Gentium Reports First Half 2013 Financial Results

• Positive Opinion from EMA's CHMP for Defitelio®.
• Defibrotide revenues up 26% to EUR 14.26 million (USD 18.55 million) for the six-month period ended June 30, 2013 from EUR 11.35 million in the prior-year period.
• Product sales of EUR 17.17 million (USD 22.34 million) for the six-month period ended June 30, 2013, recording an increase of EUR 3.49 million or 26%.
• Cash flow positive and stronger cash position.
• Non-GAAP Adjusted EBITDA of EUR 4.30 million (USD 5.59 million) for the first half of 2013.

VILLA GUARDIA (COMO), Italy, Aug. 13, 2013 (GLOBE NEWSWIRE) -- Gentium S.p.A. (Nasdaq:GENT) (the "Company") today reported financial results for the first half of 2013 and the second quarter ended June 30, 2013. The Company reports its financial 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 June 28, 2013, EUR 1.00 = $1.301

"On July 26th, we received a positive opinion for Defitelio® from the European Medicines Agency's ("EMA") Committee for Medicinal Products for Human Use ("CHMP") who recommended a marketing authorization, under exceptional circumstances, for the treatment of severe veno-occlusive disease ("VOD"). We are delighted that the CHMP reversed its negative opinion on Defitelio®, recommending it for approval. The positive opinion represents an important milestone for the Company," stated Dr. Khalid Islam, Chairman and Chief Executive Officer of Gentium S.p.A.

"We look forward to the final ratification by the European Commission ("EC"), within three months, which will be effective and valid for all 28 Countries of the European Union ("EU"). We could expect the initiation of the commercial launch to take place towards the end of Q4/2013. We have already established our EU commercial presence in the United Kingdom, France, Germany, Spain and Italy and completed the country-specific health technology assessments needed for the pricing and reimbursements process," stated Mr. Adrian Haigh, Chief Operating Officer of Gentium GmbH.

"We are pleased to report that Defibrotide revenues for the three and six-month periods ended June 30, 2013 increased by 21% and 26%, respectively, when compared with the three and six-month periods ended June 30, 2012. Defibrotide net product sales for the three-month period ended June 30, 2013 amounted to EUR 7.77 million (USD 10.11 million), which is the highest of any quarter since the commencement of our cost recovery and named-patient programs. Additionally, we recorded an increase of 20% and of 26% in product sales for the three and six-month period ended June 30, 2013 compared with the same periods of 2012," stated Mr. Salvatore Calabrese, Senior Vice President and Chief Financial Officer of Gentium S.p.A. "We maintain our profitability, with a net income of EUR 1.85 million in the second quarter of 2013 compared with EUR 0.82 million in the second quarter of 2012. Diluted earnings per share was EUR 0.12 for the second quarter of 2013 compared with EUR 0.05 for the same period in 2012."

Conference Call with Management Today

As previously announced, Gentium will host a conference call today at 7:00 a.m. ET / 1:00 p.m. CET. To participate in the call, interested parties may dial 1 866 966 9439 (North America toll-free) or +44 (0) 1452 555 566 (international/toll) and use Conference ID 12154777. Participants must register ten minutes before the call is scheduled to begin. Individuals may also access the live webcast at http://www.gentium.com/investors/event-calendar.

The event will be archived for replay for 30 days. The replay can be accessed on the Company's website, http://www.gentium.com/investors/event-calendar or by dialing 1 866 247 4222 (North America toll-free) or +44 (0) 1452 55 00 00 (international/toll) and using Conference ID 12154777.

Financial Highlights

For the six-month period ended June 30, 2013, compared with the six-month period ended June 30, 2012:

• Product sales were EUR 17.17 million compared with EUR 13.68 million, recording an increase of EUR 3.49 million or 26%.
• Defibrotide net sales through the named-patient and cost recovery programs amounted to EUR 14.26 million compared with EUR 11.35 million, recording an increase of EUR 2.91 million or 26%. Sales of the Company's active pharmaceutical ingredients (API) amounted to EUR 2.92 million compared with EUR 2.33 million, an increase of EUR 0.59 million or 25%.
• Total revenues were EUR 18.33 million compared with EUR 14.17 million.
• Operating costs and expenses were EUR 15.69 million compared with EUR 14.02 million.
• Research and development expenses, which are included in operating costs and expenses, were EUR 6.91 million compared with EUR 5.19 million.
• Selling, general and administrative expenses, which are also included in operating costs and expenses were EUR 5.56 million compared with EUR 5.95 million.
• Operating income was EUR 2.65 million compared with EUR 0.14 million.
• Pre-tax income was EUR 2.77 million compared with EUR 0.22 million.
• Net income/(loss) was EUR 2.65 million compared with EUR (0.09) million.
• Basic and diluted net income per share was EUR 0.18 and EUR 0.17, respectively, compared with a basic and diluted net loss per share of EUR (0.01).

