Genta reports net loss of $11.7M for fourth-quarter 2009

Mar 29 2010

Genta Incorporated (OTCBB: GETA.OB) today reported results for the quarter and year ended December 31, 2009. The Company also provided an overview of recent corporate highlights and anticipated milestones.

• Genta reported initial data on overall response and progression-free survival from AGENDA, the Company's randomized, double-blind, Phase 3 trial of dacarbazine with or without Genasense^® (oblimersen sodium) Injection. While differences in both endpoints favored the group treated with Genasense, the differences were not statistically significant and the results were not considered sufficient to resubmit the New Drug Application (NDA) for regulatory approval of Genasense at this time.
• The Independent Data Monitoring Board for AGENDA was asked to conduct a futility analysis in order to ascertain the trial's potential to demonstrate a survival benefit. For this analysis, the conditional probability was set at a minimum level of 50% using the prospectively specified target hazard ratio of 0.69. The AGENDA study passed this futility analysis. In view of this finding, the Company determined that the study should continue, and that the trial should remain blinded for overall survival until mature data are available 24 months after randomization of the last patient, as prospectively specified. The Company currently anticipates that followup will be completed in the 1^st-Quarter 2011.
• Results from the Phase 2 trial of Genasense, Abraxane^®, and Temodar^® as 1^st-line treatment of patients with advanced melanoma continued to show promising results. Final data from this trial will be presented at the annual meeting of the American Society of Clinical Oncology (ASCO) in June 2010.
• The Company initiated a Phase 2 trial of tesetaxel, the leading oral taxane in clinical development, as 2^nd-line treatment of patients with advanced melanoma. Initial data from this study are expected during 2010. Tesetaxel has received designation by the U. S. Food and Drug Administration (FDA) as an Orphan Drug in this indication.
• Genta completed a dose-ranging and pharmacokinetic study of tesetaxel administered once every 3 weeks in patients with advanced cancer. Data from this trial will be presented at the annual ASCO meeting in June 2010. Subsequently, the Company initiated a dose-ranging study using a weekly schedule, which is currently ongoing. The Company plans to initiate additional Phase 2a and Phase 2b trials of tesetaxel in 2010.
• Two U.S. patents were issued and several additional patent applications were filed for compositions and therapeutic uses of oral gallium-containing compounds. The Company has supplied Ganite^® (gallium nitrate injection) for a clinical study in patients with cystic fibrosis who are susceptible to resistant bacterial infections, which will initiate in the 2^nd-Quarter 2010. Initial data from a clinical and pharmacokinetic study of a gallium compound to treat chronic pulmonary infections with Pseudomonas aeruginosa will be presented at the annual meeting of the American Association of Cancer Research (AACR) in April 2010.
• The Company raised gross proceeds totaling approximately $36 million in common stock, warrants, and convertible debt offerings during the 2nd-half of 2009 and the 1st-quarter of 2010. The Company's current cash position is approximately $21 million, exclusive of an additional $5 million in a blocked account that can be released subject to certain terms and conditions.

Financial Results

The Company issued convertible notes and warrants in June 2008 and in April 2009 and issued shares of common stock, convertible notes and warrants in July 2009 and in September 2009. At the time of the financings in June 2008 and in April 2009, there was an insufficient number of authorized shares of common stock in order to permit conversion of all notes and warrants. Accordingly, the conversion obligation for the notes and warrants were classified as liabilities and measured at fair value on the balance sheet. The liabilities were then marked-to-market up until the dates that the Company's stockholders approved changes in the corporate structure, resulting in income of $40.8 million for the fourth quarter of 2008 and expense of $26.7 million and $462.0 million for the twelve months ended December 31, 2009 and 2008, respectively.

The net loss for the quarter ended December 31, 2009 was $(11.7) million, or $(0.06) per basic and diluted share, compared to net income of $29.6 million, or $12.90 per basic share and $0.89 per diluted share, for the quarter ended December 31, 2008. For the year ended December 31, 2009, the net loss was $(86.3) million, or $(0.84) per basic and diluted share, compared to a net loss of $(505.8) million, or $(455.09) per basic and diluted share, for the year ended December 31, 2008.

At December 31, 2009, Genta had cash and cash equivalents totaling $1.2 million compared with $4.9 million at December 31, 2008. As recently reported, on March 9, 2010, the Company closed on a financing, whereby it issued $25 million of units consisting of various senior unsecured convertible notes, and warrants to purchase additional senior unsecured convertible notes with an aggregate principal amount of $10.0 million. The Company's current cash position is approximately $21 million, exclusive of an additional $5 million in a blocked account that can be released subject to certain terms and conditions. Net cash used in operating activities through December 31, 2009 was $21.5 million, which represents an average monthly outflow of $1.8 million. The average monthly outflow during 2010 is expected to be $1.2 million.