BERKELEY HEIGHTS, NJ - August 7, 2008
- Genta Incorporated (OTCBB: GNTA) today announced financial
results for the quarter ended June 30, 2008. The Company
recorded significant milestones in the second quarter, including
the following:
-
NDA amendment for Genasense® in CLL submitted to
FDA
-
AGENDA Phase 3 trial of Genasense in melanoma updated
at EADO
-
Clinical hold on tesetaxel, a leading, clinical-stage
oral taxane, lifted by FDA
-
Pharmacokinetics of oral G4544 for bone disease
presented at ASCO
-
Company closes $20 million financing in convertible
notes
"Genta has three high-value clinical-stage products, and we have
now secured funding that should enable us to conclude both our NDA
amendment for Genasense® in CLL, as well as enrollment into our
Phase 3 program in melanoma," said Dr. Raymond P. Warrell, Jr.,
Genta's Chairman and Chief Executive Officer. "FDA has
targeted December 3, 2008 as the action date for the CLL NDA
amendment, and we expect to report AGENDA results in melanoma
during 2009. In response to Genta's regulatory submission,
FDA has now lifted the clinical hold on tesetaxel, which will allow
us to resume clinical trials with a leading oral taxane that
addresses a large, well-characterized market. Our portfolio
includes unique compounds that offer significant revenue and
partnering opportunities."
Highlights of the Genta programs appear below.
GENASENSE: THE LEADING ANTISENSE DRUG IN CLINICAL
DEVELOPMENT
Genasense in Melanoma:
Genta is currently enrolling patients with advanced melanoma
in a Phase 3 trial of Genasense plus chemotherapy, known as
AGENDA. AGENDA is a randomized, double-blind,
placebo-controlled trial that is intended to support global
registration of Genasense for patients with advanced
melanoma. The study is designed to confirm certain safety and
efficacy results from Genta's prior randomized trial of Genasense
combined with dacarbazine in patients identified by a biomarker who
have not previously received chemotherapy. The co-primary
endpoints of AGENDA are progression-free survival and overall
survival. This global trial is targeting the recruitment of
300 patients from Europe, the U.S., Canada, and Australia.
Genasense in Chronic Lymphocytic Leukemia (CLL):
During the quarter, Genta submitted an amendment to its New
Drug Application (NDA) for the use of Genasense plus chemotherapy
in patients with relapsed/refractory CLL. The submission was
based primarily on new information from the Company's completed,
randomized Phase 3 trial that showed, among other findings, a
significant increase in overall survival for patients who achieved
a complete or partial response when treated with Genasense plus
chemotherapy compared with patients treated with chemotherapy
alone. Subsequently, FDA has notified the Company that it
considers Genta's submission as a complete response and a Class 2
resubmission with a Prescription Drug User Fee Act (PDUFA) goal
date for FDA's response of December 3, 2008. The submission
requests marketing approval of Genasense for the proposed
indication.
TESETAXEL: A LEADING ORAL TAXANE WITH ANTICANCER ACTIVITY
In other regulatory activity, Genta submitted its response to a
prior notice from FDA that had placed tesetaxel, a clinical-stage
oral taxane, on full "clinical hold" During the quarter, the
Company was notified by FDA that the clinical hold had been lifted
and that Genta may resume clinical trials with tesetaxel.
Tesetaxel is the latest addition to the Genta oncology
portfolio. The agent was developed to avoid serious effects
associated with other taxanes (such as paclitaxel [Taxol®; Bristol
Myers Squibb] and docetaxel [Taxotere®; sanofi aventis]), including
severe infusion reactions, peripheral nerve damage, and drug
resistance. More than 250 patients have received tesetaxel,
and the drug has demonstrated anticancer activity in several
clinical trials. If further studies document efficacy and
safety, tesetaxel offers substantial opportunities to improve
convenience, safety, and activity for patients who are currently
receiving conventional taxanes.
G4544: A NEW ORAL DRUG FOR SKELETAL DISEASES
G4544 is the Company's proprietary small molecule that is intended
to treat diseases associated with accelerated bone loss.
G4544 contains the active ingredient in the Company's marketed
product, Ganite®. Genta completed a Phase 1 single-dose study
of G4544, and the pharmacokinetics of G4544 were presented at the
2008 ASCO meeting. These data showed oral bioavailability in
a range that may be effective for therapy of various bone
diseases.
