Genta Announces Second Quarter Earnings Results and Highlights Conference Call Will ...
BERKELEY HEIGHTS, N.J., Aug 08, 2002 /PRNewsire-FirstCall via Comtex/ -- Genta Incorporated (Nasdaq: GNTA) today announced operating results for the second quarter ended June 30, 2002. The Company reported a net loss of $17.1 million, or $(0.25) per share, for the quarter ended June 30, 2002, compared to a net loss of $10.9 million, or $(0.21) per share, for the comparable period in 2001. For the six months ended June 30, 2002, the Company's net loss was $29.7 million, or $(0.44) per share, compared to a net loss of $18.4 million, or $(0.35) per share, for the comparable period in 2001.
During the second quarter, the Company signed a collaborative agreement with Aventis that provides significant sharing of expenses related to Genta's lead anticancer drug, Genasense(TM). In the second quarter, total operating expenses, net of Aventis reimbursement, increased by approximately $6.8 million when compared to the comparable quarter in 2001. The increase in expenses primarily reflects the purchase of Genasense drug substance, acceleration of clinical trials, and one-time milestone payments totaling $3.5 million to the University of Pennsylvania and National Institutes of Health pursuant to the Aventis collaboration.
Of the $6.2 million in prepaid expenses, $5.5 million represents a deposit on the purchase of Genasense drug substance, a substantial portion of which is expected to be subject to future reimbursement by Aventis. The Company has recorded a receivable on the balance sheet in the amount of $7.2 million, which it has invoiced to Aventis and is subject to reimbursement in the 3rd quarter.
Year-to-date, the Company's total operating expenses increased by $11.5 million compared with the comparable six-month period in 2001. Cash, cash equivalents, and short-term investments increased to a total of $143.5 million as of June 30, 2002, compared to $33.5 million at March 31, 2002.
Specific highlights of the quarter include:
Aventis Collaboration
In April, Genta and Aventis concluded the second largest transaction for any single biotech product. The collaborative agreement to develop and commercialize Genasense(TM) may provide up to $477 million in cash, equity, milestones, and convertible debt to Genta. To date, Genta has received $131.9 million, which consisted of $50 million in cash, $71.9 million in an equity purchase, and $10 million in convertible debt. Pursuant to the achievement of certain regulatory milestones, Genta may receive an additional $280 million in cash, along with an option to place an additional $65 million in convertible debt with Aventis. The first milestone payment, which is payable upon the first approval of Genasense in the U.S., consists of $75 million in cash plus a $20 million allotment of convertible debt. Genta will also receive royalties on all worldwide sales of Genasense.
Additional milestones provided by the agreement consist of the following:
$40 million for 2nd U.S. approval $40 million for 1st major approval $40 million for 1st front-line major $45 million for 2nd major approval $20 million for 1st E.U. approval $20 million for 2nd E.U. approval
(A "major" indication is defined as prostate, breast, colon, lung or non-Hodgkin's lymphoma.)
Under the terms of the agreement, Genta and Aventis will jointly develop and co-market Genasense in the United States, and Aventis will have exclusive development and marketing rights to the compound in all countries outside of the U.S. Genta will retain responsibility for global manufacturing and for regulatory filings within the U.S., while Aventis will assume all regulatory responsibilities outside the U.S.
Subsequent to execution of the agreement, Aventis will fund 75% of all NDA-directed development costs in the U.S., and 100% of all other development, marketing, and sales costs worldwide.
Accounting Effects of the Aventis Agreement
As shown in the attached statements, the upfront cash payments will be amortized over approximately nine years. Reimbursable expenses have been shown as a reduction to operating expenses in the second quarter. For the third quarter of 2002, the Company currently anticipates operating expenses will range between $26 and $27 million; approximately 35% to 38% of this amount should be reimbursable by Aventis. The cash expense is expected to include $11 million deposit for purchase of additional drug substance of which a substantial portion is expected to be reimbursed by Aventis.
Genasense Clinical Trials
Genasense is a drug that is believed to optimize the effectiveness of current forms of anticancer therapy. The Company is currently conducting three similarly designed, randomized Phase 3 clinical trials in patients with malignant melanoma, multiple myeloma, and chronic lymphocytic leukemia. The Company currently believes that enrollment in each of these trials should be complete by the end of 2002, thereby enabling submission of a New Drug Application in the summer of 2003, assuming a positive result has been observed in at least one of these studies. Both Genta and Aventis are working to accelerate enrollment in existing clinical trials, as well as expedite the initiation of new trials that may expand future indications for the drug.
