Transgene Announces Fiscal Year 2004 Financial Results STRASBOURG, France, Feb. 23 /PRNewswire-FirstCall/ -- Transgene (Nasdaq: TRGNY; Eurolist Paris: FR0005175080) announced today unaudited second half and 2004 financial results. Condensed Consolidated Statements of Operations US GAAP (Amounts in thousands) Six months ended December 31, 2004 2004 2003 US$ euro euro (unaudited) (unaudited) (audited) Total revenues 2 067 1 527 1 182 Research and development (13 442) (9 929) (10 358) General & administrative (3 104) (2 293) (2 209) Restructuring 0 0 94 Total operating expenses (16 546) (12 222) (12 473) Loss from operations (14 479) (10 695) (11 291) Interest and other income, net 200 148 415 Income tax benefit 965 713 0 Net loss (13 313) (9 834) (10 876) US GAAP (Amount in thousands) Twelve months ended December 31, 2004 2004 2003 US$ euro euro (unaudited) (unaudited) (audited) Total revenues 3 403 2 514 2 501 Research and development (27 091) (20 011) (20 257) General & administrative (5 649) (4 173) (4 274) Restructuring 0 0 94 Total operating expenses (32 740) (24 184) (24 437) Loss from operations (29 337) (21 670) (21 936) Interest and other income, 662 489 1 061 Income tax benefit 942 696 0 Net loss (27 733) (20 485) (20 875) "In 2004, our net cash expenditure was controlled and remained below our original estimate, and our clinical developments progressed very well with the accumulation of promising results," stated Philippe Archinard, Chief Executive Officer of Transgene. For the year ended December 31, 2004, Transgene reported unchanged total revenues of 2.5 million euro (US$ 3.4 million) compared to 2003. Contract manufacturing and research revenues increased 0.3 million euro (US$ 0.4 million) due to sub-contracting agreements with the Association National de Recherche contre le Sida, Merial and International AIDS Vaccine Initiative. Revenues from the manufacturing of clinical lots for Eurovacc, most of which were received during 2004, will be recognized upon final pharmaceutical release of the batches in the first half of 2005. Licensing revenues decreased 0.2 million euro (US$ 0.3 million) mainly due to the up-front payment received from Merck & Co., Inc in January 2003. Cost reimbursements from the Association Francaise contre les Myopathies slightly decreased from 1.2 million euro (US$ 1.6 million) to 1.1 million euro (US$ 1.5 million) in 2004. Operating expenses were 24.2 million euro (US$ 32.8 million) in 2004, almost unchanged compared to 2003. Research and development costs were down 0.2 million euro (US$ 0.3 million) at 20 million euro (US$ 27 million). Costs related to basic research and clinical studies decreased. This decrease was largely offset by increases in the costs of manufacturing and control due to work performed under sub-contracts, and in other research and development support activities. General and administrative expenses remained flat at 4.2 million euro (US$ 5.7 million). Due principally to a lower level of cash and cash equivalents, interest income was halved in 2004 (0.5 million euro or US$ 0.7 million) compared to 2003 (1.1 million euro or US$ 1.5 million). The research and development tax credit amounted to 0.7 million euro (US$ 0.9 million) in 2004. According to the French tax authorities' current policies, it will be refunded in 2008 if it has not been used to offset taxable income within the next three years. Transgene reported a net loss of 20.5 million euro (US$ 27.8 million), or 2.04 euro (US$ 2.76) per share, in 2004, compared to a net loss of 20.9 million euro (US$ 28.30 million), or 2.08 euro (US$ 2.82) per share, in 2003. Cash expenditures in 2004 amounted to 20.3 million euro (US$ 27.5 million) compared to 19.6 million euro (US$ 26.5 million) in 2003. This increase was primarily due to the decrease by 0.6 million euro (US$ 0.8 million) in the cash refund of research tax credit received in 2004 compared to 2003. Interest income also decreased by 0.6 million euro (US$ 0.8 million) in 2004 compared to 2003. These negative impacts have been partially offset by lower operating expenses (a decrease of 0.4 million euro or US$ 0.5 million) and capital expenditures (a decrease of 0.3 million euro or US$ 0.4 million) in 2004 compared to 2003. At December 31, 2004, Transgene had 14.7 million euro (US$ 19.9 million) in cash and cash equivalents. In December 2004, the principal shareholder of Transgene announced its commitment to cover Transgene's cash needs until the end of 2005 unless another financing option is adopted during this timeframe. Conference Call Transgene will conduct a conference call today, February 23, 2005, at 17:00 Central European Time (11 am US Eastern time). To participate in the conference call, please call one of the following numbers within 10 minutes prior to commencement: +1 718 354 1158 for the U.S. +33 (0) 1 55 17 41 79 for France +44 (0) 20 7784 1014 for other countries Transgene, based in Strasbourg, France, is a biopharmaceutical company dedicated