CuraGen Reports Second Quarter 2009 Financial Results
Further Reduces Outstanding Convertible Debt in July 2009 Reaches Agreement to Settle Recent Class Action Lawsuits
Press Release
Source: CuraGen Corporation
On Friday July 31, 2009, 6:00 am EDT
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Companies:CuraGen Corp.
BRANFORD, Conn., July 31 /PRNewswire-FirstCall/ -- CuraGen Corporation (Nasdaq: CRGN - News) today reported its financial results for the second quarter of 2009 and announced that it had further reduced its outstanding convertible debt and reached an agreement in principle, expressed in a memorandum of understanding, to settle recent shareholder class action lawsuits filed in the State of Connecticut and the State of Delaware in connection with the proposed merger between CuraGen Corporation and Celldex Therapeutics, Inc. The settlement is subject to documentation and court approval.
During the three and six month periods ended June 30, 2009, CuraGen utilized $3.8 million and $7.8 million, respectively, of cash and investments for operations, which includes cash paid for legal, audit and strategic advisor fees of $0.6 million and $0.7 million for the three and six month periods ended June 30, 2009, respectively. As of June 30, 2009, CuraGen had $76 million of cash and investments and $14.1 million of 4% convertible subordinated notes due February 2011. CuraGen repurchased $1.64 million of its 4% convertible subordinated notes for $1.39 million in July 2009 and as of July 31, 2009, had $12.5 million of 4% convertible subordinated notes outstanding. During 2009, through privately negotiated transactions, CuraGen has repurchased $6.5 million of convertible subordinated notes at an average cost of 80% of par.
For the three and six months ended June 30, 2009, CuraGen reported total operating expenses of $4.7 and $8.3 million, respectively, which included costs incurred for legal, audit and strategic advisor fees of $1.5 million and $1.6 million for the three and six month periods ended June 30, 2009, respectively.
CuraGen is continuing to enroll patients in clinical trials of CR011-vcMMAE, an antibody-drug conjugate that targets GPNMB. "We continue to be very positive about the development opportunities for CR011 in breast cancer and melanoma," commented Dr. Timothy M. Shannon, President and Chief Executive Officer of CuraGen. "We look forward to presenting updated data for the breast cancer study in the second half of 2009."
In July 2009, CuraGen also reached an agreement in principle and signed a memorandum of understanding to settle two shareholder class action lawsuits that had been filed in connection with the proposed merger between CuraGen Corporation and Celldex Therapeutics, Inc. The settlement is subject to documentation and court approval. "While we continue to deny any wrongdoing or liability with respect to the claims asserted in the class action suits, unfortunately, the monthly costs of defending against these lawsuits far outweighed the benefits of continued litigation. Therefore, we have agreed to the terms of a settlement, which will include additional disclosure in the final proxy statement regarding the merger and, if approved by the court, a payment for the shareholder plaintiffs' attorneys' fees and expenses. Although we expect to have some increases to our initial projections of net cash at closing from the repurchase of debt at a discount as partial offsets, we now expect that the settlement payment and the monthly defense costs in connection with these class action suits will result in a decrease in the net cash at closing from our original projection of $54.5 million to between $53.5 and $54.0 million," commented Dr. Shannon.
The revised projected net cash figures results in a reduction of the expected purchase price for CuraGen from $94.5 million or $1.56 per fully diluted share, to between $93.5 million and $94.0 million or $1.54 - $1.55 per fully diluted share. The proposed merger is projected to close in the third quarter of 2009.
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