Genetronics Biomedical Corporation

March 15, 2005 06:01 ET

Genetronics Reports 2004 Financial Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: GENETRONICS BIOMEDICAL CORPORATION

AMEX SYMBOL: GEB

MARCH 15, 2005 - 06:01 ET

Genetronics Reports 2004 Financial Results

SAN DIEGO--(CCNMatthews - Mar 15, 2005) -

Genetronics Biomedical Corporation (AMEX:GEB) today reported financial
results for the quarter and year ended December 31, 2004.

Total revenue for the quarter and year ended December 31, 2004, was
$542,738 and $1,167,099, respectively, compared to $38,077 and $80,529
for the same periods in 2003. Revenue consisted of license fees,
milestone payments, and amounts received from collaborative research and
development arrangements and grants.

Total expenses for the quarter and year ended December 31, 2004, were
$4,337,154 and $12,430,239, respectively, compared to $1,803,481 and
$6,668,774 for the same periods in 2003.

The net loss attributable to common stockholders for the quarter and
year ended December 31, 2004, was $4,012,846, or $0.22 per share, and
$11,705,336, or $0.66 per share, respectively, compared with a net loss
attributable to common stockholders of $13,727,673, or $0.91 per share,
and $22,875,437, or $1.72 per share, for the same periods in 2003.

"2004 was a year of transformation for Genetronics. We initiated two
Phase III and two pre-marketing clinical studies in oncology; appointed
additional highly experienced executives to the board of directors and
management team; completed a $10.9 million funding; and established
license agreements with Merck and Vical," stated Avtar Dhillon, MD,
president and CEO. "With momentum in both our cancer and DNA delivery
programs we look forward to a dynamic 2005 that will include the
initiation of additional clinical studies, release of new data, and
important steps toward commercialization and partnering of our
technology."

Revenue

License fees and milestone payment revenue for the quarter and year
ended December 31, 2004, was $88,971 and $214,351, respectively,
compared to $1,469 and $5,882 for the same periods in 2003. The increase
in license fees for the quarter and year ended December 31, 2004, as
compared to the same periods in 2003, was mainly due to license revenue
recognized from the collaboration and licensing agreement with Merck
signed in May 2004 to develop and commercialize our MedPulser DNA
Delivery System, which is being developed for use with certain of
Merck's DNA vaccine programs. Under this agreement, we will receive
payments if certain product development milestones are achieved. The
upfront payment received from Merck in 2004 and prospective future
milestone payments will be amortized over the term of the agreement.
Royalties are payable on sales utilizing the device developed under this
agreement.

Revenue recorded under collaborative research and development
arrangements for the quarter and year ended December 31, 2004, was
$446,610 and $945,591, respectively, compared to $36,608 and $74,647 for
the same periods in 2003. The increase in revenue from collaborative
research and development arrangements during the quarter and year ended
December 31, 2004, as compared to the same periods in 2003, was
primarily due to revenue recognized from the collaboration and licensing
agreements with Merck signed in May 2004.

During 2004, we were awarded a grant by the National Institutes of
Health to conduct research in the field of vascular gene therapy. The
$100,000 Phase I grant, entitled "Ex vivo venous gene delivery by pulsed
electric fields," was awarded through the Small Business Innovative
Research (SBIR) program and may be followed, upon evaluation, by a Phase
II award of up to $1.0 million.

Expenses

Research and development expenses for the quarter and year ended
December 31, 2004 was $2,586,005 and $6,548,599, respectively, compared
to $598,508 and $2,146,909 for the same periods in 2003. The increase in
research and development expenses for the quarter and year ended
December 31, 2004, as compared to the same periods in 2003, was
primarily due to an increase in clinical trial expenses. These clinical
trial expenses include the use of a clinical research organization hired
in association with our clinical trials and costs associated with the
use of outside clinical and regulatory consultants. The remainder of the
increase was mainly due to increased personnel expenses to support
internal efforts related to product development and clinical trials,
increased external research expenses, and additional travel and other
consulting expenses associated with our clinical trials.

