MARTINSRIED/MUNICH, Germany and PRINCETON, N.J., Aug. 8
/PRNewswire-FirstCall/ -- GPC Biotech AG (Frankfurt Stock Exchange: GPC;
TecDAX 30; Nasdaq: GPCB) today reported financial results for the second
quarter and first six months ended June 30, 2007.
First six months of 2007 compared to first six months of 2006
Revenues decreased 35% to euro 7.2 million for the six months ended
June 30, 2007, compared to euro 11.0 million for the same period in 2006.
The decrease in revenues is mainly due to lower development funding
received under the co-development and license agreement with Pharmion for
satraplatin in Europe and certain other territories, as well as the
expiration of various research collaboration arrangements with ALTANA
Pharma. Research and development (R&D) expenses decreased 2% to euro 28.6
million for the first six months of 2007 compared to euro 29.1 million for
the same period in 2006. In the first six months of 2007, general and
administrative (G&A) expenses increased 129% to euro 23.4 million compared
to euro 10.2 million for the first six months of 2006. The increase in G&A
expenses is primarily due to the formation of a sales and marketing
organization for the U.S., as well as legal expenses related to litigation.
The Company also reported restructuring charges of euro 0.9 million in the
second quarter of 2007 primarily for employee severance and termination
costs related to the closing of its Massachusetts facility. Those charges
are included in R&D and G&A expenses. Net loss for the first six months of
2007 increased 52% to euro (42.8) million compared to euro (28.1) million
for the first six months of 2006. Basic and diluted loss per share was euro
(1.20) for the first six months of 2007 compared to euro (0.87) for the
same period in 2006.
Quarter over quarter results: second quarter 2007 compared to first
quarter 2007
Revenues for the second quarter of 2007 were euro 3.4 million compared
to euro 3.8 million for the previous quarter. R&D expenses increased 19% to
euro 15.5 million for the second quarter of 2007, compared to euro 13.0
million in the first quarter of 2007. G&A expenses for the second quarter
of 2007 increased 13% to euro 12.4 million compared to euro 11.0 million
for the previous quarter. The Company's net loss increased 23% to euro
(23.7) million in the second quarter of 2007, compared to euro (19.2)
million for the previous quarter. Basic and diluted loss per share was euro
(0.66) for the second quarter of 2007 compared to euro (0.54) for the
previous quarter.
Comparison to previous year: second quarter 2007 compared to second
quarter 2006
Revenues for the three months ended June 30, 2007 decreased 39% to euro
3.4 million compared to euro 5.6 million for the same period in 2006. R&D
expenses increased 7% for the second quarter of 2007 to euro 15.5 million
compared to euro 14.5 million for the same period in 2006. G&A expenses for
the second quarter of 2007 increased 114% to euro 12.4 million compared to
euro 5.8 million for the same quarter in 2006. Net loss for the second
quarter of 2007 increased 56% to euro (23.7) million compared to euro
(15.2) million for the second quarter of 2006. Basic and diluted loss per
share was euro (0.66) for the second quarter of 2007 compared to euro
(0.46) for the same period in 2006.
Cash position
As of June 30, 2007, cash, cash equivalents, marketable securities and
short-term investments totaled euro 93.1 million (December 31, 2006: euro
97.1 million), including euro 1.5 million in restricted cash. Net cash burn
for the first six months of 2007 was euro 42.0 million with net cash burn
of euro 19.4 million in the first quarter and euro 22.6 million in the
second quarter of 2007. Net cash burn is derived by adding net cash used in
operating activities and purchases of property, equipment and licenses. The
figures used to calculate net cash burn are contained in the Company's
unaudited consolidated statements of cash flows for the six-month period
ended June 30, 2007.
At June 30, 2007, the Company recorded a receivable in the amount of
euro 7.4 million related to the signing of a license agreement with Yakult
Honsha Co. Ltd. for satraplatin for Japan. This payment was received in
July 2007.
