- Defibrotide usage increased by 28% to EUR 16.89 million (US$ 21.91 million)
- Total product sales of EUR 21.73 million (US$ 28.19 million)
- Net income of EUR 2.71 million (US$ 3.52 million)
- Cash flow positive and stronger cash position
VILLA GUARDIA (COMO), Italy, March 27, 2012 (GLOBE NEWSWIRE) -- Gentium S.p.A. (Nasdaq:GENT) (the "Company") today reported financial results for the quarter and year ended December 31, 2011. The Company reports its financial and operating results using U.S. Generally Accepted Accounting Principles (GAAP). The Company's financial statements are prepared using the Euro as its functional currency. On December 31, 2011, EUR 1.00 = $1.2973.
"We are pleased to report that Defibrotide usage increased by 28% in 2011 when compared with 2010, and total product sales fell within our most recent range of guidance of €21-23 million ($27.2 -$29.8 million). We have been able to finance the establishment of our European commercial team, repay the current portion of our long-term debt and fund our working capital," stated Salvatore Calabrese, SVP Finance and Chief Financial Officer of Gentium S.p.A. "We ended 2011 with a net income of €2.71 million ($3.52 million), which was impacted by a tax reform that established a minimum corporate tax, expenses incurred in connection with the establishment of our commercialization infrastructure, and the termination of the ratable accounting of 2010 Sigma-Tau upfront payments. In 2011, the Company remained cash flow positive and strengthened our cash position. For 2012, we project revenues from product sales to be in the range of €22-€25 million ($29-$32 million)."
"The recent publication of the Defibrotide prevention study in The Lancet (vol 379) and the commentary on the outcome of the study as 'one that will hopefully change practice in pediatric patients and might also provide an impetus to investigate treatment options for adult patients' is very encouraging," stated Dr. Khalid Islam, Chairman and Chief Executive Officer of Gentium S.p.A. "We continue to see an increased usage of Defibrotide globally. Through our recently established license and distribution agreements with several specialized partners and our expanded commercial infrastructure, we are attending in a more timely manner to physician requests worldwide. We continue to explore opportunities for new partnerships that would enable us to provide Defibrotide in countries where the drug is currently unavailable. On the regulatory front, we have submitted our response to the Day 120 List of Questions (the "LoQs") issued by the European Medicines Agency's ("EMA") Committee for Medicinal Products for Human Use ("CHMP"), and will continue to work closely with the EMA on our marketing authorization application ("MAA") for Defibrotide in Europe. Additionally, we continue to work on our remediation plan to address the issues raised by the US Food and Drug Administration ("FDA") with respect to our New Drug Application ("NDA") for Defibrotide, and we are hopeful that we would be in a position to file a new NDA as early as 2012."
As previously announced, Gentium will host a conference call today (March 27 2012) at 8:00 a.m. ET / 2:00 p.m. CET to discuss the 2011 financial results and to provide a business update to interested parties. To participate in the call, please dial 1-866-966-9439 (US toll-free) or +44(0)1452-555-566 (international/toll) using the Conference ID 62307659. Participants must register ten minutes before the call is scheduled to begin.
The call will also be broadcast live on the internet at http://www.gentium.com and will be archived for replay for 30 days. The replay can be accessed on the Company's website, http://www.gentium.com or by calling 1-866-247-4222 (US toll-free) or +44(0)1452-550-000 (international/toll) using Conference ID 62307659.
2011 Corporate Highlights:
On February 8, 2011, we announced the completion of preclinical and in-life clinical studies showing that Defibrotide has low or no potential for drug-drug interactions and did not prolong the QT/QTc interval in volunteers. Defibrotide appears to have some effect on pregnancy and intrauterine development, although given the veno-occlusive disease ("VOD") disease status and pre-transplant and chemo-inductive therapy regimens, pregnant females are unlikely to be included in the Defibrotide population.
On March 3, 2011, we announced the appointment of Adrian Haigh as Senior Vice President, Commercial Operations, whose role includes responsibility for preparing for the commercial launch of Defibrotide upon regulatory approval, if any.
On April 5, 2011, we hosted a symposium on Defibrotide entitled "Advances in the Management of Endothelial Complications of Hematopoietic Stem Cell Transplantation: the Emerging Role of Defibrotide," at the 37th Annual Meeting of the European Group for Blood and Marrow Transplantation in Paris, France.
