GPC Biotech AG Reports Financial Results For First Quarter Of 2006
MARTINSRIED/MUNICH, Germany, May 4 /PRNewswire-FirstCall/ -- Waltham, Mass. and Princeton, N.J. -- GPC Biotech AG today reported financial results for the first quarter ended March 31, 2006.
Quarter over quarter results: first quarter 2006 compared to fourth quarter 2005
Revenues for the first quarter of 2006 increased 90% to euro 5.4 million compared to euro 2.8 million for the previous quarter. Research and development (R&D) expenses decreased 7% to euro 14.5 million for the first quarter of 2006 compared to euro 15.6 million for the fourth quarter of 2005. General and administrative (G&A) expenses for the first quarter of 2006 decreased 20% to euro 4.4 million compared to euro 5.5 million for the previous quarter. The Company's net loss decreased 25% to euro (12.9) million in the first quarter of 2006, compared to euro (17.2) million for the previous quarter. Basic and diluted loss per share was euro (0.41) for the first quarter of 2006 compared to euro (0.57) for the previous quarter.
Comparison to previous year: first quarter 2006 compared to first quarter 2005
Revenues for the three months ended March 31, 2006 increased 187% to euro 5.4 million compared to euro 1.9 million for the same period in 2005. The increase in revenues is due to the co-development and license agreement for satraplatin for Europe and certain other territories with Pharmion that was signed in December 2005. R&D expenses increased 30% for the first quarter of 2006 to euro 14.5 million compared to euro 11.2 million for the same period in 2005. The increase was mainly due to activities related to the satraplatin SPARC Phase 3 registrational trial. G&A expenses for the first quarter of 2006 increased 11% to euro 4.4 million compared to euro 3.9 million for the same quarter in 2005. Net loss for the first quarter of 2006 increased 4% to euro (12.9) million compared to euro (12.4) million for the first quarter of 2005. Basic and diluted loss per share was euro (0.41) for the first quarter of 2006 compared to euro (0.42) for the same period in 2005.
As of March 31, 2006, cash, cash equivalents, marketable securities and short-term investments totaled euro 144.1 million (December 31, 2005: euro 95.2 million), including euro 1.6 million in restricted cash. Net cash generated by operating activities was euro 12.8 million, and purchases of property, equipment and licenses were euro 0.3 million for the first quarter of 2006.
"Our revenues almost tripled compared to the same quarter in 2005 due to our co-development and license agreement with Pharmion," said Mirko Scherer, Ph.D., Senior Vice President and Chief Financial Officer. "This is the first quarter that the majority of our revenues are a result of our drug development programs and not from technology collaborations."
"In the first months of 2006, we have continued to build on the good progress made during 2005," said Bernd R. Seizinger, M.D., Ph.D., Chief Executive Officer. "Importantly, the interim efficacy analysis for the satraplatin Phase 3 trial has now been held by the independent Data Monitoring Board, and the recommendation, as we had expected, was that the trial continue as planned, based on their finding that both the design and conduct of the trial remain sound, no new or unexpected toxicities were observed, and the futility analysis was passed. We thus look forward to reporting the final progression-free survival results this fall."
Dr. Seizinger continued, "In the meantime, much activity is happening at GPC Biotech as the SPARC registrational trial completes. We have initiated new clinical trials with satraplatin in combination with other anticancer treatments and in a variety of cancer settings. We have also recently expanded our drug development and commercialization management teams with the hiring of three senior executives to fill newly-created positions at the Company. In another step in the planning for our future, we also were able to complete a private placement of euro 36 million involving prominent SAP co- founder Dietmar Hopp. The first few months of 2006 have been exciting, and we look forward to continuing our productive year as we move our programs forward."
