VILLA GUARDIA (COMO), Italy, May 26 Gentium S.p.A. (NASDAQ: GENT) (the "Company") today reported financial results for the quarter ended March 31, 2010. The Company reports its financial condition 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 March 31, 2010, EUR 1.00 = $1.3479.
"The financial results of the first quarter of 2010 are in line with our previously announced year-end forecast. Net loss decreased from EUR 2.97 million for the three-month period ended March 31, 2009 to EUR 0.03 million for the same period in 2010," stated Salvatore Calabrese, Senior Vice-President, Finance of Gentium S.p.A. "The Company was cash flow positive, despite the one-time restructuring charges of EUR 0.95 million during the quarter."
"The demand for Defibrotide through our named-patient and cost recovery programs continues to support the need to treat and prevent veno-occlusive disease," stated Dr. Khalid Islam, Chairman and Chief Executive Officer of Gentium S.p.A. "We remain focused on completing certain preclinical and clinical studies requested by the regulatory authorities so that we can file our new drug application (NDA) for Defibrotide by the end of the second quarter 2011."
For the first quarter ended March 31, 2010 compared with the prior year's first quarter:
Cash and cash equivalents were EUR 5.80 million and EUR 1.39 million as of March 31, 2010 and December 31, 2009, respectively. In February 2010, the Company received an initial payment of EUR 5.11 million ($7.0 million) from Sigma-Tau in connection with amending the existing license and supply agreement to include the commercialization of the prevention of Defibrotide in North America, Central America and South America.
Product sales for the three-month period ended March 31, 2010 were EUR 3.92 million compared to EUR 0.97 million for the same period in 2009, an increase of EUR 2.95 million. The increase was primarily due to the distribution of Defibrotide through the named-patient and cost recovery programs which were initiated in April 2009 and October 2009, respectively. For the three-month period ended March 31, 2010, named-patient and cost recovery programs sales amounted to EUR 2.61 million, which are net of EUR 0.39 million in service fees.
API revenues increased to EUR 1.31 million for the three-month period ended March 31, 2010 from EUR 0.97 million for the same period in 2009, reflecting the increase in volume of sales for suglicotide and urokinase.
Sales to a related party, Sirton, for the three-month period ended March 31, 2010 and 2009 represented 0% and 20% of the total product sales, respectively. The decrease in sales to a related party was due to the fact that beginning in the second quarter of 2009, the Company terminated the supply agreement with Sirton and entered into direct sales agreements with Sirton's customers in order to mitigate the risk associated with Sirton's poor financial condition.
Other revenues were EUR 1.07 million for the three-month-period ended March 31, 2010 compared to EUR 0.04 million for the same period in 2009. Fluctuation versus the prior period is primarily attributable to an increase in activities that were reimbursed from Sigma-Tau under a cost sharing arrangement with the Company, which amounted to EUR 0.18 million and EUR 0.04 million as of March 31, 2010 and 2009, respectively, and a ratable recognition of EUR 0.85 million ($1.17 million) of the EUR 5.11 million ($7.0 million) up-front payment made by Sigma-Tau in connection with the amendment of the existing license and supply agreement with the Company. The up-front payment is being recognized ratably through the second quarter of 2011, which is when the Company expects to file an NDA for Defibrotide.
Cost of goods sold was EUR 0.97 million for the three-month period ended March 31, 2010 compared to EUR 0.76 million for the same period in 2009. Cost of goods sold as a percentage of product sales was 25% for the three-month period ended March 31, 2010 compared to 78% for the same period in 2009. The percentage decrease is primarily due to higher margins on Defibrotide sold through the named-patient and cost recovery programs.
The Company incurred research and development expenses of EUR 1.41 million for the three-month period ended March 31, 2010 compared to EUR 1.45 million for the same period in 2009. Research and development expenses were primarily for the development of Defibrotide to treat and prevent VOD. The slight decrease from the comparable period in 2009 was primarily due to completion of clinical trials.
General and administrative expenses were EUR 1.39 million for the three-month period ended March 31, 2010 compared to EUR 1.63 million for the same period in 2009. The decrease was primarily due to a release of a reserve for doubtful accounts in the amount of EUR 0.09 million, lower payroll costs and a decrease in stock-based compensation expenses.
Corporate restructuring charges resulting from a strategic decision to close the Company's New York office amounted to EUR 0.95 million for the three-month period ended March 31, 2010.
Net loss was EUR 0.03 million for the three-month period ended March 31, 2010 compared to EUR 2.97 million for the same period in 2009. The difference was primarily due to increased net sales and higher margins associated with the named-patient and cost recovery programs, increase in other income and revenues (including the ratable recognition as revenue of a portion of the up-front payment made by Sigma-Tau in connection with the amendment of the existing license and supply agreement with the Company), decrease in general and administrative expenses offset by the Company's one-time restructuring charges.
The Company ended the first quarter of 2010 with EUR 5.80 million in cash and cash equivalents, compared with cash and cash equivalents of EUR 1.39 million as of December 31, 2009. The increase was mainly due to the upfront payment of EUR 5.11 million ($7.0 million) received from Sigma-Tau in connection with the amendment of the existing license and supply agreement, revenues generated from named patient and cost recovery programs, and deferment of the payment of principal debt outstanding, offset by a partial payment of the one-time restructuring charges of EUR 0.86 million ($1.14 million) for restructuring charges related to the closure of New York office and payment of outstanding payables from the prior year. For the three-month period ended March 31, 2010, the Company also benefited from a tax credit EUR 0.76 million utilized to offset the payment of an equivalent amount of social security and withholding tax and utilization of a 2009 VAT credit of EUR 0.17 million.
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 transplant (SCT) can damage the lining cells of hepatic blood vessels and so result in VOD, a blockage of the small veins of 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). SCT is a frequently used treatment modality following high-dose chemotherapy and radiation therapy for hematologic cancers and other conditions in both adults and children. There is currently no approved agent for the treatment or prevention of VOD in the US or the EU.
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. FDA and Orphan Medicinal Product Designation by the European Commission both to treat and to prevent VOD and 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."
-- Total revenues were EUR 4.99 million, compared with EUR 1.01 million. Product sales for the three-month period ended March 31, 2010 were EUR 3.92 million compared to EUR 0.97 million for the same period in 2009. As of March 31, 2010, Defibrotide net sales through named-patient and cost recovery programs amounted to EUR 2.61 million, or 67% of total product sales; there were no sales of Defibrotide during same period of the prior year. As of March 31, 2010, sales of the Company's active pharmaceutical ingredients (API) amounted to 1.31 million, or 33% of total product sales, compared to EUR 0.97 million for the same period in 2009. -- Operating costs and expenses, which include restructuring charges of EUR 0.95 million, were EUR 5.10 million, compared with EUR 4.16 million. -- Research and development expenses, which are included in operating costs and expenses, were EUR 1.41 million, compared with EUR 1.45 million. -- Operating loss was EUR 0.11 million, compared with EUR 3.14 million. -- Net loss was EUR 0.03 million, compared with EUR 2.97 million. -- Basic and diluted net loss per share was EUR 0.002, compared with EUR 0.20 per share.
SOURCE Gentium S.p.A