Gentium S.p.A. (AMEX:GNT) (the "Company") today reported financial
results for the quarter and year ended December 31, 2005.
Highlights of the fourth quarter of 2005 and recent weeks as of the
first week in April 2006 include: -- Phase III trial in U.S. for
treatment of Veno-Occlusive Disease (VOD) with Multiple Organ
Failure (Severe VOD): The Institutional Review Board (IRB) of the
Dana-Farber/Harvard Cancer Center of Boston, Mass., which is also
the IRB for Dana-Farber Cancer Institute, Massachusetts General
Hospital, Beth Israel Deaconess Medical Center and The Children's
Hospital, has given its approval to participate in the trial. All
four of these institutions are expected to participate in the
trial. Work to compile historical control data will begin
immediately, and the first patients are expected to be treated by
early May 2006; -- Phase II/III clinical trials in Europe for the
prevention of VOD in children: 30 centers have IRB approval, 11
centers are open for patient admission, 15 patients are enrolled;
-- Independent Phase I/II study of Defibrotide to treat advanced
and refractory Multiple Myeloma (MM) patients 3 centers have IRB
approval and are open for patient enrollment, 5 patents are
enrolled; -- Phase II/III clinical trials in Europe for the
prevention of VOD in adults: Investigators meeting scheduled for
early Q2, trial expected to start Q2; -- The Company has recently
engaged the first of several medical monitors, this one being based
in the U.S., to act as a liaison with investigators, IRB's and
CRO's; and, -- The Company has recently updated its investor
presentation, which can found on its web site at www.gentium.it,
including updated estimates on the market size and pricing for VOD
based on research by Medical Marketing Economics, LLC. Clinical
Highlights and Outlook Commenting on Gentium's clinical progress
during the quarter, Laura Ferro, M.D., Chairman and Chief Executive
Officer, said, "We are excited to be beginning our Phase III trial
for the treatment of Severe VOD with Defibrotide. We note that
Defibrotide addresses a life threatening disease for which there
are currently no treatment options." Financial Highlights The
Company reports its financial condition and operating results using
U.S. Generally Accepted Accounting Principles (GAAP). The Company's
manufacturing facility was closed from February through August 2004
for a major upgrade; therefore, comparison of 2005 operating
results with 2004 results may not be meaningful. The Company's
financial statements are prepared using the Euro (EUR), its
functional currency. On December 31, 2005, EUR 1.00 = $1.18. For
the fourth quarter ended December 31, 2005 compared with the prior
year's fourth quarter: -- Total revenues were EUR 1.44 million,
compared to EUR 1.23 million -- Operating costs and expenses were
EUR 3.59 million, compared to EUR 2.97 million -- Operating loss
was EUR 2.15 million, compared to EUR 1.73 million -- Interest
(income) expense, net, was (EUR 0.05) million, compared to EUR 2.16
million -- Pre-tax loss was EUR 1.92 million, compared to EUR 4.00
million -- Net loss was EUR 2.51 million, compared to EUR 4.00
million -- Basic and diluted net loss per share was EUR 0.27,
compared to EUR 0.80 For the year ended December 31, 2005 compared
with the prior year: -- Total revenues were EUR 3.64 million,
compared to EUR 3.70 million -- Operating costs and expenses were
EUR 11.02 million, compared to EUR 8.45 million -- Operating loss
was EUR 7.38 million, compared to EUR 4.75 million -- Interest
expense, net, was EUR 4.15 million, compared to EUR 2.20 million --
Pre-tax loss was EUR 11.78 million, compared to EUR 7.0 million --
Net loss was EUR 12.43 million, compared to EUR 7.03 million --
Basic and diluted net loss per share was EUR 1.79 compared to EUR
1.41 -- Cash used in operating activities was EUR 8.7 million,
compared to EUR 4.1 million -- Cash and cash equivalents amounted
to EUR 12.8 million as of December 31, 2005. The Company's Italian
GAAP financial statements will be presented for shareholder
approval at the Company's upcoming annual ordinary shareholders'
meeting. Dr. Ferro commented, "We are pleased to report that the
EUR 8.7 million of cash used in operations and our capital
expenditures for the year of EUR 1.3 million are in-line with
expectations we set at the time of our IPO. In 2006 we will have a
full year of public company related expenses as well as a full year
of our increased staffing. In addition, the number of clinical
trials we are running will result in a substantial increase in
research and development spending in 2006. These increased expenses
will be partially offset by the significant decrease in interest
expense since our Series A notes were all converted or redeemed in
2005. However, we still expect a significantly larger loss in 2006
than in 2005. Currently, we expect to use approximately EUR 15
million of cash in operating activities and approximately EUR 1.7
million for capital expenditures." Operating Results and Trends As
noted above, the Company's manufacturing facility was closed from
February through August 2004 for a major upgrade; therefore,
comparisons of 2005 operating results with 2004 results may not be
meaningful. The fluctuation in product sales revenue for the three-
and twelve-month periods compared with the prior year is primarily
the result of changes in demand by our principal customer, Sirton,
who experienced a slight increase in demand from its principal
customer, Crinos, and for the twelve-month period due to a decrease
in sales in 2005 compared to 2004 from a customer in Korea. Total
revenues for the year ended December 31, 2005 were less than in
2004, in spite of an increase in product sales during the
twelve-month period, because of milestone payments earned in 2004.
