GTC Biotherapeutics Reports Second Quarter 2006 Financial Results; EMEA Provides Scientific Advice on the Study of ATryn(R) In DIC.FRAMINGHAM, Mass. -- GTC GTC See: Good 'til cancelled order GTC See good-till-canceled order (GTC). Biotherapeutics, Inc. ("GTC", Nasdaq: GTCB GTCB Gulf Tax Credit Bond (Alabama, Louisiana, Mississippi, USA) ) reported today its financial results for the second quarter ended July 2, 2006, as well as receipt of the Scientific Advice of the European Medicines Agency The European Medicines Agency (EMEA) is a European agency for the evaluation of medicinal products. Until 2004, the European Medicines Agency was known as The European Agency for the Evaluation of Medicinal Products. Roughly parallel to the U.S. , or EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. , on a planned clinical program to study ATryn(R) as a treatment for disseminated intravascular coagulation disseminated intravascular coagulation n. Abbr. DIC A hemorrhagic disorder that occurs following the uncontrolled activation of clotting factors and fibrinolytic enzymes throughout small blood vessels, resulting in tissue necrosis and , or DIC DIC diffuse intravascular coagulation; disseminated intravascular coagulation. DIC abbr. disseminated intravascular coagulation Disseminated intravascular coagulation (DIC) , associated with severe sepsis severe sepsis A condition defined clinically as 'Sepsis associated with organ dysfunction, hypotension, or hypoperfusion abnormalities (which include) …lactic acidosis, oliguria, or an acute alteration in mental status . The total net loss for the quarter was $9.1 million, or $0.15 per share, compared with $7.1 million, or $0.15 per share, in the second quarter of 2005. The total net loss for the first six months of 2006 was $17.6 million, or $0.29 per share, compared to $15.2 million, or $0.33 per share, for the first six months of 2005. "In early June, GTC reached an historic milestone in successfully obtaining a positive opinion from EMEA on our submission of ATryn(R) for marketing approval in Europe. Based on this positive opinion, the European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community yesterday approved ATryn(R) for use throughout the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community in patients with a hereditary antithrombin deficiency undergoing surgical procedures Surgical procedures have long and possibly daunting names. The meaning of many surgical procedure names can often be understood if the name is broken into parts. For example in splenectomy, "ectomy" is a suffix meaning the removal of a part of the body. "Splene-" means spleen. . We look forward to working with our European partner, LEO Pharma A/S, on the steps necessary to make the initial launch of this product on a country by country basis, currently planned to start in the second quarter of 2007. Importantly, we are also working with LEO to establish the European clinical program to examine the therapeutic potential of ATryn(R) as a treatment for DIC associated with severe sepsis," stated Geoffrey F. Cox, Ph.D., GTC's Chairman of the Board and Chief Executive Officer. "To ensure that we can expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex move forward to take advantage of being the first company to obtain a transgenic trans·ge·nic adj. 1. Of, relating to, or being an organism whose genome has been altered by the transfer of a gene or genes from another species or breed: transgenic mice. 2. approval, we recently closed a registered equity placement with a group of investors. This has strengthened our balance sheet and prepares us to progress to additional milestones in our commercial development plans." European Scientific Advice and U.S. Clinical Progress LEO Pharma has recently obtained Scientific Advice from the EMEA on the DIC clinical program. Scientific Advice is a non-public document that provides guidance that will be used to evaluate the data submitted in any subsequent application for market authorization. In accordance with this guidance, LEO plans to commence a phase II study by the end of 2006 to explore safety and efficacy, and establish appropriate dosing in preparation for a phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA study. The phase II study will be a comparative study performed in at least 200 patients with anticipated patient recruitment to occur over a period of twelve months starting from when the first patient enrolls. DIC is the widespread formation of clots within blood vessels Blood vessels Tubular channels for blood transport, of which there are three principal types: arteries, capillaries, and veins. Only the larger arteries and veins in the body bear distinct names. and is often associated with severe sepsis. In this indication, the infection and resulting septic septic /sep·tic/ (sep´tik) pertaining to sepsis. sep·tic adj. 1. Of, relating to, having the nature of, or affected by sepsis. 2. condition consume much of the patient's own antithrombin. This antithrombin deficiency then results in DIC. In addition to a number of research studies that support the potential therapeutic value of antithrombin for this indication, DIC is an approved indication approved indication, n 1. reliable signs that a certain remedy should be used. Not synonymous with “authorized.” 