessed at https://www.webcaster4.com/Webcast/Page/1139/14570, which is also available at the Investor page of Transgenomic’s website. An archived webcast of the call will be available for 30 days. A telephone replay will be available from 8:00 PM. ET today through 11:59 PM ET on April 28, 2016 by dialing 800-839-4012 (domestic) or 402-220-2981 (international).

About Transgenomic
Transgenomic, Inc. is a global biotechnology company advancing personalized medicine in cardiology, oncology, and inherited diseases through advanced diagnostic technologies, such as its revolutionary ICE COLD-PCR^™. The company also provides specialized clinical and research services to biopharmaceutical companies developing targeted therapies. Transgenomic’s diagnostic technologies are designed to improve medical diagnoses and patient outcomes.

Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” of Transgenomic within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements include, but are not limited to, those with respect to management's current views and estimates of future economic circumstances, industry conditions, company performance and financial results, including the ability of the Company to grow its involvement in the diagnostic products and services markets, expectations regarding new clients, projects and prospects, MX-ICP’s ability to accelerate the Company’s growth and generate revenue, and the operation of our billing systems. The known risks, uncertainties and other factors affecting these forward-looking statements are described from time to time in Transgenomic's filings with the Securities and Exchange Commission. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all statements contained in this press release. All information in this press release is as of the date of the release and Transgenomic does not undertake any duty to update this information, including any forward-looking statements, unless required by law.

TRANSGENOMIC, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
	Twelve Months Ended
	December 31,
	2015			2014
NET SALES	$	1,653		$	1,240
COST OF GOODS SOLD:		1,940			2,175
Gross profit		(287	)		(935	)
OPERATING EXPENSES:
Selling, general and administrative		7,055			7,385
Research and development		1,853			2,249
		8,908			9,634
OPERATING LOSS FROM CONTINUING OPERATIONS		(9,195	)		(10,569	)
OTHER INCOME (EXPENSE):
Interest expense, net		(724	)		(665	)
Warrant revaluation		(205	)		455
Other, net		(14	)		—
		(943	)		(210	)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(10,138	)		(10,779	)
INCOME TAX BENEFIT		—			—
LOSS FROM CONTINUING OPERATIONS		(10,138	)		(10,779	)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES		(22,816	)		(3,163	)
NET LOSS		(32,954	)		(13,942	)
PREFERRED STOCK DIVIDENDS		(1,324	)		(1,144	)
NET LOSS FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS		(11,462	)		(11,923	)
NET LOSS FROM DISCONTINUED OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS		(22,816	)		(3,163	)
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(34,278	)	$	(15,086	)
BASIC AND DILUTED LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	(0.93	)	$	(1.59	)
BASIC AND DILUTED LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS	$	(1.85	)	$	(0.42	)
BASIC AND DILUTED LOSS PER COMMON SHARE	$	(2.78	)	$	(2.01	)
BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING		12,321,739			7,493,844

Transgenomic, Inc.
Summary Financial Results
Proforma Modified EBITDA
(dollars in thousands)

Management uses Modified EBITDA, a non-GAAP measure, to measure the Company's financial performance and to internally manage its businesses. Management believes that Modified EBITDA provides useful information to investors as a measure of comparison with peer and other companies. Modified EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. Modified EBITDA calculations may vary from company to company. Accordingly, our computation of Modified EBITDA may not be comparable with a similarly-titled measure of another company.

The following sets forth the reconciliation of Net Loss to Modified EBITDA for the periods indicated:

	Twelve Months Ended
	December 31,
	2015			2014
NET LOSS FROM CONTINUING OPERATIONS	$	(10,138	)	$	(10,779	)
INTEREST EXPENSE	724			665
DEPRECIATION AND AMORTIZATION	489			569
CHANGE IN FAIR VALUE OF WARRANTS	205			(455		)
STOCK COMPENSATION EXPENSE	611			939
MODIFIED EBITDA	$	(8,109	)	$	(9,061	)

TRANSGENOMIC, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	(unaudited)
	December 31,			December 31,
	2015			2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	444		$	1,609
Accounts receivable, net	264			466
Inventories, net	50			—
Other current assets	537			385
Assets held for sale	1,987			26,106
Total current assets	3,282			28,566
PROPERTY AND EQUIPMENT, NET	259			485
OTHER ASSETS:
Intangibles, net	1,170			751
Other assets	105			204
	$	4,816		$	30,006
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current liabilities	$	16,717		$	8,148
Liabilities held for sale	264			3,838
Total current liabilities	16,981			11,986
OTHER LIABILITIES:
Long term debt, less current maturities	—			7,375
Common stock warrant liability	350			145
Accrued preferred stock dividend	—			3,130
Other long-term liabilities	305			817
Total liabilities	17,636			23,453
STOCKHOLDERS’ (DEFICIT) EQUITY	(12,820		)	6,553
	$	4,816		$	30,006