MARTINSRIED/MUNICH, Germany and PRINCETON, N.J., Aug. 8
/PRNewswire-FirstCall/ -- GPC Biotech AG (Frankfurt Stock Exchange:
GPC; TecDAX 30; Nasdaq: GPCB) today reported financial results for
the second quarter and first six months ended June 30, 2007. First
six months of 2007 compared to first six months of 2006 Revenues
decreased 35% to euro 7.2 million for the six months ended June 30,
2007, compared to euro 11.0 million for the same period in 2006.
The decrease in revenues is mainly due to lower development funding
received under the co-development and license agreement with
Pharmion for satraplatin in Europe and certain other territories,
as well as the expiration of various research collaboration
arrangements with ALTANA Pharma. Research and development (R&D)
expenses decreased 2% to euro 28.6 million for the first six months
of 2007 compared to euro 29.1 million for the same period in 2006.
In the first six months of 2007, general and administrative
(G&A) expenses increased 129% to euro 23.4 million compared to
euro 10.2 million for the first six months of 2006. The increase in
G&A expenses is primarily due to the formation of a sales and
marketing organization for the U.S., as well as legal expenses
related to litigation. The Company also reported restructuring
charges of euro 0.9 million in the second quarter of 2007 primarily
for employee severance and termination costs related to the closing
of its Massachusetts facility. Those charges are included in
R&D and G&A expenses. Net loss for the first six months of
2007 increased 52% to euro (42.8) million compared to euro (28.1)
million for the first six months of 2006. Basic and diluted loss
per share was euro (1.20) for the first six months of 2007 compared
to euro (0.87) for the same period in 2006. Quarter over quarter
results: second quarter 2007 compared to first quarter 2007
Revenues for the second quarter of 2007 were euro 3.4 million
compared to euro 3.8 million for the previous quarter. R&D
expenses increased 19% to euro 15.5 million for the second quarter
of 2007, compared to euro 13.0 million in the first quarter of
2007. G&A expenses for the second quarter of 2007 increased 13%
to euro 12.4 million compared to euro 11.0 million for the previous
quarter. The Company's net loss increased 23% to euro (23.7)
million in the second quarter of 2007, compared to euro (19.2)
million for the previous quarter. Basic and diluted loss per share
was euro (0.66) for the second quarter of 2007 compared to euro
(0.54) for the previous quarter. Comparison to previous year:
second quarter 2007 compared to second quarter 2006 Revenues for
the three months ended June 30, 2007 decreased 39% to euro 3.4
million compared to euro 5.6 million for the same period in 2006.
R&D expenses increased 7% for the second quarter of 2007 to
euro 15.5 million compared to euro 14.5 million for the same period
in 2006. G&A expenses for the second quarter of 2007 increased
114% to euro 12.4 million compared to euro 5.8 million for the same
quarter in 2006. Net loss for the second quarter of 2007 increased
56% to euro (23.7) million compared to euro (15.2) million for the
second quarter of 2006. Basic and diluted loss per share was euro
(0.66) for the second quarter of 2007 compared to euro (0.46) for
the same period in 2006. Cash position As of June 30, 2007, cash,
cash equivalents, marketable securities and short-term investments
totaled euro 93.1 million (December 31, 2006: euro 97.1 million),
including euro 1.5 million in restricted cash. Net cash burn for
the first six months of 2007 was euro 42.0 million with net cash
burn of euro 19.4 million in the first quarter and euro 22.6
million in the second quarter of 2007. Net cash burn is derived by
adding net cash used in operating activities and purchases of
property, equipment and licenses. The figures used to calculate net
cash burn are contained in the Company's unaudited consolidated
statements of cash flows for the six-month period ended June 30,
2007. At June 30, 2007, the Company recorded a receivable in the
amount of euro 7.4 million related to the signing of a license
agreement with Yakult Honsha Co. Ltd. for satraplatin for Japan.