In July 2007, the Company's partner Pharmion announced the acceptance
for review by the European Medicines Agency (EMEA) of the Marketing
Authorization Application (MAA) for satraplatin in combination with
prednisone for the treatment of metastatic hormone-refractory prostate
cancer patients whose prior chemotherapy has failed. As a result of this
acceptance, GPC Biotech will receive a milestone payment of approximately
euro 6.0 million ($8 million) from Pharmion. Also as a result of the
acceptance for review of the MAA, GPC Biotech will pay to Spectrum
Pharmaceuticals a total of approximately euro 2.4 million ($3.2 million),
representing a direct milestone payment plus Spectrum's share of the $8
million milestone payment from Pharmion.
The Company also provided updated guidance for the remainder of 2007:
- Revenues for the full year 2007 expected to be in the range of euro 17
to 19 million.
- Immediate cost-cutting measures have been implemented that are expected
to result in approximately euro 10 million in savings through the end of
2007. Additional guidance on expenses is not being provided at this
time as the Company continues to evaluate various options.
- Year-end 2007 cash, cash equivalents and available-for-sale securities
position expected to be approximately euro 60 million.
"Despite the recent setback, we remain in a solid financial position
and believe we have sufficient cash under current expectations to carry us
through to a potential regulatory submission based on the overall survival
analysis," said Mirko Scherer, Ph.D., Senior Vice President and Chief
Financial Officer. "With our recent cost-cutting measures alone and
anticipated revenues and expenses for the rest of the year, we expect to
end 2007 with approximately euro 60 million in cash and equivalents."
"While we have been very disappointed by recent events that led to our
withdrawal of the satraplatin NDA, we must move forward," said Bernd R.
Seizinger, M.D., Ph.D., Chief Executive Officer. "We are first focused on
overall survival results from the satraplatin SPARC trial. Based on that
outcome, we plan to work closely with the FDA with the goal of submitting
an NDA to the agency as quickly as possible."
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 August 8 at 14:00 CET/8:00 AM ET.
The dial-in numbers for the call are as follows:
European participants: 0049-(0)69-5007-1305 or 0044-(0)20-7806-1950
U.S. participants: 1-718-354-1385
About GPC Biotech
GPC Biotech AG is a publicly traded biopharmaceutical company focused
on discovering, developing and commercializing new anticancer drugs. GPC
Biotech's lead product candidate satraplatin is currently in a Phase 3
registrational trial in second-line hormone-refractory prostate cancer.
Satraplatin was in-licensed from Spectrum Pharmaceuticals, Inc. GPC Biotech
is also developing a monoclonal antibody with a novel mechanism-of-action
against a variety of lymphoid tumors, currently in Phase 1 clinical
development, and has ongoing drug development and discovery programs that
leverage its expertise in kinase inhibitors. GPC Biotech AG is
headquartered in Martinsried/Munich (Germany) and has a wholly owned U.S.
subsidiary headquartered in Princeton, New Jersey. For additional
information, please visit GPC Biotech's Web site at http://www.gpc-biotech.com.
This press release contains forward-looking statements, which express
the current beliefs and expectations of the management of GPC Biotech AG.
Such statements are based on current expectations and are subject to risks
and uncertainties, many of which are beyond our control, that could cause
future results, performance or achievements to differ significantly from
the results, performance or achievements expressed or implied by such
forward-looking statements. Actual results could differ materially
depending on a number of factors, and we caution investors not to place
undue reliance on the forward- looking statements contained in this press
release. In particular, there can be no guarantee that the results from the
final analysis of overall survival data from the SPARC trial will be
available when anticipated or sufficient to support regulatory approval in
the United States or elsewhere. In addition, there can be no guarantee that
additional information relating to the safety, efficacy or tolerability of
satraplatin will not be obtained upon further analysis of data from the
SPARC trial or analysis of additional data from other ongoing clinical
trials for satraplatin. Furthermore, we cannot guarantee that satraplatin
will be approved for marketing in a timely manner, if at all, by regulatory
authorities nor that, if marketed, satraplatin will be a successful
commercial product. We direct you to GPC Biotech's Annual Report on Form
20-F for the fiscal year ended December 31, 2006 and other reports filed
with the U.S. Securities and Exchange Commission for additional details on
the important factors that may affect the future results, performance and
achievements of GPC Biotech. Forward-looking statements speak only as of
the date on which they are made and GPC Biotech undertakes no obligation to
update these forward-looking statements, even if new information becomes
available in the future.
