MARTINSRIED/MUNICH Germany, Aug. 8 /PRNewswire-FirstCall/ -- Waltham, Mass. and Princeton, N.J. -- GPC Biotech AG today reported financial results for the second quarter and first six months ended June 30, 2006.
Quarter over quarter results: second quarter 2006 compared to first quarter 2006
Revenues for the second quarter of 2006 were euro 5.6 million compared to euro 5.4 million for the previous quarter. Research and development (R&D) expenses were euro 14.5 million for the second quarter of 2006, practically unchanged from the first quarter of 2006. General and administrative (G&A) expenses for the second quarter of 2006 increased 33% to euro 5.8 million compared to euro 4.4 million for the previous quarter. The Company’s net loss increased 18% to euro (15.2) million in the second quarter of 2006, compared to euro (12.9) million for the previous quarter. Basic and diluted loss per share was euro (0.46) for the second quarter of 2006 compared to euro (0.41) for the previous quarter.
Comparison to previous year: second quarter 2006 compared to second quarter 2005
Revenues for the three months ended June 30, 2006 increased 126% to euro 5.6 million compared to euro 2.5 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 4% for the second quarter of 2006 to euro 14.5 million compared to euro 13.9 million for the same period in 2005. G&A expenses for the second quarter of 2006 decreased 12% to euro 5.8 million compared to euro 6.6 million for the same quarter in 2005. G&A expenses for the second quarters of both 2005 and 2006 include a non-cash charge related to a contractual loss on a sublease. This charge was euro 1.0 million for the second quarter of 2006 compared to euro 2.8 million for the same period in 2005. Net loss for the second quarter of 2006 decreased 5% to euro (15.2) million compared to euro (16.0) million for the second quarter of 2005. Basic and diluted loss per share was euro (0.46) for the second quarter of 2006 compared to euro (0.53) for the same period in 2005.
First six months of 2006 compared to first six months of 2005
Revenues increased 152% to euro 11.0 million for the six months ended June 30, 2006, compared to euro 4.4 million for the same period in 2005. Research and development (R&D) expenses increased 16% to euro 29.1 million for the first six months of 2006 compared to euro 25.1 million for the same period in 2005. In the first six months of 2006, general and administrative (G&A) expenses decreased 3% to euro 10.2 million compared to euro 10.5 million for the first six months of 2005. Net loss for the first six months of 2006 decreased 1% to euro (28.1) million compared to euro (28.4) million for the first six months of 2005. Basic and diluted loss per share was euro (0.87) for the first six months of 2006 compared to euro (0.96) for the same period in 2005.
As of June 30, 2006, cash, cash equivalents, marketable securities and short-term investments totaled euro 127.9 million (December 31, 2005: euro 95.2 million), including euro 1.6 million in restricted cash. Net cash burn for the first six months of 2006 was euro 3.6 million with net cash generated of euro 12.8 million in the first quarter of 2006 and net cash burn of euro 16.2 million for the second quarter of 2006. Net cash burn/generated is derived by adding net cash provided by (used in) operating activities and purchases of property, equipment and licenses. The figures used to calculate net cash burn are contained in the Company’s unaudited consolidated statements of cash flows for the six-month period ended June 30, 2006.
“Our revenues more than doubled in the second quarter of 2006 compared to the same period in 2005 due to our co-development and license agreement with Pharmion, and we are on track to reach our revenue goal of approximately doubling revenues for the full year 2006,” said Mirko Scherer, Ph.D., Senior Vice President and Chief Financial Officer. “Our solid financial position is enabling us to move forward rapidly as we plan for the commercialization of satraplatin, in addition to developing our pipeline by initiating new trials with our lead drug candidate and advancing other programs.”
“The first half of 2006 was a busy time for GPC Biotech as we put into place critical elements to achieve the next stage in our corporate development, including key senior executive hires for our clinical development, and commercialization management teams,” said Bernd R. Seizinger, M.D., Ph.D., Chief Executive Officer. “The second half of this year will be a pivotal time for us as we anticipate the final results on progression-free survival from our SPARC Phase 3 registrational trial for satraplatin within the next ten weeks. If positive, we expect to complete our NDA filing with the FDA by year end and continue advancing our marketing and sales plans for the successful launch of satraplatin.”
Highlights from the second quarter of 2006 and later * Company hires three senior executives to fill newly-created positions to expand drug development and commercialization management teams * Independent Data Monitoring Board recommends that GPC Biotech continue satraplatin Phase 3 trial as planned following interim analyses of progression-free survival and also of overall survival * Non-clinical section of rolling NDA submitted to FDA for satraplatin * 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 * New clinical trials opened with satraplatin: * Phase 2 study evaluating satraplatin in combination with Tarceva(R) (erlotinib) in patients with advanced non-small cell lung cancer * Phase 1/2 study evaluating satraplatin in combination with radiation therapy and Xeloda(R) (capecitabine) in patients with rectal cancer * Two Phase 1 trials evaluating satraplatin plus Xeloda in patients with advanced solid tumors; first studies initiated that are evaluating satraplatin in combination with another oral chemotherapy treatment. * Phase 1 study evaluating satraplatin in combination with Gemzar(R) (gemcitabine) in patients with advanced solid tumors 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 August 8 at 14:30 CET/8:30 AM EDT. The dial-in numbers for the call are as follows:
European participants: 0049-69-5007-1846
U.S. participants: 1-866-578-5801 (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.
