BERKELEY HEIGHTS, N.J., Aug. 7 /PRNewswire-FirstCall/ -- Genta
Incorporated (OTC:GNTA) (BULLETIN BOARD: 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(R) 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(R) 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(R);
Bristol Myers Squibb] and docetaxel [Taxotere(R); 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(R). 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(R) (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(R) (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:
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(R) 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. CONTACT: Genta Investor Relations
Genta Incorporated Selected Condensed Consolidated Financial Data
(In thousands, except per share data) (Unaudited) Three Months
Ended Six Months Ended June 30 June 30 2008 2007 2008 2007 Product
sales - net $131 $105 $248 $199 Cost of goods sold 29 26 54 48
Gross margin 102 79 194 151 Operating expenses: Research and
development 4,454 4,099 10,891 7,481 Selling, general and
administrative 2,587 4,735 6,225 8,787 Settlement of office lease
obligation 3,307 - 3,307 - Reduction in liability for settlement of
litigation (80) (240) (340) (1,800) Total operating expenses 10,268
8,594 20,083 14,468 Amortization of deferred financing costs (840)
- (840) - Fair value - conversion feature liability (720,000) -
(720,000) - Fair value - warrant liability (7,200) - (7,200) - All
other income/(expense), net (158) 280 (92) 478 Net loss $(738,364)
$(8,235) $(748,021) $(13,839) Net loss per basic and diluted share
$(20.10) $(0.27) $(21.21) $(0.48) Weighted average shares - basic
and diluted 36,741 30,621 35,261 28,604 Selected Condensed
Consolidated Balance Sheet Data June 30 2008 December 31 Unaudited
2007 Cash, cash equivalents and marketable securities $16,278
$7,813 Working capital (deficit)* (750,173) 877 Total assets 44,029
29,293 Total stockholders' (deficit)/equity (741,957) 2,931 *
Includes fair value of the conversion feature liability and the
warrant liability DATASOURCE: Genta Incorporated CONTACT: Genta
Investor Relations, +1-908-286-3980, Web site:
http://www.genta.com/
http://www.genta.com/investorrelation/events.html
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