On May 10, 2011, we announced the filing of our MAA for Defibrotide for the treatment and prevention of hepatic VOD in adults and children. On February 21, we announced Gentium's submission of its responses to the Day 120 LoQs from the EMA's CHMP. The CHMP will continue its review of the MAA and will either issue an opinion on the MAA or submit a List of Outstanding Issues requiring further clarification, the latter of which will stop the review clock to permit us time to respond.
On June 15, 2011, we announced the appointment of Link Pharmaceuticals as the exclusive distributor of Defibrotide in Australia and New Zealand.
On June 16, 2011, we announced the appointment of Gen Illac A.C. as the exclusive distributor of Defibrotide in Turkey.
On June 21, 2011, we announced the appointment of Medison Pharma Ltd. as the exclusive distributor of Defibrotide in Israel and the Palestinian Authority.
On July 6, 2011, we announced the filing of our NDA with the FDA for Defibrotide for the treatment of hepatic VOD in adults and children undergoing hematopoietic stem-cell transplantation. On August 17, 2011, we announced our voluntary withdrawal of the NDA following correspondence from the FDA identifying several potential "Refuse to File" issues. We have begun implementing a remediation plan, which includes an analysis of the issues raised by the FDA, and the engagement of contract research organizations ("CROs") and several outside consultants to assist us in addressing the issues raised. Currently, we are working with these CROs and consultants to conduct additional quality reviews of the original datasets and databases.
On November 22, 2011, we announced the establishment of our commercial team in Europe. The team plans to implement direct sales forces in Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland and the United Kingdom and to manage sales through several distributor partners for other parts of the world outside of these territories and the Americas.
On December 12, 2011, interim results from the on-going Phase 3 Treatment Investigational New Drug study consisting of 269 patients, were presented at the American Society of Hematology. The data demonstrated significantly improved outcomes for patients with severe VOD treated with Defibrotide when compared with untreated historical controls. The results confirm the findings of previous trials and also provide positive outcomes for the use of Defibrotide in post-chemotherapy patients that did not receive stem cell transplantation. Additionally, there were low incidences of graft versus host disease in allogeneic stem cell transplant patients treated with Defibrotide. The results are consistent with previous studies showing that Defibrotide is well tolerated in these populations.
On January 9, 2012, we announced the appointment of Swedish Orphan Biovitrum AB as the exclusive distributor of Defibrotide in the Nordic and Baltic territories.
On February 21, 2012, we announced that Gentium has responded to the Day 120 LoQs, from the EMA's CHMP. The CHMP will continue its review of the MAA and will either issue an opinion on the MAA or submit a List of Outstanding Issues, or LoOIs, requiring further clarification, the latter of which will stop the review clock to permit us time to respond.
On February 27, 2012, we announced the publication of results from the pediatric prevention Phase III study in the renowned medical journal, The Lancet.
- On March 6, 2012, we announced the appointment of Carin Heringa as Senior Vice President and Scientific Director of the Company.
For the year ended December 31, 2011 compared to the year ended December 31, 2010:
- Product sales were EUR 21.73 million, compared to EUR 19.72 million;
- Total revenues were EUR 23.88 million, compared to EUR 24.55 million;
- Operating costs and expenses were EUR 20.39 million, compared to EUR 20.08 million;
- Research and development expenses, which are included in operating costs and expenses, were EUR 5.53 million, compared to EUR 6.10 million;
- Operating income was EUR 3.50 million, compared to EUR 4.47 million;
- Income tax expenses were EUR 0.81 million, compared to EUR 0.40 million;
- Net income was EUR 2.71 million, compared to EUR 4.08 million;
- Basic and diluted net income per share was EUR 0.18 and EUR 0.17, respectively, compared to EUR 0.27 per share.
In addition, cash and cash equivalents amounted to EUR 9.99 million as of December 31, 2011.
For the fourth quarter ended December 31, 2011 compared to the prior year's fourth quarter:
- Product sales were EUR 5.71 million compared to EUR 4.85 million;
- Total revenues were EUR 5.84 million, compared to EUR 6.11 million;
- Operating costs and expenses were EUR 5.40 million, compared to EUR 5.25 million;
- Research and development expenses, which are included in operating costs and expenses, were EUR 1.19 million, compared to EUR 1.48 million;
- Operating income was EUR 0.44 million, compared to EUR 0.86 million;
- Income tax expense was EUR 0.18 million, compared to EUR 0.45 million;
- Net income was EUR 0.08 million, compared to EUR 0.64 million;
- Basic and diluted net income per share were EUR 0.01 and EUR 0.005, compared to EUR 0.04 per share.