Gallium Nitrate (Ganite(TM)) Clinical Trials
In May, the Company initiated a Phase 2b clinical trial using Ganite(TM) (gallium nitrate injection) for the treatment of non-Hodgkin's lymphoma (NHL). The new trial focuses on patients with low- or intermediate-grade NHL who have myelosuppression (low blood counts) and who have failed prior chemotherapy and rituximab (Rituxan(R)). Previously published data have shown a 40-50% response rate in such patients. The Company plans to file an Orphan Drug Application for this indication in the 3rd quarter.
Genta Incorporated is a biopharmaceutical company with a diversified product portfolio that is focused on anticancer therapy. The Company's research platform is anchored by oligonucleotide chemistry, particularly applications of antisense and decoy aptamer technology. Genasense(TM), the Company's lead compound, has received "Fast Track" and "Orphan Drug" designation from the Food and Drug Administration. Genasense(TM) is currently undergoing late-stage, Phase 3 clinical testing in several clinical indications. Genta's pipeline also comprises a portfolio of small molecules, including gallium-containing compounds and Androgenics compounds. Genta aims to become a direct marketer of its pharmaceutical products in North America. For more information about Genta, please visit our website at: genta.com.
The statements contained in this press release and the related conference call that will take place today that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. Without limiting the foregoing, the words "anticipates," "believes," "expects," "intends," "may" and "plans" and similar expressions are intended to identify forward-looking statements. The Company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's views as of the date they are made with respect to future events, but are subject to many risks and uncertainties, which could cause the actual results of the Company to differ materially from any future results expressed or implied by such forward-looking statements. For example, the results obtained in pre-clinical or clinical studies may not be indicative of results that will be obtained in future clinical trials, and delays in the initiation or completion of clinical trials may occur as a result of many factors. Further examples of such risks and uncertainties also include, but are not limited to: the obtaining of sufficient financing to maintain the Company's planned operations; timely development, receipt of necessary regulatory approvals, and acceptance of new products; the successful application of the Company's technology to produce new products; the obtaining of proprietary protection for any such technology and products; the impact of competitive products and pricing and reimbursement policies; and changing market conditions. The Company does not undertake to update forward-looking statements. Although the Company believes that the forward-looking statements contained herein are reasonable, it can give no assurances that the Company's expectations are correct. All forward looking statements are expressly qualified in their entirety by this cautionary statement and other factors detailed in the Company's reports filed with the Securities and Exchange Commission.
Genta Incorporated Selected Condensed Consolidated Financial Data (In thousands, except per share data)
Three Months Six Months Ended Ended June 30, June 30, 2002 2001 2002 2001
Revenues $910 $12 $915 $82
Costs and expenses: Research and development 9,693 9,318 19,530 14,974 General and administrative 8,247 1,811 11,049 3,184 Promega settlement -- -- -- 1,000 Compensation expense related to stock options 238 243 477 394 Total cost and expenses 18,178 11,372 31,056 19,552
Loss from operations (17,268) (11,360) (30,141) (19,470)
Interest income and other expense, net 199 457 445 1,108 Net loss applicable to common shareholders $(17,069) $(10,903) $(29,696) $(18,362)
Net loss per common share $(0.25) $(0.21) $(0.44) $(0.35)
Shares used in computing net loss per share 69,184 52,924 67,862 52,100
Condensed Consolidated Balance Sheet Data
June 30, December 31, 2002 2001 Cash, cash equivalents and short-term investments $143,526 $54,086 Working capital 139,783 42,709 Total assets 163,175 60,630 Total stockholders' equity 91,871 48,310
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SOURCE Genta Incorporated
CONTACT: Tara Spiess, Director of Investor Relations and Corporate Communications of Genta Incorporated, +1-908-286-3980; or Media - Hala Bashir of Noonan Russo Presence, +1-212-845-4277; or I.R. - Brian Korb of Trout Group, +1-212-477-9007, both for Genta
URL: prnewswire.com genta.com
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