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GPC Biotech AG (GPCG.DE) Reports Financial Results for First Quarter 2009



5/28/2009 10:47:31 AM

MARTINSRIED/MUNICH, GERMANY and PRINCETON, NJ--(Marketwire - May 28, 2009) - GPC Biotech AG (FRANKFURT: GPC) (XETRA: GPC) today reported financial results for the first quarter and three months ended March 31, 2009.

First quarter 2009 compared to first quarter 2008

The Company had no revenues in the first quarter of 2009, compared to EUR 1.5 million for the first quarter of 2008. The decrease in revenues is due to the termination of the co-development and license agreement for satraplatin with Celgene Corporation in September 2008. Research and development (R&D) expenses decreased 74% to EUR 1.5 million for the first three months of 2009 compared to EUR 5.7 million for the same period in 2008. The decrease in R&D expenses is primarily due to staff reductions as a result of the restructuring plan implemented in 2008, a decrease in clinical trial costs and a credit to share-based compensation expense due to the cancellation of stock options and convertible bonds. In the first quarter of 2009, administrative expenses were EUR 3.5 million compared to EUR 3.5 million for the first quarter of 2008. Net loss for the first quarter of 2009 improved 39% to EUR (4.3) million compared to EUR (7.1) million for the first quarter of 2008. Basic and diluted loss per share was EUR (0.12) for the first quarter of 2009 compared to EUR (0.19) for the same quarter in 2008.

As of March 31, 2009, cash, cash equivalents and available-for-sale investments totaled EUR 11.6 million (December 31, 2008: EUR 32.0 million), including EUR 0.2 million in restricted cash, which is under Other Financial Assets on the balance sheet. As previously announced, in February 2009, in connection with the proposed business combination with Agennix Incorporated, the Company made a loan to Agennix in the amount of $20 million (EUR 15.7 million) in the form of a senior secured convertible promissory note. The proceeds of this loan are being used to support the clinical development of talactoferrin prior to the closing of the transaction. Net cash burn for the first quarter of 2009 was EUR 4.9 million. Net cash burn is derived by adding net cash used in operating activities and purchases of property, equipment and intangible assets. The figures used to calculate net cash burn are contained in the Company's unaudited interim consolidated cash flow statement for the first quarter ended March 31, 2009.

Quarter over quarter results: first quarter 2009 compared to fourth quarter 2008

For the first quarter of 2009, the Company had no revenues, compared to EUR 31,000 for the previous quarter. R&D expenses decreased 56% to EUR 1.5 million for the first quarter of 2009 compared to EUR 3.4 million for the fourth quarter of 2008. Administrative expenses for the first quarter of 2009 decreased 29% to EUR 3.5 million compared to EUR 4.9 million for the previous quarter. The Company's net loss was EUR (4.3) million in the first quarter of 2009 compared to EUR (9.0) million for the previous quarter. Basic and diluted loss per share was EUR (0.12) for the first quarter of 2009 compared to EUR (0.25) for the previous quarter.

Bernd R. Seizinger, M.D., Ph.D., Chief Executive Officer, said: "We are very excited about the proposed combination with Agennix and look forward to our shareholders voting on the proposed merger agreement at our annual shareholders' meeting on June 23."

Year-to-date highlights

To date in 2009, the Company has had the following key achievements:

  • Business Combination Agreement was signed, under which the Company proposes to combine businesses with U.S. biotechnology company, Agennix, Incorporated, in a new German company. Agennix has an oncology program, talactoferrin, currently in two Phase 3 clinical trials for non-small cell lung cancer. Dievini Hopp BioTech holding GmbH & Co. KG is investing EUR 15 million in the new company.
  • New data on satraplatin from the SPARC Phase 3 trial in second-line castrate- or hormone-refractory prostate cancer were presented at the American Society for Clinical Oncology (ASCO) Genitourinary Cancers Symposium. The data showed an improvement in overall survival in a subset of patients refractory to docetaxel (Taxotere®).
  • New pre-clinical data on RGB-286638 multi-targeted kinase inhibitor were presented at the American Association for Cancer Research (AACR) Annual Meeting. The data showed that RGB-286638 demonstrates in vivo activity in several pre-clinical models of multiple myeloma. The compound has also been shown to induce cell death in multiple myeloma cells independent from the p53 status; p53 is a gene involved in the control of cell proliferation. New data in solid tumor cells were also presented.