Highlights for 2006 year to date -- Independent Data Monitoring Board recommends that GPC Biotech continue satraplatin Phase 3 trial as planned. Data Monitoring Board reports design and conduct of trial remain sound and SPARC trial passes futility analysis -- Company hires three senior executives to fill newly-created positions to expand drug development and commercialization management teams -- Private placement with two investment companies owned by SAP co-founder Dietmar Hopp and his son, respectively, raising euro 36.2 million -- New clinical trial opened with satraplatin: -- Phase 1 trial evaluating satraplatin plus Taxotere(R) (docetaxel) in patients with advanced solid tumors; trial is evaluating a different dosing schedule with Taxotere compared to trial started in mid-2005 -- Presentation of new clinical and pre-clinical data on satraplatin, supportive of the clinical work the Company has underway to explore the potential of satraplatin in a variety of combination therapies and cancer settings -- Granting of orphan drug designation for 1D09C3 by European Commission for chronic lymphocytic leukemia and multiple myeloma 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 http://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 Thursday, May 4, 2006 at 14:30 CET/8:30 AM EDT. The dial-in numbers for the call are as follows:
European participants: 0049 (0)69 500 71846
U.S. participants: 1-866-770-7146 (toll-free)
GPC Biotech AG is a biopharmaceutical company discovering and developing new anticancer drugs. The Company's lead product candidate -- satraplatin -- has achieved target enrollment in a Phase 3 registrational trial as a second-line chemotherapy treatment in hormone-refractory prostate cancer. The U.S. FDA has granted fast track designation to satraplatin for this indication, and GPC Biotech has begun the rolling NDA submission process for this compound. GPC Biotech is also developing a monoclonal antibody with a novel mechanism-of-action against a variety of lymphoid tumors, currently in Phase 1 clinical development, and has ongoing drug development and discovery programs that leverage its expertise in kinase inhibitors. GPC Biotech AG is headquartered in Martinsried/Munich (Germany). The Company's wholly owned U.S. subsidiary has sites in Waltham, Massachusetts and Princeton, New Jersey. For additional information, please visit the Company's Web site at http://www.gpc-biotech.com.
This press release may contain forward-looking statements. Forward- looking statements may be, but are not necessarily, identified by words like "believe", "anticipate", "intend", "expect", "target", "goal", "estimate", "plan", "assume", "may", "will", "could" and similar expressions. Forward-looking statements include, but are not limited to, statements about the progress, timing and completion of research, development, pre-clinical studies and clinical trials for the Company's product candidates; the timing and ultimate success in obtaining regulatory approval in the U.S., Europe or any other jurisdiction for satraplatin or any other product candidates; the Company's ability to market, commercialize, achieve market acceptance for and sell the Company's product candidates; the Company's ability to adequately protect its intellectual property and operate its business without infringing upon the intellectual property rights of others; and the Company's estimates regarding anticipated operating losses, future revenues, capital requirements and needs for additional financing. Forward-looking statements in this press release are based on the Company's current expectations and projections about future events and are subject to risks, uncertainties and assumptions. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur. We direct you to the Company's Form 20-F for the fiscal year ended December 31, 2005 and other reports filed with the U.S. Securities and Exchange Commission (SEC) for additional details on the important factors that may affect the Company's future results, performance and achievements. Except as required by law, the Company disclaims any intent or obligation to publicly update or revise these forward-looking statements whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosure the Company makes on its current reports on Form 6-K to the SEC.
