Gentium Reports 2006 Financial Results.Provides Financial And Clinical Update VILLA GUARDIA (COMO), Italy -- Gentium S.p.A. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : GENT) (the "Company") today reported financial results for the quarter and year ended December 31, 2006. Highlights of the fourth quarter of 2006 and recent months include: * Continued progress with the U.S. Phase III clinical trial Noun 1. phase III clinical trial - 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 for the 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): this study is expected to be conducted at 35 centers; 27 centers are currently open for enrollment and 33 patients have been enrolled; * Ongoing progress with the European Phase II/III clinical trials for the prevention of VOD in children: 30 centers are open for patient enrollment; 115 patients have been enrolled; * Completed Phase I of Phase I/II study of Defibrotide to treat advanced and refractory 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 patients; presented preliminary Phase I data at the Annual Meeting of Society of Hematology (ASH) in December 2006; final Phase I data expected in the second half of 2007; * Acquired the Italian marketing rights to Defibrotide from Crinos, and in addition, Crinos has agreed to waive its right of first refusal Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others. Notes: For example, a football team may have the right of first refusal on a player's contract. to market future therapeutic indications for Defibrotide in the European market; * Completed a $47.5 million private placement of 2,354,000 of its ordinary shares at a price of $20.17 per share primarily with U.S. and Italian institutional investors; * Continued to present data in support of Defibrotide's mechanisms of action at numerous prestigious medical meetings, most recently at the American Association American Association refers to one of the following professional baseball leagues:
AACR Anglo-American Cataloging Rules AACR Australasian Association of Cancer Registries AACR African Armed Conflicts Resolved ), where pre-clinical data was presented showing Defibrotide to modulate heparanase expression and to prevent angiogenesis angiogenesis /an·gio·gen·e·sis/ (-jen´e-sis) vasculogenesis; development of blood vessels either in the embryo or in the form of neovascularization or revascularization. an·gi·o·gen·e·sis n. both of which have been correlated with advanced progression and metastasis metastasis /me·tas·ta·sis/ (me-tas´tah-sis) pl. metas´tases 1. transfer of disease from one organ or part of the body to another not directly connected with it, due either to transfer of pathogenic microorganisms or to of many tumor types, including multiple myeloma; and at the recent World Congress of Nephrology nephrology Branch of medicine dealing with kidney function and diseases. An understanding of kidney physiology is important not only in treating kidney disease but in knowing the effect of drugs, diet, and hypertension on kidney disease, and vice versa. , pre-clinical data was presented showing Defibrotide to modulate glucose-induced heparanase expression, representing a potential mechanism of anti-diabetic activity Clinical Highlights and Outlook Commenting on Gentium's clinical progress, Laura Ferro, M.D., Chairman and Chief Executive Officer, said, "During 2006 we achieved a number of significant milestones including the acquisition of the Italian marketing rights for Defibrotide from Crinos. This long term strategic objective was important as it allows us to better manage this key asset in the European markets. It also gives us control over its distribution and the flexibility to market Defibrotide ourselves or alternatively to seek marketing partners in the European market. In addition, in February 2007 we significantly strengthened our balance sheet with the successful completion of a $47.5 financing, which will help fund our investment in acquiring the Italian rights to Defibrotide and will support our expanding clinical development programs." Dr. Ferro continued, "Our clinical development programs are advancing well, specifically we are very pleased with the progress we have made with the enrollment of the European Phase II/III trial of Defibrotide to prevent VOD in children. During 2006, there were two peer-reviewed publications from two independent pediatric pediatric /pe·di·at·ric/ (pe?de-at´rik) pertaining to the health of children. pe·di·at·ric adj. Of or relating to pediatrics. studies of Defibrotide to treat and prevent Severe VOD, which were very encouraging and underscored the potential of Defibrotide in treating these very sick pediatric patients. In 2006, we initiated patient enrollment in our U.S. 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 of Defibrotide to treat Severe VOD, and are actively enrolling patients in this pivotal trial at 27 clinical sites. "Throughout the year, we continued to present pre-clinical data that further elucidated Defibrotide's mechanism of action in a number of important therapeutic indications. These pre-clinical data were encouraging and underscored Defibrotide's potential utility in a number of important therapeutic areas of unmet medical need including cancer and diabetic nephropathy diabetic nephropathy (n  fro´p . In addition, this growing body of
scientific knowledge supports our clinical strategy and corroborates
what we have demonstrated in human clinical trials," concluded Dr.
Ferro.