Financial guidance

GPC Biotech continues to expect that the average annual cash burn of the combined entity will be approximately EUR 30 million for 2009 and for 2010. This amount excludes one-time total transaction-related costs of approximately EUR 7 million, which includes banking and legal fees associated with the merger for GPC Biotech, Agennix and the new entity, as well as fees for the listing of the new entity on the Frankfurt Stock Exchange. GPC Biotech expects that the existing cash of GPC Biotech and Agennix, plus the cash contribution of dievini Hopp BioTech holding as part of the proposed merger, will be sufficient to fund operations of the combined entity into the second quarter of 2010. GPC Biotech believes that it should have sufficient cash as a stand-alone entity to close the proposed merger, depending on the actual closing date. If the merger is not completed in a timely manner or at all, the ability of GPC Biotech to continue as a going concern on a stand-alone basis will be at risk.

Conference call scheduled

As previously announced, the Company has scheduled a conference call to which participants may listen via live webcast, accessible through the GPC Biotech Web site at www.gpc-biotech.com or via telephone. A replay will be available via the Web site following the live event. The call, which will be conducted in English, will be held on May 28 at 15:00 CET/9:00 AM ET. The dial-in numbers for the call are as follows:

Participants from Europe: 0049 (0)69 667775756 or 0044 (0)20 3003 2666

Participants from the U.S.: 1-646-843-4608

Please dial in 10 minutes before the beginning of the meeting.

About GPC Biotech

GPC Biotech AG is a publicly traded biopharmaceutical company focused on developing anti-cancer drugs. The Company currently has two programs in clinical development: satraplatin, an oral platinum compound and RGB-286638, a multi-targeted protein kinase inhibitor. On February 18, 2009, the Company announced plans to combine its business with U.S.-based Agennix, Incorporated in a new German company. Agennix, a privately held biotechnology company, is developing oral talactoferrin, a product candidate that is currently in Phase 3 trials for non-small cell lung cancer. GPC Biotech AG is headquartered in Martinsried/Munich (Germany) and has a wholly owned U.S. subsidiary in Princeton, New Jersey. For additional information, please visit GPC Biotech's Web site at www.gpc-biotech.com.

This press release contains forward-looking statements which express the current beliefs and expectations of the management of GPC Biotech. Such statements are based on current expectations and are subject to risks and uncertainties, many of which are beyond our control, that could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially depending on a number of factors, and we caution investors not to place undue reliance on the forward-looking statements contained in this press release. There can be no guarantee that the proposed merger will be approved by GPC Biotech shareholders or will close in a timely manner, if at all. Forward-looking statements speak only as of the date on which they are made and GPC Biotech undertakes no obligation to update these forward-looking statements, even if new information becomes available in the future.

Taxotere® is a registered trademark of Aventis Pharma S.A.

GPC Biotech AG
Interim consolidated statement of operations
for the three months ended March 31, 2009

                                               Three months ended March 31

                                                    2009          2008
                                       Notes    (unaudited)   (unaudited)
In thousand EUR, except share data
 and per share data

Revenue                                       6            -         1,514

Research and development expenses             6       (1,537)       (5,749)
Administrative expenses                               (3,518)       (3,502)
Amortization of intangible assets                        (45)          (65)
Impairment of intangible assets                         (407)            -
Other income, net                                        985           331
Finance income                                           275           605
Finance costs                                            (29)         (189)
                                                ------------  ------------

Net loss before tax                                   (4,276)       (7,055)

                                                ------------  ------------

Net loss for the period                               (4,276)       (7,055)
                                                ============  ============

Basic and diluted loss per share                  (EUR  0.12)   (EUR  0.19)

Average number of shares used in
 computing basic and diluted loss
 per share                                        36,836,853    36,836,853


See accompanying notes to unaudited interim condensed consolidated
financial statements



GPC Biotech AG
Interim consolidated statement of comprehensive income (loss)
for the three months ended March 31, 2009

                                              Three months ended March 31
                                                  2009           2008
                                               (unaudited)    (unaudited)
in EUR  000
Net loss                                             (4,276)        (7,055)

Other comprehensive income (loss):
Net gain/(loss) on available-for-sale (AFS)
 investments                                             35            (22)
Exchange differences on translating
 foreign operations                                     370           (627)
                                              -------------  -------------
                                                        405           (649)
                                              -------------  -------------
Total comprehensive loss                             (3,871)        (7,704)
                                              -------------  -------------

See accompanying notes to unaudited interim condensed consolidated
financial statements