Taxotere(R) (docetaxel) is a registered trademark of Aventis Pharma S.A. For further information, please contact: GPC Biotech AG Fraunhoferstr. 20 82152 Martinsried/Munich, Germany Martin Braendle Associate Director, Investor Relations & Corporate Communications Phone: +49 (0)89 8565-2693 firstname.lastname@example.org In the U.S.: Laurie Doyle Associate Director, Investor Relations & Corporate Communications Phone: +1 781 890 9007 X267 email@example.com Additional Media Contacts: In Europe: Maitland Noonan Russo Brian Hudspith Phone: +44 (0)20 7379 5151 firstname.lastname@example.org In the U.S.: Noonan Russo Matt Haines Phone: +1 212 845 4235 email@example.com - Financials follow - Condensed Consolidated Statements of Operations (U.S. GAAP) Three months ended March 31, in thousand euros, except share and per share data 2006 (unaudited) 2005 (unaudited) Collaborative revenues (a) 5,398 1,880 Total revenues 5,398 1,880 Research and development expenses 14,519 11,196 General and administrative expenses 4,377 3,945 In process research and development - 570 Amortization of intangible assets 72 99 Total operating expenses 18,968 15,810 Operating loss (13,570) (13,930) Other income (expense), net (674) 776 Interest income 951 776 Interest expense (22) (23) Net loss before Cumulative effect of change in accounting principle (13,315) (12,401) Cumulative effect of change in accounting principle 433 - Net loss (12,882) (12,401) Loss per share before change in accounting principle (0.43) (0.42) Cumulative effect of change in accounting principle 0.02 - Basic and diluted loss per share, in euro (0.41) (0.42) Shares used in computing basic and diluted loss per share 31,317,316 29,187,304 (a) Revenues from related party Collaborative revenues 1,474 1,824 See accompanying notes to unaudited condensed consolidated financial statements. Condensed Consolidated Balance Sheets (U.S. GAAP) in thousand euro, except share data and per share data Assets March 31, December 31, 2006 (unaudited) 2005 Current assets Cash and cash equivalents 79,465 30,559 Marketable securities and short-term investments 63,074 63,061 Accounts receivable - 31,326 Accounts receivable, related party - 1,436 Prepaid expenses 1,573 1,333 Other current assets 5,009 3,920 Total current assets 149,121 131,635 Property and equipment, net 3,952 4,103 Intangible assets, net 689 1,072 Other assets, non-current 1,252 838 Restricted cash 1,602 1,615 Total assets 156,616 139,263 Liabilities and shareholders' equity Current liabilities Accounts payable 348 2,141 Accrued expenses and other current liabilities 10,281 11,274 Current portion of deferred revenue, related party 4,512 5,228 Current portion of deferred revenue 15,977 19,548 Total current liabilities 31,118 38,191 Deferred revenues, related party, net of current portion 488 975 Deferred revenue, net of current portion 12,210 12,053 Convertible bonds 2,454 2,334 Other liabilities, non-current 2,036 2,177 Shareholders' equity Ordinary shares, euro 1 non-par, notional value; Shares authorized: 53,780,630 at March 31, 2006 and December 31, 2005 Shares issued and outstanding: 33,089,233 at March 31, 2006 and 30,151,757 at December 31, 2005 33,089 30,152 Additional paid-in capital 319,646 284,931 Accumulated other comprehensive loss (2,086) (2,093) Accumulated deficit (242,339) (229,457) Total shareholders' equity 108,310 83,533 Total liabilities and shareholders' equity 156,616 139,263 See accompanying notes to unaudited condensed consolidated financial statements. Condensed Consolidated Statements of Cash Flows (U.S. GAAP) Three months ended March 31, in thousand euros 2006 (unaudited) 2005 (unaudited) Cash flows from operating activities Net loss (12,882) (12,401) Adjustments to reconcile net loss to net cash provided by / (used in) operating activities : Depreciation 434 662 Amortization 71 50 Compensation cost for stock option plans and convertible bonds 1,560 1,790 Acquired in-process research and development - 570 Cumulative effect of change in accounting principle (433) - Change in accrued interest income on marketable securities and short-term investments (82) 371 Bond premium amortization 199 139 (Gain)/loss on disposal of property and equipment (28) (22) Changes in operating assets and liabilities: Accounts receivable, related party 1,436 1,006 Accounts receivable 31,325 - Other assets, current and non-current (1,425) 767 Accounts payable (1,774) (371) Deferred revenue, related party (1,203) (1,231) Deferred revenue (3,414) 444 Other liabilities and accrued expenses (974) 60 Net cash provided by / (used in) operating activities 12,810 (8,166) Cash flows from investing activities Purchases of property, equipment and licenses (327) (2,554) Proceeds from the sale of property and equipment - 27 Proceeds from sale of marketable securities and short-term investments - (5,001) Net cash used in investing activities (327) (7,528) Cash flows from financing activities Proceeds from issuance of shares in asset acquisition, net of payments for costs of transaction 36,080 - Proceeds from issuance of shares in asset