GTC Biotherapeutics Inc (GTCB, Financial) filed Quarterly Report for the period ended 2010-04-04.
Gtc Biotherapeutics Inc has a market cap of $14.3 million; its shares were traded at around $0.651 with and P/S ratio of 5.06. GTCB is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The key drivers of our losses are revenue, costs of revenue, and research and development expenses. During the fourth quarter of 2009, we implemented a restructuring plan, which included a headcount reduction of 30%, or 45 full time equivalent employees. This restructuring included employees from most departments located at both our Framingham and central Massachusetts locations. We recorded severance expense in the amount of $460,000 for the year ended January 3, 2010 of which approximately $374,000 and $86,000 was recorded to research and development expense and selling, general and administrative expense, respectively. During the first quarter of 2010, approximately $109,000 was paid out of the severance reserve. At April 4, 2010, approximately $50,000 remained in accrued liabilities in relation to unpaid severance costs, which will be paid out through the second quarter of 2010. This reduction will help enable us to meet the requirements of our key programs and maximize the impact of our cash resources. This change along with other operating expense reductions is expected to provide savings of $5 to $6 million on an annualized basis. Based on the first quarter of 2010 and our projections for the remainder of 2010, we believe we are on track to achieve these savings in 2010. Through the end of the first quarter of 2010, we have reduced the run rate of expenses by approximately 72% of these expected reductions on an annual basis, which is in line with our planned expectations.
We use our cash primarily to pay salaries, wages and benefits, facility and facility-related costs of office, farm and laboratory space and other outside direct costs such as manufacturing and clinical trial expenses. During the first quarter of 2010 we had a net increase in cash and marketable securities of $1 million, which reflects $5.9 million used in operations and $83,000 used to pay down debt, net of $7 million of funding from LFB related to our issuance to LFB of a secured note.
Our consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the continuity of business, realization of assets and the satisfaction of liabilities in the ordinary course of business. We have incurred losses from operations and negative operating cash flow in the first quarter of 2010 and since inception, and we had an accumulated deficit of $337 million at April 4, 2010. The primary sources of additional capital raised in 2009 and the first three months of 2010 have been equity financings and debt financings. Based on our cash balance as of April 4, 2010, as well as the potential cash receipts from existing programs, we anticipate that we have the ability to continue our operations to the end of the second quarter of 2010. We are currently engaged in discussions for potential new partnering arrangements and plan to bring in further financial resources through some combination of partnering transactions, including milestones, and other debt or equity financing. However, there can be no assurance that we will be able to enter into anticipated partnering arrangements, or raise additional capital, on terms that are acceptable to us, or at all. If no funds are available we would have to sell or liquidate the business. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our planned commercialization efforts, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. Additionally, any future equity funding would dilute the ownership percentage of our existing equity investors. On November 5, 2009, we implemented a restructuring plan to enable us to meet the requirements of key programs and maximize the impact of our cash resources. The restructuring plan, which is expected to provide savings of $5 to $6 million on an annualized basis, included a reduction in our workforce from 154 to 109 employees.
Cash used in operating activities increased by approximately $1.4 million from $4.5 million for the first three months of 2009 to $5.9 million in the first three months of 2010. The increase is primarily a result of milestone payments of $4 million received from Lundbeck and $750,000 received from JCOM in 2009 partially offset by a decrease in our net loss of $2.6 million, which includes $1.9 million of cost reimbursement from LFB in the first quarter of 2010.
Our $24.3 million of outstanding long-term debt at April 4, 2010 includes approximately $13.1 million owed to LFB (net of unamortized discount of approximately $319,000) on the convertible note that we issued to LFB in December 2008, approximately $716,000 owed to LFB (net of an unamortized discount of approximately $127,000) on the convertible note that we issued to LFB in December 2006, approximately $3.5 million owed to LFB on the term debt promissory note that we issued in June 2009 and approximately $7 million on the term debt promissory note that was issued in January 2010. Of the $24.3 million, approximately $326,000 was classified as current, which reflects the amount due through March 2011 on the convertible notes and the term debt promissory notes with LFB as well as the amounts due for capital leases.