This payment was received in July 2007. In July 2007, the Company's
partner Pharmion announced the acceptance for review by the
European Medicines Agency (EMEA) of the Marketing Authorization
Application (MAA) for satraplatin in combination with prednisone
for the treatment of metastatic hormone-refractory prostate cancer
patients whose prior chemotherapy has failed. As a result of this
acceptance, GPC Biotech will receive a milestone payment of
approximately euro 6.0 million ($8 million) from Pharmion. Also as
a result of the acceptance for review of the MAA, GPC Biotech will
pay to Spectrum Pharmaceuticals a total of approximately euro 2.4
million ($3.2 million), representing a direct milestone payment
plus Spectrum's share of the $8 million milestone payment from
Pharmion. The Company also provided updated guidance for the
remainder of 2007: - Revenues for the full year 2007 expected to be
in the range of euro 17 to 19 million. - Immediate cost-cutting
measures have been implemented that are expected to result in
approximately euro 10 million in savings through the end of 2007.
Additional guidance on expenses is not being provided at this time
as the Company continues to evaluate various options. - Year-end
2007 cash, cash equivalents and available-for-sale securities
position expected to be approximately euro 60 million. "Despite the
recent setback, we remain in a solid financial position and believe
we have sufficient cash under current expectations to carry us
through to a potential regulatory submission based on the overall
survival analysis," said Mirko Scherer, Ph.D., Senior Vice
President and Chief Financial Officer. "With our recent
cost-cutting measures alone and anticipated revenues and expenses
for the rest of the year, we expect to end 2007 with approximately
euro 60 million in cash and equivalents." "While we have been very
disappointed by recent events that led to our withdrawal of the
satraplatin NDA, we must move forward," said Bernd R. Seizinger,
M.D., Ph.D., Chief Executive Officer. "We are first focused on
overall survival results from the satraplatin SPARC trial. Based on
that outcome, we plan to work closely with the FDA with the goal of
submitting an NDA to the agency as quickly as possible." Conference
call scheduled As previously announced, the Company has scheduled a
conference call to which participants may listen via live webcast,
accessible through the GPC Biotech Web site at
http://www.gpc-biotech.com/ or via telephone. A replay will be
available via the Web site following the live event. The call,
which will be conducted in English, will be held on August 8 at
14:00 CET/8:00 AM ET. The dial-in numbers for the call are as
follows: European participants: 0049-(0)69-5007-1305 or
0044-(0)20-7806-1950 U.S. participants: 1-718-354-1385 About GPC
Biotech GPC Biotech AG is a publicly traded biopharmaceutical
company focused on discovering, developing and commercializing new
anticancer drugs. GPC Biotech's lead product candidate satraplatin
is currently in a Phase 3 registrational trial in second-line
hormone-refractory prostate cancer. Satraplatin was in-licensed
from Spectrum Pharmaceuticals, Inc. GPC Biotech is also developing
a monoclonal antibody with a novel mechanism-of-action against a
variety of lymphoid tumors, currently in Phase 1 clinical
development, and has ongoing drug development and discovery
programs that leverage its expertise in kinase inhibitors. GPC
Biotech AG is headquartered in Martinsried/Munich (Germany) and has
a wholly owned U.S. subsidiary headquartered in Princeton, New
Jersey. For additional information, please visit GPC Biotech's Web
site at http://www.gpc-biotech.com/. This press release contains
forward-looking statements, which express the current beliefs and
expectations of the management of GPC Biotech AG. Such statements
are based on current expectations and are subject to risks and
uncertainties, many of which are beyond our control, that could
cause future results, performance or achievements to differ
significantly from the results, performance or achievements
expressed or implied by such forward-looking statements. Actual
results could differ materially depending on a number of factors,
and we caution investors not to place undue reliance on the
forward- looking statements contained in this press release. In
particular, there can be no guarantee that the results from the
final analysis of overall survival data from the SPARC trial will
be available when anticipated or sufficient to support regulatory
approval in the United States or elsewhere. In addition, there can
be no guarantee that additional information relating to the safety,
efficacy or tolerability of satraplatin will not be obtained upon
further analysis of data from the SPARC trial or analysis of
additional data from other ongoing clinical trials for satraplatin.
Furthermore, we cannot guarantee that satraplatin will be approved
for marketing in a timely manner, if at all, by regulatory
authorities nor that, if marketed, satraplatin will be a successful
commercial product. We direct you to GPC Biotech's Annual Report on
Form 20-F for the fiscal year ended December 31, 2006 and other
reports filed with the U.S. Securities and Exchange Commission for
additional details on the important factors that may affect the
future results, performance and achievements of GPC Biotech.