GPC Biotech AG
Interim consolidated statement of financial position
as of March 31, 2009

                                                March 31,    December 31,
                                                  2009           2008
                                               (unaudited)
                                     Notes       EUR 000        EUR 000

Assets
Non-current assets
Note receivable                             2        15,142              -
Property and equipment                                  479            524
Intangible assets                                     3,143          3,584
Other financial assets                                  146            146
                                              -------------  -------------
Total non-current assets                             18,910          4,254

Current assets
Trade receivables                                         6              6
Prepayments                                             265            432
Other current assets                                  2,839          2,209
Available-for-sale investments                          171            136
Cash and cash equivalents                            11,251         31,686
                                              -------------  -------------
Total current assets                                 14,532         34,469


Total Assets                                         33,442         38,723
                                              =============  =============

Equity and Liabilities
Equity attributable to the Company's equity
 holders
Issued capital                                       36,837         36,837
Share premium                                       366,400        369,654
Other reserves                                       (3,513)        (3,918)
Retained loss                                      (383,225)      (378,949)
                                              -------------  -------------
Total equity                                         16,499         23,624

Non-current liabilities
Convertible bonds                           6           234          1,705
Deferred revenue, net of current portion    6         7,380          7,380
                                              -------------  -------------
Total non-current liabilities                         7,614          9,085

Current liabilities
Trade payables                                        1,600          1,221
Accruals and other current liabilities      2         7,686          4,750
Deferred revenue, current portion                        43             43
                                              -------------  -------------
Total current liabilities                             9,329          6,014

                                              -------------  -------------
Total liabilities                                    16,943         15,099

Total equity and liabilities                         33,442         38,723
                                              =============  =============


See accompanying notes to unaudited interim condensed consolidated
financial statements



GPC Biotech AG
Interim consolidated cash flow statement
for the three months ended March 31, 2009

                                              Three months ended March 31
                                                  2009           2008
                                               (unaudited)    (unaudited)
                                                 EUR 000        EUR 000

Cash flows from operating activities

Net loss for the period                              (4,276)        (7,055)

Adjustments for:
  Depreciation                                           70            227
  Amortization                                           45             65
  Compensation cost (reversal) for share-based
   payments                                          (3,254)          (921)
  Amortization of premium of marketable
   securities                                             -             17
  Impairment of property, equipment and
   intangible assets                                    407             17
  Finance income                                       (275)          (605)
  Finance costs                                          29            189
  Gain from the sale of property and equipment           (4)          (305)
                                              -------------  -------------
                                                     (7,258)        (8,371)
  Decrease in other assets, non-current and
   current                                              341            894
  Decrease in trade receivables                           -            642
  Increase (decrease) in trade payables                 324         (1,056)
  Decrease in deferred revenues                           -         (1,238)
  Increase (decrease) in accruals and other
   liabilities                                        1,653         (1,583)
                                              -------------  -------------

Cash used in operating activities                    (4,940)       (10,712)
                                              -------------  -------------

Interest received                                        49            153

Interest paid                                            (1)             -
                                              -------------  -------------

Net cash used in operating activities                (4,892)       (10,559)
                                              -------------  -------------

Cash flows from investing activities

Purchase of property and equipment and
 intangible assets                                        -             (1)
Proceeds from sale of property and equipment
 and intangible assets                                    5            207
Proceeds from sale of available-for-sale
 investments                                              -         10,000
Purchase of note receivable                         (15,657)             -
                                              -------------  -------------
Net cash (used in) provided by investing
 activities                                         (15,652)        10,206
                                              -------------  -------------

Cash flows from financing activities

Repayment of convertible bonds                         (317)          (445)
                                              -------------  -------------
Net cash used in financing activities                  (317)          (445)
                                              -------------  -------------

Effect of exchange rate changes on cash and
 cash equivalents                                       426           (786)
Changes in restricted cash                                -            (14)
                                              -------------  -------------

Net decrease in cash and cash equivalents           (20,435)        (1,598)
Cash and cash equivalents at beginning of
 period                                              31,686         49,681
                                              -------------  -------------
Cash and cash equivalents at end of period           11,251         48,083
                                              =============  =============

See accompanying notes to unaudited interim condensed consolidated
financial statements



GPC Biotech AG
Interim consolidated statement of changes in equity
For the three months ended March 31, 2009

                                            Issued      Share    Retained
                                  Shares    capital    premium     loss
in EUR 000, excluding number of
 shares
Balance at January 1, 2008      36,836,853     36,837   369,267   (357,665)