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Gtc Biotherapeutics Inc has a market cap of $14.3 million; its shares were traded at around $0.651 with and P/S ratio of 5.06. GTCB is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Our consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the continuity of business, realization of assets and the satisfaction of liabilities in the ordinary course of business. We have operated at a net loss since our inception in 1993, and we used $5.9 million of net cash in our operating cash flows during the first three months of 2010. We also have negative working capital of $13.1 million as of April 4, 2010. We are entirely dependent upon funding from equity financings, partnering programs and proceeds from short and long-term debt to finance our operations until we achieve commercial success in selling and licensing our products and positive cash flow from operations. Based on our cash balance as of April 4, 2010, as well as potential cash receipts from existing programs, we believe our capital resources will be sufficient to fund operations to the end of the second quarter of 2010. Our recurring losses from operations and our limited available funds raise substantial doubt about our ability to continue as a going concern. Our plans with regard to this matter include seeking additional financing arrangements and seeking collaboration arrangements. If no funds are available, we would have to sell or liquidate the business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amount of reclassification of liabilities, or any adjustments that might be necessary should we be unable to continue as a going concern. Management expects that future sources of funding may include new or expanded partnering arrangements and additional sales of equity or debt securities. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We may be required to delay, reduce the scope of or eliminate our research and development programs, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. Additionally, any future equity funding would dilute ownership of our existing equity investors. On November 5, 2009, we implemented a restructuring plan to enable us to meet the requirements of key programs and maximize the impact of our cash resources. The restructuring plan, which is expected to provide savings of $5 to $6 million on an annualized basis, included a reduction in our workforce from 154 to 109 employees.The key drivers of our losses are revenue, costs of revenue, and research and development expenses. During the fourth quarter of 2009, we implemented a restructuring plan, which included a headcount reduction of 30%, or 45 full time equivalent employees. This restructuring included employees from most departments located at both our Framingham and central Massachusetts locations. We recorded severance expense in the amount of $460,000 for the year ended January 3, 2010 of which approximately $374,000 and $86,000 was recorded to research and development expense and selling, general and administrative expense, respectively. During the first quarter of 2010, approximately $109,000 was paid out of the severance reserve. At April 4, 2010, approximately $50,000 remained in accrued liabilities in relation to unpaid severance costs, which will be paid out through the second quarter of 2010. This reduction will help enable us to meet the requirements of our key programs and maximize the impact of our cash resources. This change along with other operating expense reductions is expected to provide savings of $5 to $6 million on an annualized basis. Based on the first quarter of 2010 and our projections for the remainder of 2010, we believe we are on track to achieve these savings in 2010. Through the end of the first quarter of 2010, we have reduced the run rate of expenses by approximately 72% of these expected reductions on an annual basis, which is in line with our planned expectations.
We use our cash primarily to pay salaries, wages and benefits, facility and facility-related costs of office, farm and laboratory space and other outside direct costs such as manufacturing and clinical trial expenses. During the first quarter of 2010 we had a net increase in cash and marketable securities of $1 million, which reflects $5.9 million used in operations and $83,000 used to pay down debt, net of $7 million of funding from LFB related to our issuance to LFB of a secured note.
Our consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the continuity of business, realization of assets and the satisfaction of liabilities in the ordinary course of business. We have incurred losses from operations and negative operating cash flow in the first quarter of 2010 and since inception, and we had an accumulated deficit of $337 million at April 4, 2010. The primary sources of additional capital raised in 2009 and the first three months of 2010 have been equity financings and debt financings. Based on our cash balance as of April 4, 2010, as well as the potential cash receipts from existing programs, we anticipate that we have the ability to continue our operations to the end of the second quarter of 2010. We are currently engaged in discussions for potential new partnering arrangements and plan to bring in further financial resources through some combination of partnering transactions, including milestones, and other debt or equity financing. However, there can be no assurance that we will be able to enter into anticipated partnering arrangements, or raise additional capital, on terms that are acceptable to us, or at all. If no funds are available we would have to sell or liquidate the business. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our planned commercialization efforts, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. Additionally, any future equity funding would dilute the ownership percentage of our existing equity investors. On November 5, 2009, we implemented a restructuring plan to enable us to meet the requirements of key programs and maximize the impact of our cash resources. The restructuring plan, which is expected to provide savings of $5 to $6 million on an annualized basis, included a reduction in our workforce from 154 to 109 employees.
Cash used in operating activities increased by approximately $1.4 million from $4.5 million for the first three months of 2009 to $5.9 million in the first three months of 2010. The increase is primarily a result of milestone payments of $4 million received from Lundbeck and $750,000 received from JCOM in 2009 partially offset by a decrease in our net loss of $2.6 million, which includes $1.9 million of cost reimbursement from LFB in the first quarter of 2010.
Our $24.3 million of outstanding long-term debt at April 4, 2010 includes approximately $13.1 million owed to LFB (net of unamortized discount of approximately $319,000) on the convertible note that we issued to LFB in December 2008, approximately $716,000 owed to LFB (net of an unamortized discount of approximately $127,000) on the convertible note that we issued to LFB in December 2006, approximately $3.5 million owed to LFB on the term debt promissory note that we issued in June 2009 and approximately $7 million on the term debt promissory note that was issued in January 2010. Of the $24.3 million, approximately $326,000 was classified as current, which reflects the amount due through March 2011 on the convertible notes and the term debt promissory notes with LFB as well as the amounts due for capital leases.
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