We initiated two Phase III head and neck clinical trials during 2004 in
the United States and Europe. These trials compare our electroporation
therapy to surgery using a primary endpoint of function preservation and
secondary endpoints of local tumor control, disease free survival, and
overall survival. In addition, we initiated two European pre-marketing
trials for skin cancer and head and neck cancer to gather additional
clinical and pharmacoeconomic data. Due to the initiation of the
clinical trials, we anticipate research and development expenses from
clinical and regulatory activities to increase in fiscal 2005.

General and administrative expenses, which include business development
expenses, for the quarter and year ended December 31, 2004, was
$1,843,607 and $6,129,195, respectively, compared to $1,247,538 and
$4,566,882 for the same periods in 2003. The increase in general and
administrative expenses for the quarter and year ended December 31,
2004, as compared to the same periods in 2003, was mainly due to
increased consulting and legal expenses, increased stock option expenses
pursuant to the issuance of stock options for non-employee consultants,
and increased personnel costs. There were also significant external
consulting and accounting-related expenses in 2004 related to the
implementation of internal control over financial reporting requirements
under Section 404 of the Sarbanes-Oxley Act of 2002.

Net Loss Attributable to Common Stockholders

The decrease in the net loss for the quarter and year ended December 31,
2004, as compared to the same period in 2003, resulted from higher
revenue from license fees, milestone payments, and collaborative
research and development arrangements. In addition, during the year
ended December 31, 2003, in connection with the sale of our Series A and
B preferred stock, we recorded imputed dividend charges of $6,045,799
and $11,807,144, respectively, related to the beneficial conversion
feature of this preferred stock.

Capital Resources

We ended 2004 with cash and cash equivalents of $17,889,797 and working
capital of $13,036,685. As of December 31, 2003, we had cash and cash
equivalents of $13,460,446 and working capital of $12,593,153.

Outlook

Going forward, we have the following business objectives:

-- 1. Conclude patient enrollment in phase III recurrent and second
primary head and neck cancer studies in the U.S. and the European Union
(EU);

-- 2. Conclude the European pre-marketing clinical study in new and
recurrent primary squamous cell carcinoma of the head and neck (SCCHN)
to support the commercialization of our MedPulser® Electroporation
Therapy System in the EU;

-- 3. Conclude the European pre-marketing clinical study for new and
recurrent primary skin cancers to support commercialization of the
MedPulser Electroporation Therapy System;

-- 4. Initiate clinical studies for additional indications such as
breast and pancreas cancers (a Phase I pancreatic cancer study was
announced on March 1, 2005);

-- 5. Obtain reimbursement codes for the MedPulser Electroporation
Therapy System for the treatment of head and neck or cutaneous cancers
in the EU;

-- 6. Enter into additional industry relationships for the use of our
electroporation technology in the delivery of specific genes;

-- 7. Initiate additional Phase I human clinical studies involving the
use of electroporation with DNA, most likely in the areas of infectious
diseases and cancer; and

-- 8. Conclude a strategic license with a partner in the U.S. and/or EU
for marketing rights to the MedPulser Electroporation Therapy System in
oncology.

About Genetronics Biomedical Corporation

Genetronics Biomedical Corporation is a late stage biomedical company
focused on building an oncology franchise based on its proprietary
electroporation therapy. The therapy targets a significant unmet
clinical need: the selective killing of cancer cells and local ablation
of solid tumors while preserving healthy tissue. The company is moving
its lead product, the MedPulser® Electroporation Therapy System,
through pre-sales studies for head and neck as well as skin cancers in
Europe, where it has CE Mark accreditation, and a U.S. Phase III pivotal
study for recurrent head and neck cancer. Merck, Vical, Chiron, the U.S.
Navy and other partners are also employing Genetronics' electroporation
technology, which facilitates local delivery of drugs and nucleic acids,
in their development of novel DNA vaccines and gene therapies.
Genetronics is a leader in the application of electroporation for human
therapies, with over 240 patents worldwide that are issued, allowed or
pending. More information can be obtained at www.genetronics.com.

