GenVec 2011 net loss decreases to $7.4 million

Mar 15 2012

Today GenVec, Inc. (NASDAQ: GNVC) announced financial results for the fourth quarter and year ended December 31, 2011.  For the year ended December 31, 2011, the Company reported a net loss of $7.4 million, or $0.58 per share, compared with a net loss of $12.3 million, or $0.97 per share, for the year ended December 31, 2010. GenVec ended the year with $26.4 million in cash, cash equivalents, and short-term investments.  

"In 2011 we made significant progress in our hearing loss program, partnered with Novartis, and advanced the development of our attractive portfolio of vaccine opportunities. We also enhanced our differentiated, proprietary core technology, adding further value to our product pipeline. We believe 2012 has the potential for important advances in these programs," stated Paul H. Fischer, Ph.D., GenVec's President and CEO.

2011 and Recent Corporate Highlights

• We extended our Research Collaboration and License Agreement with Novartis (NYSE: NVS).  Under the extension, Novartis will fund research at GenVec through January 2013 to support its hearing loss and balance disorders program.
• We achieved the second milestone in our research collaboration with Novartis which was triggered by the successful completion of certain preclinical development activities.  After this achievement, we are eligible to receive up to an additional $206.0 million in milestone payments if certain clinical, regulatory, and sales milestones are met, in addition to royalties on future sales.
• Research was published describing how GenVec technology, utilizing a vector targeted to supporting cells and limited in expression to those cells, can be used to restore balance function in an animal model.
• We expanded our relationship with Merial, initially focused on the development of vaccines against FMD, to explore applications of our technology in other areas of animal health.
• We entered into a Cooperative Research and Development Agreement with the U.S. Naval Medical Research Center (NMRC) to support their dengue fever vaccine research. Under a separate contract with the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc., GenVec will receive funding for the development and preparation of vaccines related to this program.
• We completed a reverse stock split and regained compliance with NASDAQ listing requirements.
• Adel A.F. Mahmoud, M.D., Ph.D. and Edward M. Connor, Jr., M.D. were elected to the Company's Board of Directors adding to the Board's depth of knowledge in the areas of infectious disease and vaccine development.
• Through our collaboration with the Department of Homeland Security (DHS), we completed a field safety study of our foot-and-mouth disease (FMD) vaccine.

2011 Financial Results

Revenue increased 8% to $17.7 million in 2011 from $16.5 million in 2010. The increase in 2011 is primarily due to increased revenue of $2.2 million and $1.1 million generated by our hearing loss and balance disorders and foot and mouth disease programs, respectively.  We entered into a collaboration agreement with Novartis in January 2010, which accounted for $3.8 million and $3.4 million of revenue in 2011 and 2010, respectively, and a development agreement related to the supply of clinical trial material related to activities under the collaboration agreement in August 2010, which accounted for $6.0 million and $4.4 million in revenue in 2011 and 2010, respectively.  Work scope under the two Novartis agreements resulted in increased revenue in 2011 as compared to 2010. Increased revenue associated with our foot and mouth disease program is due mainly to an increase in work scope under our agreements with the DHS.  Partially offsetting the increased revenue associated with our hearing loss and balance disorders and foot and mouth disease programs is decreased revenue of $2.2 million associated with our HIV program as compared to the prior year periods due to reduced work scope.

Operating expenses for 2011 decreased 13% to $25.2 million from $29.1 million in 2010.  Research and development expenses decreased 17% to $17.4 million in 2011 from $20.9 million in 2010. In 2011 we experienced lower research and development costs than in the comparable prior year period due primarily to closure of the PACT trial. Decreased manufacturing costs in the hearing program and reduced license costs also contributed to reduced expenses.  These decreases were partially offset by increased manufacturing costs for our FMD program and supply costs for our hearing, government funded, and research programs as compared to the comparable period in 2010.

General and administrative expenses decreased 4% to $7.8 million in 2011 from $8.2 million in 2010. General and administrative expenses were lower in 2011 primarily due to lower professional service, license, and personnel costs.

Fourth Quarter 2011 Results

For the fourth quarter ended December 31, 2011, GenVec reported a net loss of $2.5 million, or $0.19 per share, compared with a net loss of $1.0 million, or $0.08 per share, for the comparable prior year period.  The Company reported revenues of $3.4 million in the fourth quarter of 2011 compared to $5.2 million for the same period in 2010.  This decrease was primarily due to reduced revenue related to both our hearing loss and balance disorders program, $1.2 million, and HIV program, $0.8 million. Reduced revenue in each case is due to a reduced work scope in the 2011 period as compared to the same period in 2010. Research and development expenses decreased 21% in 2011 from $4.9 million in the fourth quarter of 2010 to $3.9 million in the fourth quarter of 2011 due mainly to reduced material and supply costs associated with both our internal research programs and funded programs. General and administrative expenses in the fourth quarter of 2011 increased 33% to $2.0 million from $1.5 million in the comparable period in 2010 primarily due to increased personnel and recruiting costs, partially offset by lower professional costs.

2012 Guidance

GenVec's Senior Vice President and Chief Financial Officer, Douglas J. Swirsky, commented, "For 2012, we anticipate our cash burn will average $2.0 million per quarter."