Genset Reports First Quarter 2001 Financial Results

Apr 24, 2001, 01:00 ET from Genset, S.A.

    PARIS, April 24 /PRNewswire Interactive News Release/ --
 Genset, S.A. (Nasdaq:   GENXY; Nouveau Marche: GENSET), reported a consolidated
 net loss excluding non-recurring items for the quarter ended March 31, 2001
 of euro 10.0 million ($8.8 million), or euro 1.23 per share ($0.36 per
 American Depositary Share), as compared to a net loss of euro 7.7 million
 ($6.8 million), or euro 1.02 per share ($0.30 per American Depositary Share),
 for the quarter ended March 31, 2000.  The Company's net loss including
 non-recurring items for the quarter ended March 31, 2001 was euro 17.6 million
 ($15.5 million), or euro 2.17 per share ($0.64 per American Depositary Share).
     Total revenues for the quarter decreased from euro 8.2 million
 ($7.2 million) for the quarter ended March 31, 2000 to euro 5.2 million
 ($4.5 million) for the quarter ended March 31, 2001.  The change in total
 revenues for the first quarter of 2001 reflects the Company's shift in
 strategy away from entering into limited gene target discovery deals on behalf
 of pharmaceutical companies to a focus on discovering and developing drug
 targets and products for its own account.  As a result, research and
 development ("R&D") revenues decreased from euro 5.6 million ($4.9 million) to
 euro 0.8 million ($0.7 million), accounting for 16% of total revenues, while
 oligonucleotide sales increased 62.6% from euro 2.7 million ($2.3 million) to
 euro 4.3 million ($3.8 million), reaching its highest level ever.
     Cash decreased during the quarter by euro 10.0 million ($8.8 million).  As
 of March 31, 2001, Genset had cash, cash equivalents and short-term
 investments of euro 57.8 million ($50.8 million), compared to
 euro 67.8 million ($59.6 million) as of December 31, 2000 and to
 euro 39.2 million ($34.5 million) as of March 31, 2000.
     Andre Pernet CEO of Genset stated, "The most visible event which occurred
 in the first quarter of 2001 was the publication of our preclinical Famoxin
 results in the Proceedings of the National Academy of Sciences.  But just as
 important to the future of Genset is that we took several of the most
 important steps critical to accomplishing our goal of beginning to build a
 drug pipeline.  Importantly, we are restructuring our business by finishing
 our existing alliances and have renegotiated our gene discovery agreement with
 Abbott to make it more consistent with our new strategy."  Under the new
 agreement, Genset was released from performing any further research for
 Abbott, recovered the intellectual property generated in its bipolar program
 and agreed to make a one-time payment to Abbott and to license to Abbott at a
 future date a protein in the area of CNS for target screening.  Dr. Pernet
 added, "We also successfully achieved the negotiation of our social plan at
 Evry.  This occurred with the full agreement of the personnel representatives
 and of the public authorities.  All measures have been taken to help the
 employees who are leaving Genset.  The first results are promising and we
 will, according to our commitments, do our best to help all employees to find
 a new job in a near future."
     Genset's first quarter results include certain non-recurring items
 related to its transitory steps.  First, the Company recorded approximately
 euro 1.4 million in employee costs related to the recently completed social
 plan as well as fees of euro 0.6 million to effect the plan.  A non-cash
 charge of euro 3.5 million was recorded to write-off certain equipment,
 primarily for sequencing, no longer required due to the restructuring.
 Secondly, the Company recorded euro 1.7 million due to Abbott to regain the
 intellectual property generated in the bipolar program and release it from
 further research efforts.  This was strategically important for Genset since
 bipolar disorders are a key target in its internal development plans.  Lastly,
 euro 0.4 million was paid to explore the potential sale of the Company's
 oligonucleotide division which is ongoing.  The Company will make a decision
 in the near future as to whether it is in its best interest to sell the
 division.
     R&D expenses for the quarter were euro 8.5 million ($7.4 million),
 compared to euro 12.0 million ($10.5 million) for the same quarter in 2000.
 This decrease in R&D expenses is the result of the Company's previously
 announced efforts to control overall spending.  For the quarter, general &
 administrative expenses increased 6% to euro 3.4 million ($3.0 million) from
 euro 3.2 million ($2.9 million) in the first quarter 2000.  Fourth quarter
 2000 general and administrative expenses totaled euro 4.0 million
 ($3.5 million).
     In the area of non-operating expenses, the Company reported a net foreign
 exchange gain for the quarter of euro 0.6 million ($0.5 million), as compared
 to a foreign exchange loss in the first quarter of 2000 of euro 0.1 million
 ($0.1 million).  Net interest expense for the quarter was euro 0.5 million
 ($0.4 million), compared to a net result equal to zero during the first
 quarter of 2000.  The decrease primarily results from the convertible bond
 issuance in June 2000.
     Genset did not record any income tax benefit for the quarter as a
 consequence of its efforts to decrease its R&D expenses during the quarter.
 The Company recorded an income tax benefit of euro 1.2 million ($1.1 million)
 for the first quarter of 2000.
     The Company anticipates that it will continue to incur losses for the
 foreseeable future; the amount and duration of such losses will depend largely
 on the level of its continued investment in research and development
 activities and the timing of future licensing deals on the results of these
 activities.
     Genset is a genomics company focused on generating a pipeline of drug
 candidates in the areas of CNS and metabolic disorders.  Genset has
 successfully used its integrated technology platform and association studies
 approach to identify and characterize drug targets and drug response markers
 in the fields of CNS, metabolic and other diseases.  Building upon the
 expertise accumulated in various alliances with pharmaceutical partners and
 its portfolio of genomic patents, Genset now intends to pursue and validate
 novel drug targets and candidates for its own account, starting with a lead
 protein candidate in its obesity program.
 