This press release contains certain forward-looking statements relating
to Genetronics' plans to develop its electroporation drug and gene
delivery technology and to maximize shareholder value. Actual events or
results may differ from Genetronics' expectations as a result of a
number of factors, including the uncertainties inherent in clinical
trials and product development programs, evaluation of potential
opportunities, the level of corporate expenditures, the assessment of
Genetronics' technology by potential corporate partners, capital market
conditions, and other factors set forth in the Genetronics' Annual
Report on Form 10-K for the 12-month period ended December 31, 2004, and
other regulatory filings. There can be no assurance that any product in
the Genetronics product pipeline will be successfully developed or
manufactured, or that final results of clinical studies will be
supportive of regulatory approvals required to market licensed products.



GENETRONICS BIOMEDICAL CORPORATION

CONSOLIDATED BALANCE SHEETS


December 31, December 31,
2004 2003
------------ ------------

ASSETS

Current assets:
Cash and cash equivalents $17,889,797 $13,460,446
Accounts receivable 424,157 175,000
Prepaid expenses and other 124,723 116,526
------------ ------------
Total current assets 18,438,677 13,751,972
Fixed assets, net 155,253 175,902
Patents and other assets, net 2,357,572 2,301,116
------------ ------------
Total assets $20,951,502 $16,228,990
============ ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $2,155,592 $787,087
Accrued clinical trial expenses 2,195,816 40,568
Deferred revenue 1,050,584 331,164
------------ ------------
Total current liabilities 5,401,992 1,158,819
Deferred rent - 22,536
------------ ------------
Total liabilities 5,401,992 1,181,355
------------ ------------

Stockholders' equity:
Preferred stock 2 1
Common stock 18,420 15,920
Additional paid-in capital 103,438,408 91,233,698
Accumulated deficit (87,907,320) (76,201,984)
------------ ------------
Total stockholders' equity 15,549,510 15,047,635
------------ ------------
Total liabilities and stockholders' equity $20,951,502 $16,228,990
============ ============

All applicable share and per share amounts have been adjusted to
give effect to the one-for-four reverse stock split of our common
stock on September 13, 2004.


GENETRONICS BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF
OPERATIONS

Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
------------ ------------- ------------- -------------
(unaudited)
Revenue:
License fee and
milestone payments $88,971 $1,469 $214,351 $5,882
Revenue under
collaborative research
and development
arrangements 446,610 36,608 945,591 74,647
Grants 7,157 - 7,157 -
------------ ------------- ------------- -------------
Total revenue 542,738 38,077 1,167,099 80,529
------------ ------------- ------------- -------------

Expenses:
Research and
development 2,586,005 598,508 6,548,599 2,146,909
General and
administrative 1,843,607 1,247,538 6,129,195 4,566,882
Interest income,
net (92,458) (42,565) (247,555) (45,017)
------------ ------------- ------------- -------------

Total expenses 4,337,154 1,803,481 12,430,239 6,668,774
------------ ------------- ------------- -------------

Loss from continuing
operations (3,794,416) (1,765,404) (11,263,140) (6,588,245)

Discontinued operations:
Gain on disposal
and other, net - - 290,209 2,034,078
Loss from
operations - - - (110,740)
------------ ------------- ------------- -------------

Net loss (3,794,416) (1,765,404) (10,972,931) (4,664,907)

Imputed and declared
dividends on
preferred stock (218,430) (11,962,269) (732,405) (18,210,530)
------------ ------------- ------------- -------------

Net loss attributable
to common
stockholders $(4,012,846) $(13,727,673) $(11,705,336) $(22,875,437)
============ ============= ============= =============

Amounts per common share -
basic and diluted:
Loss from continuing
operations $(0.21) $(0.12) $(0.64) $(0.49)
Income from discontinued
operations, net - - 0.02 0.14
Imputed and declared
dividends on
preferred stock (0.01) (0.79) (0.04) (1.37)
------------ ------------- ------------- -------------
Net loss attributable
to common
stockholders $(0.22) $(0.91) $(0.66) $(1.72)
============ ============= ============= =============

Weighted average number
of common shares -
basic and
diluted 18,341,032 15,122,008 17,623,559 13,316,624
============ ============= ============= =============


All applicable share and per share amounts have been adjusted to
give effect to the one-for-four reverse stock split of our common
stock on September 13, 2004.



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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Genetronics Biomedical Corporation
    Bernie Hertel, 858-410-3101
    Investor Relations
    or
    Atkins + Associates
    Susan Neath, 858-527-3486
    Media Relations