Satraplatin has not yet been approved by the FDA in the U.S., the EMEA
in Europe or any other regulatory authority and no conclusions can or
should be drawn regarding its safety or effectiveness. Only the relevant
regulatory authorities can determine whether satraplatin is safe and
effective for the use(s) being investigated.
GPC Biotech AG
Condensed Consolidated Statements of Operations (U.S. GAAP)
Three months ended Six months ended
in thousand euro, June 30, June 30,
except share and per 2007 2006 2007 2006
share data (unaudited) (unaudited) (unaudited) (unaudited)
Collaborative
revenues (a) 3,320 5,425 7,082 10,823
Grant revenues 67 194 144 194
Total revenues 3,387 5,619 7,226 11,017
Research and
development expenses 15,527 14,535 28,567 29,054
General and
administrative
expenses 12,376 5,800 23,399 10,177
Amortization of
intangible assets 90 71 181 143
Total operating
expenses 27,993 20,406 52,147 39,374
Operating loss (24,606) (14,787) (44,921) (28,357)
Other income
(expense), net (68) (1,473) 89 (2,147)
Interest income 1,049 1,085 2,077 2,036
Interest expense (40) (22) (67) (44)
Net loss before
cumulative effect of
change in accounting
principle (23,665) (15,197) (42,822) (28,512)
Cumulative effect of
change in accounting
principle - - - 433
Net loss (23,665) (15,197) (42,822) (28,079)
Loss per share before
change in accounting
principle (0.66) (0.46) (1.20) (0.88)
Cumulative effect of
change in accounting
principle - - - 0.01
Basic and diluted loss
per share (0.66) (0.46) (1.20) (0.87)
Shares used in
computing basic and
diluted loss per
share 36,106,533 33,103,667 35,776,752 32,220,336
(a) Revenues from
related party
Collaborative
revenues - 1,870 - 3,344
See accompanying notes to unaudited condensed consolidated financial
statements.
GPC Biotech AG
Condensed Consolidated Balance Sheets (U.S. GAAP)
in thousand euro, except share data and per share data
June 30 December 31
Assets 2007 (unaudited) 2006
Current assets
Cash and cash equivalents 44,939 38,336
Marketable securities and short-term
investments 46,577 57,186
Accounts receivable 11,061 11
Accounts receivable, related party - 395
Prepaid expenses 960 1,299
Other current assets 3,235 2,970
Total current assets 106,772 100,197
Property and equipment, net 4,626 4,259
Intangible assets, net 219 405
Other assets, non-current 1,009 1,127
Restricted cash 1,538 1,531
Total assets 114,164 107,519
Liabilities and shareholders' equity
Current liabilities
Accounts payable 3,679 2,262
Accrued expenses and other current
liabilities 17,964 14,346
Current portion of deferred revenue 8,367 7,240
Current portion of deferred revenue,
related party - 896
Total current liabilities 30,010 24,744
Deferred revenue, net of current portion 13,446 9,103
Convertible bonds 3,098 3,108
Other liabilities, non-current - 3,389
Shareholders' equity
Ordinary shares, euro 1 non-par,
notional value:
Shares authorized: 62,695,630 at
June 30, 2007 and December 31, 2006
Shares issued and outstanding: 36,253,053
at June 30, 2007 and 33,895,444 at
December 31, 2006 36,253 33,895
Additional paid-in capital 368,370 328,171
Subscribed shares 1,529 334
Accumulated other comprehensive loss (2,250) (1,755)
Accumulated deficit (336,292) (293,470)
Total shareholders' equity 67,610 67,175
Total liabilities and shareholders' equity 114,164 107,519
See accompanying notes to unaudited condensed consolidated financial
statements.