Forward-looking statements speak only as of the date on which they
are made and GPC Biotech undertakes no obligation to update these
forward-looking statements, even if new information becomes
available in the future. Satraplatin has not yet been approved by
the FDA in the U.S., the EMEA in Europe or any other regulatory
authority and no conclusions can or should be drawn regarding its
safety or effectiveness. Only the relevant regulatory authorities
can determine whether satraplatin is safe and effective for the
use(s) being investigated. GPC Biotech AG Condensed Consolidated
Statements of Operations (U.S. GAAP) Three months ended Six months
ended in thousand euro, June 30, June 30, except share and per 2007
2006 2007 2006 share data (unaudited) (unaudited) (unaudited)
(unaudited) Collaborative revenues (a) 3,320 5,425 7,082 10,823
Grant revenues 67 194 144 194 Total revenues 3,387 5,619 7,226
11,017 Research and development expenses 15,527 14,535 28,567
29,054 General and administrative expenses 12,376 5,800 23,399
10,177 Amortization of intangible assets 90 71 181 143 Total
operating expenses 27,993 20,406 52,147 39,374 Operating loss
(24,606) (14,787) (44,921) (28,357) Other income (expense), net
(68) (1,473) 89 (2,147) Interest income 1,049 1,085 2,077 2,036
Interest expense (40) (22) (67) (44) Net loss before cumulative
effect of change in accounting principle (23,665) (15,197) (42,822)
(28,512) Cumulative effect of change in accounting principle - - -
433 Net loss (23,665) (15,197) (42,822) (28,079) Loss per share
before change in accounting principle (0.66) (0.46) (1.20) (0.88)
Cumulative effect of change in accounting principle - - - 0.01
Basic and diluted loss per share (0.66) (0.46) (1.20) (0.87) Shares
used in computing basic and diluted loss per share 36,106,533
33,103,667 35,776,752 32,220,336 (a) Revenues from related party
Collaborative revenues - 1,870 - 3,344 See accompanying notes to
unaudited condensed consolidated financial statements. GPC Biotech
AG Condensed Consolidated Balance Sheets (U.S. GAAP) in thousand
euro, except share data and per share data June 30 December 31
Assets 2007 (unaudited) 2006 Current assets Cash and cash
equivalents 44,939 38,336 Marketable securities and short-term
investments 46,577 57,186 Accounts receivable 11,061 11 Accounts
receivable, related party - 395 Prepaid expenses 960 1,299 Other
current assets 3,235 2,970 Total current assets 106,772 100,197
Property and equipment, net 4,626 4,259 Intangible assets, net 219
405 Other assets, non-current 1,009 1,127 Restricted cash 1,538
1,531 Total assets 114,164 107,519 Liabilities and shareholders'
equity Current liabilities Accounts payable 3,679 2,262 Accrued
expenses and other current liabilities 17,964 14,346 Current
portion of deferred revenue 8,367 7,240 Current portion of deferred
revenue, related party - 896 Total current liabilities 30,010
24,744 Deferred revenue, net of current portion 13,446 9,103
Convertible bonds 3,098 3,108 Other liabilities, non-current -
3,389 Shareholders' equity Ordinary shares, euro 1 non-par,
notional value: Shares authorized: 62,695,630 at June 30, 2007 and
December 31, 2006 Shares issued and outstanding: 36,253,053 at June
30, 2007 and 33,895,444 at December 31, 2006 36,253 33,895
Additional paid-in capital 368,370 328,171 Subscribed shares 1,529
334 Accumulated other comprehensive loss (2,250) (1,755)
Accumulated deficit (336,292) (293,470) Total shareholders' equity
67,610 67,175 Total liabilities and shareholders' equity 114,164
107,519 See accompanying notes to unaudited condensed consolidated
financial statements. Condensed Consolidated Statements of Cash
Flows (U.S. GAAP) Six months ended June 30, 2007 2006 in thousand
euro (unaudited) (unaudited) Cash flows from operating activities
Net loss (42,822) (28,079) Adjustments to reconcile net loss to net
cash used in operating activities: Depreciation 862 891
Amortization 180 143 Compensation cost for stock option plans and
convertible bonds 5,823 3,246 Loss accrual on sublease contract
(100) 1,013 Cumulative effect of change in accounting principle -