2. FDA-approved condition for a drug or other treatment that allows labeling. for plasma-derived antithrombin in Japan. DIC occurs in an estimated 220,000 severe sepsis cases in the European Union each year, of which approximately 50% are fatal, representing a major unmet medical need of significant interest in critical care. The design of the hereditary deficiency phase III study with ATryn(R) for the planned U.S. regulatory submission follows a review with the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. of the clinical data generated for the European market authorization submission. There will be a total of 17 additional patients with hereditary antithrombin deficiency undergoing high risk procedures such as surgery and childbirth recruited for this phase III study. The results of this study will be combined with the 14 patients in the European study and compared to historical data from at least 35 patients that were previously treated with antithrombin derived from plasma sources. Antithrombin is used in patients with hereditary deficiency to reduce the risk of the formation of a blood clot blood clot n. A semisolid, gelatinous mass of coagulated blood that consists of red blood cells, white blood cells, and platelets in a fibrin network. known as a deep vein thrombosis A blood clot (thrombos) in a vein deep within the muscle, typically in the thigh or calf. It is caused by disease or the lack of activity such as sitting for hours at a computer screen. , or DVT See deep vein thrombosis. , during high risk procedures. The primary endpoint of the U.S. study is based on the observation of clinical symptoms of a DVT together with the comparison to historical data. The data on childbirth patients gathered in this phase III study for the U.S. is planned to be used in a subsequent filing with the EMEA in 2007 to request expansion of the approved label to include childbirth procedures in the European Union. Based on current estimates, enrollment of the last patient in this study is projected to occur before the end of the first quarter of 2007. A Biologics License Application in the U.S. is planned for submission within approximately six months of completion of enrollment in the phase III study. Financial Results Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has at July 2, 2006 totaled $19.4 million, a $16.8 million decrease compared to $36.2 million at January 1, 2006. The decrease includes a $2.4 million final repayment on a promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. to Genzyme Corporation which was financed by the expanded term loan from GE Capital at the end of 2005. Exclusive of the effects of the promissory note repayment, $14.4 million of net cash and marketable securities was used in the first six months of 2006. The registered direct placement of stock and warrants, which was completed July 21, 2006, has subsequently provided approximately $16.2 million of additional cash, net of offering costs. After giving effect to the placement, the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma cash and marketable securities starting the third quarter would have been $35.6 million. The cash use for the remainder of 2006 is anticipated to be in the range of $7 million to $11 million, consistent with previous guidance. The rate of net cash use for the second half of the year is expected to be lower primarily due to anticipated payments from LEO for product that is being supplied to support the clinical program for the DIC indication as well as the $2 million milestone payment to be received as a result of European Commission approval. Revenues for the second quarter were $0.4 million, a 59% decrease from the $1 million in the second quarter 2005. During the second quarter of 2006, approximately $1.4 million of cash received from Merrimack Pharmaceuticals for work in its MM-093 program and a $1 million milestone payment from LEO for obtaining the positive opinion were recorded to deferred revenue in accordance with our revenue recognition policy for multiple element arrangements. Revenues totaled $2.6 million for the first six months of 2006 compared to $2.3 million in the first six months of 2005, an increase of 12%. Reported revenues are expected to vary on a quarter-to-quarter basis due to the nature and timing of milestone-based research and development revenues. Costs of revenue and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. totaled $9.5 million in the second quarter, approximately 19% higher than the $8 million total in the second quarter 2005. Costs of revenue and operating expenses totaled $20.2 million in the first half of 2006, approximately 18% higher than the $17.2 million for the first half of 2005. The increases in the year to year comparisons were primarily driven by increased expenses in the ATryn(R) program associated with the manufacture of clinical material and execution of the US clinical trial, expansion of activities on our external program with Merrimack Pharmaceuticals, expenses associated with the implementation of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R, which is the accounting guidance for "Share Based Payments", and increased legal costs. These increases in the year to year comparison were partially offset by reduced expenses for the EMEA regulatory activities for ATryn(R), lower expenses in the CD137 development program and reduced expenses on the external programs with Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. and Centocor, which were successfully completed in 2005. The results per share were affected by an increase in the weighted average number of shares outstanding from 46.8 million shares for the second quarter 2005 to 61.4 million shares in the second quarter 2006. The weighted average number of shares outstanding increased from 45.8 million shares for the first six months of 2005 to 61.1 million shares in the first six months of 2006. The increases in the weighted