Condensed Consolidated Statements of Cash Flows (U.S. GAAP)
Six months ended June 30,
2007 2006
in thousand euro (unaudited) (unaudited)
Cash flows from operating activities
Net loss (42,822) (28,079)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 862 891
Amortization 180 143
Compensation cost for stock option
plans and convertible bonds 5,823 3,246
Loss accrual on sublease contract (100) 1,013
Cumulative effect of change in
accounting principle - (433)
Change in accrued interest income on
marketable securities and short-term
investments (351) (170)
Bond premium amortization 105 378
Other than temporary impairment on
marketable securities - 390
(Gain)/loss on disposal of property
and equipment (43) (23)
Changes in operating assets and
liabilities:
Accounts receivable (11,050) 31,325
Accounts receivable, related party 395 1,436
Other assets, current and non-current 117 (1,127)
Accounts payable 1,473 (401)
Deferred revenue 5,470 (7,126)
Deferred revenue, related party (896) (3,037)
Other liabilities and accrued expenses,
current and non-current 144 (1,287)
Net cash (used in) provided by operating
activities (40,693) (2,861)
Cash flows from investing activities
Purchases of property, equipment and licenses (1,269) (742)
Proceeds from the sale of property and
equipment 45 45
Proceeds from the sale or maturity of marketable
securities and short-term investments 11,000 5,000
Purchases of marketable securities and
short-term investments - (5,976)
Net cash provided by (used in) investing
activities 9,776 (1,673)
Cash flows from financing activities
Proceeds from issuance of shares, net of
payments for cost of transaction 32,633 36,080
Proceeds from issuance of convertible bonds 345 140
Payments for cancellation of convertible bonds (24) -
Proceeds from exercise of stock options and
convertible bonds 5,384 560
Cash received for subscribed shares - -
Net cash provided by financing activities 38,338 36,780
Effect of exchange rate changes on cash (784) (359)
Changes in restricted cash (35) (30)
Net increase/(decrease) in cash and cash
equivalents 6,602 31,857
Cash and cash equivalents at the beginning
of the period 38,337 30,559
Cash and cash equivalents at the end of the
period 44,939 62,416
See accompanying notes to unaudited condensed consolidated financial
statements
GPC Biotech AG
Consolidated Statements of Changes in Shareholders' Equity
(in thousand euro, except share data)
Ordinary shares
Additional
Paid-in Subscribed
Shares Amount Capital Shares
Balance at December 31, 2005 30,151,757 30,152 284,931 -
Components of comprehensive loss:
Net loss
Change in unrealized gain on
available-for-sale securities
Accumulated translation
adjustments
Total comprehensive loss
Issuance of shares 2,860,000 2,860 33,220
Exercise of stock options and
convertible bonds 138,446 138 442
Cumulative effect of change
in accounting principle (433)
Compensation cost for stock
options and convertible bonds 3,246
Balance at June 30, 2006
(unaudited) 33,150,203 33,150 321,406 -
Balance at December 31, 2006 33,895,444 33,895 328,171 334
Components of comprehensive loss:
Net loss
Change in unrealized gain on
available-for-sale securities
Accumulated translation
adjustments
Total comprehensive loss
Issuance of shares 1,564,587 1,565 31,068
Exercise of stock options and
convertible bonds 793,022 793 3,725 1,195
Compensation cost for stock
options and convertible bonds 5,406
Balance at June 30, 2007
(unaudited) 36,253,053 36,253 368,370 1,529
Accumulated
Other Total
Comprehensive Accumulated Shareholders'
Loss Deficit Equity
Balance at December 31, 2005 (2,093) (229,457) 83,533
Components of comprehensive loss:
Net loss (28,079) (28,079)
Change in unrealized gain on
available-for-sale securities 471 471
Accumulated translation
adjustments (58) (58)
Total comprehensive loss (27,666)
Issuance of shares 36,080
Exercise of stock options and
convertible bonds 580
Cumulative effect of change
in accounting principle (433)
Compensation cost for stock
options and convertible bonds 3,246
Balance at June 30, 2006
(unaudited) (1,680) (257,536) 95,340
Balance at December 31, 2006 (1,755) (293,470) 67,175
Components of comprehensive loss:
Net loss (42,822) (42,822)
Change in unrealized gain on
available-for-sale securities 146 146
Accumulated translation
adjustments (641) (641)
Total comprehensive loss (43,317)
Issuance of shares 32,633
Exercise of stock options and
convertible bonds 5,713
Compensation cost for stock options
and convertible bonds 5,406
Balance at June 30, 2007
(unaudited) (2,250) (336,292) 67,610
See accompanying notes to unaudited condensed consolidated financial
statements
GPC Biotech AG
Notes to the Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed 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"), applicable to interim financial reporting, specifically Accounting
Principles Board Opinion No. 28 "Interim Financial Reporting". These
unaudited condensed consolidated financial statements do not include all
information and disclosures required for a complete set of financial
statements. However, 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 three month
and six-month periods ended June 30, 2007, are not necessarily indicative
of results to be expected for the full year ending December 31, 2007. The
balance sheet at December 31, 2006 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, 2006.
