BERKELEY HEIGHTS, NJ - November 6, 2008
- Genta Incorporated (OTCBB: GNTA.OB) today announced financial
results for the quarter ended September 30, 2008. The Company
recorded significant milestones in the third quarter, including the
following:
-
AGENDA Phase 3 trial of Genasense in melanoma passes
futility analysis; enrollment completion expected in First
Quarter 2009
-
FDA targets December 3, 2008 for decision on
Genasense®/CLL NDA
-
Tesetaxel regulatory applications completed enabling
clinical trials
"We are continuing our dialog with FDA on the Genasense® NDA in
CLL and look forward to news regarding a decision later this
quarter," said Dr. Raymond P. Warrell, Jr., Genta's Chairman and
Chief Executive Officer. "Patient accrual into AGENDA, our
randomized Phase 3 trial of Genasense in advanced melanoma, is
proceeding well, and we anticipate completing enrollment in the 1st
quarter of 2009. The recent evaluation of AGENDA by the
independent Data Monitoring Committee for both safety and futility
has allowed the trial to progress to completion. For
tesetaxel, we have now completed the regulatory filings needed to
resume clinical trials. This new agent, which we believe is
the leading oral taxane currently in clinical development, may
offer substantial benefit to patients, along with significant
revenue and partnering potential for our Company. We remain
focused on creating the financial structures that will enable us to
leverage these portfolio opportunities."
Recent highlights include the following:
Genasense in Chronic Lymphocytic Leukemia (CLL):
In July 2009, the Food and Drug Administration (FDA)
notified the Company that the amendment to its New Drug Application
(NDA) for the use of Genasense plus chemotherapy in patients with
relapsed/refractory CLL had been accepted for review. This
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. FDA has assigned a Prescription Drug
User Fee Act (PDUFA) goal date of December 3, 2008 to this
application.
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 300 patients identified by a biomarker
who have not previously received chemotherapy. During the
third quarter, an independent Data Monitoring Board reviewed
information from this study and communicated to the Company that
the trial passed a planned analysis for futility and enrollment
should continue to intended completion. The Company currently
expects to complete enrollment in the first quarter of 2009.
Tesetaxel:
In recent regulatory activity, Genta has submitted
amendments to both the Investigational New Drug (IND) applications
and to the Drug Master File (DMF). Acceptance of these
amendments should allow the Company to resume clinical trials with
tesetaxel. Tesetaxel, a leading oral taxane, 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 completed Phase 2a studies have
demonstrated anticancer activity in patients with advanced gastric
cancer and advanced breast cancer. If further studies
document efficacy and safety, tesetaxel may offer substantial
opportunities to improve convenience, safety, and activity for
patients who are currently receiving conventional taxanes.
The Company expects to announce its clinical development plans and
timelines for tesetaxel in the near future.
Financial Information
In June 2008, the Company entered into a convertible note
transaction (described below). That transaction required that
the Company seek stockholder approval to increase the number of
authorized shares of common stock. While such approval was
obtained in October 2008, for prior periods, including the
third-quarter results that are being reported today, the Company
has been required to mark-to-market the liabilities for the
conversion feature of its notes and a warrant issued as part of the
transaction. These liabilities change with the price of
Genta's common stock, and these fluctuations have caused us to
report positive net income for the third quarter of 2008.
The Company reported net income of $212.6 million, or $5.78 per
basic share, and $0.10 per diluted share for the third quarter of
2008, compared with a net loss of $7.7 million, or $(0.25) per
share, for the third quarter of 2007. The calculation of
diluted earnings per share includes the assumption that all
outstanding instruments potentially convertible into shares of
common stock are converted, including the impact of converting $20
million of convertible notes into 2 billion shares of common stock
and the warrant into 40 million shares of common stock. For the
nine months ended September 30, 2008, the Company reported a net
loss of $535.4 million, or $(14.97) per share, compared with a net
loss of $21.6 million, or $(0.74) per share, for the nine months
ended September 30, 2007.
