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Modigene reported a net loss of $12.4 million and $12.0 million, or $0.63and $0.46 per basic and diluted share, for the six and three months endingJune 30, 2007, respectively, compared to a net loss of $0.96 million and $0.55million, or $0.07 and $0.04 per basic and diluted share, for the six and threemonth periods ending June 30, 2006, respectively. The increase in net loss wasprimarily the result of recognition of a one-time, non-cash $11 milliongoodwill charge resulting from the purchase of Modigene Delaware. The goodwillwas recognized as an in-process research and development expense when theacquisition closed during the second quarter of 2007.
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As expected, the Company has not generated any substantial revenue duringthe six and three months ended June 30, 2007. To date, Modigene has funded itsoperations primarily through he sale of equity securities and grants from theIsraeli Office of the Chief Scientist.
In the three month periods ending June 30, 2007 and June 30, 2006,Modigene incurred a gross research and development expense of $412,392 and$169,876, respectively. In the six month periods ending June 30, 2007 and June30, 2006, the Company incurred a gross research and development expense of$640,787 and $291,629, respectively. This expected increase in R&D expensereflected an increase in activities associated with the advancement ofModigene's lead preclinical compounds towards clinical trials.
In the three month periods ending June 30, 2007 and June 30, 2006,Modigene incurred a gross general and administrative expense of $588,059 and$376,690, respectively. In the six month periods ending June 30, 2007 and June30, 2006, the Company incurred a gross general and administrative expense of$822,320 and $667,404, respectively. The increase in G&A expense reflected theincreased level of activity associated with Modigene's public company status.
"This was a transformational quarter for Modigene, as we completed ourmerger with Modigene Delaware, began trading on the OTC Bulletin Board, raisedgross proceeds of $15 million in new capital and welcomed life sciencesindustry veterans Dr. Philip Frost and Dr. Jane Hsiao to our Board ofDirectors," said Abraham Havron, Ph.D., Chief Executive Officer of Modigene."We made important gains in our drug development efforts, successfullycompleting critical preclinical experiments for our longer-acting human growthhormone (hGH-CPT), interferon beta (IFN beta-CTP) and erythropoietin drugcandidates, which further confirmed the good biologic activity and longduration of action demonstrated in earlier studies."
Dr. Havron continued, "Our confidence about our core CTP technology wasbolstered by the success of Organon in moving its CPT-FSH fertility hormoneinto Phase 3 trials, a milestone further validating the clinical promise ofour approach. Modigene took an important step towards the goal of initiatingour own clinical trials by entering into an agreement for the GMP manufactureof our longer-acting human growth hormone. We are very pleased with the
momentum we have achieved in advancing our lead product candidates during thequarter and we look forward to continued progress in the coming months."
On June 30, 2007, Modigene had approximately $13 million in cash andmarketable securities. The Company anticipates that current cash should besufficient to fund operations through early 2009, including advancing thepreclinical and clinical development of its longer-acting protein drugcandidates, hGH-CTP and IFN beta-CTP.
ABOUT CTP
Modigene's technology was discovered by researchers at WashingtonUniversity in St. Louis, Missouri and is based on a short amino acid sequence,the Carboxyl Terminal Peptide (CTP). CTP oc