2. New Accounting Pronouncements
As of January 1, 2007, GPC Biotech adopted FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109" (FIN 48). The Company has certain deferred tax assets as
a result of several years of losses from operations. Management determined
that it was not probable that sufficient future taxable income would be
available to realize those deferred tax assets. Therefore, management
recognized a full valuation allowance for those deferred tax assets.
The Company's policy is to accrue interest and penalties on the tax
obligations and classify them as current or noncurrent depending on when
the amount is anticipated to be paid. Currently, the Company does not take
any other tax positions nor has any interest or penalties.
On June 14, 2007, the Financial Accounting Standards Board ("FASB")
ratified EITF 07-3, "Accounting for Non-Refundable Advance Payments for
Goods or Services to Be Used in Future Research and Development
Activities". EITF 07-3 requires that all non-refundable advance payments
for R&D activities that will be used in future periods be capitalized until
used. In addition, the deferred research and development costs need to be
assessed for recoverability. EITF 07-3 is applicable for fiscal years
beginning after December 15, 2007 and is to be applied prospectively
without the option of early application. The Company will evaluate the
impact, if any, of EITF 07-3 on its financial statements.
3. Related Party Disclosures
ALTANA Pharma AG ("ALTANA Pharma") is no longer a related party to the
Company because the board membership of Dr. Bernd Seizinger at ALTANA
Pharma ended December 31, 2006. Therefore, transactions consummated with
ALTANA Pharma from and after January 1, 2007, are no longer classified as
transactions with a related party.
4. Commitments and Contingencies
Contingent Commitments and Contingent Losses
From time to time, the Company may be party to certain legal
proceedings and claims which arise during the ordinary course of business.
The Company also has other contingencies relating to potential milestone
payments. Legal proceedings and contingent commitments are subject to
various uncertainties and the outcomes are difficult to predict. GPC
Biotech may incur significant expense in defending these or future legal
proceedings and in fulfilling these contingencies, however, in the opinion
of management, the ultimate outcome of these matters will not have material
adverse effects on the Company's financial position, results of operations
or cash flows. In accordance with SFAS No. 5, "Accounting for
Contingencies", the Company makes a provision for a liability when it is
both probable that a liability has been incurred at the date of the
financial statements and when the amount of the loss is reasonably
estimable. With respect to a number of the items listed below, management
has determined that a loss is not probable or the amount of the loss is not
reasonably estimable, or both.
Arbitration Proceedings
On December 12, 2006, the Company was notified by Spectrum
Pharmaceuticals Inc. ("Spectrum"), that Spectrum had initiated an
arbitration proceeding with the American Arbitration Association ("AAA") in
the United States to resolve a dispute between the companies under the
co-development and license agreement for satraplatin. In the course of the
arbitration proceedings, Spectrum has made several claims of breach of
contract, including (1) an assertion that it is entitled to a payment from
GPC Biotech of approximately euro 9.0 million relating to payments received
by GPC Biotech under the co-development and license agreement between GPC
Biotech and Pharmion GmbH entered on December 19, 2005, (2) a claim that
GPC Biotech has not used commercially reasonable efforts to obtain
regulatory approval and to promote the distribution of satraplatin in
Japan, and (3) a claim that GPC Biotech has not negotiated with Spectrum in
good faith regarding the co-promotion of satraplatin in the United States.