Total product sales, which include sales of Defibrotide and active pharmaceutical ingredients ("APIs") were €21.73 million for 2011 compared to €19.72 million for 2010, an increase of €2.01 million or 10.2%. The increase was primarily due to a higher volume of Defibrotide distributed through the named-patient and cost recovery programs, which can be partially attributed to the partnerships entered into in 2011 with specialized regional partners for the distribution of Defibrotide on a named-patient basis, and an increased awareness of Defibrotide. Revenues from the distribution of Defibrotide through the named-patient and cost recovery programs amounted to €16.89 as of December 31, 2011, compared to €13.18 million as of December 31, 2010, recording an increase of €3.71 million or 28%. The fourth quarter Defibrotide sales of €4.55 million are the highest quarter sales recorded to date. For the years ended December 31, 2011 and 2010, named-patient and cost recovery program sales were net of €3.17 million and €2.13 million in service fees, respectively.
API sales were €4.85 million for 2011 compared to €6.53 million for 2010, a decrease of €1.68 million or 26%. Of the €1.68 million decrease, €1.40 million is attributable to the sulglicotide API business, which suffered a drop in volume of sales of €0.82 million and a reduction in price of €0.58 million, mainly due to a 20% reimbursement cut from the South Korean government for a finished drug manufactured by a South Korean commercial partner that uses sulglicotide as an API. In addition, we experienced a decrease of €.28 million in urokinase revenues, which was largely attributable to lower volume of sales.
Other revenues mainly refer to our licensing, supply and distribution and cost sharing agreements with Sigma Tau. Other revenues were €2.15 million for 2011 compared to €4.84 million for 2010. The decrease versus the prior year is primarily attributable to a decrease in activities eligible for reimbursement from Sigma-Tau pursuant to a cost sharing arrangement, such as pre-clinical and clinical trials. Reimbursements for such activities amounted to € 0.32 million and €1.14 million for 2011 and 2010, respectively. In addition, of the €5.11 million ($7.0 million) up-front payment advanced by Sigma-Tau in connection with the amendment of the existing license and supply agreement to include the prevention indication of Defibrotide in the Americas, we had a ratable recognition of €1.70 million ($2.33 million) for 2011 compared to €3.41 million for 2010, a decrease of €1.71 or 50%.
Our cost of goods sold was €6.04 million in 2011 compared to €5.79 million in 2010. The cost of goods sold includes write-downs of €0.34 million and €0.38 million for 2011 and 2010, respectively, in order to adjust the carrying values of some APIs to their net realizable values. Overall, the cost of goods sold as percentage of product sales was 28% in 2011 compared to 29% in 2010, mainly due to a different composition of product mix with proportionately increased sales of Defibrotide, which has a higher margin compared to sales of our other APIs. The increase in gross margin was partially offset by a decrease in the price of sulglicotide and unfavorable manufacturing costs associated with the reprocessing of some of the APIs.
We incurred research and development expenses of €5.53 million in 2011 compared to €6.10 million for 2010. Research and development expenses were primarily for the development of Defibrotide to treat and prevent VOD. The decrease from the comparable period in 2010 was primarily due to the completion of a technology transfer, costs associated with pre-clinical and clinical trials, such as reproductive toxicity, hERG channel, QT/QTc, and pharmacokinetics of Defibrotide in healthy volunteers, and stock-based compensation, offset by an increase in scientific consultancy, regulatory activities and severance, employee termination benefits and other exit costs in the amount of €0.43 million associated with a change in management in early October.
Our general and administrative expenses were €5.49 million for 2011 compared to €5.84 million for 2010. 2010 general and administrative expenses included the release of a reserve for doubtful accounts of €0.27 million due to the deemed payment of accounts receivable through the elimination of the same amount of accounts payable due to the same counterparty. Excluding such release, general and administrative expenses would have been €5.63 million. The slight decrease from the prior year was primarily due to the elimination of administrative and payroll expenses incurred by our New York office, which closed in 2010, offset by an increase in administrative expenses incurred in connection with the formation of a wholly-owned subsidiary in Switzerland, along with higher stock-based compensation expenses, which amounted to €1.35 million and €1.22 million for the years ended December 31, 2011 and December 31, 2010, respectively.