Loss for the period                                                 (7,055)
Other comprehensive loss
Total comprehensive loss                                            (7,055)

Compensation cost (reversal)
 from share-based payment                                             (921)

                                ---------- ---------- ---------  ---------
Balance at March 31, 2008
 (unaudited)                    36,836,853     36,837   368,346   (364,720)
                                ========== ========== =========  =========


Balance at January 1, 2009      36,836,853     36,837   369,654   (378,949)

Loss for the period                                                 (4,276)
Other comprehensive income
Total comprehensive loss                                            (4,276)

Compensation cost (reversal)
 from share-based payment                                           (3,254)
                                ---------- ---------- ---------  ---------
Balance at March 31,
 2009 (unaudited)               36,836,853     36,837   366,400   (383,225)
                                ========== ========== =========  =========



                                                       Foreign
                                  Conv.       AFS      transl.     Total
                                  bonds     reserve    reserve     equity
in EUR 000, excluding number of
 shares
Balance at January 1, 2008             720      (162)    (4,878)    44,119

Loss for the period                                                 (7,055)
Other comprehensive loss                         (22)      (627)      (649)
Total comprehensive loss                         (22)      (627)    (7,704)

Compensation cost (reversal)
 from share-based payment                                             (921)

                                ---------- ---------  ---------  ---------
Balance at March 31, 2008
 (unaudited)                           720      (184)    (5,505)    35,494
                                ========== =========  =========  =========


Balance at January 1, 2009             720        23     (4,661)    23,624

Loss for the period                                                 (4,276)
Other comprehensive income                        35        370        405
Total comprehensive loss                          35        370     (3,871)

Compensation cost (reversal)
 from share-based payment                                           (3,254)
                                ---------- ---------  ---------  ---------
Balance at March 31,
 2009 (unaudited)                      720        58     (4,291)    16,499
                                ========== =========  =========  =========

See accompanying notes to unaudited interim condensed consolidated
financial statements


GPC Biotech AG

Notes to the unaudited interim condensed consolidated financial statements

1. Basis of Presentation and Accounting Policies

Basis of presentation

The accompanying interim condensed consolidated financial statements of GPC Biotech AG ("the Company") for the three months ended March 31, 2009 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, ("IAS 34"). The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), and should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2008.

Accounting policies

The accounting policies adopted and valuation methods applied in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company's annual consolidated financial statements for the year ended December 31, 2008, except for the adoption of new Standards and Interpretations as of January 1, 2009, as noted below:

IAS 1 Revised

As of 1 January 2009, the Company adopted International Accounting Standard 1 ®, Presentation of Financial Statements, ("IAS 1®). The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the Standard introduces the statement of comprehensive income: it presents all items of recognized income and expense, either in one single statement, or in two linked statements. The Company has elected to present two statements. The changes required by IAS 1® did not affect the measurement or recognition of these items of comprehensive income.

Improvements to IFRSs

In May 2008, the Board issued its first omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the amendments resulted in minor changes to some of the Company's accounting policies but did not have any impact on the financial position or performance of the Company.

As disclosed in the accompanying interim management report and Note 2 in the Company's Annual Report for the year ended December 31, 2008, the ability of the Company to continue as a going concern on a stand-alone basis is at risk.

2. Business Developments

On February 18, 2009, GPC Biotech announced that it had signed a Business Combination Agreement with Agennix, Incorporated under which the two companies proposed to merge their businesses. Agennix is a privately held biotechnology company based in Houston, Texas. Agennix is developing talactoferrin, a novel oral anticancer therapy that is currently in two Phase 3 trials for non-small cell lung cancer. Talactoferrin has potential in other cancers, as well as non-cancer uses, such as diabetic foot ulcers. In the transaction, GPC Biotech is to be merged onto a new German company, which will hold all of the shares of Agennix and a EUR 15 million cash contribution by dievini Hopp BioTech holding GmbH & Co KG, which is also a party to the Business Combination Agreement and one of the largest shareholders of GPC Biotech. The merger is subject to the approval of the shareholders of GPC Biotech, the equity holders of the new company and to other closing conditions.

GPC Biotech expects its share of one time costs associated with this transaction to be approximately EUR 3.9 million which include banking fees, legal services and other one-time charges. In the three months ended March 31, 2009, the Company expensed approximately EUR 3.0 million of such costs which were included in Administrative expenses. Please see the Company's Annual Report for the year ended December 31, 2008, for additional information.

