GenVec Inc. (GNVC, Financial) filed Quarterly Report for the period ended 2009-03-31.
GenVec Inc. is a biopharmaceutical company developing novel gene-based therapeutic drugs and vaccines. Each of the Company's product candidates uses patent-protected technology to deliver genes that produce beneficial proteins. GenVec's lead product TNFerade is currently in a pivotal Phase II/III study in locally advanced pancreatic cancer; Phase II studies are in progress in rectal cancer and metastatic melanoma; and Phase I/II studies are in progress in head and neck cancer. GenVec also uses its proprietary adenovector technology to develop vaccines for infectious diseases including HIV malaria seasonal and pandemic flu and foot-and-mouth disease. GenVec Inc. has a market cap of $60.2 million; its shares were traded at around $0.679 with and P/S ratio of 4.
Research and development expenses for the three-month period ended March 31, 2009 decreased 5 percent to $7.3 million as compared to $7.7 million for the comparable prior year period. The decrease is primarily due to lower personnel costs, reduced patient site and lab costs related to our TNFerade program and reduced materials costs related to our funded programs and to a lesser extent TNFerade and general lab materials and supplies. These decreases are partially offset by increased costs related to the manufacturing costs of TNFerade, as it relates to the amendment to our Cobra amendment more fully described in the following paragraph, and our FMD program. Included in the personnel costs are $193,000 in severance costs as a result of our reduction of 15 positions in January 2009. There were no severance costs in the comparable period in 2008. Additionally, stock-based compensation expense allocated to research and development decreased $91,000 as compared to the comparable prior year period.
In March 2009, we entered into a letter agreement amending the original agreement and the associated services. Under the terms of the amendment, Cobra suspended its activities under the original agreement until the end of the second quarter of 2009, when at our sole discretion, we may terminate the original agreement, or we may resume performance pursuant to a newly negotiated schedule of services and fees. Under the terms of the amendment, we paid Cobra an initial payment of $700,000 in March, and will pay an additional $1.1 million through June 30, 2009. These payments will provide us with access to the Cobra facility in 2009 through June 30th. In addition, we waived our rights to amounts remaining unused as of the date of the amendment relating to the advanced payment. As a result, in March 2009 we expensed the remaining $669,000 of the advance payment. Prior to the amendment being signed, we made an additional advance payment of $425,000. All amounts paid to Cobra on or before March 31, 2009 have been charged to expense. If we decide to terminate the agreement at the end of the second quarter of 2009, we will be obligated to pay Cobra a termination fee of $350,000.
General and administrative expense for the three-month period ended March 31, 2009 decreased 21 percent to $1.9 million as compared to $2.4 million for the comparable prior year period. The decrease is primarily due to lower personnel costs, seminar and conference costs, travel costs, professional costs, and depreciation costs, partially offset by higher insurance costs and facility costs in the period. Included in the personnel costs are $76,000 in severance costs as a result of our reduction of 7 positions in January 2009. There was $81,000 in severance costs in the comparable period in 2008. Additonally, stock-based compensation expense allocated to general and administrative expenses, which is included in the personnel costs, decreased $45,000 for the three-month period ended March 31, 2009 as compared to the same period in 2008.
For the three months ended March 31, 2009, we used $5.2 million of cash for operating activities. This consisted of a net loss for the period of $5.7 million, which included approximately $221,000 of non-cash depreciation and amortization, $427,000 of non-cash stock option expenses, and $273,000 from the write off of our deferred financing charges due to the expiration of our CEFF with Kingsbridge. Net cash was used primarily for the advancement of our TNFerade pancreatic clinical trial, including our manufacturing activities, and to a lesser extent general and administrative activities.
We have also taken and are continuing to take steps to lower our operating costs in order to reduce our expenses. These steps included our announcement on January 29, 2009 that we were eliminating 22 positions, as a result of which we incurred $269,000 of expenses in the first quarter of 2009. Further, where possible, we are minimizing our unfunded expenditures on activities that are not critical to the clinical development of TNFerade. This includes reducing our current spending on contract manufacturing, which is reflected in the amendment to our manufacturing development agreement with Cobra as described above. We currently estimate we will use approximately $9.0 to $10.0 million of cash in the 12 months ending March 31, 2010. Our estimated cash to be used includes approximately $2.1 million in contractual obligations, including amounts due under our Cobra amendment, and, $0.1 million for capital expenditures. Based on this estimate we have sufficient resources to fund our operations into the second quarter of 2010.