average shares outstanding primarily reflect the issuance of approximately 21.4 million shares of common stock in three offerings during 2005. The gross proceeds to GTC from those offerings totaled approximately $35 million. GTC had approximately 61.4 million shares outstanding as of July 2, 2006. After giving effect to the July 2006 registered direct placement, GTC has approximately 73.4 million shares outstanding. Conference Call Information GTC Biotherapeutics will discuss these results and expectations with financial analysts in a web cast conference call at 10:00 a.m. (Eastern) today. The dial-in number from inside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. is 1-800-599-9816. The dial-in number from outside the United States is 1-617-847-8705. The participant passcode is 24504992. The webcast may be found at www.gtc-bio.com. About GTC Biotherapeutics, Inc. GTC Biotherapeutics is a leader in the development, production, and commercialization of therapeutic proteins through transgenic animal Transgenic animal Animals that have had genes from other species inserted into their genetic code. Mentioned in: Glycogen Storage Diseases technology. GTC's lead program is ATryn(R), its recombinant form of human antithrombin. The European Commission has granted market authorization for the use of ATryn(R) in patients with a hereditary antithrombin deficiency undergoing surgical procedures. In addition to the ATryn(R) program, GTC is developing a recombinant human alpha-1 antitrypsin, a recombinant human albumin, a CD137 antibody to stimulate the immune system immune system Cells, cell products, organs, and structures of the body involved in the detection and destruction of foreign invaders, such as bacteria, viruses, and cancer cells. Immunity is based on the system's ability to launch a defense against such invaders. as a potential treatment for solid tumors, and a malaria vaccine Malaria vaccines are an area of intensive research, however, no effective vaccine has yet been introduced into clinical practice. Justification for malaria vaccine research . In its external programs, GTC's technology is used to develop transgenic production of its partners' proprietary products, including both large-volume protein therapeutics as well as products that are difficult to produce in significant quantities from conventional recombinant production systems. One of the external programs is in clinical trials with a transgenically produced product. Additional information is available on the GTC web site, http://www.gtc-bio.com. This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including without limitation statements regarding the timing and scope of the DIC clinical program, the anticipated timing for a European market launch of ATryn(R), the planned submission for label expansion in Europe, the progress and prospects of ATryn(R) in the United States, and the expected cash to be used in 2006. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such statements. Factors that may cause such differences include, but are not limited to, the risks and uncertainties discussed in GTC's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and its other periodic reports as filed with the Securities and Exchange Commission, including the uncertainties associated with conducting clinical studies, and the risks and uncertainties associated with dependence upon the actions of partners and regulatory agencies, the uncertainties associated with intellectual property, and the uncertainty that the Company will be able to obtain additional revenues and financial resources, including through continuing and new external programs and marketing and strategic partners for some of its internal programs and additional equity financings. GTC cautions investors not to place undue reliance on the forward-looking statements contained in this release. These statements speak only as of the date of this document, and GTC undertakes no obligation to update or revise the statements, except as may be required by law.
GTC BIOTHERAPEUTICS, INC.
Selected Financial Information
(Unaudited, in thousands except per share amounts)
Three months ended Six months ended
------------------ ------------------
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
-------- -------- -------- --------
Revenue $ 416 $ 1,017 $ 2,617 $ 2,339
Costs of revenue and
operating expenses:
Cost of revenue 1,214 906 2,437 2,279
Research and development 5,854 5,188 13,332 10,605
Selling, general and
administrative 2,425 1,901 4,462 4,296
-------- -------- -------- --------
9,493 7,995 20,231 17,180
-------- -------- -------- --------
Loss from operations $ (9,077) $ (6,978) $(17,614) $(14,841)
Other income (expense): (20) (142) 14 (312)
-------- -------- -------- --------
Net Loss $ (9,097) $ (7,120) $(17,600) $(15,153)
Net loss per common share
(basic and diluted) $ (0.15) $ (0.15) $ (0.29) $ (0.33)
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Weighted average number of
shares outstanding (basic
and diluted) 61,397 46,835 61,085 45,836
======== ======== ======== ========
July 2, January 1,
2006 2006
-------- --------
Cash and marketable
securities $ 19,445 $ 36,169
Other current assets 2,137 2,754
Property and equipment, (net) 15,683 16,735
Other assets 10,527 11,061
-------- --------
Total assets $ 47,792 $ 66,719
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Current liabilities $ 18,735 $ 20,322
Long-term debt 4,919 7,005
Other liabilities 3,997 2,683
Stockholders' equity 20,141 36,709
-------- --------
Total liabilities and
stockholders' equity $ 47,792 $ 66,719
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