For the second quarter ended June 30, 2013, as compared with the second quarter ended June 30, 2012:

• Product sales were EUR 9.64 million compared with EUR 8.03 million, recording an increase of EUR 1.61 million or 20%.
• Defibrotide net sales through the named-patient and cost recovery programs were EUR 7.77 million compared with EUR 6.42 million, recording an increase of EUR 1.35 or 21%. Sales of the Company's API amounted to EUR 1.87 million compared with EUR 1.61 million, an increase of EUR 0.26 million or 16%.
• Total revenues were EUR 10.23 million, compared with EUR 8.51 million.
• Operating costs and expenses were EUR 8.34 million, compared with EUR 7.72 million.
• Research and development expenses, which are included in operating costs and expenses, were EUR 3.56 million, compared with EUR 3.02 million.
• Selling, general and administrative expenses, which are also included in operating costs and expenses, were EUR 2.60 million compared with EUR 2.93 million
• Operating income was EUR 1.89 million, compared with EUR 0.80 million.
• Pre-tax income was EUR 1.96 million compared with EUR 0.89 million.
• Net income was EUR 1.85 million, compared with EUR 0.82 million.
• Basic and diluted net income per share was EUR 0.12, compared with EUR 0.05.

Cash and cash equivalents were EUR 16.15 million as of June 30, 2013 compared with EUR 12.49 million at December 31, 2012.

Operating Results

Total product sales for the six-month period ended June 30, 2013 were EUR 17.17 million compared with EUR 13.68 million for the same period in 2012, an increase of EUR 3.49 million, or 26%. The variance was primarily due to the increase in sales of Defibrotide through the named-patient programs, attributable to a price increase, which came into effect in the second quarter, offset by a lower volume, due to a higher demand in the prior quarter, as consequence of an announced price increase. Contributing to the variance there was a decrease in service fees associated with the named patient program managed by one of our European partners, which came into effect in the second quarter of last year, and an increase in sales volume of one of our API's business.  

For the six-month periods ended June 30, 2013 and 2012, named-patient and cost recovery programs sales amounted to EUR 14.26 million and EUR 11.35 million, respectively, representing an increase of EUR 2.91 million or 26%.

API's revenues were EUR 2.92 million for the six-month period ended June 30, 2013, as compared with EUR 2.33 million for the same period in 2012, representing an increase of EUR 0.59 million or 25%. The increase was primarily due to higher volumes of sales in the sulglicotide business which passed from EUR 1.16 million to EUR 2.30 million, partially offset by a decrease of EUR 0.25 million and EUR 0.30 million in the urokinase and heparin businesses, respectively, largely attributable to volume.

Other revenues were EUR 1.16 million for the six-month period ended June 30, 2013 compared with EUR 0.49 million for the same period in 2012, representing an increase of EUR 0.67 million. The variance was mainly due to an increase in activities that were eligible for reimbursement from Sigma-Tau under a cost sharing arrangement with the Company, renegotiated in May 2012, which amounted to EUR 1.02 million and EUR 0.44 million for the six-month periods ended June 30, 2013 and 2012, respectively.

Cost of goods sold was EUR 2.61 million for the six-month period ended June 30, 2013 compared with EUR 2.28 million for the same period in 2012. Cost of goods sold as a percentage of product sales was 15% for the six-month period ended June 30, 2013 compared with 17% for the same period in 2012. In prior year period, we released a previously established reserve of EUR 0.63 million, due to the sale of an API that was written-off in Q4/2011, which contributed positively on the gross margin, without such release cost of goods sold as percentage of product sales would have been 21% instead of 17%. When compared with prior year period, the decrease in the incidence of cost of goods sold as percentage of product sale was attributable to increase in price and decrease in service fees for Defibrotide distributed on a named patient basis and to a slight price increase in margin in sulglicotide due to renegotiation of the sale price which come into effect in 2013.

Research and development expenses were EUR 6.91 million, for the six-month period ended June 30, 2013, compared with EUR 5.19 million, for the same period in 2012, an increase of EUR 1.72 million or 33%. Research and development expenses were primarily for the development of Defibrotide to treat and prevent VOD. The increase from the comparable period in 2012 is attributed to increase in payroll and payroll related cost due to increase in headcounts, travel expenses, the engagement of contract research organizations and outside scientific and regulatory consultancy, to assist the Company in addressing issues raised by the U.S. Food and Drug Administration (FDA) and supporting the Company through the European Medicines Agency's (EMA) regulatory review process.

