GenVec Inc. (GNVC, Financial) filed Quarterly Report for the period ended 2010-03-31.
Genvec Inc. has a market cap of $72.5 million; its shares were traded at around $0.581 with and P/S ratio of 5.2. GNVC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
In January 2010, we signed a research collaboration and license agreement (the Agreement) with Novartis to discover and develop novel treatments for hearing loss and balance disorders. Under terms of the Agreement, we licensed the world-wide rights to our preclinical hearing loss and balance disorders program to Novartis. We received a 5.0 million non-refundable upfront license fee and Novartis purchased $2.0 million of our common stock. The common stock was valued at fair value on the date of issuance. The remaining $3.7 million will be recognized ratably over the term of the two year research and collaboration term of the Agreement. During the three months ended March 31, 2010 we recognized $388,000 of the upfront payment. In addition, we will receive funding from Novartis for a research program focused on developing additional adenovectors for hearing loss. If certain clinical, regulatory, and sales milestones are met, we are eligible to receive up to an additional $206.6 million in milestone payments in addition to royalties on future sales, if any. During the three months ended March 31, 2010, we recognized $215,000 for research performed under the Agreement.
Research and development expenses for the three-month period ended March 31, 2010 decreased 21% from $7.3 million in 2009 to $5.7 million in 2010. The decrease is primarily due to lower manufacturing and data management costs related to our TNFerade program. Also contributing to the decrease but to a lesser extent are lower personnel costs. Manufacturing costs decreased significantly due to $1.8 million of expense associated with the Cobra agreement that was recognized in the three-month period ended March 31, 2009 as there was no corresponding costs in the comparable period in 2010. These decreases are partially offset by increased general laboratory supply costs. Included in the personnel costs are $193,000 in severance costs for the three-month period ended March 31, 2009 as a result of our reduction in force in January 2009. There were no severance costs in the comparable period in 2010. Additionally, stock-based compensation expense allocated to research and development increased $39,000 as compared to the comparable prior year period.
For the three months ended March 31, 2010, we used $2.8 million of cash for operating activities. This consisted of a net loss for the period of $4.7 million, which included approximately $60,000 of non-cash depreciation and amortization and $489,000 of non-cash stock option expenses. In addition, cash was used for the payment of accrued compensation and other obligations of $1.1 million, offset by a net increase in unearned revenue, due mainly to the Novartis agreement, of $3.1 million. Net cash was used primarily for the advancement of our TNFerade pancreatic clinical trial, and to a lesser extent, general and administrative activities.
Net cash provided by financing activities during the three months ended March 31, 2010 was $35.1 million, which included $26.2 million from the issuance of common stock and warrants associated with our February 2010 equity financing, $3.3 million from our collaboration with Novartis, $5.5 million from the exercise of previously issued warrants, $71,000 from the issuance of common stock related to the exercise of employee stock options and $40,000 of cash provided from the issuance of common stock under our Employee Stock Purchase Plan.
On February 1, 2010, pursuant to the 2007 shelf registration statement, we completed a registered direct offering to various investors of 14,000,000 shares of common stock and warrants to purchase 4,200,000 shares of common stock. The shares of common stock and warrants were offered in units consisting of one share of common stock and 0.3 warrants to purchase one share of common stock at a per unit price of $2.00. The warrants, which have a term of five years and an exercise price of $2.75 per share, have been valued using the Black-Scholes pricing model as of the closing date and have been accounted for in permanent equity. The estimated fair market value of the warrants at the date of issuance was $5.0 million. Proceeds of this offering, net of offering costs, totaled $26.2 million.
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Genvec Inc. has a market cap of $72.5 million; its shares were traded at around $0.581 with and P/S ratio of 5.2. GNVC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
GenVec s net loss was $4.7 million (or $0.04 per share) on revenues of $2.9 million for the three months ended March 31, 2010. This compares to a net loss of $5.7 million (or $0.06 per share) on revenues of $3.8 million in the same period in the prior year. Included in our net loss for the first three months of 2010 was stock-based compensation expense of $489,000 as compared to $427,000 for the same period in the prior year. GenVec ended the first quarter of 2010 with $43.2 million in cash and investments.In January 2010, we signed a research collaboration and license agreement (the Agreement) with Novartis to discover and develop novel treatments for hearing loss and balance disorders. Under terms of the Agreement, we licensed the world-wide rights to our preclinical hearing loss and balance disorders program to Novartis. We received a 5.0 million non-refundable upfront license fee and Novartis purchased $2.0 million of our common stock. The common stock was valued at fair value on the date of issuance. The remaining $3.7 million will be recognized ratably over the term of the two year research and collaboration term of the Agreement. During the three months ended March 31, 2010 we recognized $388,000 of the upfront payment. In addition, we will receive funding from Novartis for a research program focused on developing additional adenovectors for hearing loss. If certain clinical, regulatory, and sales milestones are met, we are eligible to receive up to an additional $206.6 million in milestone payments in addition to royalties on future sales, if any. During the three months ended March 31, 2010, we recognized $215,000 for research performed under the Agreement.
Research and development expenses for the three-month period ended March 31, 2010 decreased 21% from $7.3 million in 2009 to $5.7 million in 2010. The decrease is primarily due to lower manufacturing and data management costs related to our TNFerade program. Also contributing to the decrease but to a lesser extent are lower personnel costs. Manufacturing costs decreased significantly due to $1.8 million of expense associated with the Cobra agreement that was recognized in the three-month period ended March 31, 2009 as there was no corresponding costs in the comparable period in 2010. These decreases are partially offset by increased general laboratory supply costs. Included in the personnel costs are $193,000 in severance costs for the three-month period ended March 31, 2009 as a result of our reduction in force in January 2009. There were no severance costs in the comparable period in 2010. Additionally, stock-based compensation expense allocated to research and development increased $39,000 as compared to the comparable prior year period.
For the three months ended March 31, 2010, we used $2.8 million of cash for operating activities. This consisted of a net loss for the period of $4.7 million, which included approximately $60,000 of non-cash depreciation and amortization and $489,000 of non-cash stock option expenses. In addition, cash was used for the payment of accrued compensation and other obligations of $1.1 million, offset by a net increase in unearned revenue, due mainly to the Novartis agreement, of $3.1 million. Net cash was used primarily for the advancement of our TNFerade pancreatic clinical trial, and to a lesser extent, general and administrative activities.
Net cash provided by financing activities during the three months ended March 31, 2010 was $35.1 million, which included $26.2 million from the issuance of common stock and warrants associated with our February 2010 equity financing, $3.3 million from our collaboration with Novartis, $5.5 million from the exercise of previously issued warrants, $71,000 from the issuance of common stock related to the exercise of employee stock options and $40,000 of cash provided from the issuance of common stock under our Employee Stock Purchase Plan.
On February 1, 2010, pursuant to the 2007 shelf registration statement, we completed a registered direct offering to various investors of 14,000,000 shares of common stock and warrants to purchase 4,200,000 shares of common stock. The shares of common stock and warrants were offered in units consisting of one share of common stock and 0.3 warrants to purchase one share of common stock at a per unit price of $2.00. The warrants, which have a term of five years and an exercise price of $2.75 per share, have been valued using the Black-Scholes pricing model as of the closing date and have been accounted for in permanent equity. The estimated fair market value of the warrants at the date of issuance was $5.0 million. Proceeds of this offering, net of offering costs, totaled $26.2 million.
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