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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
PURSUANT to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
Filing No. 1 for the month of July, 1999
Visible Genetics Inc.
(Exact name of Registrant)
700 Bay Street, Suite 1000, Toronto ON, Canada M5G 1Z6
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F |X| Form 40-F |_|
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes |_| No |X|
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<PAGE>
VISIBLE GENETICS INC.
On July 7, 1999, Visible Genetics Inc. (the "Company") issued a press release
announcing that, Richard T. Daly has been named President and Chief Executive
Officer, succeeding founder John K. Stevens, Ph.D., who will remain Chairman of
the Board.
Mr. Daly, 49 years old, holds an MBA from The Harvard Business School and has 23
years of management experience in the health-care industry. Prior to joining
VGI, Mr. Daly was President and Chief Executive Officer of Clinical Partners,
Inc., an HIV disease-management company. Prior to his experience at Clinical
Partners, Mr. Daly was President of Baxter Canada. In four years at Baxter
Canada, Mr. Daly more than doubled revenue to US$300 million.
In addition, VGI announced that it is revising its accounting treatment for
certain international distribution and marketing agreements entered into in the
first quarter of 1999. After consultation with its auditors,
PriceWaterhouseCoopers LLP, VGI has reduced its previously announced first
quarter 1999 sales by $1,255,000 and expects to recognize a portion of those
sales in subsequent periods. Of this reduction, $324,000 has been accounted for
on the basis of lease accounting and is expected to now be recognized as revenue
over four years and $192,000 will be recognized on a cash received basis. In
addition, $739,000 relates to two contracts the Company has, at its option,
chosen to renegotiate.
As a result of these changes, sales during the first quarter were reduced from
$4,516,096 to $3,260,613; cost of sales were reduced from $2,365,282 to
$2,150,472; and net loss and net loss per share were increased from $3,293,371
($0.35 per share) to $4,334,044 ($0.46 per share). All amounts are in United
States dollars. The revised financial statements reflecting these changes are
attached.
This Form 6-K contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks, uncertainties and
other factors that may cause the Company's results to differ materially from
expectations. These include risks relating to the ability to obtain regulatory
approval, market acceptance of genotyping and the Company's products and other
risks detailed from time to time in the Company's SEC filings, including its
prospectus dated January 4, 1999 and most recent Annual Report on Form 20-F.
These forward-looking statements speak only as of the date hereof. VGI disclaims
any intent or obligation to update these forward-looking statements.
The Company hereby incorporates by reference the text of this Form 6-K but not
the press release attached as Exhibit 1, into the Company's Registration
Statements on Form F-3 (File Nos. 333-67607 and 333-68939).
Exhibit 1. Press Release dated July 7, 1999
<PAGE>
Visible Genetics Inc.
Consolidated Balance Sheets
(Unaudited, United States Dollars)
March 31 December 31
1999 1998
Revised-See Note 1
------------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 4,282,553 $ 6,165,924
Short-term investments 3,093,982 5,108,254
Trade receivables 4,529,830 4,770,796
Other receivables 1,314,251 1,445,820
Net investment in sales-type lease 217,369 --
Prepaid and deposits 299,709 233,072
Inventory 3,530,281 3,912,336
------------ ------------
Total current assets 17,267,975 21,636,202
Other long-term assets 694,617 --
Fixed assets 4,136,769 3,877,163
Patents and licences 2,577,923 2,269,170
------------ ------------
$ 24,677,284 $ 27,782,535
============ ============
LIABILITIES
Current liabilities
Notes payable $ 7,869,967 $ 7,494,877
Accounts payable 3,353,233 3,985,103
Accrued liabilities 2,110,240 1,723,840
------------ ------------
Total current liabilities 13,333,440 13,203,820
------------ ------------
SHAREHOLDERS' EQUITY
Share capital 47,820,045 46,412,685
Other equity 2,119,806 2,232,465
Cumulative translation adjustment (110,706) 84,822
Deficit (38,485,301) (34,151,257)
------------ ------------
11,343,844 14,578,715
------------ ------------
$ 24,677,284 $ 27,782,535
============ ============
<PAGE>
Visible Genetics Inc.