(433) Change in accrued interest income on marketable securities
and short-term investments (351) (170) Bond premium amortization
105 378 Other than temporary impairment on marketable securities -
390 (Gain)/loss on disposal of property and equipment (43) (23)
Changes in operating assets and liabilities: Accounts receivable
(11,050) 31,325 Accounts receivable, related party 395 1,436 Other
assets, current and non-current 117 (1,127) Accounts payable 1,473
(401) Deferred revenue 5,470 (7,126) Deferred revenue, related
party (896) (3,037) Other liabilities and accrued expenses, current
and non-current 144 (1,287) Net cash (used in) provided by
operating activities (40,693) (2,861) Cash flows from investing
activities Purchases of property, equipment and licenses (1,269)
(742) Proceeds from the sale of property and equipment 45 45
Proceeds from the sale or maturity of marketable securities and
short-term investments 11,000 5,000 Purchases of marketable
securities and short-term investments - (5,976) Net cash provided
by (used in) investing activities 9,776 (1,673) Cash flows from
financing activities Proceeds from issuance of shares, net of
payments for cost of transaction 32,633 36,080 Proceeds from
issuance of convertible bonds 345 140 Payments for cancellation of
convertible bonds (24) - Proceeds from exercise of stock options
and convertible bonds 5,384 560 Cash received for subscribed shares
- - Net cash provided by financing activities 38,338 36,780 Effect
of exchange rate changes on cash (784) (359) Changes in restricted
cash (35) (30) Net increase/(decrease) in cash and cash equivalents
6,602 31,857 Cash and cash equivalents at the beginning of the
period 38,337 30,559 Cash and cash equivalents at the end of the
period 44,939 62,416 See accompanying notes to unaudited condensed
consolidated financial statements GPC Biotech AG Consolidated
Statements of Changes in Shareholders' Equity (in thousand euro,
except share data) Ordinary shares Additional Paid-in Subscribed
Shares Amount Capital Shares Balance at December 31, 2005
30,151,757 30,152 284,931 - Components of comprehensive loss: Net
loss Change in unrealized gain on available-for-sale securities
Accumulated translation adjustments Total comprehensive loss
Issuance of shares 2,860,000 2,860 33,220 Exercise of stock options
and convertible bonds 138,446 138 442 Cumulative effect of change
in accounting principle (433) Compensation cost for stock options
and convertible bonds 3,246 Balance at June 30, 2006 (unaudited)
33,150,203 33,150 321,406 - Balance at December 31, 2006 33,895,444
33,895 328,171 334 Components of comprehensive loss: Net loss
Change in unrealized gain on available-for-sale securities
Accumulated translation adjustments Total comprehensive loss
Issuance of shares 1,564,587 1,565 31,068 Exercise of stock options
and convertible bonds 793,022 793 3,725 1,195 Compensation cost for
stock options and convertible bonds 5,406 Balance at June 30, 2007
(unaudited) 36,253,053 36,253 368,370 1,529 Accumulated Other Total
Comprehensive Accumulated Shareholders' Loss Deficit Equity Balance
at December 31, 2005 (2,093) (229,457) 83,533 Components of
comprehensive loss: Net loss (28,079) (28,079) Change in unrealized
gain on available-for-sale securities 471 471 Accumulated
translation adjustments (58) (58) Total comprehensive loss (27,666)
Issuance of shares 36,080 Exercise of stock options and convertible
bonds 580 Cumulative effect of change in accounting principle (433)
Compensation cost for stock options and convertible bonds 3,246
Balance at June 30, 2006 (unaudited) (1,680) (257,536) 95,340
Balance at December 31, 2006 (1,755) (293,470) 67,175 Components of
comprehensive loss: Net loss (42,822) (42,822) Change in unrealized
gain on available-for-sale securities 146 146 Accumulated
translation adjustments (641) (641) Total comprehensive loss
(43,317) Issuance of shares 32,633 Exercise of stock options and
convertible bonds 5,713 Compensation cost for stock options and
convertible bonds 5,406 Balance at June 30, 2007 (unaudited)
(2,250) (336,292) 67,610 See accompanying notes to unaudited
condensed consolidated financial statements GPC Biotech AG Notes to
