Gentium Reports 2005 Financial Results; Provides Financial and Clinical Update.VILLA villa. Although used to designate any country residence, especially in Italy and S France, the term villa particularly refers to a type of pleasure residence with extensive grounds favored by the Romans and richly developed in Italy in the Renaissance. GUARDIA (COMO Como (kō`mō), city (1991 pop. 87,059), capital of Como prov., Lombardy, N Italy, at the southwest end of Lake Como, near the Swiss border. It is an important tourist center and is noted for its silk industry. ), Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. -- Gentium Gentium (Latin: of the nations) is an open Unicode serif typeface designed by Victor Gaultney and released under the SIL Open Font License [OFL],[1] which permits modification and redistribution. S.p.A. (AMEX AMEX See: American Stock Exchange :GNT GNT Good News Translation (Bible) GNT Generation Nouvelles Technologies (Paris, France) GNT Greek New Testament GNT Grand National Teams (ACBL Bridge competition) ) (the "Company") today reported financial results for the quarter and year ended December December: see month. 31, 2005. Highlights of the fourth quarter of 2005 and recent weeks as of the first week in April 2006 include: --Phase III trial in U.S. for treatment of Veno-Occlusive Disease ve·no-oc·clu·sive disease n. An inflammatory condition, especially of the liver, characterized by the occlusion and destruction of tiny veins. (VOD See video-on-demand. VoD - video on demand ) with Multiple Organ Failure (Severe VOD): The Institutional Review Board (IRB IRB See: Industrial Revenue Bond ) of the Dana-Farber/Harvard Cancer Center Dana-Farber/Harvard Cancer Centeris the largest National Cancer Institute (NCI) designated Comprehensive Cancer Center in the nation. Founded in 1998, DF/HCC is an inter-institutional research enterprise that unites all of the cancer research efforts of the Harvard affiliated community. of Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. , Mass., which is also the IRB for Dana-Farber Cancer Institute, Massachusetts General Hospital Massachusetts General Hospital Health care The major teaching hospital for Harvard Medical School, widely regarded as one of the best health care centers in the world , Beth Israel Deaconess Medical Center Both an international and regional referral center, Beth Israel Deaconess Medical Center (BIDMC) in Boston, Massachusetts is a major teaching hospital of Harvard Medical School. It was formed out of the 1996 merger of Beth Israel Hospital (founded in 1916) and and The Children's Hospital A children's hospital is a hospital which offers its services exclusively to children. The number of children's hospitals proliferated in the 20th century, as pediatric medical and surgical specialties separated from internal medicine and adult surgical specialties. , has given its approval to participate in the trial. All four of these institutions are expected to participate in the trial. Work to compile To translate a program written in a high-level programming language into machine language. See compiler. historical control data will begin immediately, and the first patients are expected to be treated by early May 2006; --Phase II/III clinical trials in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). for the prevention of VOD
in children: 30 centers have IRB approval, 11 centers are open for
patient admission, 15 patients are enrolled;--Independent Phase I/II study of Defibrotide Defibrotide is a deoxyribonucleic acid derivative (single stranded) derived from cow lung or porcine mucosa. It is an anticoagulant with a multiple mode of action (see below). Pharmacokinetics Defibrotide is available as an oral, intravenous, and intramuscular formulation. to treat advanced and refractory refractory Material that is not deformed or damaged by high temperatures, used to make crucibles, incinerators, insulation, and furnaces, particularly metallurgical furnaces. Multiple Myeloma multiple myeloma A malignant proliferation of abnormal plasma cells that populate the marrow-containing bones of the body. The affected plasma cells produce myeloma protein, a monoclonal antibody that replaces normal antibodies in the blood, thereby increasing susceptibility (MM) patients 3 centers have IRB approval and are open for patient enrollment, 5 patents are enrolled; --Phase II/III clinical trials in Europe for the prevention of VOD in adults: Investigators meeting scheduled for early Q2, trial expected to start Q2; --The Company has recently engaged the first of several medical monitors, this one being based in the U.S., to act as a liaison with investigators, IRB's and CRO's; and, --The Company has recently updated its investor presentation, which can found on its web site at www.gentium.it, including updated estimates on the market size and pricing for VOD based on research by Medical Marketing Economics, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Clinical Highlights and Outlook Commenting on Gentium's clinical progress during the quarter, Laura Ferro, M.D., Chairman and Chief Executive Officer, said, "We are excited to be beginning our 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 trial for the treatment of Severe VOD with Defibrotide. We note that Defibrotide addresses a life threatening disease for which there are currently no treatment options." Financial Highlights The Company reports its financial condition and operating results using U.S. