Gentium Reports First Quarter Financial Results and Clinical Update.VILLA 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. (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 ended March 31, 2006. Highlights of the first quarter of 2006 and recent weeks (as of May 16, 2006) include: --Initiation of 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 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): Institutional Review Board (IRB IRB See: Industrial Revenue Bond ) approval from four centers; patient enrollment is expected to begin by the end of this month; --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 and 12 centers are open for
patient enrollment;--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 patients: four centers have IRB approval and are open for patient enrollment; --Phase II/III clinical trials in Europe for the prevention of VOD in adults: Investigators meeting held in Hamburg Hamburg, city, Germany Hamburg (häm`b rkh), officially Freie und Hansestadt Hamburg (Free and Hanseatic City of Hamburg), city (1994 pop. (Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). ) on March 22,
2006, and anticipate initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of this study by July July: see month. 2006; and,--Engaged a medical monitor in the U.S. to act as a liaison with investigators, IRBs and Clinical Research Organizations. Clinical Highlights and Outlook Commenting on Gentium's clinical progress during the quarter, Laura Ferro, M.D., Chairman and Chief Executive Officer, said, "Gentium got off to a strong start in 2006, marked by continued progress with our clinical development programs for Defibrotide. Most notably, we initiated our U.S. Phase III trial of Defibrotide to treat Severe VOD, a life threatening disease for which there are currently no treatment options. We also commenced our VOD prevention program with the initiation of our 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. prevention Phase II/III trial in Europe and look forward to initiating our Phase II/III European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. prevention trial in adults in the near future." 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 (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 March 31, 2006, EUR 1.00 = $1.21. The Company previously released its 2005 financial statements on April 13, 2005. Subsequently, it was determined that the life of the Company's outstanding stock options was less than had been used in the calculation of those financial results and an adjustment was made to the amount of previously recorded stock-based compensation. As a result of that change, the net loss for 2005 was decreased by EUR 107. The change had no effect on cash flow or shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . For the first quarter ended March 31, 2006 compared with the prior year's first quarter: --Total revenues were EUR 0.95 million, compared to EUR 0.66 million --Operating costs and expenses were EUR 3.94 million, compared to EUR 1.85 million --Research and development expenses, which are included in operating costs operating costs npl → gastos mpl operacionales and expenses, were EUR 1.62 million, compared to EUR 0.64 million --Operating loss was EUR 2.99 million, compared to EUR 1.19 million --Interest income (expense), net, was EUR 0.05 million, compared to (EUR 2.15) million --Pre-tax loss was EUR 3.10 million, compared to EUR 3.39 million --Net loss was EUR 3.10 million, compared to EUR 3.41 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 0.32, compared to EUR 0.68 per share --Cash used in operating activities was EUR 2.17 million, compared to EUR 2.19 million --Cash and cash equivalents amounted to EUR 9.75 million as of March 31, 2006 Dr. Ferro commented, "This year we will have a full year of public company related expenses, a full year of increased staffing, and substantial increases in research and development expenses associated with both size and scope of our clinical development programs, when compared with 2005. These increased expenses will be partially offset by a significant decrease in interest expense as a result of the repayment and redemption of our Series A notes in June June: see month. 2005. However, we still expect a significantly larger loss and greater use of cash in 2006 compared with 2005." Operating Results and Trends The fluctuation Fluctuation A price or interest rate change. in product sales revenue for the three-month period compared with the prior-year period is primarily the result of changes in demand by our principal customer, Sirton, which experienced an 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. . Total product sales for the three-month period ended March 31, 2006 increased by EUR 0.32 million, or 54%, compared with the same period in 2005. The increase is primarily due to higher sales volumes of 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. , which represented EUR 0.29 million or 91% of the increase. 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 , as a percentage of product sales, decreased from 84.7% for the three months ended March 31, 2005, to 83.4% in the same period in 2006. The decrease is primarily due to a revision in the estimated life of certain manufacturing equipment resulting in a reduction in depreciation expense, offset to some extent by increased quality control costs. Research and development spending increased during the three-month period 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 the Phase II/III trial for the prevention of VOD in adults. Growth in 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. and outside services to support increased activity in our clinical trials, including clinical product production costs and stock based compensation expense also contributed to increased research and development expenses. The Company had 62 employees as of March 31, 2006, compared with 47 as of March 31, 2005. Other general and administrative expense increases were primarily the result of building corporate infrastructure, legal and public company expenses, an increase in internally provided administrative services to replace administrative services previously provided by affiliates, and stock based compensation expense. The increase in internally provided services accounts for the decrease in charges from affiliates between the periods. 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 following the completion of our initial public offering in June 2005. For the three months ended March 31, 2005, interest expense on the Series A notes was EUR 2.09 million, including non-cash interest expense of EUR 1.99 million from the amortization of the issue discount and issue cost. 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 the Fast Track Designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. 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 Orphan orphan: see adoption; foundling hospital; guardian and ward. See widow & orphan. Orphan See also Abandonment. Adverse, Anthony finally, at middle age, discovers origins. [Am. Lit. 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 to both treat and prevent VOD. 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."