Consolidated Statement of Operations
(Unaudited, United States Dollars)
Three months ended March 31
1999 1998
Revised-See Note 1
------------------ -----------
Sales $ 3,260,613 $ 1,059,719
Cost of sales 2,150,472 809,771
------------- -----------
Gross margin 1,110,141 249,948
Expenses
Sales, general and administrative 3,163,728 2,188,259
Research and development 1,853,821 1,146,279
------------- -----------
5,017,549 3,334,538
------------- -----------
Loss from operations before interest (3,907,408) (3,084,590)
Interest income 113,650 82,071
Interest and financing expense 540,286 1,574
------------- -----------
Net loss for the period $ (4,334,044) $(3,004,093)
Weighted average number of common
shares outstanding 9,410,845 7,261,097
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Basic and fully diluted loss per share $ (0.46) $ (0.41)
============= ===========
<PAGE>
Visible Genetics Inc.
Consolidated Statements of Cash Flows
(Unaudited, United States Dollars)
<TABLE>
<CAPTION>
Three months ended March 31
1999 1998
Revised-See Note 1
------------------ -----------
<S> <C> <C>
Cash provided by (used in)
Operating activities
Net Loss for the period $ (4,334,044) $(3,004,093)
Add: Items not involving cash -
Depreciation 370,333 196,412
Amortization 66,831 43,876
Deferred compensation cost related to options granted -- 19,435
Non cash financing expense related to warrants granted 331,893 --
Foreign exchange 29,779 (16,667)
Increase (decrease) from changes in -
Trade receivables 3,730 241,285
Other receivables 131,569 (58,955)
Net investment in sales-type lease (217,369) --
Prepaid and deposits (66,637) (63,720)
Inventory 382,055 (638,070)
Other long-term assets (694,617) --
Accounts payable (788,483) 601,735
Accured liabilities 386,400 (9,213)
------------ -----------
(4,398,560) (2,687,975)
============ ===========
Financing activities
Common shares issued, net of expenses 1,338,389 23,783
Other equity issuances 11,438 1,841
Short term borrowings -- 778,947
------------ -----------
1,349,827 804,571
============ ===========
Investing activities
Marketable securities 2,014,272 3,997,728
Fixed assets (629,939) (851,095)
Intangible assets (218,971) (81,012)
------------ -----------
1,165,362 3,065,621
============ ===========
Increase (decrease) in cash during the period (1,883,371) 1,182,217
Cash, beginning of period 6,165,924 1,866,679
------------ -----------
Cash, end of period $ 4,282,553 $ 3,048,896
============ ===========
</TABLE>
<PAGE>
Visible Genetics Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited, United States Dollars)
Three months ended March 31
1999 1998
Revised-See Note 1
------------------ -----------
Net loss for the period $ (4,334,044) $(3,004,093)
Other comprehensive income:
Foreign currency translation adjustments (195,528) (17,097)
------------ -----------
Comprehensive loss for the period $ (4,529,572) $(3,021,190)
------------ -----------
Visible Genetics Inc.
Consolidated Statements of Deficit
(Unaudited, United States Dollars)
Three months ended March 31
1999 1998
Revised-See Note 1
------------------ ------------
Deficit, beginning of year $ (34,151,257) $(19,260,296)
Net loss for the period (4,334,044) (3,004,093)
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Deficit, end of the period $ (38,485,301) $(22,264,389)
------------- ------------
<PAGE>
Note 1. - Visible Genetics Inc. (the "Company") has revised its accounting
treatment for certain international distribution and marketing agreements
entered into in the first quarter of 1999. The Company has reduced its
previously announced first quarter 1999 sales by $1,255,483 and expects to
recognize a portion of those sales in subsequent periods. Of this reduction,
$324,483 has been accounted for on the basis of lease accounting and is expected
to now be recognized as revenue over four years and $192,000 will be recognized
on a cash received basis. In addition, $739,000 relates to two contracts the
Company has, at its option, chosen to renegotiate.
As a result of these changes, sales during the first quarter were reduced from
$4,516,096 to $3,260,613; cost of sales were reduced from $2,365,282 to
$2,150,472; and net loss and net loss per share were increased from $3,293,371
($0.35 per share) to $4,334,044 ($0.46 per share).
In addition, the Company identified certain reclassifications between accounts
in the Balance Sheet and within the Statement of Cash Flows that were also
adjusted to conform to the presentation adopted in the December 31, 1998 audited
financial statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VISIBLE GENETICS INC.
Date: July 7, 1999 By: /s/ Jeffrey D. Sherman
----------------------------
Name: Jeffrey D. Sherman
Title: Vice President, Finance and C.F.O.
[LETTERHEAD OF VISIBLE GENETICS INC.]
[LOGO]
For Immediate Release
Contacts:
Richard T. Daly, (416) 813-3281
President & CEO, Visible Genetics Inc.
Bruno Maruzzo (416) 813-3271
Investor Relations, Visible Genetics Inc.