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). The Company's manufacturing facility was closed from February February: see month. through August 2004 for a major upgrade; therefore, comparison of 2005 operating results with 2004 results may not be meaningful. The Company's financial statements are prepared using the Euro (EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ), its functional currency. On December 31, 2005, EUR 1.00 = $1.18. For the fourth quarter ended December 31, 2005 compared with the prior year's fourth quarter: --Total revenues were EUR 1.44 million, compared to EUR 1.23 million --Operating costs and expenses were EUR 3.59 million, compared to EUR 2.97 million --Operating loss was EUR 2.15 million, compared to EUR 1.73 million --Interest (income) expense, net, was (EUR 0.05) million, compared to EUR 2.16 million --Pre-tax loss was EUR 1.92 million, compared to EUR 4.00 million --Net loss was EUR 2.51 million, compared to EUR 4.00 million --Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share was EUR 0.27, compared to EUR 0.80 For the year ended December 31, 2005 compared with the prior year: --Total revenues were EUR 3.64 million, compared to EUR 3.70 million --Operating costs and expenses were EUR 11.02 million, compared to EUR 8.45 million --Operating loss was EUR 7.38 million, compared to EUR 4.75 million --Interest expense, net, was EUR 4.15 million, compared to EUR 2.20 million --Pre-tax loss was EUR 11.78 million, compared to EUR 7.0 million --Net loss was EUR 12.43 million, compared to EUR 7.03 million --Basic and diluted net loss per share was EUR 1.79 compared to EUR 1.41 --Cash used in operating activities was EUR 8.7 million, compared to EUR 4.1 million --Cash and cash equivalents amounted to EUR 12.8 million as of December 31, 2005. The Company's Italian GAAP financial statements will be presented for shareholder approval at the Company's upcoming annual ordinary shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. . Dr. Ferro commented, "We are pleased to report that the EUR 8.7 million of cash used in operations and our capital expenditures for the year of EUR 1.3 million are in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with expectations we set at the time of our IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . In 2006 we will have a full year of public company related expenses as well as a full year of our increased staffing. In addition, the number of clinical trials we are running will result in a substantial increase in research and development spending in 2006. These increased expenses will be partially offset by the significant decrease in interest expense since our Series A notes were all converted or redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. in 2005. However, we still expect a significantly larger loss in 2006 than in 2005. Currently, we expect to use approximately EUR 15 million of cash in operating activities and approximately EUR 1.7 million for capital expenditures." Operating Results and Trends As noted above, the Company's manufacturing facility was closed from February through August 2004 for a major upgrade; therefore, comparisons of 2005 operating results with 2004 results may not be meaningful. The fluctuation Fluctuation A price or interest rate change. in product sales revenue for the three- and twelve-month periods compared with the prior year is primarily the result of changes in demand by our principal customer, Sirton, who experienced a slight increase in demand from its principal customer, Crinos Crinos is the half-man, half-wolf battle form of werewolves in the role-playing game . The crinos form is what most contemporary people will think of when they imagine a werewolf. , and for the twelve-month period due to a decrease in sales in 2005 compared to 2004 from a customer in Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. . Total revenues for the year ended December 31, 2005 were less than in 2004, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite an increase in product sales during the twelve-month period, because of milestone payments earned in 2004. Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold increased during the three- and twelve-month periods compared with the prior-year period. The increase is mainly due to a revision of estimated lives on the Company's manufacturing facilities and equipment which resulted in lower depreciation expense in the fourth quarter offset by an inventory write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. and an increase in quality control costs. Additionally, in the fourth quarter of 2004 the Company expensed some batch costs associated with the start-up Start-up The earliest stage of a new business venture. of the revamped manufacturing plant. Research and development spending increased during the three- and twelve-month periods in 2005 compared to 2004 primarily due to the costs for the Company's Phase II trial in the U.S. for the treatment of Severe VOD and preparations for the Company's Phase III trial. Additionally, during the fourth quarter of 2005 the Company incurred expenses in connection with the preparation of its Phase II/III trial for prevention of VOD in children. The Company increased its employee headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. from 35 at the end of 2004 to 55 at December 31, 2005. Other general and administrative expense increases were primarily the result of building corporate infrastructure, public company expenses and an increase in internally provided administrative services to replace administrative services previously provided by affiliates, which began to occur in the second quarter. These factors also account for the decrease in charges from affiliates during the periods. In the fourth quarter of 2004 and the first quarter of 2005, the Company issued approximately $8.0 million of convertible notes. As a result, interest expense increased substantially in 2005. In conjunction with the Company's initial public offering, $2.9 million of these notes were converted into common equity and the balance was repaid in June June: see month. and July July: see month. of 2005. The Company incurred interest expense of EUR 4.3 million, which included non-cash interest expense of EUR 3.8 million from amortization of the issue discount and issue costs on these notes during the year ended December 31, 2005. In conclusion, Dr. Ferro said, "The coming year promises to be an important one for Gentium as we continue to move our product candidates forward toward future potential commercial use." About Gentium Gentium, S.p.A., located in Como, Italy, is a biopharmaceutical company focused on the research, discovery and development of drugs to treat and prevent a variety of vascular diseases vascular diseases, n.pl diseases of the peripheral circulatory system. and conditions related to cancer and cancer treatments. Cautionary Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains "forward-looking statements." In some cases, you can identify these statements by forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These statements are not historical facts but instead represent the Company's belief regarding future results, many of which, by their nature, are inherently uncertain and outside the Company's control. It is possible that actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in our Prospectus filed with the Securities and Exchange Commission under Rule 424(b)(5) under the caption "Risk Factors." NOTE: All figures in tables are in EUR unless otherwise stated.
GENTIUM S.p.A.
Balance Sheets
(in thousands, except share data)
As of As of
December December
31, 2004 31, 2005
--------- ---------
ASSETS
Cash and cash equivalents 2,461 12,785
Receivables 9 8
Receivables from related parties 1,490 1,867
Inventories 886 1,628
Prepaid expenses and other current assets 1,617 918
--------- ---------
Total Current Assets 6,463 17,206
Property, manufacturing facility and
equipment, at cost 16,152 17,456
Less: Accumulated depreciation (7,609) (8,825)
--------- ---------
Property, manufacturing facility and
equipment, net 8,543 8,631
Intangible assets, net of amortization 243 267
Other non-current assets 660 9
--------- ---------
Total Assets 15,909 26,113
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Bank overdraft 100 -
Accounts payable 3,927 2,644
Payables to related parties 1,498 542
Short-term bank borrowings 2,690 -
Accrued expenses and other current
liabilities 432 1,063
Current maturities of long-term debt 2,781 916
Convertible notes payable, net of discount 2,082 -
Deferred income 564 283
--------- ---------
Total Current Liabilities 14,074 5,448
Long-term debt, net of current maturities 3,361 2,485
Termination indemnities 548 706
--------- ---------
Total Liabilities 17,983 8,639
--------- ---------
Share capital (par value: EUR 1.00;
13,300,100 and 12,690,321 shares authorized,
5,000,000 and 9,610,630 shares issued at
December 31, 2004 and 2005, respectively) 5,000 9,611
Additional paid in capital 5,834 33,197
Accumulated deficit (12,908) (25,334)
--------- ---------
Total Shareholders' Equity (Deficit) (2,074) 17,494
--------- ---------
Total Liabilities and Shareholders' Equity 15,909 26,113
========= =========
GENTIUM S.p.A.