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 financial statements are prepared using the Euro as its functional currency. On December 29, 2006, EU1.00 = $1.32. For the fourth quarter ended December 31, 2006 compared with the prior-year's fourth quarter: * Total revenues were EU1.32 million, compared with EU1.43 million * Operating costs operating costs npl → gastos mpl operacionales and expenses were EU5.14 million, compared with EU3.58 million * Research and development expenses, which are included in operating costs and expenses, were EU2.56 million, compared with EU1.51 million * Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was EU3.82 million, compared with EU2.51 million * Interest income (expense), net, was EU0.2 million, compared with EU0.05 million * Pre-tax loss was EU4.15 million, compared with EU1.92 million * Net loss was EU4.15 million, compared with EU2.51 million * Basic and diluted net loss per share was EU0.35 compared with EU0.27 per share For the year ended December 31, 2006 compared with prior-year: * Total revenues were EU4.32 million, compared with EU3.64 million * Operating costs and expenses were EU18.55 million, compared with EU10.92 million * Research and development expenses, which are included in operating costs and expenses, were EU8.93 million, compared with EU4.56 million * Operating loss was EU14.23 million, compared with EU7.28 million * Interest income (expense), net, was EU0.49 million, compared with (EU4.20) million * Pre-tax loss was EU14.37 million, compared with EU11.67 million * Net loss was EU14.37 million, compared with EU12.32 million * Basic and diluted net loss per share was EU1.33 compared with EU1.79 per share * Cash used in operating activities was EU12.15 million, compared with EU8.48 million * Cash and cash equivalents amounted to EU10.20 million as of December 31, 2006 Dr. Ferro commented, "We continue to invest in our clinical development programs, and expect the commensurate increase in staffing and third party clinical research organization costs will contribute to additional losses for the balance of this year and next year. Increases to our expenses in 2006 were primarily due to increased staffing, the initiation of our Phase III VOD treatment trial and our Phase II/III VOD pediatric prevention trial in Europe, the continued build out of infrastructure and the costs associated with being a public company. With our recent financing, we have strengthened our balance sheet and now have approximately $53.4 million to support our clinical development programs. In addition, this funding gives us the capital to negotiate new drug development and licensing agreements from a position of strength." Operating Results and Trends The fluctuation in product sales revenues for the three- and twelve-month periods compared with the prior year is primarily the result of higher sales volume of the Company's active pharmaceutical ingredients defibrotide, urokinase urokinase /uro·ki·nase/ (UK) (u?ro-ki´nas) u-plasminogen activator; an enzyme in the urine of humans and other mammals, elaborated by the parenchymal cells of the human kidney and acting as a plasminogen activator. and sulglicotide to its principal customer and affiliate, Sirton, as well as sales of sulglicotide to a Korean customer. Total product sales revenues for the year ended December 31, 2006 increased by EU0.7 million, or 21%, compared with the same period in 2005. 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 was EU3.1 million for the twelve-month period ended December 31, 2006, compared to EU2.91 million in 2005. In 2006, the Company wrote down EU144 thousand of inventory which failed to meet quality specification. Cost of goods sold as a percentage of product sales was 75.9% in 2006 and 86.6% in 2005. The decrease in costs of goods sold as a percentage of sales was primarily due to the revised estimate Revised estimate The third estimate of GDP released about three months after the measurement period. on manufacturing facilities and equipment useful life which resulted in lower depreciation expenses allocated to cost of goods sold and adjustment of inventory to net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. which in prior year was accounted as cost of good sold for EU291. Research and development spending increased during the three- and twelve- month periods in 2006 compared with 2005, primarily due to the costs associated with the Company's Phase III trial in the U.S. for the treatment of Severe VOD, the Company's Phase II/III trial for prevention of VOD in children and preparations for a Phase II/III trial for the prevention of VOD in adults. Growth in headcount and outside services to support increased activity in our clinical trials, including clinical product production costs, contract research organization expenses and stock-based compensation expense also contributed to increased research and development expenses. The Company had 74 employees as of December 31, 2006, compared with 55 as of December 31, 2005. Other general and administrative expense increases were primarily the result of building corporate infrastructure as well as a full year of public company expenses and stock-based compensation expense. The decrease in charges from affiliates between the periods is the result of our development of these service capabilities internally. Interest income (expense), net, changed primarily due to the repayment and conversion of the Company's Series A senior convertible notes in June 2005, and the higher level of invested funds compared with the prior year. For the twelve months ended December 31, 2005, interest expense on the Series A notes was EU4.3 million, including non-cash interest expense of EU3.8 million from the amortization of the issue discount and debt issue cost. These notes were converted or redeemed in June 2005. Additionally, interest income increased by EU416 thousand from EU156 thousand in the period ended December 31, 2005 to EU708 thousand in the comparable 2006 period, as the result of a higher level of invested funds. The Company ended the fourth quarter of 2006 with EU10.20 million in cash and cash equivalents, compared with cash and cash equivalents of EU12.79 million as of December 31, 2005. 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. Defibrotide, the Company's lead product candidate, is an investigational drug that has been granted Orphan Drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the status and Fast Track Designation by the U.S. 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. to treat Severe VOD and to prevent VOD and Orphan Medicinal Product medicinal product, n a substance administered to humans or animals through injection, application, oral ingestion, inhalation, and so forth, whose purpose is to ultimately restore health or eliminate disease in an individual. Designation by 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 both to treat and to prevent VOD. Cautionary Note Regarding Forward-Looking Statements This press release contains "forward-looking statements." In some cases, you can identify these statements by forward-looking 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 Form 20-F under the caption "Risk Factors." Source: Gentium [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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