Spectrum is also seeking a declaration that GPC Biotech's alleged breaches
of contract provide a basis for termination of the co-development and
license agreement. The Company believes that Spectrum's claims have no
merit and is therefore contesting such claims vigorously. Management
assessed the prospect of an unfavorable outcome of this arbitration as less
than probable. The hearing was completed on July 13, 2007 and closing
arguments are scheduled for the end of August 2007. The Company cannot
predict when the arbitration panel will issue its ruling on the dispute.
Fees which the Company pays to its external legal advisors and for
other services associated with this arbitration process are expensed in the
period when such legal and other services are rendered.
Marketing Approval of Satraplatin in the U.S. and Europe
Upon receiving marketing approval for satraplatin in the U.S. and/or
Europe, the Company is required to make the following payments:
* Under the Company's agreement with a third party, GPC Biotech is
obligated to make milestone payments for each of these approvals in a
total amount of approximately euro 6.7 million.
* The Company has a cash bonus plan to retain the Company's employees in
which the total payout may lead to an increase in personnel expenses of
up to euro 1.8 million.
* The Company issued stock appreciation rights (SARs) to senior
management, the members of the Supervisory Board, and certain employees.
These SARs would entitle the holder to cash payments if the performance
condition has been met.
Acceptance of NDA Filing
On April 16, 2007, the U.S Federal Drug Administration (FDA) accepted
the Company's filing of the New Drug Application (NDA) for satraplatin for
patients with hormone-refectory prostate cancer (HRPC) whose prior
chemotherapy has failed. In connection with this acceptance, the Company
was required to pay approximately euro 2.9 million to a third party. This
payment was made in May 2007, however, charged to research and development
expense in 2006 when the occurrence of this event was deemed probable.
Development and Supply Agreement
GPC Biotech is the owner and licensee of certain technology and patent
rights regarding the monoclonal antibody known as 1D09C3. In March 2007,
GPC Biotech entered into a development and supply agreement with a
biologics supplier under which the biologics supplier agreed to: (1)
develop a high- productivity cell line and develop and scale-up a robust
manufacturing process and (2) produce quantities of 1D09C3 bulk drug
substance for clinical development and commercial supply. Pursuant to the
agreement, GPC Biotech is required to make certain payments over a period
of 7 (seven) years. These payments will be charged to research and
development expenses as services are rendered
Contingent Gains
The Company is entitled to receive a milestone payment of approximately
euro 6.0 million upon the acceptance for filing of the first Marketing
Authorization Application (MAA) with the European Medicines Agency (EMEA).
On July 25th, 2007, Pharmion GmbH announced the EMEA had accepted for
filing the MAA for satraplatin (please refer to Note 10 "Subsequent Events"
for further details). The Company is also entitled to receive a net
milestone payment of approximately euro 12.3 million upon the approval of
the first MAA with EMEA. These contingent gains will be recognized as
revenue when the milestones are achieved.
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 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 and convertible debt would be antidilutive.
6. Comprehensive Loss
Comprehensive loss was euro 42.8 million and euro 27.7 million for the
six months ended June 30, 2007 and 2006, respectively. Comprehensive loss
is composed of net loss, unrealized gains and losses on marketable
securities and short-term investments and cumulative foreign currency
translation adjustments. Accumulated other comprehensive loss at June 30,
2007 and 2006 reflected euro 0.6 million and euro 0.3 million of unrealized
gains on marketable securities and short-term investments and euro 2.8
million and euro 2.0 million of cumulative foreign currency translation
loss adjustments, respectively.
7. Shareholders' Equity
On January 24, 2007, the Company issued 1,564,587 new ordinary shares
at euro 21.50 per share for a total net amount of euro 32.6 million through
a private placement. GPC Biotech received the proceeds from the placement
after registration of the corresponding capital increase in the German
commercial register in February 2007.