aquisition, net of payments for costs of transaction - 10,705 Proceeds from issuance of convertible bonds 140 - Proceeds from exercise of stock options and convertible bonds 426 178 Net cash provided by financing activities 36,646 10,883 Effect of exchange rate changes on cash (209) 621 Changes in Restricted cash (14) (149) Net increase/(decrease) in cash and cash equivalents 48,906 (4,339) Cash and cash equivalents at the beginning of the period 30,559 59,421 Cash and cash equivalents at the end of the period 79,465 55,082 Supplemental Information: Cash paid for interest - 40 See accompanying notes to unaudited condensed consolidated financial statements. Condensed Consolidated Statements of Changes in Shareholders' Equity (U.S. GAAP) Ordinary shares Additional Paid- in thousand euros, except Shares Amount in Capital share data Balance as of December 31, 2004 28,741,194 28,741 266,074 Components of comprehensive loss: Net loss Change in unrealized gain on available-for-sale securities Accumulated translation adjustments Total comprehensive loss Issuance of shares in equity offering 1,311,098 1,311 11,538 Exercise of stock options and convertible bonds 23,360 24 154 Compensation costs, stock options and convertible bonds 1,790 Balance as of March 31, 2005 (unaudited) 30,075,652 30,076 279,556 Balance as of December 31, 2005 30,151,757 30,152 284,931 Components of comprehensive loss: Net loss Change in unrealized gain on available-for-sale securities Accumulated translation adjustments Total comprehensive loss Issuance of shares 2,860,000 2,860 33,220 Exercise of stock options and convertible bonds 77,476 77 368 Cumulative effect of change in accounting principle (433) Compensation costs, stock options and convertible bonds 1,560 Balance as of March 31, 2006 (unaudited) 33,089,233 33,089 319,646 Condensed Consolidated Statements of Changes in Shareholders' Equity (U.S. GAAP) Accumulated Other Total Comprehensive Accumulated Shareholders' Loss Deficit Equity in thousand euros, except share data Balance as of December 31, 2004 (2,732) (167,250) 124,833 Components of comprehensive loss: Net loss (12,401) (12,401) Change in unrealized gain on available-for-sale securities (103) (103) Accumulated translation adjustments 724 724 Total comprehensive loss (11,780) Issuance of shares in equity offering 12,849 Exercise of stock options and convertible bonds 178 Compensation costs, stock options and convertible bonds 1,790 Balance as of March 31, 2005 (unaudited) (2,111) (179,651) 127,870 Balance as of December 31, 2005 (2,093) (229,457) 83,533 Components of comprehensive loss: Net loss (12,882) (12,882) Change in unrealized gain on available-for-sale securities 130 130 Accumulated translation adjustments (123) (123) Total comprehensive loss (12,875) Issuance of shares 36,080 Exercise of stock options and convertible bonds 445 Cumulative effect of change in accounting principle (433) Compensation costs, stock options and convertible bonds 1,560 Balance as of March 31, 2006 (unaudited) (2,086) (242,339) 108,310 See accompanying notes to unaudited condensed consolidated financial statements. GPC Biotech AG Notes to the Unaudited Condensed Consolidated Financial Statements 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of GPC Biotech AG (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), except that they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2006 are not necessarily indicative of results to be expected for the full year ending December 31, 2006. The balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date, but does not include all of the information required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2005.
Certain prior period amounts in the statement of operations and statement of cash flows have been reclassified to conform to current period presentation. The Company has reclassified investments in money market funds from marketable securities and short-term investments to cash and cash equivalents in prior periods. Accordingly, the Company has revised the classification to exclude euro 31.4 million from marketable securities and short-term investments at March 31, 2005 and to include such amount under cash and cash equivalents. In addition, the Company has reclassified the purchase and sale of these investments in money market funds and their foreign currency effects in its consolidated statements of cash flows, which decreased cash used in investing activities by euro 30.4 million and decreased cash used in operations by euro 0.9 million for the three months ended March 31, 2005. The reclassifications had no impact on the Company's results of operations or its overall financial position.
2. Share-based Compensation
Prior to January 1, 2006 the Company accounted for stock options and convertible bonds under the expense provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). As of January 1, 2006, the Company adopted SFAS No. 123 (Revised 2004) "Share-Based Payment" ("SFAS 123R") using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Results for prior periods have not been restated.