Net product sales of Ganite for the third quarter and nine months
ended September 30, 2008 of $0.1 million and $0.4 million,
respectively, were virtually unchanged from the comparison periods
one year ago.
Research and development expenses were $5.3 million for the third
quarter of 2008, compared with $4.8 million for third quarter of
2007. This increase was primarily due to higher expenses from
the AGENDA clinical trial, partially offset by lower payroll costs,
resulting from lower headcount. The Company reduced its
workforce to conserve cash in both April 2008 and in May
2008. Research and development expenses were $16.1 million
for the nine months ended September 30, 2008, compared with $12.2
million for the nine months ended September 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 for the three and nine
months ended September 30, 2008 were $2.3 million and $8.5 million,
respectively, compared with $4.1 million and $12.9 million for
their comparison periods. The reductions are primarily due to
our efforts at lowering administrative expenses, lower office rent
and lower payroll costs.
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 Genta's receipt of at least $5.0 million from a business
development transaction. This agreement resulted in an incremental
$3.3 million in expenses for the nine months ended September 30,
2008.
In the fourth quarter of 2006, the Company recorded an expense of
$5.3 million that provided 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, June 27, 2008. The
fluctuation in the price of Genta's common stock resulted in income
of $0.8 million in the third quarter of 2007, and income of $0.3
million for the nine months ended September 30, 2008, compared with
$2.6 million for the nine months ended September 30, 2007.
On June 5, 2008, the Company entered into a securities purchase
agreement with certain institutional and accredited investors to
place up to $40.0 million of senior secured convertible
notes. On June 9, 2008, the Company placed $20.0 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 $1,000.00 of principal. The Company incurred a financing
fee of $1.2 million, and in addition, issued a warrant to its
financial advisor to purchase 40,000,000 shares of common stock at
an exercise price of $0.02 per share.
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 on 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 $380.0 million was calculated,
and that amount that exceeded the proceeds of the $20.0 million
initial closing, $360.0 million, was expensed. The Company recorded
an initial discount of $20.0 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 $20 million in initial discount on the
convertible note, the $7.6 million recorded upon the issuance of
the warrant and the $1.2 million financing fee are being amortized
over the two-year life of the note, resulting in amortization of
deferred financing costs of $3.6 million and $4.4 million,
respectively, for the three and nine months ended September 30,
2008.
On June 30, 2008, both the conversion feature liability and warrant
liability were valued based upon a Black-Scholes valuation model
that included a closing price of our common stock of $0.38 per
share. On September 30, 2008, the conversion feature
liability and the warrant liability were valued based on a
Black-Scholes valuation model that included a closing price of
Genta's common stock of $0.27 per share, resulting in income of
$220.0 million and $4.4 million, respectively, for the third
quarter of 2008 and expense of $500.0 million and $2.8 million,
respectively, for the nine months ended September 30, 2008.
The conversion feature liability and the warrant liability will be
re-measured and credited to permanent equity as of October 6, 2008,
the date on which the Company's stockholders approved an amendment
to Genta's Restated Certificate of Incorporation, as amended, to
increase the total number of authorized shares of capital stock
available for issuance.
Net other expense was $0.7 million and $0.8 million, respectively,
for the three and nine months ended September 30, 2008, compared to
net other income of $0.2 million and $0.7 million, respectively,
for the three and nine months ended September 30, 2007. This
difference was due to accrued interest on the recently issued
convertible notes and from lower investment income, resulting from
lower investment balances.
At September 30, 2008, Genta had cash, cash equivalents and
marketable securities totaling $8.7 million compared with $7.8
million at December 31, 2007. During the first nine months of 2008,
cash used in operating activities was $22.0 million compared with
$23.7 million for the same period in 2007. The Company estimates
that its average net cash outflow will be less than $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, November 6, 2008, at 8:00 am EST. Participants can access
the live call by dialing (877) 634-8606 (U.S. and Canada) or (973)
200-3973 (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 70101499.
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 class of drugs 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:
http://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;
- the adequacy of the Company's patents and proprietary
rights;
- the impact of litigation that has been brought against the
Company; 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
info@genta.com
908-286-3980