Cost of goods sold increased during the three- and twelve-month
periods compared with the prior-year period. The increase is mainly
due to a revision of estimated lives on the Company's manufacturing
facilities and equipment which resulted in lower depreciation
expense in the fourth quarter offset by an inventory write-off and
an increase in quality control costs. Additionally, in the fourth
quarter of 2004 the Company expensed some batch costs associated
with the start-up of the revamped manufacturing plant. Research and
development spending increased during the three- and twelve-month
periods in 2005 compared to 2004 primarily due to the costs for the
Company's Phase II trial in the U.S. for the treatment of Severe
VOD and preparations for the Company's Phase III trial.
Additionally, during the fourth quarter of 2005 the Company
incurred expenses in connection with the preparation of its Phase
II/III trial for prevention of VOD in children. The Company
increased its employee headcount from 35 at the end of 2004 to 55
at December 31, 2005. Other general and administrative expense
increases were primarily the result of building corporate
infrastructure, public company expenses and an increase in
internally provided administrative services to replace
administrative services previously provided by affiliates, which
began to occur in the second quarter. These factors also account
for the decrease in charges from affiliates during the periods. In
the fourth quarter of 2004 and the first quarter of 2005, the
Company issued approximately $8.0 million of convertible notes. As
a result, interest expense increased substantially in 2005. In
conjunction with the Company's initial public offering, $2.9
million of these notes were converted into common equity and the
balance was repaid in June and July of 2005. The Company incurred
interest expense of EUR 4.3 million, which included non-cash
interest expense of EUR 3.8 million from amortization of the issue
discount and issue costs on these notes during the year ended
December 31, 2005. In conclusion, Dr. Ferro said, "The coming year
promises to be an important one for Gentium as we continue to move
our product candidates forward toward future potential commercial
use." About Gentium Gentium, S.p.A., located in Como, Italy, is a
biopharmaceutical company focused on the research, discovery and
development of drugs to treat and prevent a variety of vascular
diseases and conditions related to cancer and cancer treatments.
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 may differ, possibly 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 Prospectus filed
with the Securities and Exchange Commission under Rule 424(b)(5)
under the caption "Risk Factors." NOTE: All figures in tables are
in EUR unless otherwise stated. -0- *T GENTIUM S.p.A. Balance
Sheets (in thousands, except share data) As of As of December
December 31, 2004 31, 2005 --------- --------- ASSETS Cash and cash
equivalents 2,461 12,785 Receivables 9 8 Receivables from related
parties 1,490 1,867 Inventories 886 1,628 Prepaid expenses and
other current assets 1,617 918 --------- --------- Total Current
Assets 6,463 17,206 Property, manufacturing facility and equipment,
at cost 16,152 17,456 Less: Accumulated depreciation (7,609)
(8,825) --------- --------- Property, manufacturing facility and
equipment, net 8,543 8,631 Intangible assets, net of amortization
243 267 Other non-current assets 660 9 --------- --------- Total
Assets 15,909 26,113 ========= ========= LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT) Bank overdraft 100 - Accounts
payable 3,927 2,644 Payables to related parties 1,498 542
Short-term bank borrowings 2,690 - Accrued expenses and other
current liabilities 432 1,063 Current maturities of long-term debt
2,781 916 Convertible notes payable, net of discount 2,082 -
Deferred income 564 283 --------- --------- Total Current
Liabilities 14,074 5,448 Long-term debt, net of current maturities
3,361 2,485 Termination indemnities 548 706 --------- ---------
Total Liabilities 17,983 8,639 --------- --------- Share capital
(par value: EUR 1.00; 13,300,100 and 12,690,321 shares authorized,
5,000,000 and 9,610,630 shares issued at December 31, 2004 and
2005, respectively) 5,000 9,611 Additional paid in capital 5,834
33,197 Accumulated deficit (12,908) (25,334) --------- ---------
Total Shareholders' Equity (Deficit) (2,074) 17,494 ---------
