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GTC Biotherapeutics Reports Third Quarter 2004 Financial Results

[Please see the link below for the financial tables.]

http://biz.yahoo.com/bw/041104/45206_1.html

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FRAMINGHAM, Mass.--(BUSINESS WIRE)--Nov. 4, 2004--GTC Biotherapeutics, Inc. ("GTC", Nasdaq: GTCB) reported today its financial results for the third quarter ended October 3, 2004. The total net loss for the quarter was $7.2 million, or $0.18 per share, compared with $7.6 million, or $0.25 per share, for the third quarter of 2003. The total net loss for the first nine months of 2004 was $22 million, or $0.60 per share, compared to $21 million, or $0.73 per share, for the first nine months of 2003. Cash, cash equivalents and marketable securities at October 3, 2004 were $29.8 million compared to $31.1 million at December 28, 2003. GTC utilized $15.2 million of cash, cash equivalents and marketable securities in the first nine months of 2004, exclusive of the registered direct placement of common stock in March 2004 which raised $13.9 million net of placement expenses. GTC utilized $4.6 million of cash, cash equivalents and marketable securities in the third quarter of 2004.

"We are continuing to plan for a market launch of ATryn® for the hereditary deficiency indication in Europe in mid-2005," stated Geoffrey F. Cox, Ph.D., GTC's Chairman of the Board and Chief Executive Officer. "ATryn® also is gaining significant interest from key opinion leaders and potential partners for development of larger market indications."

GTC expects its net use of cash and marketable securities for 2004, inclusive of the effect of the March 2004 registered direct placement, to be approximately $6.1 million. The annual cash projection for 2004 assumes cash collections of approximately $13 million for the year, primarily from external programs as well as partnering for ATryn®. Approximately $8.7 million of cash collections has either been received or is anticipated on contracts currently in backlog. These contracts include the programs with Merrimack, Centocor, a third existing external partner, and the funding of GTC's malaria vaccine program with the National Institute of Allergy and Infectious Diseases (NIAID). GTC is anticipating utilizing approximately $20 million of cash in 2005 which includes supporting the launch of ATryn® in Europe and the HD clinical trial in the US. After a successful launch of this product in mid-2005, and on the basis of a supportive ATryn® partnering agreement, GTC may manufacture additional product to supply clinical studies for larger markets. This additional manufacturing may increase GTC's total net cash utilization in 2005 to $25 million.

Revenues were $0.9 million for the quarter, a 57% decrease from the $2.2 million for the third quarter of 2003. Revenues for the first nine months of 2004 totaled $3.4 million, a 57% decrease from the $8 million reported for the same period in 2003. The decrease in revenue for the quarter and the first nine months is primarily due to the stage of development of the ongoing programs. Reported revenues are expected to vary on a quarter-to-quarter basis due to the nature and timing of milestone-based research and development revenues.

Costs of revenue and operating expenses totaled $7.9 million for the quarter, a 21% decrease from the $10.1 million total for the third quarter 2003. Cost of revenue and operating expenses totaled $25.2 million for the first nine months of 2004, a 15% decrease from the $29.6 million reported for the same period in 2003. The decreases were driven primarily by lower expenses in the external development programs as well as reduced expenses resulting from the restructurings that were completed in the first quarter of 2004.

The per share results were affected by an increase in the weighted average number of shares outstanding from 30.5 million shares for the third quarter of 2003 to 38.8 million shares for the third quarter of 2004. The weighted average number of shares outstanding increased from 28.7 million shares for the first nine months of 2003 to 36.9 million shares for the first nine months of 2004. The increases in the weighted average shares outstanding primarily reflect the issuance of approximately 3.6 million shares of common stock in a private placement to institutional investors in August 2003 and the issuance of approximately 6.4 million shares of common stock in a registered direct placement in March 2004. The net proceeds to GTC from those offerings totaled approximately $22.4 million. GTC had approximately 38.8 million shares outstanding as of October 3, 2004. [There are about 44M shares on a fully-diluted basis.]

Highlights

ATryn®

GTC recently met with representatives from the European Medicines Agency (EMEA) to discuss the Company's general strategy for responding to the Consolidated List of Questions received as part of the review of the information submitted in a Marketing Authorization Application (MAA) for ATryn®. The MAA covers the use of ATryn® in the prophylactic treatment of patients with hereditary antithrombin deficiency (HD) during high-risk situations such as surgery and childbirth. GTC expects to file its complete responses to the EMEA's questions before the end of the year. Subject to satisfactory approval of the MAA, GTC is planning for a European market launch of ATryn® in mid-2005.

During the fourth quarter, GTC plans to submit an amendment to its Investigational New Drug (IND) application to the Food and Drug Administration (FDA) to define the clinical protocol for ATryn® in the United States in the HD indication. The results of this clinical study, in conjunction with the data provided to the EMEA, are anticipated to form the basis for a filing for market approval in the US.

In addition, GTC is working towards completion of an agreement with a marketing partner before the end of the fourth quarter to support the anticipated launch of ATryn® in mid-2005.

Antithrombin is a plasma protein with anticoagulant and anti-inflammatory properties. GTC expresses this protein in the milk of goats that have the human antithrombin gene linked to a milk-protein promoter. This transgenic approach provides the opportunity to produce recombinant forms of proteins, such as antithrombin, that are difficult to express in conventional production methods. Antithrombin is the first of a series of human plasma proteins that GTC is developing as recombinant products. Other recombinant human plasma proteins that GTC is developing include recombinant human albumin and recombinant human alpha 1 antitrypsin. The total market for these three plasma derived products has been estimated to be $1 billion. The history of successful recombinant product development in the blood clotting factors (VIIa, VIII, and IX) indicates that recombinant forms of plasma proteins can generally dominate and surpass the previously established markets.

Recombinant Human Albumin Program

For the recombinant human albumin (rhA) program, GTC has developed cattle that express this protein in their milk. Downstream processing has been developed and GTC has begun providing samples to potential customers. The initial markets these potential customers are evaluating include the use of rhA as an excipient, or stabilizer, in biologic drug formulations. Currently, many biologic drugs are formulated using albumin derived from human plasma.

Portfolio of External Programs

GTC recently completed a license agreement with Nexia Biotechnologies to enable the further development of its Protexia® product as a potential treatment for nerve agents. In addition, the program with Merrimack Pharmaceuticals entered clinical trials in 2003 and GTC is under contract to deliver additional material to Merrimack for clinical evaluation in 2004. One of the programs with Centocor has begun delivering material for preclinical studies.

Conference Call Information

GTC Biotherapeutics will discuss these results and expectations with financial analysts in a web cast conference call at 10:00 a.m. (Eastern) today. The call may be heard through the Company's web site, http://www.gtc-bio.com. The dial-in number from inside the United States is 866-800-8652. The dial-in number from outside the United States is 617-614-2705. The participant passcode is 12258699. The webcast may be found at www.gtc-bio.com.
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