to the discovery and development of therapeutic vaccines and immunotherapy products for the treatment of cancer and infectious diseases. Transgene has a broad portfolio of products in clinical development. This press release contains a forward-looking statement referring to the promising results of Transgene's clinical studies during 2004; however, all of Transgene's potential products are in research, preclinical development or early stage clinical trials, and, as is the case with all biopharmaceutical products under development, results from future studies with more data may show less favorable outcomes. Current results are preliminary and based upon a small number of patients. It is uncertain whether any of the products which Transgene is developing will ever demonstrate adequate therapeutic efficacy or achieve regulatory approval or commercial use. For a description of the risks facing the successful development of Transgene's products, see Transgene's Annual Report on Form 20-F for the year ended December 31, 2003, filed with the U.S. Securities and Exchange Commission (the "Annual Report"). This press release also contains a forward-looking statement regarding the funding of Transgene's cash needs through the end of 2005 which reflects statements made by the Company's principal shareholder at the Board of Directors meeting on December 7, 2004. It is not a guaranty by the Company of on-going operations or future performance. Notes: The official financial information of Transgene is stated in Euros. The financial information expressed in US$ is translated solely for the convenience of the reader at 1.00 euro = $ 1.3538, the noon buying rate of the Federal Reserve Bank of New York on December 31, 2004. The 2003 accounts have been restated to SFAS 123 "Accounting for Stock based Compensation". *** Tables to follow *** Condensed Consolidated Balance Sheets (US GAAP) (Amounts in thousands) December 31, December 31, 2004 2004 2003 US$ euro euro (Unaudited) (Audited) ASSETS Cash and cash equivalents 19 833 14 650 34 940 Other current assets 3 563 2 632 2 522 23 396 17 282 37 462 Property, plant and equipment, net 9 605 7 095 8 034 Other assets 1 523 1 125 322 34 525 25 502 45 818 LIABILITIES AND SHAREHOLDERS' EQUITY Total current liabilities 7 447 5 501 5 301 Total long-term liabilities 7 809 5 768 5 998 Total shareholders' equity 19 269 14 233 34 519 34 525 25 502 45 818 Condensed Consolidated Statements of Operations US GAAP (Amounts in thousands except share and per share data) Six months ended December 31, 2004 2004 2003 US$ euro euro (unaudited) (unaudited) (audited) Revenues Revenues from collaborative and licensing agreements 2 067 1 527 1 140 Grants received for research and development 0 0 42 Total revenues 2 067 1 527 1 182 Operating expenses Research and development (13 442) (9 929) (10 358) General & administrative (3 104) (2 293) (2 209) Restructuring 0 0 94 Total operating expenses (16 546) (12 222) (12 473) Loss from operations (14 479) (10 695) (11 291) Interest and other income, net 200 148 415 Income tax benefit 965 713 0 Net loss (13 313) (9 834) (10 876) Loss per ordinary share (1,32) (0,98) (1,08) Weighted average number of shares outstanding 10 055 760 10 055 760 10 055 760 Loss per ADS (American Depositary Share) (0,44) (0,33) (0,36) Weighted average number of ADSs outstanding 30 167 280 30 167 280 30 167 280 US GAAP (Amounts in thousands except share and per share data) Twelve months ended December 31, 2004 2004 2003 US$ euro euro (unaudited) (unaudited) (audited) Revenues Revenues from collaborative and licensing agreements 3 403 2 514 2 459 Grants received for research and development 0 0 42 Total revenues 3 403 2 514 2 501 Operating expenses Research and development (27 091) (20 011) (20 257) General & administrative (5 649) (4 173) (4 274) Restructuring 0 0 94 Total operating expenses (32 740) (24 184) (24 437) Loss from operations (29 337) (21 670) (21 936) Interest and other income, net 662 489 1 061 Income tax benefit 942 696 0 Net loss (27 733) (20 485) (20 875) Loss per ordinary share (2,76) (2,04) (2,08) Weighted average number of shares outstanding 10 055 760 10 055 760 10 055 760 Loss per ADS (American Depositary Share) (0,92) (0,68) (0,69) Weighted average number of ADSs outstanding 30 167 280 30 167 280 30 167 280 Notes: The official financial information of Transgene is stated in Euros. The financial information expressed in US$ is translated solely for the convenience of the reader at 1.00 euro = $ 1.3538, the noon buying rate of the Federal Reserve Bank of New York on December 31, 2004. The 2003 accounts have been restated to SFAS 123 "Accounting for Stock based Compensation". DATASOURCE: Transgene CONTACT: Philippe Poncet, C.F.O. and Investors Relations of Transgene, +33-3-88-27-91-01; or Michael Long of Cohn & Wolfe, +1-415-365-8523; or Tiphaine Hecketsweiler of Image 7, +33-1-53-70-74-70 Web site: http://www.transgene.fr/

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