MARTINSRIED/MUNICH, Germany, Nov. 3 /PRNewswire-FirstCall/ -- and U.S. Research & Development Facilities in Waltham/Boston, Mass. and Princeton, N.J., -- GPC Biotech AG today reported financial results for the third quarter and first nine months ended September 30, 2005.
Quarter over quarter results: third quarter 2005 compared to second quarter 2005
Revenues for the third quarter of 2005 decreased 15% to euro 2.1 million compared to euro 2.5 million for the previous quarter. Research and development (R&D) expenses increased 6% to euro 14.8 million for the third quarter of 2005 compared to euro 14.0 million for the second quarter of 2005. General and administrative (G&A) expenses for the third quarter of 2005 decreased 30% to euro 4.6 million compared to euro 6.6 million for the previous quarter. G&A expenses for the second quarter of 2005 included a charge of euro 2.8 million related to a contractual loss on a sublease. The Company’s net loss increased 3% to euro (16.5) million in the third quarter of 2005, compared to euro (16.0) million for the previous quarter. Basic and diluted loss per share was euro (0.55) for the third quarter of 2005 compared to euro (0.53) for the previous quarter.
Comparison to previous year: third quarter 2005 compared to third quarter 2004
Revenues for the three months ended September 30, 2005 decreased 18% to euro 2.1 million compared to euro 2.6 million for the same period in 2004. R&D expenses increased 58% for the third quarter of 2005 to euro 14.8 million compared to euro 9.4 million for the same period in 2004. The increase in the third quarter of 2005 was mainly due to increased drug development activities, including costs related to the satraplatin SPARC Phase 3 registrational trial.
G&A expenses for the third quarter of 2005 increased 26% to euro 4.6 million compared to euro 3.7 million for the same quarter in 2004. Non-cash charges for stock options and convertible bonds, which are included in R&D and G&A expenses, were euro 1.6 million for the third quarter of 2005 compared to euro 0.7 million for the same period in 2004. Net loss for the third quarter of 2005 increased 68% to euro (16.5) million compared to euro (9.8) million for the third quarter of 2004. Basic and diluted loss per share was euro (0.55) for the third quarter of 2005 compared to euro (0.34) for the same period in 2004.
First nine months of 2005 compared to first nine months of 2004
As anticipated, revenues decreased 29% to euro 6.5 million for the nine months ended September 30, 2005, compared to euro 9.1 million for the same period in 2004. R&D expenses increased 45% to euro 40.1 million for the first nine months of 2005 compared to euro 27.7 million for the same period in 2004. The increase was mainly due to increased drug development activities, including the continued ramp-up of patient enrollment in the satraplatin SPARC Phase 3 registrational trial, as well as increased drug discovery efforts following the acquisition of the assets of Axxima Pharmaceuticals in early 2005. In the first nine months of 2005, G&A expenses increased 63% to euro 15.1 million compared to euro 9.3 million for the first nine months of 2004. G&A expenses for the 2005 period include a charge related to the contractual loss on a sublease of euro 2.9 million. Non-cash charges for stock options and convertible bonds, which are included in R&D and G&A expenses, were euro 5.0 million for the first nine months of 2005 compared to euro 1.7 million for the same period in 2004. Inclusive of the charge related to the sublease, net loss increased 72% to euro (45.0) million compared to the first nine months of 2004. Basic and diluted loss per share was euro (1.51) compared to euro (1.10) for the same period in 2004. Figures related to the acquisition of the assets of Axxima Pharmaceuticals are subject to change.
As of September 30, 2005, cash, cash equivalents, marketable securities and short-term investments totaled euro 108.9 million (December 31, 2004: euro 131.0 million), including euro 1.5 million in restricted cash. The net cash burn was euro 36.5 million for the first nine months of 2005. Net cash burn is derived by adding net cash used in operating activities (euro 33.0 million) and purchases of property, equipment and licenses (euro 3.5 million). The figures used to calculate net cash burn are contained in the Company’s unaudited consolidated statements of cash flows for the nine-month period ended September 30, 2005. Net cash burn was euro 12.9 million for the third quarter of 2005, euro 11.9 million for the second quarter of 2005 and euro 11.6 million for the first quarter of 2005.