     Genset's news releases are available on the Company's web site at
 http://www.genxy.com.
     All figures are adjusted to the current exchange rate.
 
                                  Genset, S.A.
                     CONDENSED CONSOLIDATED FINANCIAL DATA
                            (Unaudited - U.S. GAAP)
                  (Amounts in thousands except per share data)
 
                            STATEMENTS OF OPERATIONS
 
                                              Three months ended March 31,
                                           2001           2001           2000
                                            US$          euros          euros
     Research and development revenues      725            825          5,557
     Oligonucleotide sales                3,809          4,332          2,664
       Total revenues                     4,534          5,157          8,221
 
     Research and development expenses   (7,447)        (8,468)       (11,965)
     Cost of goods sold                  (2,367)        (2,691)        (1,376)
     Selling and marketing expenses        (477)          (543)          (558)
     General and Administrative expenses (3,020)        (3,434)        (3,243)
       Total operating expenses
        - recurring                     (13,311)       (15,136)       (17,142)
       Loss from operations before
        non recurring items              (8,777)        (9,979)        (8,921)
     Non recurring items                 (6,668)        (7,583)            --
       Loss from operations including
        non recurring items             (15,445)       (17,562)        (8,921)
 
     Interest income                        348            396            260
     Interest expense                      (761)          (866)          (131)
     Foreign exchange gain (loss)           529            602           (144)
     Other income (Expenses)                 23             26             28
     Equity in income (loss)
      of affiliated companies                (6)            (7)            (0)
       Loss before income tax,
        minority interests and
        cumulative effect of change
        in accounting principle         (15,312)       (17,411)        (8,908)
 
     Income tax benefit                     (83)           (94)         l,212
     Minority interest                      (56)           (63)           (21)
       Net loss                         (15,451)       (17,568)        (7,717)
 
     Loss per ordinary share              (1.91)         (2.17)         (1.02)
     Weighted average number of
      ordinary shares outstanding (*)     8,105          8,105          7,588
 
     Loss per ADS
      (American Depositary Share)         (0.64)         (0.72)         (0.34)
     Weighted average number of
      equivalent ADSs outstanding (*)    24,315         24,315         22,764
 
     (*) As of March 31, 2001 there were outstanding 8,104,850 ordinary shares,
         or 24,315,550 equivalent ADSs
 
               BALANCE SHEET
                                                March 31,          December 31,
                                          2001            2001         2000 (A)
                                           US$           euros           euros
     ASSETS
     Cash and cash equivalents and
      short-term investments             50,802          57,769         67,752
     Other current assets                19,447          22,113         21,257
       Total current assets              70,249          79,882         89,009
     Property and equipment, net         17,358          19,740         23,716
     Other assets, net                   16,545          18,813         18,806
       Total assets                     104,152         118,435        131,531
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Total current liabilities           21,457          24,400         20,049
     Total debt and capital leases,
      less current portion               53,427          60,753         60,518
     Minority interest                      589             670            594
     Total shareholders' equity          28,679          32,612         50,370
       Total liabilities and
        shareholders' equity            104,152         118,435        131,531
 
     (A) Derived from audited figures.
         The financial information expressed in U.S.$ is presented solely for
         the convenience of the reader and is translated from euros at the noon
         buying rate in New York on March 30, 2001 which was U.S.$ 0.8794 for
         each euro.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X71691341
 