In connection with the Business Combination Agreement, GPC Biotech made a $20 million (approximately EUR 15.7 million) loan to Agennix in the form of a senior secured convertible promissory note, bearing an interest rate of 12% per annum, which is included in non-current assets in the accompanying interim consolidated statement of financial position as of March 31, 2009.

3. Restructuring Activities

In March 2009, the Company implemented a corporate restructuring plan which resulted in a reduction in the total workforce of 8 employees, all located in the Princeton, New Jersey office. The Company incurred a total restructuring charge of approximately EUR 0.4 million related to this plan in the first quarter of 2009. These charges primarily consisted of employee severance and termination benefits and were included in both research and development and administrative expenses. The Company expects to complete this restructuring plan by the end of 2009.

A summary of the significant components of the restructuring liability at March 31, 2009, is as follows (in thousand EUR ):

                                        Employee
                                      Termination     Lease
                                        Benefits       Loss       Total
                                      ------------  ----------  ----------
January 1, 2009 Balance                        175          34         209
                                      ------------  ----------  ----------

Amortization of Lease Loss                       -         (16)        (16)

Restructuring Charges                          350           -         350

Restructuring Payments                         (81)          -         (81)

Exchange Differences                             3           -           3
                                      ------------  ----------  ----------

March 31, 2009 Balance                         447          18         465
                                      ============  ==========  ==========

The restructuring liability of EUR 0.5 million and EUR 0.2 million as of March 31, 2009 and December 31, 2008, respectively, is included in accruals and other current liabilities in the accompanying condensed consolidated statements of financial position.

In the first quarter of 2009, the Company recorded an impairment charge on intangible assets of approximately EUR 0.4 million, which represented the difference between the fair value of the assets no longer used and their net carrying value.

4. Contingencies

From time to time, the Company may be party to certain legal proceedings and claims which arise during the ordinary course of business. Legal proceedings are subject to various uncertainties and the outcomes are difficult to predict. GPC Biotech may incur significant expense in defending these and future lawsuits. In the opinion of management, the ultimate outcome of these matters will not have material adverse effects on the Company's financial position, results of operations or cash flows. In accordance with International Accounting Standard No. 37, Provisions, Contingent Liabilities and Contingent Assets, ("IAS 37"), the Company makes a provision for a liability when it is probable that a liability has been incurred and when the amount of the loss is reasonably estimable.

Shareholder litigation

On March 12, 2009, the Company announced that the U.S. District Court for the Southern District of New York issued an order dismissing the consolidated class action complaint against the Company. On April 1, 2009, the plaintiffs filed a motion seeking permission of the Court to file an amended consolidated class action complaint, and on May 1, 2009, the Company filed a response in opposition to such motion. The plaintiffs have until May 29, 2009, to reply to the Company's response. Please see the Company's Annual Report for the year ended December 31, 2008, for additional information.

Retention plan

In the first quarter of 2009, the Company paid approximately EUR 0.5 million to certain employees in accordance with the retention plan introduced in 2008. As of March 31, 2009, the Company has no remaining liability to any of its employees relating to the 2008 retention plan.

5. Shareholders' Equity

As of March 31, 2009, GPC Biotech had conditional capital to potentially issue additional shares of the Company in the amount of EUR 17.4 million, with EUR 3.2 million thereof accounting for conditional capital available pursuant to Section 192(2)(3) of the German Stock Corporation Act (AktG). In addition, GPC Biotech had authorized capital to potentially issue additional shares of the Company in the amount of EUR 16.2 million.

No stock options or convertible bonds were exercised or converted for the three months ended March 31, 2009.

6. Additional Disclosures

Convertible bonds

Convertible bonds for the three months ended March 31, 2009, decreased 88% to EUR 0.2 million compared to EUR 1.7 million as of December 31, 2008. The decrease in convertible bonds is primarily due to the Company's cancellation of convertible bonds. As of March 31, 2009, approximately EUR 1.5 million of convertible bonds are included in other current liabilities as the Company plans to repay these amounts within the next 12 months.

Revenue

The Company recognized no revenues for the three months ended March 31, 2009, compared to EUR 1.5 million for the same period in 2008. The decrease in revenues is due to the termination of the co-development and license agreement with Celgene in 2008.

Research and development expenses

Research and development ("R&D") expenses for the three months ended March 31, 2009, decreased 74% to EUR 1.5 million compared to EUR 5.7 million for the same period in 2


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