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GenVec Inc. is a biopharmaceutical company developing novel gene-based therapeutic drugs and vaccines. Each of the Company's product candidates uses patent-protected technology to deliver genes that produce beneficial proteins. GenVec's lead product TNFerade is currently in a pivotal Phase II/III study in locally advanced pancreatic cancer; Phase II studies are in progress in rectal cancer and metastatic melanoma; and Phase I/II studies are in progress in head and neck cancer. GenVec also uses its proprietary adenovector technology to develop vaccines for infectious diseases including HIV malaria seasonal and pandemic flu and foot-and-mouth disease. GenVec Inc. has a market cap of $60.2 million; its shares were traded at around $0.679 with and P/S ratio of 4.
Highlight of Business Operations:
GenVec s net loss was $5.7 million (or $0.06 per share) on revenues of $3.8 million for the three months ended March 31, 2009. This compares to a net loss of $6.3 million (or $0.08 per share) on revenues of $3.7 million in the same period in the prior year. Included in our net loss for the first three months of 2009 was stock-based compensation expense of $427,000 as compared to $563,000 for the same period in the prior year. GenVec ended the first quarter of 2009 with $12.0 million in cash and investments.Research and development expenses for the three-month period ended March 31, 2009 decreased 5 percent to $7.3 million as compared to $7.7 million for the comparable prior year period. The decrease is primarily due to lower personnel costs, reduced patient site and lab costs related to our TNFerade program and reduced materials costs related to our funded programs and to a lesser extent TNFerade and general lab materials and supplies. These decreases are partially offset by increased costs related to the manufacturing costs of TNFerade, as it relates to the amendment to our Cobra amendment more fully described in the following paragraph, and our FMD program. Included in the personnel costs are $193,000 in severance costs as a result of our reduction of 15 positions in January 2009. There were no severance costs in the comparable period in 2008. Additionally, stock-based compensation expense allocated to research and development decreased $91,000 as compared to the comparable prior year period.
In March 2009, we entered into a letter agreement amending the original agreement and the associated services. Under the terms of the amendment, Cobra suspended its activities under the original agreement until the end of the second quarter of 2009, when at our sole discretion, we may terminate the original agreement, or we may resume performance pursuant to a newly negotiated schedule of services and fees. Under the terms of the amendment, we paid Cobra an initial payment of $700,000 in March, and will pay an additional $1.1 million through June 30, 2009. These payments will provide us with access to the Cobra facility in 2009 through June 30th. In addition, we waived our rights to amounts remaining unused as of the date of the amendment relating to the advanced payment. As a result, in March 2009 we expensed the remaining $669,000 of the advance payment. Prior to the amendment being signed, we made an additional advance payment of $425,000. All amounts paid to Cobra on or before March 31, 2009 have been charged to expense. If we decide to terminate the agreement at the end of the second quarter of 2009, we will be obligated to pay Cobra a termination fee of $350,000.
General and administrative expense for the three-month period ended March 31, 2009 decreased 21 percent to $1.9 million as compared to $2.4 million for the comparable prior year period. The decrease is primarily due to lower personnel costs, seminar and conference costs, travel costs, professional costs, and depreciation costs, partially offset by higher insurance costs and facility costs in the period. Included in the personnel costs are $76,000 in severance costs as a result of our reduction of 7 positions in January 2009. There was $81,000 in severance costs in the comparable period in 2008. Additonally, stock-based compensation expense allocated to general and administrative expenses, which is included in the personnel costs, decreased $45,000 for the three-month period ended March 31, 2009 as compared to the same period in 2008.
For the three months ended March 31, 2009, we used $5.2 million of cash for operating activities. This consisted of a net loss for the period of $5.7 million, which included approximately $221,000 of non-cash depreciation and amortization, $427,000 of non-cash stock option expenses, and $273,000 from the write off of our deferred financing charges due to the expiration of our CEFF with Kingsbridge. Net cash was used primarily for the advancement of our TNFerade pancreatic clinical trial, including our manufacturing activities, and to a lesser extent general and administrative activities.
We have also taken and are continuing to take steps to lower our operating costs in order to reduce our expenses. These steps included our announcement on January 29, 2009 that we were eliminating 22 positions, as a result of which we incurred $269,000 of expenses in the first quarter of 2009. Further, where possible, we are minimizing our unfunded expenditures on activities that are not critical to the clinical development of TNFerade. This includes reducing our current spending on contract manufacturing, which is reflected in the amendment to our manufacturing development agreement with Cobra as described above. We currently estimate we will use approximately $9.0 to $10.0 million of cash in the 12 months ending March 31, 2010. Our estimated cash to be used includes approximately $2.1 million in contractual obligations, including amounts due under our Cobra amendment, and, $0.1 million for capital expenditures. Based on this estimate we have sufficient resources to fund our operations into the second quarter of 2010.
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