October 23, 2000
Genset, S.A. (Nasdaq: GENXY, Nouveau Marché: GENSET), reported a consolidated net loss for the quarter ended September 30, 2000 of 9.9 million ($8.7 million), or 1.23 per share ($0.36 per American Depositary Share), as compared to a net loss of 5.7 million ($5.1 million), or 0.77 per share ($0.23 per American Depositary Share), for the quarter ended September 30, 1999. The Company reported a net loss for the nine months ended September 30, 2000 of 23.5 million compared to a loss of 16.5 million for the same period in 1999.
Total revenues for the quarter decreased by 12.7% to 6.2 million ($5.5 million), as compared to total revenues of 7.1 million ($6.3 million) for the quarter ended September 30, 1999. Total revenues for the nine months ended September 30, 2000 increased to 23.6 million compared to 20.3 million in the same period in 1999. The change in total revenues for the third quarter reflects the Company's shift in strategy away from entering into limited gene target discovery deals on behalf of pharmaceutical companies to a focus on developing products for its own benefit. As a result, research and development ("R&D") revenues decreased 42.7% to 2.9 million ($2.5 million), accounting for 46% of total revenues, while oligonucleotide sales increased 58.2% to 3.4 million ($3.0 million).
Cash decreased during the quarter by 7.4 million ($6.5 million). As of September 30, 2000, Genset had cash, cash equivalents and short-term investments of 79.9 million ($70.6 million), compared to 21.1 million ($18.7 million) as of December 31, 1999.
André Pernet, who became CEO of Genset in August said, "This has been an important quarter for Genset in our transition to a business model which takes further advantage of our proven genomics engine. We are restructuring our business by finishing our existing alliances and have begun our efforts to capture for ourselves a much greater portion of the value generated through drug development. Going forward we expect to bring our own potential products, such as Famoxin, forward to the point where we can enter into partnerships of a much greater value to Genset than the deals of the past." He added, "I am extremely happy with our rapid progress in this important evolution."
Dr. Pernet also noted that, "With the Company's transition to a new business model, we experienced a high turnover in our non-scientific senior management. Marc Vasseur, who resigned as Chief Biology Officer this summer to pursue other projects, decided not to continue on as a director of the Company. Most other departures have been replaced by internal promotions of skilled personnel with significant experience in the Company. We have also successfully begun to hire new senior officers with extensive and appropriate experience in the pharmaceutical industry, who will be critical in guiding our transition towards drug development and licensing."
"In the oligonucleotide business", André Pernet said, "we continue to see large increases in the revenue line. While our expansion into Australia and Asia has caused our costs to increase temporarily, we can see the benefit of these important investments in increased sales. We are well positioned to take advantage of this growing world-wide market."
Genset's total operating expenses increased 18.4% to 16.8 million ($14.8 million) for the quarter ended September 30, 2000, from 14.2 million ($12.5 million) for the same quarter in 1999. This increase was due primarily to the increase in costs associated with the expansion of the oligonucleotide division and the increased patent activity. R&D expenses for the quarter were 0.9 million ($9.6 million), almost in line with those of the third quarter of 1999, 10.4 million ( 9.2 million).
For the quarter, general & administrative expenses increased 29.8% to 3.2 million ($2.8 million) from 2.4 million ($2.2 million) in the third quarter 1999, primarily as a result of changes in personnel and an increase in patent activities including numerous new patent filings and extensions.
The Company's reported expenses are higher by 0.4 million ( 0.2 million in cost of goods sold and 0.2 million in R&D expenses) due to a non-cash charge related to the required implementation during the quarter of "Interpretation 44 of APB 25" concerning the accounting for stock options.
In the area of non-operating expenses, the Company reported a net foreign exchange gain for the quarter of 0.2 million ($0.2 million), as compared to a small foreign exchange loss in the third quarter of 1999.
Genset recorded an income tax benefit of 0.4 million ($0.4 million) for the third quarter of 2000, compared to a benefit of 1.1 million ($1.0 million) for the third quarter of 1999.
The Company anticipates that it will continue to incur losses for the next few quarters; the amount and duration of such losses will depend largely on the level of its continued investment in research and development activities and the timing of future licensing deals on the results of these activities.
Genset is a genomics company focused on generating a pipeline of drug candidates in the areas of CNS and metabolic disorders. Genset has successfully used its integrated technology platform and association studies approach to identify and characterize drug targets and drug response markers in the fields of CNS, metabolic and other diseases. Building upon the expertise accumulated in various alliances with pharmaceutical partners and its portfolio of genomic patents, Genset now intends to pursue and validate novel drug targets and candidates for its own account, starting with a lead protein candidate in its obesity program.
Genset's news releases are available on the Company's Web site at genxy.com. |