FINANCIAL INFORMATION
For the second quarter of 2008, the Company reported a net loss
of $738.4 million, or $(20.10) per share, compared with a net loss
of $8.2 million, or ($0.27) per share, for the second quarter of
2007. For the six months ended June 30, 2008, the Company
reported a net loss of $748.0 million, or ($21.21) per share,
compared with a net loss of $13.8 million, or ($0.48) per share,
for the six months ended June 30, 2007. (All 2007 share and
per-share data have been retroactively adjusted to account for the
effect of a 1-for-6 reverse stock split on July 13, 2007.)
Net product sales of Ganite for the second quarter and six
months ended June 30, 2008 of $0.1 million and $0.2 million,
respectively, were virtually unchanged from the comparison periods
one year ago. The Company has indicated it intends to seek a
buyer for Ganite.
Research and development expenses were $4.5 million for the
second quarter of 2008, compared with $4.1 million for second
quarter of 2007. This increase was primarily due to higher
expenses from the AGENDA clinical trial, partially offset by lower
payroll costs. The Company reduced its workforce to conserve
cash in both April and May 2008. Research and development
expenses were $10.9 million for the six months ended June 30, 2008,
compared with $7.5 million for the six months ended June 30, 2007.
This increase was primarily due to the recognition in March 2008 of
$2.5 million for license payments on tesetaxel and higher expenses
from the AGENDA clinical trial, partially offset by lower payroll
costs.
Selling, general and administrative expenses were $2.6 million
for the second quarter of 2008, compared with $4.7 million for the
second quarter of 2007, and $6.2 million for the six months ended
June 30, 2008, compared with $8.8 million for the six months ended
June 30, 2007. These decreases were primarily due to lower
payroll costs, resulting from the two workforce reductions, as well
as lower administrative expenses.
In May 2008, to reduce its ongoing expenses, the Company reduced
its office space. The Company's landlord received a termination
payment of $1.3 million, comprised of security deposits, and will
receive a future payment of $2.0 million upon the earlier of July
1, 2009 or the Company's completion of a business development
transaction that exceeds $5.0 million in upfront cash. This
agreement resulted in an incremental $3.3 million in expenses for
the second quarter and six months ended June 30, 2008.
In the fourth quarter of 2006, the Company recorded an expense
of $5.3 million that provides for the issuance of 2.0 million
shares of Genta common stock, for a settlement in principle of
class action litigation. This liability was marked to market until
the date that the settlement became final on June 27, 2008.
Changes in the price of Genta's common stock resulted in income of
$0.1 million in the second quarter of 2008, compared with $0.2
million in the second quarter of 2007, and income of $0.3 million
for the six months ended June 30, 2008, compared with $1.8 million
for the six months ended June 30, 2007.
On June 5, 2008, the Company entered into a securities purchase
agreement with certain institutional and accredited investors to
place up to $40 million of senior secured convertible notes and on
June 9, 2008, the Company placed $20 million of such notes in the
initial closing. The notes bear interest at an annual rate of
15% payable at quarterly intervals in stock or cash at the
Company's option, and are convertible into shares of Genta common
stock at a conversion rate of 100,000 shares of common stock for
every $1,000 of principal. In addition, in connection with
the placement of the notes, the Company issued a warrant to its
private placement agent to purchase 40,000,000 shares of common
stock at an exercise price of $0.02 per share and incurred a
financing fee of $1.2 million.
On the date that the convertible notes were issued, there were
an insufficient number of authorized shares of common stock in
order to permit exercise of all of the issued convertible notes. In
accordance with EITF 00-19 "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock" when there are insufficient authorized shares, the
conversion obligation for the convertible notes is classified as a
liability measured at fair value on the balance sheet. On June 9,
2008, based upon a Black-Scholes valuation model that included a
closing price of Genta's common stock of $0.20 per share, a fair
value of the conversion feature of $380 million was calculated, and
that amount that exceeded the proceeds of the $20 million from the
initial closing, $360 million, was expensed. The Company recorded
an initial discount of $20 million equal to the face value of the
notes.
Similarly, the warrant was treated as a liability, and was
recorded at a fair value of $7.6 million based upon the
Black-Scholes valuation model and a closing price of Genta's common
stock of $0.20 per share. The financing fee and the $7.6 million in
deferred financing costs recorded upon the issuance of the warrant
are being amortized over the two-year life of the note, resulting
in amortization of $0.8 million in the month of June 2008. On
June 30, 2008, based upon a Black-Scholes valuation model that
included a closing price of Genta's common stock of $0.38 per
share, an additional expense of $380 million was recorded to mark
the conversion feature liability to market, resulting in a total
fair value conversion feature liability expense in June of $720.0
million and an expense of $7.2 million was recorded to mark the
warrant liability to market.