the Unaudited Condensed Consolidated Financial Statements 1. Basis
of Presentation The accompanying unaudited condensed consolidated
financial statements of GPC Biotech AG (the "Company") have been
prepared in accordance with accounting principles generally
accepted in the United States ("U.S. GAAP"), applicable to interim
financial reporting, specifically Accounting Principles Board
Opinion No. 28 "Interim Financial Reporting". These unaudited
condensed consolidated financial statements do not include all
information and disclosures required for a complete set of
financial statements. However, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating
results for the three month and six-month periods ended June 30,
2007, are not necessarily indicative of results to be expected for
the full year ending December 31, 2007. The balance sheet at
December 31, 2006 has been derived from the audited consolidated
financial statements at that date, but does not include all of the
information required by U.S. GAAP for complete financial
statements. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended
December 31, 2006. 2. New Accounting Pronouncements As of January
1, 2007, GPC Biotech adopted FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109" (FIN 48). The Company has certain deferred
tax assets as a result of several years of losses from operations.
Management determined that it was not probable that sufficient
future taxable income would be available to realize those deferred
tax assets. Therefore, management recognized a full valuation
allowance for those deferred tax assets. The Company's policy is to
accrue interest and penalties on the tax obligations and classify
them as current or noncurrent depending on when the amount is
anticipated to be paid. Currently, the Company does not take any
other tax positions nor has any interest or penalties. On June 14,
2007, the Financial Accounting Standards Board ("FASB") ratified
EITF 07-3, "Accounting for Non-Refundable Advance Payments for
Goods or Services to Be Used in Future Research and Development
Activities". EITF 07-3 requires that all non-refundable advance
payments for R&D activities that will be used in future periods
be capitalized until used. In addition, the deferred research and
development costs need to be assessed for recoverability. EITF 07-3
is applicable for fiscal years beginning after December 15, 2007
and is to be applied prospectively without the option of early
application. The Company will evaluate the impact, if any, of EITF
07-3 on its financial statements. 3. Related Party Disclosures
ALTANA Pharma AG ("ALTANA Pharma") is no longer a related party to
the Company because the board membership of Dr. Bernd Seizinger at
ALTANA Pharma ended December 31, 2006. Therefore, transactions
consummated with ALTANA Pharma from and after January 1, 2007, are
no longer classified as transactions with a related party. 4.
Commitments and Contingencies Contingent Commitments and Contingent
Losses From time to time, the Company may be party to certain legal
proceedings and claims which arise during the ordinary course of
business. The Company also has other contingencies relating to
potential milestone payments. Legal proceedings and contingent
commitments are subject to various uncertainties and the outcomes
are difficult to predict. GPC Biotech may incur significant expense
in defending these or future legal proceedings and in fulfilling
these contingencies, however, in the opinion of management, the
ultimate outcome of these matters will not have material adverse
effects on the Company's financial position, results of operations
or cash flows. In accordance with SFAS No. 5, "Accounting for
Contingencies", the Company makes a provision for a liability when
it is both probable that a liability has been incurred at the date
of the financial statements and when the amount of the loss is
reasonably estimable. With respect to a number of the items listed
below, management has determined that a loss is not probable or the
amount of the loss is not reasonably estimable, or both.