Sales and marketing expenses were €2.24 million for 2011 compared to none for 2010. Sales and marketing expenses relate to costs incurred in connection with the establishment of our European commercial team. Sales and marketing expenses refer mainly to recruiting, payroll, health economic and marketing analysis and stock-based compensation costs.
Restructuring charges were none and €1.10 million for 2011 and 2010, respectively. 2011 severance, employee termination benefits and other exit costs of €0.43 million associated with a change in management in early October were classified as research and development expenses. For 2010, €0.95 million in such charges were attributable to employee termination benefits, outplacements costs, costs to terminate lease agreements and other exit costs resulting from the strategic decision to close our New York office and to consolidate our resources and corporate operations into our headquarters in Como, Italy. In addition, as a result of a workforce reduction, we recorded €0.15 million in one-time employee termination benefits, outplacements costs, termination notice and legal contractual compensation due upon early resolution of the employments agreements.
Income tax expenses were €0.81 million for 2011 compared to €0.40 million for 2010, an increase of €0.41 million or 100%. The increase is mainly due to new corporate tax legislation enacted in December 2011 by the Italian Parliament to raise funds for the country's deficit. The corporate tax reform established that net operating losses can be carried forward indefinitely, as opposed to five years, and can offset up to 80% of the taxable income establishing a minimum corporate tax rate of 5.5%. We accrued €0.30 million in such taxes in 2011.
Our net income was €2.71 million in 2011 compared to €4.08 million in 2010. The difference was primarily due to an increase in the volume of Defibrotide sold through the named-patient and cost recovery programs, offset by a decrease in our API sales and other income and revenues under the cost sharing agreement entered into with Sigma-Tau (including the ratable recognition of a portion of the up-front payment made by Sigma-Tau in connection with the amendment of its existing license and supply agreement with us). Also contributing to the variance was a decrease in research and development expenses and restructuring charges, offset by an increase in sales and marketing expenses associated with the establishment of a sales-force which was not present in 2010 as well as an increase in current income tax expenses as a consequence of the new corporate tax reform.
Veno-occlusive disease is a potentially life-threatening condition, which typically occurs as a significant complication of stem cell transplantation. Certain high-dose conditioning regimens used as part of stem cell transplantation can damage the lining cells of hepatic blood vessels and result in VOD, a blockage of the small veins in the liver that leads to liver failure and can result in significant dysfunction in other organs such as the kidneys and lungs (so-called severe VOD). Stem cell transplantation is a frequently used treatment modality following high-dose chemotherapy and radiation therapy for hematologic cancers and other conditions in both adults and children. At present, we are unaware of any approved agent for the treatment or prevention of VOD in the United States or the European Union.
Gentium S.p.A., located in Como, Italy, is a biopharmaceutical company focused on the development and manufacture of drugs to treat and prevent a variety of diseases and conditions, including vascular diseases related to cancer and cancer treatments. Defibrotide, the Company's lead product candidate, is an investigational drug that has been granted Orphan Drug status by the U.S. Food and Drug Administration (FDA) and Orphan Medicinal Product Designation by the European Medicines Agency, both to treat and to prevent VOD, as well as Fast Track Designation by the U.S. FDA to treat VOD.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements." In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These statements are not historical facts but instead represent the Company's belief regarding future results, many of which, by their nature, are inherently uncertain and outside the Company's control. It is possible that actual results, including with respect to any financial forecast or the possibility of any future regulatory approval, may differ materially from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in our Form 20-F filed with the Securities and Exchange Commission under the caption "Risk Factors."