Selling, general and administrative expenses were EUR 5.56 million for the six-month period ended June 30, 2013 compared with EUR 5.95 million for the same period in 2012, a decrease of EUR 0.39 million or 7%. Selling, general and administrative expenses refer mainly to legal and corporate expenses, payroll and payroll related costs, market research, consultancy, travel and stock-based compensation costs. The variance was mainly due to decrease in payroll and payroll related costs attributable to reorganization of the activities in Italy, decrease in health economic and marketing analysis, regulatory, travel expenses and personnel selection.

Net income was EUR 2.65 million for the six-month period ended June 30, 2013 compared with a loss of (EUR 0.09) million for the same period in 2012. The difference was mainly due to an increase in sales of Defibrotide sold through the named-patient programs, a slight increase in the API sales and other income and revenues under the cost sharing agreement entered into with Sigma-Tau. Also contributing to the variance there was an increase in research and development expenses offset by a decrease in selling, general and administrative and income tax expenses.

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 EMA 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 our Form 20-F filed with the Securities and Exchange Commission under the caption "Risk Factors."

Explanation and Use of Non-GAAP Financial Measures

To provide investors with greater insight and a better understanding of how our management and board of directors analyze our financial performance and make operational decisions, we supplement our consolidated financial statements that are presented on a GAAP basis in this press release with the following non-GAAP financial measures: adjusted EBITDA and adjusted EBITDA per basic and diluted share.

These non-GAAP financial measures should not be considered in isolation; they are in addition to, and are not a substitution for, financial performance measures under GAAP. These non-GAAP financial measures may be different from non-GAAP measures used by other companies. Further, we may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.

We define non-GAAP adjusted EBITDA as net income/(loss) before net interest income/(expense), income tax expense (benefit), depreciation and amortization expense, share-based compensation expense and net unrealized foreign currency exchange gain/(loss). We define non-GAAP adjusted EBITDA per basic and diluted share as non-GAAP adjusted EBITDA applicable to common shareholders divided by the weighted average basic and fully diluted shares outstanding during the period as computed in accordance with GAAP.

We use non-GAAP adjusted EBITDA:

• as a measure of operating performance, because it does not include the impact of items that we do not consider indicative of our core operating performance;
• for planning purposes, including the preparation of our annual operating budget;
• to allocate resources to enhance the financial performance of our business;
• to evaluate the effectiveness of our business strategies; and
• in communications with our board of directors and investors concerning our financial performance.

We believe that non-GAAP adjusted EBITDA and non-GAAP adjusted EBITDA per basic and diluted share are useful to investors in evaluating our operating performance for the following reasons:

• these and similar non-GAAP measures are widely used by investors to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired;
• securities analysts often use these and similar non-GAAP measures as supplemental measures to evaluate the overall operating performance of companies; and
• by comparing our non-GAAP adjusted EBITDA in different historical periods, our investors can evaluate our operating results without the additional variations of interest income (expense), income tax expense (benefit), depreciation and amortization expense, share-based compensation expense and unrealized foreign currency exchange gain (loss).

We understand that, although measures similar to non-GAAP adjusted EBITDA are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Some of the limitations of these specific non-GAAP financial measures are:

• non-GAAP adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or other contractual commitments;
• non-GAAP adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
• non-GAAP adjusted EBITDA does not reflect share-based compensation expense;
• non-GAAP adjusted EBITDA does not reflect cash requirements for income taxes;
• non-GAAP adjusted EBITDA does not reflect net interest income (expense); and
• non-GAAP adjusted EBITDA does not reflect net unrealized foreign currency exchange gain (loss).

Non-GAAP Adjusted EBITDA, Three Months Ended June 30

The following table presents a reconciliation of non-GAAP adjusted EBITDA to net income/(loss), the most comparable GAAP measure (unaudited; in thousands):

Non-GAAP Adjusted EBITDA per Basic and Diluted Share

The following tables detail how we calculate non-GAAP adjusted EBITDA per basic and diluted share and reconcile non-GAAP adjusted EBITDA per basic and diluted share to fully basic and diluted earnings per share, the most comparable GAAP measure (unaudited; in thousands, except share and per share amounts):

Non-GAAP Adjusted EBITDA, Six Months Ended June 30

The following table presents a reconciliation of non-GAAP adjusted EBITDA to net income/(loss), the most comparable GAAP measure (unaudited; in thousands):

Non-GAAP Adjusted EBITDA per Basic and Diluted Share

The following tables detail how we calculate non-GAAP adjusted EBITDA per basic and diluted share and reconcile non-GAAP adjusted EBITDA per basic and diluted share to fully basic and diluted earnings per share, the most comparable GAAP measure (unaudited; in thousands, except share and per share amounts):