GenVec reports net loss of $1.7 million for second quarter 2014

Aug 12 2014

GenVec, Inc. (NASDAQ: GNVC) today reported financial results for the three-month and six-month periods ended June 30, 2014. For the three-month period ended June 30, 2014, the company reported a net loss of $1.7 million or $0.10 per share on revenues of $0.1 million as compared to a net loss of $3.1 million or $0.24 per share on revenues of $0.7 million in the same period in the prior year. For the six-month period ended June 30, 2014, the company reported a net loss of $2.6 million or $0.17 per share on revenues of $2.3 million as compared to a net loss of $6.2 million or $0.48 per share on revenues of $2.0 million in the same period in the prior year. GenVec ended the second quarter of 2014 with $14.6 million in cash, cash equivalents, and liquid investments.

Financial Results for the Three-Month and Six-Month Periods Ended June 30, 2014

Revenues for the three-month and six-month periods ended June 30, 2014 were $0.1 million and $2.3 million, which represent a decrease of 83% and an increase of 16% as compared to $0.7 million and $2.0 million in the comparable prior year periods.

The decrease in revenue for the three-month period ended June 30, 2014 is primarily due to a decrease of $0.2 million associated with our Foot and Mouth Disease (FMD) program, $0.1 million associated with our hearing loss and balance disorders program and $0.3 million due to reduced work scope and grant work performed for our NIH programs and malaria programs.

The increase in revenue for the six-month period ended June 30, 2014 is primarily due to an increase of $1.5 million associated with our hearing loss and balance disorders program as a result of the achievement of the third milestone under our Agreement with Novartis. The $2.0 million milestone was triggered by the non-rejection of the IND submitted by Novartis to the FDA in the three-month period ended March 31, 2014. There were no milestones achieved in the six months ended June 30, 2013. Partially offsetting the increase in the six-month period ended June 30, 2014 was a decrease in revenue associated with our hearing loss and balance disorders program of $0.5 million as compared to the same period in 2013. Additionally, for the six-month period ended June 30, 2014 there were reductions in revenue of $0.5 million with respect to our FMD program and $0.7 million due to reduced work scope and grant work performed for our NIH programs and malaria programs.

Operating expenses were $1.8 million and $4.9 million for the three-month and six-month periods ended June 30, 2014, which represent decreases of 53% and 40% as compared to $3.9 million and $8.1 million in the comparable prior year periods.

Research and development expenses for the three-month and six-month periods ended June 30, 2014 decreased 65% and 68%, respectively, from $1.4 million and $3.7 million in 2013 to $0.5 million and $1.2 million in 2014. The decreases in the three and six-month periods ended June 30, 2014 were primarily due to lower personnel costs resulting from our reductions in personnel in February 2013 and June 2013 and a decreased allocation of facility costs to research and development as compared to the same periods in 2013. Additionally, in the six-month period ended June 30, 2014 we incurred reduced material costs for our funded programs and lower general supply costs as compared to the comparable period in 2013. Partially offsetting these lower costs in both periods were expenses related to our NMRC contract that were capitalized during the six-months ended June 30, 2013 prior to their recognition in July 2013. There were no such transactions in 2014.

General and administrative expense for the three-month and six-month periods ended June 30, 2014 decreased 47% and 16% with expense of approximately $1.3 million and $3.7 million in 2014 as compared to $2.5 million and $4.4 million in 2013. The decreases were primarily due to lower personnel costs resulting from our reductions in force in February 2013 and June 2013 and lower professional fees. Additionally, in 2013 we incurred expense related to the impairment of our manufacturing facility and the write-off of shelf registration expenses. Partially offsetting these decreases were the one-time facility costs associated with the relocation of our corporate office and research and development laboratories that occurred in January 2014 and an increased allocation of facility costs to general and administrative for the three-month and six-month periods ended June 30, 2014 as compared to the same periods in 2013.

2014 Guidance

For 2014, GenVec expects cash burn between $5.0 million and $7.0 million. The company believes that existing resources, combined with anticipated near-term milestones, are sufficient to fund the company's operations into the foreseeable future.