Arbitration Proceedings On December 12, 2006, the Company was
notified by Spectrum Pharmaceuticals Inc. ("Spectrum"), that
Spectrum had initiated an arbitration proceeding with the American
Arbitration Association ("AAA") in the United States to resolve a
dispute between the companies under the co-development and license
agreement for satraplatin. In the course of the arbitration
proceedings, Spectrum has made several claims of breach of
contract, including (1) an assertion that it is entitled to a
payment from GPC Biotech of approximately euro 9.0 million relating
to payments received by GPC Biotech under the co-development and
license agreement between GPC Biotech and Pharmion GmbH entered on
December 19, 2005, (2) a claim that GPC Biotech has not used
commercially reasonable efforts to obtain regulatory approval and
to promote the distribution of satraplatin in Japan, and (3) a
claim that GPC Biotech has not negotiated with Spectrum in good
faith regarding the co-promotion of satraplatin in the United
States. Spectrum is also seeking a declaration that GPC Biotech's
alleged breaches of contract provide a basis for termination of the
co-development and license agreement. The Company believes that
Spectrum's claims have no merit and is therefore contesting such
claims vigorously. Management assessed the prospect of an
unfavorable outcome of this arbitration as less than probable. The
hearing was completed on July 13, 2007 and closing arguments are
scheduled for the end of August 2007. The Company cannot predict
when the arbitration panel will issue its ruling on the dispute.
Fees which the Company pays to its external legal advisors and for
other services associated with this arbitration process are
expensed in the period when such legal and other services are
rendered. Marketing Approval of Satraplatin in the U.S. and Europe
Upon receiving marketing approval for satraplatin in the U.S.
and/or Europe, the Company is required to make the following
payments: * Under the Company's agreement with a third party, GPC
Biotech is obligated to make milestone payments for each of these
approvals in a total amount of approximately euro 6.7 million. *
The Company has a cash bonus plan to retain the Company's employees
in which the total payout may lead to an increase in personnel
expenses of up to euro 1.8 million. * The Company issued stock
appreciation rights (SARs) to senior management, the members of the
Supervisory Board, and certain employees. These SARs would entitle
the holder to cash payments if the performance condition has been
met. Acceptance of NDA Filing On April 16, 2007, the U.S Federal
Drug Administration (FDA) accepted the Company's filing of the New
Drug Application (NDA) for satraplatin for patients with
hormone-refectory prostate cancer (HRPC) whose prior chemotherapy
has failed. In connection with this acceptance, the Company was
required to pay approximately euro 2.9 million to a third party.
This payment was made in May 2007, however, charged to research and
development expense in 2006 when the occurrence of this event was
deemed probable. Development and Supply Agreement GPC Biotech is
the owner and licensee of certain technology and patent rights
regarding the monoclonal antibody known as 1D09C3. In March 2007,
GPC Biotech entered into a development and supply agreement with a
biologics supplier under which the biologics supplier agreed to:
(1) develop a high- productivity cell line and develop and scale-up
a robust manufacturing process and (2) produce quantities of 1D09C3
bulk drug substance for clinical development and commercial supply.
Pursuant to the agreement, GPC Biotech is required to make certain
payments over a period of 7 (seven) years. These payments will be
charged to research and development expenses as services are
rendered Contingent Gains The Company is entitled to receive a
milestone payment of approximately euro 6.0 million upon the
acceptance for filing of the first Marketing Authorization
Application (MAA) with the European Medicines Agency (EMEA). On
July 25th, 2007, Pharmion GmbH announced the EMEA had accepted for
filing the MAA for satraplatin (please refer to Note 10 "Subsequent
Events" for further details). The Company is also entitled to
receive a net milestone payment of approximately euro 12.3 million
upon the approval of the first MAA with EMEA. These contingent
gains will be recognized as revenue when the milestones are
achieved. 5. Loss per Share Basic loss per common share is computed
using the weighted average number of common shares outstanding
during the period. Diluted net loss per common share is computed
using the weighted average number of common and dilutive common
equivalent shares from stock options and convertible debt using the
treasury stock method. For all periods presented, diluted net loss
per share is the same as basic net loss per share, as the inclusion
of weighted average shares of common stock issuable upon the
exercise of stock options and convertible debt would be
antidilutive. 6. Comprehensive Loss Comprehensive loss was euro
42.8 million and euro 27.7 million for the six months ended June
30, 2007 and 2006, respectively. Comprehensive loss is composed of
net loss, unrealized gains and losses on marketable securities and
short-term investments and cumulative foreign currency translation
adjustments. Accumulated other comprehensive loss at June 30, 2007
and 2006 reflected euro 0.6 million and euro 0.3 million of
unrealized gains on marketable securities and short-term
investments and euro 2.8 million and euro 2.0 million of cumulative
foreign currency translation loss adjustments, respectively. 7.