“Our financial results continue to reflect our expanding efforts to successfully develop our anticancer drug candidates, especially satraplatin, and broaden their potential,” said Mirko Scherer, Ph.D., Senior Vice President and Chief Financial Officer. “We remain in a strong financial position to move our key programs forward.”
“We continue to make good progress with our oncology drug programs,” said Bernd R. Seizinger, M.D., Ph.D., Chief Executive Officer. “The satraplatin SPARC trial continues to be one of the fastest accruing large randomized Phase 3 trials for chemotherapy drugs in prostate cancer. There were 840 patients enrolled in this study as of October 26, 2005, keeping us on track, should current accrual rates continue, to complete enrollment by the end of this year. I am also pleased that we were able to open for accrual another satraplatin trial -- a Phase 2 study in patients with metastatic breast cancer. This study is part of our ongoing strategy to broadly explore the potential of satraplatin in additional areas of unmet medical need beyond the initial indication of second-line hormone-refractory prostate cancer. We look forward to continuing to drive forward satraplatin, as well as our other programs, in the months ahead.”
Highlights since second quarter of 2005 update * The satraplatin SPARC registrational trial remains one of the fastest accruing, large randomized Phase 3 trials for chemotherapy drugs in prostate cancer. 840 patients had been accrued to the trial as of October 26, 2005. The Company anticipates completing patient enrollment by the end of 2005. * Phase 2 single-arm study evaluating satraplatin in the treatment of metastatic breast cancer opened for accrual. * Article published in Chemistry and Biology regarding GPC Biotech work in novel kinase inhibitors. 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, November 3, 2005 at 14:00 CET/8:00 AM EST. The dial-in numbers for the call are as follows:
European participants: 0049 (0)69 500 71846 U.S. participants: 1-866-362-5158 (toll-free)
GPC Biotech AG is a biopharmaceutical company discovering and developing new anticancer drugs. The Company’s lead product candidate -- satraplatin -- is currently in a Phase 3 registrational trial as a second-line chemotherapy treatment in hormone-refractory prostate cancer following successful completion of a Special Protocol Assessment by the U.S. FDA and receipt of a Scientific Advice letter from the European central regulatory authority, EMEA. The FDA has also granted fast track designation to satraplatin for this indication. Other anticancer programs include: a monoclonal antibody with a novel mechanism-of-action against a variety of lymphoid tumors, currently in Phase 1 clinical development, and a small molecule broad-spectrum cell cycle inhibitors program, currently in pre-clinical development. The Company also has a number of drug discovery programs that leverage its expertise in kinase inhibitors. GPC Biotech has a multi-year alliance with ALTANA Pharma AG working with the ALTANA Research Institute in the U.S., which provides GPC Biotech with revenues through mid-2007. GPC Biotech AG is headquartered in Martinsried/Munich (Germany). The Company’s wholly owned U.S. subsidiary has research and development 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 projections or estimates relating to plans and objectives relating to our future operations, products, or services; future financial results; or assumptions underlying or relating to any such statements; each of which constitutes a forward-looking statement subject to risks and uncertainties, many of which are beyond our control. Actual results could differ materially depending on a number of factors, including the timing and effects of regulatory actions, the results of clinical trials, the Company’s relative success developing and gaining market acceptance for any new products, and the effectiveness of patent protection. There can be no guarantee that the SPARC trial will be completed in a timely manner, if at all. In addition, there can be no guarantee regarding the results of ongoing studies with satraplatin or 1D09C3. Additionally, there can be no guarantee that satraplatin or 1D09C3 will be approved for marketing in a timely manner, if at all. We direct you to the Company’s Annual Report on Form 20-F, as amended, for the fiscal year ended December 31, 2004 and other reports filed with the U.S. Securities and Exchange Commission for additional details on the important factors that may affect the Company’s future results, performance and achievements. The Company disclaims any intent or obligation to update these forward-looking statements or the factors that may affect the Company’s future results, performance or achievements, even if new information becomes available in the future.