GENTIUM S.p.A.
Balance Sheets
(in thousands, except share data)
As of As of
December March
31, 31,
2005 2006
---------- --------
ASSETS
Cash and cash equivalents EUR 12,785 EUR 9,746
Receivables 8 8
Receivables from related parties 1,867 1,998
Inventories 1,628 1,779
Prepaid expenses and other current assets 918 732
---------- --------
Total Current Assets 17,206 14,263
Property, manufacturing facility and
equipment, at cost 17,456 17,659
Less: Accumulated depreciation 8,825 9,006
---------- --------
Property, manufacturing facility and
equipment, net 8,631 8,653
Intangible assets, net of amortization 267 503
Other non-current assets 9 7
---------- --------
Total Assets EUR 26,113 EUR 23,426
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 2,644 3,331
Payables to related parties 542 565
Accrued expenses and other current
liabilities 1,063 982
Current maturities of long-term debt 916 797
Deferred income 283 248
---------- --------
Total Current Liabilities 5,448 5,923
Long-term debt, net of current maturities 2,485 2,203
Termination indemnities 706 715
---------- --------
Total Liabilities 8,639 8,841
---------- --------
Share capital (par value: EUR 1.00;
12,690,321 shares authorized, 9,610,630
shares issued at December 31, 2005 and
March 31, 2006, respectively) 9,611 9,611
Additional paid in capital 33,090 33,306
Accumulated deficit (25,227) (28,332)
---------- --------
Total Shareholders' Equity 17,474 14,585
---------- --------
Total Liabilities and Shareholders' Equity EUR 26,113 EUR 23,426
========== ========
GENTIUM S.p.A.
Statements of Operations
(Unaudited, in thousands, except per share data)
For the Three Months
Ended March 31,
-------------------------
2005 2006
---------- ----------
Revenues:
Sales to affiliates EUR 500 EUR 912
Third party product sales 93 3
---------- ----------
Total product sales 593 915
Other income and revenues 70 35
---------- ----------
Total Revenues 663 950
Operating costs and expenses:
Cost of goods sold 502 763
Charges from affiliates 271 215
Research and development 644 1,623
General and administrative 412 1,296
Depreciation and amortization 23 42
---------- ----------
1,852 3,939
---------- ----------
Operating loss (1,189) (2,989)
Foreign currency exchange gain (loss),
net (55) (168)
Interest income (expense), net (2,148) 52
---------- ----------
(2,203) (116)
---------- ----------
Pre-tax loss (3,392) (3,105)
Income tax expense:
Current (16) -
Deferred - -
---------- ----------
(16) -
---------- ----------
Net loss EUR (3,408) EUR (3,105)
========== ==========
Net loss per share:
Basic and diluted net loss per share EUR 0.68 EUR 0.32
========== ==========
Weighted average shares used to compute
basic and diluted net loss per share 5,000,000 9,610,630
========== ==========
GENTIUM S.p.A.
Statements of Cash Flows
(Unaudited, in thousands)
For the Three Months
Ended March 31,
-----------------------
2005 2006
------- -------
Cash Flows From Operating Activities:
------- -------
Net loss EUR (3,408) EUR (3,105)
------- -------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Unrealized foreign exchange loss 118 -
Depreciation and amortization 360 219
Non cash interest expense 1,750 -
Stock based compensation 66 213
Changes in operating assets and liabilities:
Accounts receivable (262) (131)
Inventories (504) (152)
Prepaid expenses and other current assets 212 188
Accounts payable and accrued expenses (428) 629
Deferred income (73) (35)
Termination indemnities (17) 8
------- -------
Net cash used in operating activities (2,186) (2,166)
------- -------
Cash Flows From Investing Activities:
Capital expenditures (244) (198)
Intangible expenditures (18) (274)
------- -------
Net cash used in investing activities (262) (472)
------- -------
Cash Flows From Financing Activities:
Capital contribution 1,600 -
Repayments of long-term debt (162) (401)
Proceeds from Series A convertible Notes 1,465 -
Proceeds (repayment) of affiliate's loan (700) -
Proceeds (repayment) from bank overdrafts and
short term borrowings (2,199) -
------- -------
Net cash provided by (used in) financing
activities 4 (401)
------- -------
Decrease in cash and cash equivalents (2,444) (3,039)
Cash and cash equivalents, beginning of period 2,461 12,785
------- -------
Cash and cash equivalents, end of period EUR 17 EUR 9,746
======= =======
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