Shareholders' Equity On January 24, 2007, the Company issued
1,564,587 new ordinary shares at euro 21.50 per share for a total
net amount of euro 32.6 million through a private placement. GPC
Biotech received the proceeds from the placement after registration
of the corresponding capital increase in the German commercial
register in February 2007. At June 30, 2007, members of the
Management Board and employees of the Company had subscribed to
219,000 ordinary shares with a total value of euro 1.5 million,
which has been included in shareholders' equity. The subscribed
shares represent amounts paid for exercises of stock options for
which ordinary shares have not been issued at June 30, 2007. The
ordinary shares are expected to be registered and issued by
September 30, 2007. During the six months ended June 30, 2007,
members of the Management Board and employees of the Company
exercised some of their fully vested stock options and convertible
bonds, receiving 793,022 new ordinary shares of the Company. 8.
Additional Disclosures Revenues Revenues decreased 35% to euro 7.2
million for the first half of 2007, compared to euro 11.0 million
for the first half of 2006. The decrease in revenues is mainly due
to (1) lower development funding received under the co- development
and license agreement with Pharmion for satraplatin in Europe and
other certain territories; and (2) the expiration of various
research collaboration arrangements with ALTANA Pharma. General and
Administrative Expenses General and administrative (G&A)
expenses for the six months ended June 30, 2007 increased 130% to
euro 23.4 million compared to euro 10.2 million for the same period
in 2006. The increase in G&A expenses is primarily due to the
formation of a sales and marketing organization in preparation of
the potential product launch of satraplatin as well as legal
expenses. Share-Based Compensation Share-based compensation cost of
euro 5.8 million and euro 3.2 million for the six months ended June
30, 2007 and 2006, respectively, was incurred. This increase is the
result of additional stock option and convertible bond grants
combined with the recognition of certain stock appreciation rights
(SARs). Product Candidate Licensing Activities On June 25, 2007 the
Company entered into a license agreement with Yakult Honsha Co.
Ltd. ("Yakult") for satraplatin in Japan. Under the terms of the
agreement, Yakult gains exclusive commercialization rights to
satraplatin for Japan and will take the lead in developing the drug
in Japan. Under the agreement, Yakult was required to make an
upfront payment of yen 1.2 billion (euro 7.4 million) to the
Company as reimbursement for past satraplatin development expenses.
Yakult is also obligated to make additional payments to the Company
based on the achievement of certain regulatory filing and approval
milestones. In addition, the Company will receive a minimum of
21.1% royalties on net sales of satraplatin in Japan. At June 30,
2007, GPC Biotech AG had recorded a receivable in the amount of
euro 7.4 million and payment was received in July, 2007. Revenue
will be deferred and recognized over the period of current product
development plan beginning July 2007. Costs Associated with Exit
Activities On May 3, 2007, the Company announced the consolidation
of its drug discovery efforts to one location, resulting in the
closing of the facility in Waltham, Massachusetts, USA along with a
total workforce reduction of approximately 16%. The Company has
accounted for this restructuring in accordance with SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activitites"
(FAS 146). Under FAS 146, the Company incurred a restructuring
charge of euro 0.9 million in the second quarter primarily relating
to employee severance and termination costs. Prior to the
announcement of the reorganization, the Company had a remaining
sublease loss liability relating to the Waltham facility totaling
euro 4.0 million which was charged to expense in prior years in
accordance with FAS 146. Because this liability was deemed adequate
to cover all contract termination costs and professional fees
associated with this restructuring, no additional amount was
charged to expense in the second quarter. The Company expects to
complete the reorganization by December 31, 2007, incurring a total
charge of approximately euro 1.0 million in the current year. These
charges are included in both Research and Development and General