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 ir@gpc-biotech.com In the U.S.: Laurie Doyle Associate Director, Investor Relations & Corporate Communications Phone: +1 781 890 9007 X267 usinvestors@gpc-biotech.com Additional Media Contacts: In the U.S.: Euro RSCG Life NRP Matt Haines Phone: +1 212 845 4235 matthew.haines@eurorscg.com In Europe: Maitland Noonan Russo Brian Hudspith Phone: +44 (0)20 7379 5151 bhudspith@maitland.co.uk - Financials follow - Consolidated Statements of Operations (U.S. GAAP) Three months ended Nine months ended September 30, September 30, in thousand euro, except 2005 2004 2005 2004 share and per share data(unaudited) (unaudited) (unaudited) (unaudited) Collaborative revenues (a) 2,126 2,591 6,494 9,146 Total revenues 2,126 2,591 6,494 9,146 Research and development expenses 14,817 9,359 40,052 27,655 General and administrative expenses 4,599 3,657 15,115 9,295 In process research and development - - 683 - Amortization of acquired intangible assets 111 22 272 147 Total operating expenses 19,527 13,038 56,122 37,097 Operating loss (17,401) (10,447) (49,628) (27,951) Other income 534 269 2,741 799 Interest income 686 736 2,462 1,825 Other expenses (294) (381) (519) (717) Interest expense (22) (22) (89) (73) Net loss (16,497) (9,845) (45,033) (26,117) Basic and diluted net loss per share, in euro (0.55) (0.34) (1.51) (1.10) Shares used in computing basic and diluted loss per share 30,091,361 28,549,712 29,762,459 23,685,873 (a) Revenues from related party Collaborative revenues 2,047 2,591 6,304 9,146
See accompanying notes to unaudited interim consolidated financial statements.
Consolidated Balance Sheets (U.S. GAAP) in thousand euro, except share data and per share data September 30, 2005 December 31, 2004 Assets (Unaudited) Current assets Cash and cash equivalents 9,465 59,421 Marketable securities and short-term investments 97,921 69,248 Accounts receivable 30 - Accounts receivable, related party 193 1,006 Prepaid expenses 1,658 1,170 Other current assets 3,047 4,211 Total current assets 112,314 135,056 Property and equipment, net 3,566 2,615 Acquired Intangible assets, net 1,432 413 Other assets, non-current 1,356 1,488 Restricted cash 1,530 2,321 Total assets 120,198 141,893 Liabilities and shareholders’ equity Current liabilities Accounts payable 2,332 519 Accrued expenses and other current liabilities 9,961 6,910 Current portion of deferred revenue 222 - Current portion of deferred revenue, related party 2,519 4,938 Total current liabilities 15,034 12,367 Deferred revenue, net of current portion 111 - Deferred revenues, related party, net of current portion 1,463 2,925 Convertible bonds 1,754 1,768 Other non-current liabilities 2,622 - Shareholders’ equity Ordinary shares, euro 1 non-par, notional value; Shares authorized: 53,780,630 as of September 30, 2005 and 51,655,630 as of December 31, 2004 Shares issued and outstanding: 30,116,985 as of September 30, 2005 and 28,741,194 as of December 31, 2004 30,117 28,741 Additional paid-in capital 283,131 266,074 Accumulated other comprehensive loss (1,751) (2,732) Accumulated deficit (212,283) (167,250) Total shareholders’ equity 99,214 124,833 Total liabilities and shareholders’ equity 120,198 141,893
See accompanying notes to unaudited interim consolidated financial statements.