Gemzar(R) (gemcitabine) is a registered trademark of Eli Lilly and Company.
Tarceva(R) (erlotinib) is a registered trademark of OSI Pharmaceuticals, Inc.
Xeloda(R) (capecitabine) is a registered trademark of Hoffmann-La Roche AG.
For further information, please contact: GPC Biotech AG Fraunhoferstr. 20 82152 Martinsried/Munich, Germany Martin Braendle Director, Investor Relations & Corporate Communications Phone: +49 (0)89 8565-2693 ir@gpc-biotech.com In the U.S.: Laurie Doyle Director, Investor Relations & Corporate Communications Phone: +1 781 890 9007 X267 usinvestors@gpc-biotech.com Additional Media Contacts: In Europe: Maitland Noonan Russo Brian Hudspith Phone: +44 (0)20 7379 5151 bhudspith@maitland.co.uk In the U.S.: Noonan Russo Matt Haines Phone: +1 212 845 4235 matthew.haines@eurorscg.com - Financials follow - Condensed Consolidated Statements of Operations (U.S. GAAP) in thousand euro, except share and per share data Three months ended June 30, Six months ended June 30, 2006 2005 2006 2005 (unaudited) (unaudited) (unaudited) (unaudited) Collaborative revenues (a)5,425 2,488 10,823 4,368 Grant revenues 194 - 194 - Total revenues 5,619 2,488 11,017 4,368 Research and development expenses 14,535 13,940 29,054 25,136 General and administrative expenses 5,800 6,571 10,177 10,516 In-process research and development - 113 - 683 Amortization of intangible assets 71 161 143 260 Total operating expenses 20,406 20,785 39,374 36,595 Operating loss (14,787) (18,297) (28,357) (32,227) Other income (expense), net (1,473) 1,325 (2,147) 2,101 Interest income 1,085 1,000 2,036 1,776 Interest expense (22) (44) (44) (67) Net loss before cumulative effect of change in accounting principle (15,197) (16,016) (28,512) (28,417) Cumulative effect of change in accounting principle - - 433 - Net loss (15,197) (16,016) (28,079) (28,417) Loss per share before change in accounting principle (0.46) (0.53) (0.88) (0.96) Cumulative effect of change in accounting principle - - 0.01 - Basic and diluted loss per share, in euro (0.46) (0.53) (0.87) (0.96) Shares used in computing basic and diluted loss per share 33,103,667 30,082,263 32,220,336 29,639,719 (a) Revenues from related party Collaborative revenues 1,870 2,433 3,344 4,257
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 June 30, December 31, 2006 2005 Assets (unaudited) Current assets Cash and cash equivalents 62,416 30,559 Marketable securities and short-term investments 63,910 63,061 Accounts receivable - 31,326 Accounts receivable, related party - 1,436 Prepaid expenses 2,137 1,333 Other current assets 4,107 3,920 Total current assets 132,570 131,635 Property and equipment, net 3,853 4,103 Intangible assets, net 602 1,072 Other assets, non-current 1,197 838 Restricted cash 1,563 1,615 Total assets 139,785 139,263 Liabilities and shareholders’ equity Current liabilities Accounts payable 1,680 2,141 Accrued expenses and other current liabilities 9,679 11,274 Current portion of deferred revenue, related party 3,166 5,228 Current portion of deferred revenue 12,908 19,548 Total current liabilities 27,433 38,191 Deferred revenues, related party, net of current portion - 975 Deferred revenue, net of current portion 11,568 12,053 Convertible bonds 2,454 2,334 Other liabilities, non-current 2,990 2,177 Shareholders’ equity Ordinary shares, euro 1 non-par, notional value; Shares authorized: 62,695,630 at June 30, 2006 and 53,780,630 at December 31, 2005 Shares issued and outstanding: 33,150,203 at June 30, 2006 and 30,151,757 at December 31, 2005 33,150 30,152 Additional paid-in capital 321,406 284,931 Accumulated other comprehensive loss (1,680) (2,093) Accumulated deficit (257,536) (229,457) Total shareholders’ equity 95,340 83,533 Total liabilities and shareholders’ equity 139,785 139,263
See accompanying notes to unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows (U.S. GAAP) in thousand euro Six months ended June 30, 2006(unaudited) 2005(unaudited) Cash flows from operating activities Net loss (28,079) (28,417) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 891 1,805 Amortization 143 260 Compensation cost for stock option plans and convertible bonds 3,246 3,451 Loss accrual on sublease contract 1,013 2,758 Acquired in-process research and development - 683 Cumulative effect of change in accounting principle (433) - Change in accrued interest income on marketable securities and short-term investments (170) 80 Bond premium amortization 378 282 Other-than-temporary impairment on marketable securities 390 - Gain on disposal of property and equipment (23) (22) Changes in operating assets and liabilities: Accounts receivable, related party 1,436 68 Accounts receivable 31,325 - Other assets, current and non-current (1,127) 624 Accounts payable (401) 1,701 Deferred revenue, related party (3,037) (2,449) Deferred revenue (7,126) 389 Other liabilities and accrued expenses (1,287) 781 Net cash used in operating activities (2,861) (18,006) Cash flows from investing activities Purchases of property, equipment and licenses (742) (3,255) Proceeds from the sale of property and equipment 45 27 Proceeds from the sale or maturity of marketable securities and short-term investments 5,000 25,799 Purchases of marketable securities and short-term investments (5,976) (20,634) Net cash (used in) / provided by investing activities (1,673) 1,937 Cash flows from financing activities Proceeds from issuance of shares, net of payments for cost of transaction 36,080 - Proceeds from issuance of shares in asset acquisition, net of payments for costs of transaction - 10,412 Proceeds from issuance of convertible bonds 140 - Proceeds from exercise of stock options and convertible bonds 560 220 Net cash provided by financing activities 36,780 10,632 Effect of exchange rate changes on cash (359) 1,589 Changes in restricted cash (30) 1,029 Net increase/(decrease) in cash and cash equivalents 31,857 (2,819) Cash and cash equivalents at the beginning of the period 30,559 59,421 Cash and cash equivalents at the end of the period 62,416 56,602 Supplemental Information: Cash paid for interest 4 63 Non-cash investing and financing activities: Net assets acquired in exchange for shares in connection with asset acquisition - 2,667
See accompanying notes to unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (U.S. GAAP) Accumulated Ordinary shares Other Total Additional Compre- Share- Paid-in hensive Accumulated holders’ Shares Amount Capital Loss Deficit Equity in thousand euro, except share data Balance as of December 31, 2004 28,741,194 28,741 266,074 (2,732) (167,250) 124,833 Components of comprehensive loss: Net loss (28,417) (28,417) Change in unrealized gain on available- for-sale securities (205) (205) Accumulated translation adjustments 1,411 1,411 Total comprehensive loss (27,211) Issuance of shares in asset acquisition 1,311,098 1,311 11,768 13,079 Exercise of stock options and convertible bonds 33,445 34 186 220 Compensation costs, stock options and convertible bonds 3,451 3,451 Balance as of June 30, 2005 (unaudited) 30,085,737 30,086 281,479 (1,526) (195,667) 114,372 Balance as of December 31, 2005 30,151,757 30,152 284,931 (2,093) (229,457) 83,533 Components of comprehensive loss: Net loss (28,079) (28,079) Change in unrealized gain on available-for-sale securities 471 471 Accumulated translation adjustments (58) (58) Total comprehensive loss (27,666) Issuance of shares 2,860,000 2,860 33,220 36,080 Exercise of stock options and convertible bonds 138,446 138 442 580 Cumulative effect of change in accounting principle (433) (433) Compensation costs, stock options and convertible bonds 3,246 3,246 Balance as of June 30, 2006 (unaudited) 33,150,203 33,150 321,406 (1,680) (257,536) 95,340
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 and six-month periods ended June 30, 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 42.5 million from marketable securities and short-term investments at June 30, 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 40.2 million and decreased cash used in operations by euro 2.3 million for the six months ended June 30, 2005. The reclassifications had no impact on the Company’s results of operations or its overall financial position.
2. New Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48"). FIN 48 is an interpretation of FASB Statement No. 109, “Accounting for Income Taxes,” and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. In addition, FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes and is effective as of the beginning of 2007 fiscal year. The Company is currently evaluating the impact, if any, that FIN 48 will have on its financial statements.
3. 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: a stock option plan, a 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 six- month period ended June 30, 2006 and 2005 were euro 3,246,000 and euro 3,451,000, respectively. As SFAS 123R has been adopted using the modified- prospective-transition method, stock-based compensation costs for the three- month and six-month periods ended June 30, 2005 have 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 six-month period ended June 30, 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 4 years plus 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 six months ended June 30, 2006, are euro 575,000 lower than if it had continued to account for share-based compensation under SFAS 123. Basic and diluted loss per share for the six months ended June 30, 2006 are euro 0.02 lower than if the Company had continued to account for share-based compensation under SFAS 123.
4. Commitments and Contingencies
In the second quarter of 2006 the Company decided not to reoccupy office and laboratory space at the end of a sublease term as it had initially planned. As a result the Company recorded a provision for this space for the period from the expiration of the current sublease through the end of the lease term. The provision was calculated based on the current estimate of the fair value of potential sublease rental income during that period. A loss in the amount of euro 1.0 million was recognized in general and administrative expenses in the second quarter of 2006. This amount represents the discounted future estimated net cash disbursements over the remaining period of the lease agreement.
The Company has several contingent commitments regarding payments pending on meeting milestones relating to research activities. In the first quarter of this year 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 June 30, 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.
5. 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 weigh