Net other expense was $0.2 million for the second quarter of
2008 compared to net other income of $0.3 million for the second
quarter of 2007, and net other expense was $0.1 million for the six
months ended June 30, 2008 compared to net other income of $0.5
million. The difference resulted from lower investment
income, owing to lower investment balances, and accrued interest on
the convertible notes. The Company has no exposure to auction
rate securities.
At June 30, 2008, Genta had cash, cash equivalents and marketable
securities totaling $16.3 million compared with $7.8 million at
December 31, 2007. During the first six months of 2008, cash
used in operating activities was $14.4 million compared with $16.8
million for the same period in 2007, primarily as a result of the
timing of payments in the two respective periods. The Company
estimates that its average net cash outflow will be $2.0 to $2.5
million per month for the remainder of 2008.
CONFERENCE CALL AND WEBCAST
Genta management will host a conference call and live audio
webcast to discuss these financial results and corporate activities
on Thursday, August 7, 2008, at 8:00 am EDT. Participants can
access the live call by dialing (877) 634-8606 (U.S. and Canada) or
(706) 679-3140 (International). The access code for the live call
is Genta Incorporated. The call will also be webcast live at
http://www.genta.com/investorrelation/events.html. For
investors unable to participate in the live call, a replay will be
available approximately two hours after the completion of the call,
and will be archived for 30 days. Access numbers for this replay
are: (800) 642-1687 (U.S. and Canada) and (706) 645-9291
(International); conference ID number is 57549066.
About Genta
Genta Incorporated is a biopharmaceutical company with a
diversified product portfolio that is focused on delivering
innovative products for the treatment of patients with
cancer. Two major programs anchor the Company's research
platform: DNA/RNA-based Medicines and Small Molecules.
Genasense® (oblimersen sodium) Injection is the Company's lead
compound from its DNA/RNA Medicines program. Genta is
currently recruiting patients to the AGENDA Trial, a global Phase 3
trial of Genasense in patients with advanced melanoma. The
leading drug in Genta's Small Molecule program is Ganite® (gallium
nitrate injection), which the Company is exclusively marketing in
the U.S. for treatment of symptomatic patients with cancer-related
hypercalcemia that is resistant to hydration. The Company has
developed G4544, an oral formulation of the active ingredient in
Ganite, that has recently entered clinical trials as a potential
treatment for diseases associated with accelerated bone loss.
The Company is also developing tesetaxel, a novel, orally absorbed,
semi-synthetic taxane that is in the same drug class as paclitaxel
and docetaxel. Ganite and Genasense are available on a
"named-patient" basis in countries outside the United States.
For more information about Genta, please visit our website at:
www.genta.com
.
Safe Harbor
This press release may contain forward-looking statements with
respect to business conducted by Genta Incorporated. By their
nature, forward-looking statements and forecasts involve risks and
uncertainties because they relate to events and depend on
circumstances that will occur in the future. Forward-looking
statements include, without limitation, statements about:
- the Company's ability to obtain necessary regulatory approval
for Genasense® from the U.S. Food and Drug Administration ("FDA")
or European Medicines Agency ("EMEA");
- the safety and efficacy of the Company's products or product
candidates;
- the Company's assessment of its clinical trials;
- the commencement and completion of clinical trials;
- the Company's ability to develop, manufacture, license and
sell its products or product candidates;
- the Company's ability to enter into and successfully execute
license and collaborative agreements, if any;
- the adequacy of the Company's capital resources and cash flow
projections, the Company's ability to obtain sufficient financing
to maintain the Company's planned operations, or the Company's
risk of bankruptcy if it is unsuccessful in obtaining such
financing or in securing shareholder approval to increase the
number of shares authorized for issuance under the Company's
certificate of incorporation, as required by the transactional
documents in our recent financing;
- the adequacy of the Company's patents and proprietary
rights;
- the impact of litigation that has been brought against the
Company and any proposed settlement of such litigation; and
- the other risks described under Certain Risks and
Uncertainties Related to the Company's Business, as contained in
the Company's Annual Report on Form 10-K and Quarterly Report on
Form 10-Q.
The Company does not undertake to update any forward-looking
statements. There are a number of factors that could cause
actual results and developments to differ materially. For a
discussion of those risks and uncertainties, please see the
Company's Annual Report on Form 10-K for 2007 and its most recent
quarterly report on Form 10-Q.
SOURCE: Genta Incorporated
CONTACT:
Genta Investor Relations
908-286-3980
info@genta.com