--------- Total Liabilities and Shareholders' Equity 15,909 26,113
========= ========= GENTIUM S.p.A. Statements of Operations
(Unaudited, in thousands, except per share data) For the Three
Months For the Year Ended Ended December 31, December 31,
--------------------- --------------------- 2004 2005 2004 2005
---------- ---------- ---------- ---------- Revenues: Sales to
affiliates 1,151 1,360 2,870 3,260 Third party product sales - 6
243 101 ---------- ---------- ---------- ---------- Total product
sales 1,151 1,366 3,113 3,361 Other income and revenues 82 70 583
280 ---------- ---------- ---------- ---------- Total Revenues
1,233 1,436 3,696 3,641 Operating costs and expenses: Cost of goods
sold 1,126 1,199 2,579 2,920 Charges from affiliates 750 266 1,665
1,047 Research and development 461 1,512 2,922 4,629 General and
administrative 592 571 1,194 2,309 Depreciation and amortization 37
40 89 118 ---------- ---------- ---------- ---------- 2,966 3,588
8,449 11,023 ---------- ---------- ---------- ---------- Operating
loss (1,733) (2,152) (4,753) (7,382) Foreign currency exchange gain
(loss), net (98) 186 (55) (249) Interest income (expense), net
(2,165) 49 (2,192) (4,148) ---------- ---------- ----------
---------- Pre-tax loss (3,996) (1,917) (7,000) (11,779) Income tax
expense (benefit): Current (113) - 65 - Deferred 65 (598) (37)
(646) ---------- ---------- ---------- ---------- (48) (598) 28
(646) ---------- ---------- ---------- ---------- Net loss (4,004)
(2,515) (7,028) (12,425) ========== ========== ==========
========== Net loss per share: Basic and diluted net loss per share
(0.80) (0.27) (1.41) (1.79) ========== ========== ==========
========== Weighted average shares used to compute basic net loss
per share 5,000,000 9,391,449 5,000,000 6,933,104 ==========
========== ========== ========== Weighted average shares used to
compute diluted net loss per share 5,000,000 9,391,449 5,000,000
6,933,104 ========== ========== ========== ========== GENTIUM
S.p.A. Statements of Cash Flows (Unaudited, in thousands) For the
Three For the Year Months Ended Ended December 31, December 31,
--------------- ---------------- 2004 2005 2004 2005 -------
------- ------- -------- Cash Flows From Operating Activities:
------- ------- ------- -------- Net loss (4,004) (2,515) (7,028)
(12,425) ------- ------- ------- -------- Adjustments to reconcile
net income to net cash provided by (used in) operating activities:
Unrealized foreign exchange loss 313 - 313 575 Depreciation and
amortization 386 208 743 1,315 Non cash interest expense 1,972 -
1,972 3,837 Deferred income taxes (benefit) (9) 598 (37) 646 Write
down of inventory to net realizable value - 161 50 291 Stock based
compensation 379 216 379 579 Changes in operating assets and
liabilities: Accounts receivable (1,098) (966) 981 (376)
Inventories 423 (106) 534 (1,033) Prepaid expenses and other
current assets (659) (206) (1,784) (149) Accounts payable and
accrued expenses 102 696 359 (1,793) Deferred income (152) (67)
(353) (281) Termination indemnities 24 13 19 158 Income taxes
payable (123) - (304) - ------- ------- ------- -------- Net cash
used in operating activities (2,446) (1,968) (4,119) (8,657)
------- ------- ------- -------- Cash Flows From Investing
Activities: Capital expenditures (823) (239) (5,178) (1,263)
Intangible expenditures (19) (63) (163) (124) ------- -------
------- -------- Net cash used in investing activities (842) (302)
(5,341) (1,387) ------- ------- ------- -------- Cash Flows From
Financing Activities: Capital contribution - - - 3,900 Proceeds
from long-term debt 2,350 - 5,205 - Repayments of long-term debt
(67) (111) (374) (581) Proceeds from Series A convertible Notes
4,477 - 4,477 1,459 Repayment of Series A convertible Notes - - -
(4,221) Proceeds (repayment) of affiliate's loan (800) - 2,200
(2,200) Proceeds (repayment) from bank overdrafts and short-term
borrowings (779) - 390 (2,790) Proceeds from initial public
offering and private placement, net of offering expenses - 8,154 -
24,801 ------- ------- ------- -------- Net cash provided by
financing activities 5,181 8,043 11,898 20,368 ------- -------
------- -------- Increase in cash and cash equivalents 1,893 5,773
2,438 10,324 Cash and cash equivalents, beginning of period 568
7,012 23 2,461 ------- ------- ------- -------- Cash and cash
equivalents, end of period 2,461 12,785 2,461 12,785 =======
======= ======= ======== *T
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