 

SOURCE Genset, S.A.
    PARIS, April 24 /PRNewswire Interactive News Release/ --
 Genset, S.A. (Nasdaq:   GENXY; Nouveau Marche: GENSET), reported a consolidated
 net loss excluding non-recurring items for the quarter ended March 31, 2001
 of euro 10.0 million ($8.8 million), or euro 1.23 per share ($0.36 per
 American Depositary Share), as compared to a net loss of euro 7.7 million
 ($6.8 million), or euro 1.02 per share ($0.30 per American Depositary Share),
 for the quarter ended March 31, 2000.  The Company's net loss including
 non-recurring items for the quarter ended March 31, 2001 was euro 17.6 million
 ($15.5 million), or euro 2.17 per share ($0.64 per American Depositary Share).
     Total revenues for the quarter decreased from euro 8.2 million
 ($7.2 million) for the quarter ended March 31, 2000 to euro 5.2 million
 ($4.5 million) for the quarter ended March 31, 2001.  The change in total
 revenues for the first quarter of 2001 reflects the Company's shift in
 strategy away from entering into limited gene target discovery deals on behalf
 of pharmaceutical companies to a focus on discovering and developing drug
 targets and products for its own account.  As a result, research and
 development ("R&D") revenues decreased from euro 5.6 million ($4.9 million) to
 euro 0.8 million ($0.7 million), accounting for 16% of total revenues, while
 oligonucleotide sales increased 62.6% from euro 2.7 million ($2.3 million) to
 euro 4.3 million ($3.8 million), reaching its highest level ever.
     Cash decreased during the quarter by euro 10.0 million ($8.8 million).  As
 of March 31, 2001, Genset had cash, cash equivalents and short-term
 investments of euro 57.8 million ($50.8 million), compared to
 euro 67.8 million ($59.6 million) as of December 31, 2000 and to
 euro 39.2 million ($34.5 million) as of March 31, 2000.
     Andre Pernet CEO of Genset stated, "The most visible event which occurred
 in the first quarter of 2001 was the publication of our preclinical Famoxin
 results in the Proceedings of the National Academy of Sciences.  But just as
 important to the future of Genset is that we took several of the most
 important steps critical to accomplishing our goal of beginning to build a
 drug pipeline.  Importantly, we are restructuring our business by finishing
 our existing alliances and have renegotiated our gene discovery agreement with
 Abbott to make it more consistent with our new strategy."  Under the new
 agreement, Genset was released from performing any further research for
 Abbott, recovered the intellectual property generated in its bipolar program
 and agreed to make a one-time payment to Abbott and to license to Abbott at a
 future date a protein in the area of CNS for target screening.  Dr. Pernet
 added, "We also successfully achieved the negotiation of our social plan at
 Evry.  This occurred with the full agreement of the personnel representatives
 and of the public authorities.  All measures have been taken to help the
 employees who are leaving Genset.  The first results are promising and we
 will, according to our commitments, do our best to help all employees to find
 a new job in a near future."
     Genset's first quarter results include certain non-recurring items
 related to its transitory steps.  First, the Company recorded approximately
 euro 1.4 million in employee costs related to the recently completed social
 plan as well as fees of euro 0.6 million to effect the plan.  A non-cash
 charge of euro 3.5 million was recorded to write-off certain equipment,
 primarily for sequencing, no longer required due to the restructuring.
 Secondly, the Company recorded euro 1.7 million due to Abbott to regain the
 intellectual property generated in the bipolar program and release it from
 further research efforts.  This was strategically important for Genset since
 bipolar disorders are a key target in its internal development plans.  Lastly,
 euro 0.4 million was paid to explore the potential sale of the Company's
 oligonucleotide division which is ongoing.  The Company will make a decision
 in the near future as to whether it is in its best interest to sell the
 division.
     R&D expenses for the quarter were euro 8.5 million ($7.4 million),
 compared to euro 12.0 million ($10.5 million) for the same quarter in 2000.
 This decrease in R&D expenses is the result of the Company's previously
 announced efforts to control overall spending.  For the quarter, general &
 administrative expenses increased 6% to euro 3.4 million ($3.0 million) from
 euro 3.2 million ($2.9 million) in the first quarter 2000.  Fourth quarter
 2000 general and administrative expenses totaled euro 4.0 million
 ($3.5 million).
     In the area of non-operating expenses, the Company reported a net foreign
 exchange gain for the quarter of euro 0.6 million ($0.5 million), as compared
 to a foreign exchange loss in the first quarter of 2000 of euro 0.1 million
 ($0.1 million).  Net interest expense for the quarter was euro 0.5 million
 ($0.4 million), compared to a net result equal to zero during the first
 quarter of 2000.  The decrease primarily results from the convertible bond
 issuance in June 2000.
     Genset did not record any income tax benefit for the quarter as a
 consequence of its efforts to decrease its R&D expenses during the quarter.
 The Company recorded an income tax benefit of euro 1.2 million ($1.1 million)
 for the first quarter of 2000.
     The Company anticipates that it will continue to incur losses for the
 foreseeable future; the amount and duration of such losses will depend largely
 on the level of its continued investment in research and development
 activities and the timing of future licensing deals on the results of these
 activities.
     Genset is a genomics company focused on generating a pipeline of drug
 candidates in the areas of CNS and metabolic disorders.  Genset has
 successfully used its integrated technology platform and association studies
 approach to identify and characterize drug targets and drug response markers
 in the fields of CNS, metabolic and other diseases.  Building upon the
 expertise accumulated in various alliances with pharmaceutical partners and
 its portfolio of genomic patents, Genset now intends to pursue and validate
 novel drug targets and candidates for its own account, starting with a lead
 protein candidate in its obesity program.
 