At June 30, 2007, members of the Management Board and employees of the
Company had subscribed to 219,000 ordinary shares with a total value of
euro 1.5 million, which has been included in shareholders' equity. The
subscribed shares represent amounts paid for exercises of stock options for
which ordinary shares have not been issued at June 30, 2007. The ordinary
shares are expected to be registered and issued by September 30, 2007.
During the six months ended June 30, 2007, members of the Management
Board and employees of the Company exercised some of their fully vested
stock options and convertible bonds, receiving 793,022 new ordinary shares
of the Company.
8. Additional Disclosures
Revenues
Revenues decreased 35% to euro 7.2 million for the first half of 2007,
compared to euro 11.0 million for the first half of 2006. The decrease in
revenues is mainly due to (1) lower development funding received under the
co- development and license agreement with Pharmion for satraplatin in
Europe and other certain territories; and (2) the expiration of various
research collaboration arrangements with ALTANA Pharma.
General and Administrative Expenses
General and administrative (G&A) expenses for the six months ended June
30, 2007 increased 130% to euro 23.4 million compared to euro 10.2 million
for the same period in 2006. The increase in G&A expenses is primarily due
to the formation of a sales and marketing organization in preparation of
the potential product launch of satraplatin as well as legal expenses.
Share-Based Compensation
Share-based compensation cost of euro 5.8 million and euro 3.2 million
for the six months ended June 30, 2007 and 2006, respectively, was
incurred. This increase is the result of additional stock option and
convertible bond grants combined with the recognition of certain stock
appreciation rights (SARs).
Product Candidate Licensing Activities
On June 25, 2007 the Company entered into a license agreement with
Yakult Honsha Co. Ltd. ("Yakult") for satraplatin in Japan. Under the terms
of the agreement, Yakult gains exclusive commercialization rights to
satraplatin for Japan and will take the lead in developing the drug in
Japan. Under the agreement, Yakult was required to make an upfront payment
of yen 1.2 billion (euro 7.4 million) to the Company as reimbursement for
past satraplatin development expenses. Yakult is also obligated to make
additional payments to the Company based on the achievement of certain
regulatory filing and approval milestones. In addition, the Company will
receive a minimum of 21.1% royalties on net sales of satraplatin in Japan.
At June 30, 2007, GPC Biotech AG had recorded a receivable in the
amount of euro 7.4 million and payment was received in July, 2007. Revenue
will be deferred and recognized over the period of current product
development plan beginning July 2007.
Costs Associated with Exit Activities
On May 3, 2007, the Company announced the consolidation of its drug
discovery efforts to one location, resulting in the closing of the facility
in Waltham, Massachusetts, USA along with a total workforce reduction of
approximately 16%. The Company has accounted for this restructuring in
accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activitites" (FAS 146). Under FAS 146, the Company incurred a
restructuring charge of euro 0.9 million in the second quarter primarily
relating to employee severance and termination costs. Prior to the
announcement of the reorganization, the Company had a remaining sublease
loss liability relating to the Waltham facility totaling euro 4.0 million
which was charged to expense in prior years in accordance with FAS 146.
Because this liability was deemed adequate to cover all contract
termination costs and professional fees associated with this restructuring,
no additional amount was charged to expense in the second quarter. The
Company expects to complete the reorganization by December 31, 2007,
incurring a total charge of approximately euro 1.0 million in the current
year. These charges are included in both Research and Development and
General and Administrative expenses at June 30, 2007.
A summary of the significant components of the restructuring liability
is as follows (in thousand euro):
Employee Contract
Termination Termination
Benefits Costs Total
January 1, 2007 Balance - 3,967 3,967
Amortization of sublease loss
including interest - (179) (179)
Restructuring Charges 858 - 858
Restructuring Payments (125) - (125)
June 30, 2007 Balance 733 3,788 4,521
Supervisory Board
On May 25, 2007 at the Company's Annual Shareholders Meeting, Donald
Soltysiak was elected to its Supervisory Board. Mr. Soltysiak succeeded Dr.
Prabhavathi Fernandes, whose term ended on the same day.
