Gentium Reports Third Quarter 2011 Financial Results

• Defibrotide product sales increased by 24%
• Product sales of EUR 16.02 million for the nine-months ended September 30, 2011
• Cash flow positive
• On target with revised projected product sales guidance of EUR 21-23 million for 2011

VILLA GUARDIA (COMO), Italy, Nov. 15, 2011 (GLOBE NEWSWIRE) -- Gentium S.p.A. (Nasdaq:GENT) (the "Company") today reported financial results for the nine-month period and quarter ended September 30, 2011. The Company reports its financial condition and operating results using U.S. Generally Accepted Accounting Principles (GAAP). The Company's financial statements are prepared using the Euro as its functional currency. On September 30, 2011, EUR 1.00 = $1.3503.

"We are pleased to report that Defibrotide product sales increased 24% to EUR 12.33 million when compared to EUR 9.97 million for the prior-year nine-month period and that we continue to be cash flow positive," stated Salvatore Calabrese, Senior Vice President and Chief Financial Officer of Gentium S.p.A. "The comparative quarterly results have been affected mainly by non-cash items such as the termination in revenue recognition for an up-front payment made by Sigma-Tau in 2010, as well as restructuring charges and sales and marketing expenses which were not present in the prior year's quarter. We expect to meet our revised product sales guidance of EUR 21-23 million for 2011."

"We continue to see an increase in the number of clinics using Defibrotide to treat and prevent veno-occlusive disease (VOD)," stated Dr. Khalid Islam, Chairman and Chief Executive Officer of Gentium S.p.A. "We credit this in part to the contribution of our specialized regional partners who distribute Defibrotide on a named-patient basis in local regions, simplifying access for clinics. We are exploring opportunities to expand into new territories, as well as increase our visibility in those geographic areas in which we are already present. On the regulatory front, we have engaged an independent clinical research organization who is reviewing and identifying issues related to the datasets previously submitted to the US Food and Drug Administration. In the meantime, we have received and reviewed the Day 120 List of Questions from the European Medicines Agency and anticipate that we will submit our responses by year end."

Financial Highlights

For the nine-month period ended September 30, 2011 compared to the same period in 2010:

• Defibrotide net-sales increased 24% to EUR 12.33 million, or 77% of total product sales, compared to EUR 9.97 million, or 67% of total product sales. Sales of the company's active pharmaceutical ingredients (API) amounted to EUR 3.69 million, or 23% of total product sales, compared to EUR 4.91 million or a 25% decrease. Total product sales increased 8% to EUR 16.02 million compared to EUR 14.87 million.
• Total revenues were EUR 18.04 million compared to EUR 18.44 million.
• Operating costs and expenses were EUR 14.99 million compared to EUR 14.83 million. 2011 and 2010 operating costs and expenses include restructuring charges of EUR 0.34 million and EUR 0.95 million, respectively.
• Research and development expenses, which are included in operating costs and expenses, were EUR 4.00 million compared to EUR 4.63 million.
• Sales and marketing expenses, which are included in operating costs and expenses, were EUR 1.34 million compared to none.
• Operating income was EUR 3.06 million compared to EUR 3.62 million.
• Income tax expenses were EUR 0.37 million compared to EUR 0.22.
• Net income was EUR 2.63 million compared to EUR 3.44 million.
• Basic and diluted net income per share was EUR 0.176 and EUR 0.167, respectively, compared to EUR 0.230 per share.

For the third quarter ended September 30, 2011 compared to the third quarter of 2010:

• Defibrotide net sales increased 22% to EUR 4.10 million, or 78% of total product sales, compared to EUR 3.36 million, or 69% of the total product sales. Sales of the company's API amounted to EUR 1.13 million, or 22% of total product sales, compared to EUR 1.49 million or a 24% decrease. Total product sales increased 8% to EUR 5.23 million compared to EUR 4.85 million.
• Total revenues were EUR 5.27 million compared to EUR 5.91 million.
• Operating costs and expenses were EUR 5.30 million compared to EUR 4.36 million. 2011 operating costs and expenses include restructuring charges of EUR 0.34 million.
• Research and development expenses, which are included in operating costs and expenses, were EUR 1.34 million compared to EUR 1.17 million.
• Sales and marketing expenses, which are included in operating costs and expenses, were EUR 0.57 million compared to none.
• Operating income/(loss) was EUR (0.03) million compared to EUR 1.55 million.
• Net income/(loss) was EUR (0.04) million compared to EUR 1.12 million.
• Basic and diluted net income/(loss) per share was EUR (0.003) compared to EUR 0.075 per share.

Cash and cash equivalents were EUR 9.91 million as of September 30, 2011 compared to EUR 8.74 million as of December 31, 2010.

Operating Results

Product sales for the nine-month period ended September 30, 2011 were EUR 16.02 million compared to EUR 14.87 million for the same period in 2010, an increase of EUR 1.15 million or 8%.  The increase was primarily due to the increased distribution of Defibrotide through the named-patient and cost recovery programs.

For the nine-month periods ended September 30, 2011 and 2010, sales from the named-patient and cost recovery programs amounted to EUR 12.33 million and EUR 9.97 million, respectively, representing an increase of EUR 2.36 million or 24%. Sales from the named-patient and cost recovery programs are net of EUR 2.29 million and EUR 1.59 million, respectively, in service fees.

API revenues were EUR 3.69 million for the nine-month period ended September 30, 2011, compared to EUR 4.91 million for the same period in 2010, reflecting a decrease of EUR 1.22 million or 25%. The decrease was primarily due to lower sales and a reduction in the price and volume of sulglicotide to accommodate a commercial partner in South Korea that has experienced a 20% cut in reimbursement from its local government for its finished drug product that uses sulglicotide as the API.