Consolidated Statements of Cash Flows (U.S. GAAP) Nine months ended September 30, in thousand euros 2005 2004 (unaudited) (unaudited) Cash flows from operating activities Net loss (45,033) (26,117) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 2,997 1,217 Amortization 273 147 Compensation cost for stock option plan and convertible bonds 5,001 1,661 Loss accrual on sublease contract 2,894 - Acquired in-process research and development 683 - Accrued interest income on marketable securities and short-term investments (554) (504) Bond premium amortization 430 373 (Gain)/loss on disposal of property and equipment (80) 56 (Gain)/loss on marketable securities and short-term investments (2,105) 129 Changes in operating assets and liabilities: Accounts receivable, related party 813 (188) Accounts receivable (30) 531 Other assets, current and non-current 1,328 (343) Accounts payable 1,713 (249) Deferred revenue 333 - Deferred revenue, related party (3,899) (4,066) Other liabilities and accrued expenses 2,195 (677) Net cash used in operating activities (33,041) (28,030) Cash flows from investing activities Purchases of property, equipment and licenses (3,482) (872) Proceeds from the sale of property and equipment 113 - Proceeds from sale of marketable securities and short-term investments 79,319 26,028 Purchases of marketable securities and short-term investments (106,125) (52,134) Net cash used in investing activities (30,175) (26,978) Cash flows from financing activities Proceeds from issuance of shares 10,412 - Proceeds from equity offering, net of payments for costs of transaction - 79,893 Proceeds from issuance of convertible bonds - 350 Payments for cancellation of convertible bonds (8) (4) Proceeds from exercise of stock options and convertible bonds 347 1,626 Principal payments under capital lease obligations - (246) Principal payments of loans - (128) Net cash provided by financing activities 10,751 81,491 Effect of exchange rate changes on cash 1,470 42 Changes in Restricted cash 1,039 (14) Net increase/(decrease) in cash (49,956) 26,511 Cash and cash equivalents at the beginning of the period 59,421 34,947 Cash and cash equivalents at the end of the period 9,465 61,458 Non-cash investing and financing activities: Accrual of cost incurred in connection with equity offering - 1,994 Amounts receivable for convertible bonds granted but not paid in - 245
See accompanying notes to unaudited interim consolidated financial statements.
Consolidated Statements of Changes in Shareholder’s Equity (U.S. GAAP) in thousand euros, Ordinary shares Additional Paid- Subscribed except share data Shares Amount in Capital Shares Balance as of December 31, 2003 20,754,075 20,754 190,335 215 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 7,160,000 7,160 70,739 Exercise of stock options and convertible bonds 721,649 722 1,165 (215) Compensation costs, stock options and convertible bonds 1,661 Balance as of September 30, 2004 (unaudited) 28,635,724 28,636 263,900 - 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 asset acquisition 1,311,098 1,311 11,768 Exercise of stock options and convertible bonds 64,693 65 288 Compensation costs, stock options and convertible bonds 5,001 Balance as of September 30, 2005 (unaudited) 30,116,985 30,117 283,131 - Accumulated Other Total in thousand euros, Comprehensive Accumulated Shareholders’ except share data Income Deficit Equity Balance as of December 31, 2003 (2,102) (127,323) 81,879 Components of comprehensive loss: Net loss (26,117) (26,117) Change in unrealized gain on available-for-sale securities (248) (248) Accumulated translation adjustments 75 75 Total comprehensive loss (26,290) Issuance of shares in equity offering 77,899 Exercise of stock options and convertible bonds 1,672 Compensation costs, stock options and convertible bonds 1,661 Balance as of September 30, 2004 (unaudited) (2,275) (153,440) 136,821 Balance as of December 31, 2004 (2,732) (167,250) 124,833 Components of comprehensive loss: Net loss (45,033) (45,033) Change in unrealized gain on available-for-sale securities (362) (362) Accumulated translation adjustments 1,343 1,343 Total comprehensive loss (44,052) Issuance of shares in asset acquisition 13,079 Exercise of stock options and convertible bonds 353 Compensation costs, stock options and convertible bonds 5,001 Balance as of September 30, 2005 (unaudited) (1,751) (212,283) 99,214
See accompanying notes to unaudited interim consolidated financial statements.
GPC Biotech AG, Martinsried Notes to the Unaudited Interim Consolidated Financial Statements 1. Basis of Presentation
The accompanying unaudited 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”) for interim financial information. Accordingly, 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 nine-month period ended September 30, 2005 are not necessarily indicative of results to be expected for the full year ending December 31, 2005. The balance sheet at December 31, 2004 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, 2004.