|CONSOLIDATED BALANCE SHEETS|
|Amounts in thousands except share||As of December 31,|
|Cash and cash equivalents||€ 8,742||€ 9,990|
|Available for sale securities||263||--|
|Accounts receivable, net of allowance of €27 as of December 31, 2010 and 2011||3,442||5,128|
|Accounts receivable from related parties, net of allowance of €850 as of December 31, 2010 and 2011||657||286|
|Inventories, net of allowance of €451 and €789 as of December 31, 2010 and 2011, respectively||2,364||2,946|
|Prepaid expenses and other current assets||541||488|
|Total Current Assets||16,009||18,838|
|Property, manufacturing facility and equipment, net||8,598||8,508|
|Intangible assets, and other non-current assets||67||66|
|Total Assets||€ 24,674||€ 27,412|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accounts payable||€ 4,308||€ 5,089|
|Accounts payable to related parties||372||290|
|Accrued expenses and other current liabilities||1,902||1,710|
|Current portion of capital lease obligations||70||21|
|Current maturities of long-term debt||1,098||504|
|Total Current Liabilities||9,454||8,108|
|Long-term debt, net of current maturities||1,759||1,545|
|Capital lease obligations||21||--|
Share capital (no par value); 18,302,617 and 19,656,317 shares|
authorized as of December 31, 2010 and 2011; 14,956,317 and
14,969,150 shares issued and outstanding at December 31, 2010 and 2011
|Total Shareholders' Equity||12,930||17,383|
|Total Liabilities and Shareholders' Equity||€ 24,674||€ 27,412|
|CONSOLIDATED STATEMENTS OF INCOME|
|For the three months|
ended December 31,
|For the year|
ended December 31,
|API product sales||€ 1,624||€ 1,156||€ 6,533||€ 4,848|
|NPP product sales||3,221||4,556||13,182||16,886|
|Total product sales||4,845||5,712||19,715||21,734|
|Other revenues from related party||1,125||29||4,547||2,026|
|Operating costs and expenses:|
|Cost of goods sold||1,501||1,888||5,786||6,035|
|Research and development||1,479||1,193||6,104||5,533|
|General and administrative||1,761||1,149||5,835||5,490|
|Sales & Marketing||--||893||--||2,237|
|Charges from related parties||128||45||346||222|
|Depreciation and amortization||237||231||908||870|
|Foreign currency exchange gain/(loss), net||(14)||56||90||46|
|Interest (expense)/income, net||(23)||27||(87)||(21)|
|Income before income tax expenses||€ 818||€ 524||€ 4,474||€ 3,521|
|Provision for income taxes:|
|Income tax expenses||(181)||(446)||(397)||(811)|
|Net income||€ 637||€ 78||€ 4,077||€ 2,710|
|Net Income per share:|
|Basic||€ 0.04||€ 0.01||€ 0.27||€ 0.18|
|Weighted average shares used to compute net income per share:|
|CONSOLIDATED STATEMENTS OF CASH FLOWS|
|For the three months|
ended December 31,
|For the year|
ended December 31,
|Net income||€ 637||€ 78||€ 4,077||€ 2,710|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Write-down of inventory||232||422||375||337|
|Unrealized foreign exchange gain/(loss)||40||(32)||8||(48)|
|Depreciation and amortization||340||342||1,323||1,320|
|Stock based compensation||344||332||1,523||1,666|
|(Gain)/Loss on fixed asset disposal||4||(14)||24||(14)|
|Allowance for doubtful accounts||26||--||26||--|
|Release of allowance for doubtful accounts||--||--||(250)||--|
|Provision for income taxes||181||215||397||580|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current and noncurrent assets||131||84||900||42|
|Accounts payable and accrued expenses||(194)||(448)||(92)||(648)|
|Net cash provided by operating activities||€ 45||€ 371||€ 8,237||€ 2,401|
|Cash Flows From Investing Activities:|
|Intangible assets expenditures||--||4||--||--|
|Sales of marketable securities||--||--||--||263|
|Proceeds from sales of equipment||--||62||--||62|
|Net cash used in investing activities||€ (121)||€ (144)||€ (205)||€ (393)|
|Cash Flows From Financing Activities:|
|Proceeds from stock options exercise||--||--||--||77|
|Repayments of long-term debt||(461)||(197)||(649)||(808)|
|Principal payment of capital lease obligation||(17)||(19)||(67)||(70)|
|Net cash used in financing activities||€ (478)||€ (216)||€ (716)||€ (801)|
|Increase/(Decrease) in cash and cash equivalents||(554)||11||7,316||1,207|
|Effect of exchange rate on cash and cash equivalents||6||70||34||41|
|Cash and cash equivalents, beginning of period||9,290||9,909||1,392||8,742|
|Cash and cash equivalents, end of period||€ 8,742||€ 9,990||€ 8,742||€ 9,990|
CONTACT: Gentium S.p.A. Salvatore Calabrese, +39 031-385-287 SVP & CFO firstname.lastname@example.org or The Trout Group Marcy Nanus, +1 646-378-2927 email@example.com
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