Other revenues were EUR 2.02 million for the nine-month period ended September 30, 2011 compared to EUR 3.57 million for the same period in 2010. This fluctuation is primarily attributable to a decrease in pre-clinical and clinical trial activities that were eligible for reimbursement from Sigma-Tau under a cost sharing arrangement with the Company, which amounted to EUR 0.29 million and EUR 0.86 million for the nine months ended September 30, 2011 and 2010, respectively. In addition, the fluctuation is attributable to the ratable recognition of EUR 1.70 million ($2.23 million) and EUR 2.56 million ($3.50 million) for the nine months ended September 30, 2011 and 2010 of the EUR 5.11 million ($7.0 million) up-front payment made by Sigma-Tau in connection with the amendment of the existing license and supply agreement with the Company to include the prevention indication of Defibrotide in the Americas. The up-front payment was recognized ratably, commencing in January 2010 through the second quarter of 2011.

Cost of goods sold was EUR 4.15 million for the nine-month period ended September 30, 2011 compared to EUR 4.29 million for the same period in 2010. Cost of goods sold as a percentage of product sales was 26% for the nine-month period ended September 30, 2011 compared to 29% for the same period in 2010. The percentage decrease is primarily due to a different product mix with proportionately increased sales of Defibrotide, which has a higher margin compared to sales of the Company's other active pharmaceutical ingredients.

The Company incurred research and development expenses of EUR 4.00 million for the nine-month period ended September 30, 2011 compared to EUR 4.63 million for the same period in 2010. Research and development expenses were primarily for the development of Defibrotide to treat and prevent VOD. The decrease from the comparable period in 2010 is attributed to the completion of certain pre-clinical and clinical trials, such as reproductive toxicity, hERG channel, QT/QTc and completion of a technology transfer to a third party, offset by an increase in scientific consultancy and regulatory activities.

General and administrative expenses were EUR 4.34 million for the nine-month period ended September 30, 2011 compared to EUR 4.07 million for the same period in 2010. 2010 general and administrative expenses include a release of a reserve for doubtful accounts for EUR 0.27 million due to the deemed payment of accounts receivable through the elimination of the same amount of accounts payable due to the same counterparty.  The slight increase in general and administrative expenses was primarily due to administrative expenses incurred with the incorporation of a subsidiary in Switzerland along with higher stock-based compensation expenses which amounted to EUR 1.07 million and EUR 0.85 million for the nine months ended September 30, 2011 and 2010, respectively, offset by a decrease in administrative and payroll expenses previously incurred by the Company's New York office, which closed in 2010.

Sales and marketing expenses were EUR 1.34 million for the nine-month period ended September 30, 2011 compared to none for the same period in 2010. Sales and marketing expenses mainly refer to expenses relating to recruiting, payroll, marketing and health economics analysis, and stock-based compensation expenses.

Corporate restructuring charges were EUR 0.34 million and EUR 0.95 million for the nine-month periods ended September 30, 2011 and 2010 respectively.

Income tax expenses were EUR 0.37 million and EUR 0.22 million for the nine-month periods ended September 30, 2011 and 2010, respectively. Income tax expenses include a provision for the Italian Regional Tax on Productive Activities, or "IRAP," which has a statutory rate of 3.9%. The IRAP tax is not deductible for corporate purposes. The IRAP tax base is similar to the corporate tax base, but does not permit a deduction for labor and interest.

Net income was EUR 2.63 million for the nine-month period ended September 30, 2011 compared to EUR 3.44 million for the same period in 2010. The difference is mainly due to an increase in the volume of Defibrotide sold through the named-patient and cost recovery programs. The increase in Defibrotide sales has offset the decrease in the Company's active pharmaceutical ingredient sales, the decrease in activities that were eligible for reimbursement from Sigma-Tau under a cost sharing arrangement with the Company, costs associated with the establishment of our European sales infrastructure, which was not present in 2010. 2011 and 2010 financial results were also affected by restructuring charges of EUR 0.34 million and EUR 0.95 million, respectively.

About VOD

Veno-occlusive disease (VOD) is a potentially life-threatening condition, which typically occurs as a result of a significant complication of stem cell transplantation. Certain high-dose conditioning regimens used as part of stem cell transplants (SCT) can damage the lining cells of hepatic blood vessels and result in VOD, a blockage of the small veins of the liver that leads to liver failure and can result in significant dysfunction of other organs such as the kidneys and lungs (so-called severe VOD). SCT is a frequently used treatment modality following high-dose chemotherapy and radiation therapy for hematologic cancers and other conditions in both adults and children. There is currently no approved agent for the treatment or prevention of VOD in the United States or the European Union.

About Gentium

Gentium S.p.A., located in Como, Italy, is a biopharmaceutical company focused on the development and manufacture of drugs to treat and prevent a variety of diseases and conditions, including vascular diseases related to cancer and cancer treatments. Defibrotide, the Company's lead product candidate, is an investigational drug that has been granted Orphan Drug status by the U.S. FDA and Orphan Medicinal Product Designation by the European Commission both to treat and to prevent VOD and Fast Track Designation by the U.S. FDA to treat VOD.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements." In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These statements are not historical facts but instead represent the Company's belief regarding future results, many of which, by their nature, are inherently uncertain and outside the Company's control. It is possible that actual results, including with respect to any financial forecast or the possibility of any future regulatory approval, may differ materially from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in the Company's Form 20-F filed with the Securities and Exchange Commission under the caption "Risk Factors."