DGEN Deltaagen Inc (CE)

Deltagen, Inc. (Pink Sheets:DGEN), a leading provider of drug discovery tools and services to the biopharmaceutical industry, today reported unaudited consolidated financial results for the three months ended March 31, 2012.

Revenues: The Company’s consolidated revenues for the three months ended March 31, 2012 totaled $0.508 million. The revenues in the first quarter of 2012 were attributable to license fees associated with the provision of knockout mice and related phenotypic data pursuant to orders placed by customers under the Company’s DeltaOneTM program. The Company’s consolidated revenues for the three months ended March 31, 2012 included $0.035 million in revenues of Xenopharm, Inc. (“Xenopharm”), a wholly owned subsidiary of the Company. There was no revenue in the first quarter of 2011 from the Company’s wholly owned subsidiary, Benten BioServices, Inc. (“Benten BioServices”).

Expenses: Total consolidated expenses for the three months ended March 31, 2012 were $1.583 million. The expenses in the first quarter of 2012 were attributable primarily to labor costs and other general and administrative expenses, including expenses of $1.232 million relating to the operation of its wholly owned subsidiary, Benten BioServices (“Benten Expenses”), $0.162 million in royalty and commission expenses, and non-recurring expenses of $0.020 million associated with the royalties and prosecution and issuance of patents licensed exclusively to Xenopharm. As of March 31, 2012, the Company had accrued aggregate total royalties to Lexicon Pharmaceuticals, Inc. (“Lexicon”) of $5.624 million in royalty payments pursuant to a March 2005 settlement agreement between Lexicon and the Company. Under the settlement, the maximum aggregate amount of royalty payments due to Lexicon is $6.00 million. Accordingly, up to $0.376 million in contingent royalty payments remained owed to Lexicon as of March 31, 2012. Commercial operations of Benten BioServices began in April 2012.

Net Income/Losses: Consolidated net losses before provision for income taxes for the three months ended March 31, 2012 were $1.074 million. Excluding Benten Expenses, net income before provision for income taxes for the three months ended March 31, 2012 would have been $0.157 million.

Cash, Cash Equivalents and Accounts Receivable: As of March 31, 2012, the Company had $0.715 million in consolidated cash and cash equivalents (compared to $1.409 million as of December 31, 2011) and $0.061 million in accounts receivable (compared to $0.076 million as of December 31, 2011).

Major Events during Q1 2012 and Subsequent Events:

Benten BioServices: Benten BioServices has commenced commercial operations and started invoicing its customers in April 2012. As of May 15, 2012, Benten BioServices had 17 full-time employees.

Bridge Funding of Benten BioServices: As part of its fund-raising efforts, Benten BioServices received $0.727 million in additional secured bridge loan financing on May 1, 2011. Benten BioServices had earlier received $1.275 million in secured bridge loan financing on December 22, 2011. The financing was led by Life Sciences Green House of Central Pennsylvania. Benten BioServices will require additional capital by June 2012 in order to continue to fund its operations in accordance with its business plan.

The unaudited consolidated financial statements for the fourth quarter and year of 2011, accompanying notes, and Management’s Discussion and Analysis of Financial Conditions and Results of Operations for such period will be posted on Deltagen’s website (www.deltagen.com).

About Deltagen

Deltagen, Inc. is a leading provider of drug discovery tools to the biopharmaceutical industry. Deltagen offers access to its extensive inventory of knockout mouse lines and related phenotypic data, which enhance the efficiency of target validation and drug discovery. In addition, Deltagen offers target validation data in the areas of immunology and metabolic diseases. Deltagen's products and programs have been validated by customers and partners such as Eli Lilly & Co., GlaxoSmithKline, Merck & Co., Inc. and Pfizer Inc. Benten BioServices, Inc., a wholly-owned subsidiary of Deltagen based in Malvern, Pennsylvania, offers regulatory-compliant services to support the development and commercialization of biopharmaceutical products. Benten BioServices' services are designed to address specific requirements for critical stages in product development, including biosafety testing, raw materials testing, assay and process validation services, cell banking and characterization services, and technology platform-specific R&D support and consulting services. For more information on Deltagen, visit the Company's website at www.deltagen.com. For more information on Benten, visit Benten's website at www.bentenbio.com.

Safe Harbor Statement

This press release contains “forward-looking statements,” including statements about Deltagen’s future revenues, cash flows and operating results, first-party royalty obligations and first-party licenses and intellectual property, fund-raising efforts, Benten BioServices' business plans, as well as other matters that are not historical facts or information. These forward-looking statements are based on management’s current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Deltagen’s ability to achieve its operational objectives and revenue projections, that may cause Deltagen’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. There are no assurances that the Company will declare any future dividends. Information identifying such important risk factors is contained in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”, which can be found at Deltagen’s website at www.deltagen.com. Deltagen undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

DELTAGEN, INC.

  CONSOLIDATED BALANCE SHEET (UNAUDITED)  

Consolidated Balance Sheet

As of 3/31/12

  Unaudited

(In Thousands)

3/31/12 Consolidated Assets Current assets: Cash and cash equivalents $ 715 Accounts receivable, net 61 Prepaid expenses, deposits and deferred tax assets   291   Total current assets $ 1,067 Property and equipment, net 2,490  

Goodwill

224

Non-current portion of deferred tax assets

  1,586   Total assets $ 5,367    

Liabilities and Stockholders' Equity

Current liabilities: Accounts payable $ 469 Accrued expenses   131   Total liabilities $ 600  

Non-Current liabilities:

Deferred rent $ 565 Convertible note   1,275   Total long-term liabilities $ 1,840   Stockholders' equity: Common stock 39 Treasury Stock (867 ) Additional paid-in capital 230,638 Retained Earnings (227,285 ) Foreign currency translation adjustment   402   Total stockholders' equity $ 2,927   Total liabilities and stockholders' equity $ 5,367     DELTAGEN, INC.   CONSOLIDATED INCOME STATEMENT (UNAUDITED)  

Consolidated Income Statements and

Statements of Retained Earnings For Quarter ended 3/31/12   Unaudited

(In Thousands)

3/31/12 Consolidated   Revenue $ 508 Royalty and Commission Costs 162 Other Operating Costs   1,421     Income From Operations $ (1,074 )   Interest Income 1 Loss on disposal of assets   -     Total Other Income   1     Income before provision for income taxes $ (1,074 )   Provision for income taxes Current income tax expense - Deferred income tax expense - Adjustment for valuation allowance   -     Total income tax expense -   Net Income (Loss) $ (1,074 )   Retained earnings at beginning of period   (226,211 )   Retained earnings at end of period $ (227,285 )   DELTAGEN, INC.   CONSOLIDATED CASH FLOW (UNAUDITED)   Consolidated Cash Flows

For Quarter ended 3/31/12

  Unaudited 3/31/12

(Dollars In Thousands)

Consolidated   Cash flows from operating activities:   Net Income (Loss) $ (1,074 )  

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 84 Stock-based compensation expense - Loss on disposal of fixed assets -  

(Increase)/Decrease in operating assets

Accounts receivable 15 Prepaids, deposits and tax assets 55 Purchase of assets (31 ) Deferred tax assets - Deferred rent 230  

Increase/(Decrease) in operating liabilities

Accounts payable (33 ) Accrued expenses   58     Change in goodwill - Issuance of convertible note - Dividends paid   -     Net Increase/(Decrease) in cash $ (694 )   Effect of foreign exchange rate change on cash and cash equivalents -   Cash and cash equivalents, at beginning of period   1,409     Cash and cash equivalents, at end of period   715