VISIBLE GENETICS NAMES RICHARD T. DALY PRESIDENT AND CEO AND
ANNOUNCES REVISED FIRST QUARTER FINANCIAL RESULTS
TORONTO, CANADA, July 7, 1999 - Visible Genetics Inc. (VGI; Nasdaq:VGIN)
announced today that Richard T. Daly has been named President and Chief
Executive Officer, succeeding founder John K. Stevens, Ph.D., who will remain
Chairman of the Board.
"Over the past year, VGI has begun the transition from an R&D-driven
organization to a sales-and marketing-driven organization," said Dr. Stevens.
"Dick's proven success in managing rapidly growing health-care companies is
ideal for VGI at this time."
Daly, 49 years old, holds an MBA from the Harvard Business School and has 23
years of management experience in the health-care industry. Prior to joining
VGI, Daly was President and Chief Executive Officer of Clinical Partners, Inc.,
an HIV disease-management company. Prior to his experience at Clinical Partners,
Daly was President of Baxter Canada. In four years at Baxter Canada, Daly more
than doubled revenue to US$300 million.
<PAGE>
"VGI now has two key operating objectives: to obtain US FDA approval for the
sale of its HIV genotyping kit to the clinical diagnostic market and to grow
revenue and market share for that kit as rapidly as possible." In addition, Daly
said, over the past several months, VGI has assembled a seasoned management team
that will help ensure we achieve these objectives."
The following executives have recently joined the company: Dean L. Winslow,
M.D., Medical Director, who was formerly Director of Antiviral Research for
Gilead Sciences; Steven A. Owings, Director of VGI's North American Business,
who was formerly Director of Roche Diagnostic Systems' US Business Unit; and
David S. Gibbons, Director of Product Management, who was formerly Senior
Manager at Becton Dickinson Microbiology Systems. They join an experienced
management team that, in addition to Mr. Daly, includes: Chalom Sayada, M.D.,
Vice President of European Business, who was formerly Marketing Director for
Roche Diagnostic Systems European Business; James Dunn, Ph.D., Vice President of
Technology, who was formerly a researcher at the National Cancer Institute of
Canada; Robert Griffin, Vice President of Manufacturing, who was formerly
manufacturing manager at Bombardier; and Richard Carroll, Ph.D., Vice President
Development, who was formerly Senior Manager at Becton Dickinson.
In addition, VGI has revised its accounting treatment for certain international
distribution and marketing agreements entered into in the first quarter of 1999.
After consultation with its auditors, PricewaterhouseCoopers LLP, VGI has
reduced its previously announced first quarter 1999 sales by $1,255,483 and
expects to recognize a portion of those sales in subsequent periods. Of this
reduction, $324,483 has been accounted for on the basis of lease accounting and
is expected to now be recognized as revenue over four years and $192,000 will be
recognized on a cash received basis. In addition, $739,000 relates to two
contracts the Company has, at its option, chosen to renegotiate.
As a result of these changes, sales during the first quarter were reduced from
$4,516,096 to $3,260,613; cost of sales were reduced from $2,365,282 to
$2,150,472; and net loss and net loss per share were increased from $3,293,371
($0.35 per share) to $4,334,044 ($0.46 per share). All amounts are in United
States dollars. The revised financial statements reflecting these changes are
attached.
Dick Daly, CEO and Sheldon Inwentash, Director, will conduct a conference call
today at 4:00 PM EDT to discuss the contents of this press release, followed by
a question and answer period. Interested participants should call 1-800-273-9672
or 416-695-5806 10 minutes prior to the call and ask for the Visible Genetics
conference call.
Visible Genetics Inc. manufactures and markets high performance DNA sequencing
systems and complete kits for the analysis of genes linked to disease. The
Company's OpenGene(TM) System employs proprietary stratified DNA testing and
single-tube, single-step sequencing methods to significantly reduce the time and
cost involved in identifying clinically relevant genetic information. VGI is a
leader in the emerging field of pharmacogenomics, which will use genetic
information in the identification and analysis
<PAGE>
of genes in order to improve patient care and reduce healthcare costs
This press release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks, uncertainties and
other factors that may cause the Company's results to differ materially from
expectations. These include risks relating to the ability to obtain regulatory
approval, market acceptance of genotyping and the Company's products and other
risks detailed from time to time in the Company's SEC filings, including its
prospectus dated January 4, 1999 and most recent Annual Report on Form 20-F.
These forward-looking statements speak only as of the date hereof. VGI disclaims
any intent or obligation to update these forward-looking statements.
###