2. Acquisition of Significant Assets
On March 2, 2005, the Company entered into agreements to acquire significant assets of Axxima Pharmaceuticals AG (“Axxima”), a Munich-based company in bankruptcy proceedings. Axxima was a drug discovery company focusing on the field of kinase inhibition. The acquisition of these assets is expected to assist in the growth of the Company’s drug pipeline with novel mechanism-based therapies to treat cancer.
The aggregate purchase price of the assets was euro 13.1 million, which was paid for by issuing 1,311,098 ordinary shares. The value of the shares issued was determined based on an average closing price of the Company’s shares around the transaction date of March 2, 2005. Costs of the transaction and costs of registering the shares were also considered in the value of the transaction. The transaction has been accounted for as an acquisition of assets in a transaction other than a business combination.
The following table summarizes the estimated fair values of the assets acquired. The allocation of the purchase price is preliminary and subject to adjustment. (in thousand euro) Cash 10,705 Property and equipment 2,683 In-process research and development acquired 683 Grant payments receivable 1,372 Intangible asset subject to amortization: Lease contract 353 Total assets acquired 15,796 Payments due (2,293) Deferred tax liability (424) Total liabilities assumed (2,717) Net assets acquired 13,079
The euro 0.7 million assigned to acquired in process research and development were expensed at the date of acquisition in accordance with FASB Interpretation No. 4, Applicability of SFAS No. 2 to Business Combinations Accounted for by the Purchase Method. The amount is included in operating expenses.
3. Restricted Cash
Restricted cash was reduced during the second quarter of 2005 in accordance with the terms of a facilities lease.
4. Contractual Loss on Sublease
In April 2005, the Company subleased facilities to a third party for an initial period of three years. The costs incurred under the sublease are expected to exceed the sublease revenues. A loss in the amount of euro 2.8 million was recognized in general and administrative expenses in the second quarter of 2005. This amount represents the discounted future net cash disbursements over the remaining period of the lease agreement. An additional loss of euro 0.1 million was accreted during the third quarter to adjust the present value of the contractual loss.
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 weighted average number of common and dilutive common equivalent shares from stock options, warrants 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, warrants and convertible debt would be antidilutive.
6. Comprehensive Loss
Comprehensive loss was euro 44.1 million and euro 26.3 million for the nine months ended September 30, 2005 and 2004, respectively. Comprehensive loss is composed of net loss, unrealized gains and losses on marketable securities and cumulative foreign currency translation adjustments. Accumulated other comprehensive loss at September 30, 2005 and 2004 reflected euro 0.1 million and euro 0.4 million of unrealized gains on marketable securities and short-term investments, and euro 1.9 million and euro 2.1 million of cumulative foreign currency translation loss adjustments, respectively.
7. Shareholders’ Equity
During the nine months ended September 30, 2005, employees and convertible bondholders of the Company exercised some of their fully vested options and convertible bonds, receiving 64,693 new ordinary shares of the Company.
As of September 30, 2005, a total of 580,000 convertible bonds at a total nominal value of euro 580,000 have been granted, but not issued or paid in.
8. 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 September 30, 2005 and 2004, the number of employees totaled 229 and 167, respectively.
Shareholdings of Management
As of September 30, 2005, 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 Stock Number of Number of Convertible Appreciation Shares Options Bonds Rights Management Board Bernd R. Seizinger, M.D., Ph.D. - 1,374,280 600,000 - Elmar Maier, Ph.D. 266,000 289,000 191,000 - Sebastian Meier-Ewert, Ph.D. 333,200 299,000 230,500 - Mirko Scherer, Ph.D. 24,000 429,000 201,000 - Supervisory Board Jurgen Drews, M.D. (Chairman) 28,800 10,000 25,000 40,000 Michael Lytton (Vice Chairman) - 10,000 39,000 30,000 Metin Colpan, Ph.D. 14,400 10,000 15,000 22,500 Prabhavathi Fernandes, Ph.D. - - 10,000 24,750 Peter Preuss 80,000 - 30,000 24,750 James Frates 1,000 - - 30,000
GPC Biotech AG
CONTACT: Martin Braendle, Associate Director, Investor Relations &Corpor