Statements of Operations
(Unaudited, in thousands, except per share data)
For the Three Months For the Year Ended
Ended December 31, December 31,
--------------------- ---------------------
2004 2005 2004 2005
---------- ---------- ---------- ----------
Revenues:
Sales to affiliates 1,151 1,360 2,870 3,260
Third party product
sales - 6 243 101
---------- ---------- ---------- ----------
Total product sales 1,151 1,366 3,113 3,361
Other income and
revenues 82 70 583 280
---------- ---------- ---------- ----------
Total Revenues 1,233 1,436 3,696 3,641
Operating costs and
expenses:
Cost of goods sold 1,126 1,199 2,579 2,920
Charges from affiliates 750 266 1,665 1,047
Research and development 461 1,512 2,922 4,629
General and
administrative 592 571 1,194 2,309
Depreciation and
amortization 37 40 89 118
---------- ---------- ---------- ----------
2,966 3,588 8,449 11,023
---------- ---------- ---------- ----------
Operating loss (1,733) (2,152) (4,753) (7,382)
Foreign currency exchange
gain (loss), net (98) 186 (55) (249)
Interest income (expense),
net (2,165) 49 (2,192) (4,148)
---------- ---------- ---------- ----------
Pre-tax loss (3,996) (1,917) (7,000) (11,779)
Income tax expense
(benefit):
Current (113) - 65 -
Deferred 65 (598) (37) (646)
---------- ---------- ---------- ----------
(48) (598) 28 (646)
---------- ---------- ---------- ----------
Net loss (4,004) (2,515) (7,028) (12,425)
========== ========== ========== ==========
Net loss per share:
Basic and diluted net loss
per share (0.80) (0.27) (1.41) (1.79)
========== ========== ========== ==========
Weighted average shares
used to compute basic net
loss per share 5,000,000 9,391,449 5,000,000 6,933,104
========== ========== ========== ==========
Weighted average shares
used to compute diluted
net loss per share 5,000,000 9,391,449 5,000,000 6,933,104
========== ========== ========== ==========
GENTIUM S.p.A.
Statements of Cash Flows
(Unaudited, in thousands)
For the Three For the Year
Months Ended Ended
December 31, December 31,
--------------- ----------------
2004 2005 2004 2005
------- ------- ------- --------
Cash Flows From Operating Activities:
------- ------- ------- --------
Net loss (4,004) (2,515) (7,028) (12,425)
------- ------- ------- --------
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Unrealized foreign exchange loss 313 - 313 575
Depreciation and amortization 386 208 743 1,315
Non cash interest expense 1,972 - 1,972 3,837
Deferred income taxes (benefit) (9) 598 (37) 646
Write down of inventory to net
realizable value - 161 50 291
Stock based compensation 379 216 379 579
Changes in operating assets and
liabilities:
Accounts receivable (1,098) (966) 981 (376)
Inventories 423 (106) 534 (1,033)
Prepaid expenses and other current
assets (659) (206) (1,784) (149)
Accounts payable and accrued
expenses 102 696 359 (1,793)
Deferred income (152) (67) (353) (281)
Termination indemnities 24 13 19 158
Income taxes payable (123) - (304) -
------- ------- ------- --------
Net cash used in operating activities (2,446) (1,968) (4,119) (8,657)
------- ------- ------- --------
Cash Flows From Investing Activities:
Capital expenditures (823) (239) (5,178) (1,263)
Intangible expenditures (19) (63) (163) (124)
------- ------- ------- --------
Net cash used in investing activities (842) (302) (5,341) (1,387)
------- ------- ------- --------
Cash Flows From Financing Activities:
Capital contribution - - - 3,900
Proceeds from long-term debt 2,350 - 5,205 -
Repayments of long-term debt (67) (111) (374) (581)
Proceeds from Series A
convertible Notes 4,477 - 4,477 1,459
Repayment of Series A
convertible Notes - - - (4,221)
Proceeds (repayment) of
affiliate's loan (800) - 2,200 (2,200)
Proceeds (repayment) from bank
overdrafts and short-term
borrowings (779) - 390 (2,790)
Proceeds from initial public
offering and private placement,
net of offering expenses - 8,154 - 24,801
------- ------- ------- --------
Net cash provided by financing
activities 5,181 8,043 11,898 20,368
------- ------- ------- --------
Increase in cash and cash equivalents 1,893 5,773 2,438 10,324
Cash and cash equivalents, beginning
of period 568 7,012 23 2,461
------- ------- ------- --------
Cash and cash equivalents, end of
period 2,461 12,785 2,461 12,785
======= ======= ======= ========
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