     Genset's news releases are available on the Company's web site at
 http://www.genxy.com.
     All figures are adjusted to the current exchange rate.
 
                                  Genset, S.A.
                     CONDENSED CONSOLIDATED FINANCIAL DATA
                            (Unaudited - U.S. GAAP)
                  (Amounts in thousands except per share data)
 
                            STATEMENTS OF OPERATIONS
 
                                              Three months ended March 31,
                                           2001           2001           2000
                                            US$          euros          euros
     Research and development revenues      725            825          5,557
     Oligonucleotide sales                3,809          4,332          2,664
       Total revenues                     4,534          5,157          8,221
 
     Research and development expenses   (7,447)        (8,468)       (11,965)
     Cost of goods sold                  (2,367)        (2,691)        (1,376)
     Selling and marketing expenses        (477)          (543)          (558)
     General and Administrative expenses (3,020)        (3,434)        (3,243)
       Total operating expenses
        - recurring                     (13,311)       (15,136)       (17,142)
       Loss from operations before
        non recurring items              (8,777)        (9,979)        (8,921)
     Non recurring items                 (6,668)        (7,583)            --
       Loss from operations including
        non recurring items             (15,445)       (17,562)        (8,921)
 
     Interest income                        348            396            260
     Interest expense                      (761)          (866)          (131)
     Foreign exchange gain (loss)           529            602           (144)
     Other income (Expenses)                 23             26             28
     Equity in income (loss)
      of affiliated companies                (6)            (7)            (0)
       Loss before income tax,
        minority interests and
        cumulative effect of change
        in accounting principle         (15,312)       (17,411)        (8,908)
 
     Income tax benefit                     (83)           (94)         l,212
     Minority interest                      (56)           (63)           (21)
       Net loss                         (15,451)       (17,568)        (7,717)
 
     Loss per ordinary share              (1.91)         (2.17)         (1.02)
     Weighted average number of
      ordinary shares outstanding (*)     8,105          8,105          7,588
 
     Loss per ADS
      (American Depositary Share)         (0.64)         (0.72)         (0.34)
     Weighted average number of
      equivalent ADSs outstanding (*)    24,315         24,315         22,764
 
     (*) As of March 31, 2001 there were outstanding 8,104,850 ordinary shares,
         or 24,315,550 equivalent ADSs
 
               BALANCE SHEET
                                                March 31,          December 31,
                                          2001            2001         2000 (A)
                                           US$           euros           euros
     ASSETS
     Cash and cash equivalents and
      short-term investments             50,802          57,769         67,752
     Other current assets                19,447          22,113         21,257
       Total current assets              70,249          79,882         89,009
     Property and equipment, net         17,358          19,740         23,716
     Other assets, net                   16,545          18,813         18,806
       Total assets                     104,152         118,435        131,531
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Total current liabilities           21,457          24,400         20,049
     Total debt and capital leases,
      less current portion               53,427          60,753         60,518
     Minority interest                      589             670            594
     Total shareholders' equity          28,679          32,612         50,370
       Total liabilities and
        shareholders' equity            104,152         118,435        131,531
 
     (A) Derived from audited figures.
         The financial information expressed in U.S.$ is presented solely for
         the convenience of the reader and is translated from euros at the noon
         buying rate in New York on March 30, 2001 which was U.S.$ 0.8794 for
         each euro.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X71691341
 
 SOURCE  Genset, S.A.