Prior to the adoption of SFAS 123R, the Company recorded all forfeitures of share-based compensation in the statements of operations as they occurred. Upon adoption of SFAS 123R, the Company estimated the forfeitures of unvested share-based compensation at January 1, 2006, and recorded a cumulative effect of change in accounting principle in the statement of operations in the amount of euro 433,000.
The Company has three share-based compensation plans: stock option plan, convertible bond plan and stock appreciation rights (SARs). These plans have been described in the footnotes to the consolidated financial statements for the year ended December 31, 2005. Compensation costs charged to research and development and general and administrative expense for the three-month period ended March 31, 2006 and 2005 were euro 1,560,000 and euro 1,790,000, respectively. As SFAS 123R has been adopted using the modified-prospective- transition method, stock-based compensation costs for the three-month period ended March 31, 2005 has not been adjusted for the effects of adopting SFAS 123R as of the beginning of that period.
The fair value of instruments issued under the share-based compensation plans was calculated using an option pricing model. The following table summarizes the assumptions used in calculating the fair value in the three- month period ended March 31, 2006 and 2005:
Period granted 2006 2005 Risk-free rate 2.90% 2.90% Dividend yield 0.0% 0.0% Volatility 60.36% 77.81% Option grant valuation method Multiple option Single option Estimated life Vesting period plus 4 years 1.04 years
Under SFAS 123R, SARs will continue to be accounted for as liability awards, however the timing of the recognition of the award expense is different than before the adoption. The ultimate compensation cost for SARs, if any, is the same after the adoption of SFAS 123R as before the adoption.
As a result of adopting SFAS 123R on January 1, 2006, the Company's loss before income taxes and net loss for the three-months ended March 31, 2006, are euro 496,000 lower than if it had continued to account for share-based compensation under SFAS 123. Basic and diluted loss per share for the three- months ended March 31, 2006 would have been euro (0.43) if the company had not adopted SFAS 123R, compared to reported basic and diluted loss per share of euro (0.41).
3. Commitments and Contingencies
The Company has several contingent commitments regarding payments pending on meeting milestones relating to research activities. In this quarter the Company initiated a cash bonus plan to retain the Company's employees until satraplatin gains marketing approval in the U.S. and in Europe. As of March 31, 2006 there were no recorded liabilities and expenses recognized with respect to this bonus plan or other research milestones as the milestones have not been met.
The Company may be party to certain legal proceedings and claims which arise during the ordinary course of business. 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.
4. Loss per Share
Basic loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive common equivalent shares from stock options and convertible debt using the treasury stock method. For all periods presented, diluted net loss per share is the same as basic net loss per share, as the inclusion of weighted average shares of common stock issuable upon the exercise of stock options and convertible debt would be antidilutive.
5. Comprehensive Loss
Comprehensive loss was euro 12.9 million and euro 11.8 million for the three months ended March 31, 2006 and 2005, respectively. Comprehensive loss is composed of net loss, unrealized gains and losses on marketable securities and short-term investments and cumulative foreign currency translation adjustments. Accumulated other comprehensive loss at March 31, 2006 and 2005 reflected euro 0.1 million of unrealized losses and euro 0.4 million of unrealized gains on marketable securities and short-term investments, and euro 2.0 million and euro 2.5 million of cumulative foreign currency translation loss adjustments, respectively.
6. Shareholders' Equity
On February 23, 2006, the Company issued 2,860,000 new ordinary shares at euro 12.67 per share for a total amount of euro 36.2 million through a private placement. The transaction was recorded in shareholders' equity net of costs of transaction of euro 0.1 million.
During the three months ended March 31, 2006, employees and convertible bondholders of the Company exercised some of their fully vested options and convertible bonds, receiving 77,476 new ordinary shares of the Company.
7. Additional Disclosures
The following disclosures are provided to comply with disclosure requirements of the Exchange Rules of the Frankfurt Stock Exchange.
Number of Employees
As of March 31, 2006 and 2005, the number of employees totalled 224 and 211, respectively.
Shareholdings of Management
As of March 31, 2006, the members of the Management Board and Supervisory Board held shares, options, convertible bonds and stock appreciation rights in the amounts set forth in the table below:
Number of Number of Number of Number of Shares Options Convertible Stock Bonds Appreciation