9. Disclosures Required by the Frankfurt Stock Exchange
Number of Employees
As of June 30, 2007 and 2006, the number of employees totalled 286 and
232, respectively.
Shareholdings of Management
As of June 30, 2007 the members of the Management Board and Supervisory
Board held shares, stock options, convertible bonds and stock appreciation
rights in the amounts set forth in the table below:
Number Number of
Number of Number of Stock
of Stock Convertible Appreciation
Shares Options Bonds Rights
Management Board
Bernd R. Seizinger, M.D., Ph.D. 61,500 789,000* 1,463,500 -
Elmar Maier, Ph.D. 170,000 95,000 358,000 -
Sebastian Meier-Ewert, Ph.D. 194,405 189,000 424,375 -
Mirko Scherer, Ph. D. 4,000 240,000 439,916 -
Supervisory Board
Jurgen Drews, M.D. (Chairman) 26,900 10,000 12,500 80,000
Michael Lytton (Vice Chairman) 7,500 10,000 31,500 60,000
Metin Colpan, Ph.D. 19,400 10,000 10,000 45,000
Donald Soltysiak - - - 10,000
James Frates 1,000 - - 60,000
Peter Preuss 87,500 - 22,500 50,000
*Amount does not include 209,840 stock options that Dr. Seizinger
transferred to a third-party financial institution under two separate
agreements in 2001, as amended
10. Subsequent Events
Acceptance of MAA by EMEA
In July 2007, the EMEA accepted Pharmion's filing of the MAA for
satraplatin in combination with prednisone for the treatment of patients
with metastatic hormone refractory prostate cancer (HRPC) whose prior
chemotherapy has failed. As a result of the MAA acceptance by the EMEA, GPC
Biotech will receive a euro 6.0 million milestone payment from Pharmion.
Also, under the terms of GPC Biotech's agreement with Spectrum, the
acceptance of the MAA by the EMEA will also trigger payments by GPC Biotech
to Spectrum in a total amount of approximately euro 2.4 million,
representing a direct milestone payment plus Spectrum's portion of the euro
6.0 million milestone payment from Pharmion.
Satraplatin NDA Application
On July 30, 2007, the Company announced that it had withdrawn the
satraplatin capsules New Drug Application (NDA) filed for accelerated
approval for the treatment of hormone-refractory prostate cancer patients
whose prior chemotherapy has failed. The Company based its decision on the
vote by the Oncologic Drugs Advisory Committee (ODAC) to the U.S. Food and
Drug Administration (FDA) on July 24, 2007 that the FDA should wait for the
final survival analysis of the SPARC trial before deciding whether
satraplatin is approvable.
Legal
On July 27, 2007, the Company announced that it had been sued in the
United States District Court for the Southern District of New York,
purportedly in a class action lawsuit on behalf of all persons who
purchased or acquired securities of GPC Biotech between December 5, 2005
and July 24, 2007 inclusive. The suit also named the Company's CEO and two
other senior executives of the Company personally. The complaint, which to
date has not been officially served on the Company, alleges that GPC
Biotech violated U.S. federal securities laws by making materially false
public statements relating to satraplatin, and thereby artificially
inflating the price of GPC Biotech securities.
GPC Biotech believes the allegations in the complaint to be without
merit and intends to vigorously defend them. Management assessed the
prospect of an unfavorable outcome of this suit as less than probable.
SOURCE GPC Biotech AG
 back to top
Related links:
http://www.gpc-biotech.com/
CONTACT:
Martin Braendle, Director, Investor Relations
& Corporate Communications, +49 (0)89 8565-2693,
ir@gpc-biotech.com or Laurie Doyle, Director, Investor Relations
& Corporate Communications, +1-609-524-5884, usinvestors@gpc-
biotech.com, both of GPC Biotech AG; Additional Media Contacts:
(Europe) Brian Hudspith, Maitland +44 (0)20 7379 5151,
bhudspith@maitland.co.uk; (U.S.) David Schull, Russo Partners,
LLC, +1-212-845-4271, david.schull@russopartnersllc.com
|