and Administrative expenses at June 30, 2007. A summary of the
significant components of the restructuring liability is as follows
(in thousand euro): Employee Contract Termination Termination
Benefits Costs Total January 1, 2007 Balance - 3,967 3,967
Amortization of sublease loss including interest - (179) (179)
Restructuring Charges 858 - 858 Restructuring Payments (125) -
(125) June 30, 2007 Balance 733 3,788 4,521 Supervisory Board On
May 25, 2007 at the Company's Annual Shareholders Meeting, Donald
Soltysiak was elected to its Supervisory Board. Mr. Soltysiak
succeeded Dr. Prabhavathi Fernandes, whose term ended on the same
day. 9. Disclosures Required by the Frankfurt Stock Exchange Number
of Employees As of June 30, 2007 and 2006, the number of employees
totalled 286 and 232, respectively. Shareholdings of Management As
of June 30, 2007 the members of the Management Board and
Supervisory Board held shares, stock options, convertible bonds and
stock appreciation rights in the amounts set forth in the table
below: Number Number of Number of Number of Stock of Stock
Convertible Appreciation Shares Options Bonds Rights Management
Board Bernd R. Seizinger, M.D., Ph.D. 61,500 789,000* 1,463,500 -
Elmar Maier, Ph.D. 170,000 95,000 358,000 - Sebastian Meier-Ewert,
Ph.D. 194,405 189,000 424,375 - Mirko Scherer, Ph. D. 4,000 240,000
439,916 - Supervisory Board Jurgen Drews, M.D. (Chairman) 26,900
10,000 12,500 80,000 Michael Lytton (Vice Chairman) 7,500 10,000
31,500 60,000 Metin Colpan, Ph.D. 19,400 10,000 10,000 45,000
Donald Soltysiak - - - 10,000 James Frates 1,000 - - 60,000 Peter
Preuss 87,500 - 22,500 50,000 *Amount does not include 209,840
stock options that Dr. Seizinger transferred to a third-party
financial institution under two separate agreements in 2001, as
amended 10. Subsequent Events Acceptance of MAA by EMEA In July
2007, the EMEA accepted Pharmion's filing of the MAA for
satraplatin in combination with prednisone for the treatment of
patients with metastatic hormone refractory prostate cancer (HRPC)
whose prior chemotherapy has failed. As a result of the MAA
acceptance by the EMEA, GPC Biotech will receive a euro 6.0 million
milestone payment from Pharmion. Also, under the terms of GPC
Biotech's agreement with Spectrum, the acceptance of the MAA by the
EMEA will also trigger payments by GPC Biotech to Spectrum in a
total amount of approximately euro 2.4 million, representing a
direct milestone payment plus Spectrum's portion of the euro 6.0
million milestone payment from Pharmion. Satraplatin NDA
Application On July 30, 2007, the Company announced that it had
withdrawn the satraplatin capsules New Drug Application (NDA) filed
for accelerated approval for the treatment of hormone-refractory
prostate cancer patients whose prior chemotherapy has failed. The
Company based its decision on the vote by the Oncologic Drugs
Advisory Committee (ODAC) to the U.S. Food and Drug Administration
(FDA) on July 24, 2007 that the FDA should wait for the final
survival analysis of the SPARC trial before deciding whether
satraplatin is approvable. Legal On July 27, 2007, the Company
announced that it had been sued in the United States District Court
for the Southern District of New York, purportedly in a class
action lawsuit on behalf of all persons who purchased or acquired
securities of GPC Biotech between December 5, 2005 and July 24,
2007 inclusive. The suit also named the Company's CEO and two other
senior executives of the Company personally. The complaint, which
to date has not been officially served on the Company, alleges that
GPC Biotech violated U.S. federal securities laws by making
materially false public statements relating to satraplatin, and
thereby artificially inflating the price of GPC Biotech securities.
GPC Biotech believes the allegations in the complaint to be without
merit and intends to vigorously defend them. Management assessed
the prospect of an unfavorable outcome of this suit as less than
probable. DATASOURCE: GPC Biotech AG CONTACT: Martin Braendle,
Director, Investor Relations & Corporate Communications, +49
(0)89 8565-2693, or Laurie Doyle, Director, Investor Relations
& Corporate Communications, +1-609-524-5884, usinvestors@gpc-
biotech.com, both of GPC Biotech AG; Additional Media Contacts:
(Europe) Brian Hudspith, Maitland +44 (0)20 7379 5151, ; (U.S.)
David Schull, Russo Partners, LLC, +1-212-845-4271, Web site:
http://www.gpc-biotech.com/
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