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SGDH, OPSY, SNEY, GRRF, GETA, August 14 Daily Market Movers Digest Report from OTCPicks.com
(M2 PressWIRE Via Acquire Media NewsEdge) Our Stocks to Watch today include SGD Holdings Ltd. (OTC: SGDH), Optical Systems Inc. (OTC: OPSY), Sunergy Inc. (OTCBB: SNEY), China GrenTech Corporation Ltd. (Nasdaq: GRRF) and Genta Inc. (OTCBB: GETA).
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SGD HOLDINGS LIMITED (OTC: SGDH)
Detailed Quote: http://www.otcpicks.com/quotes/SGDH.php
Company Profile: http://www.otcpicks.com/sgd-holdings/sgd-holdings.htm
SGD Holdings, Ltd. is a holding company which owns and operates through its wholly-owned subsidiary, Ecopaper, Inc. (www.ecopaper.com). Its goal is to acquire new technologies which can positively impact the environment either through internal development or by acquisition.
SGDH News:
August 12 - SGD Holdings, Ltd. Wholly-Owned Subsidiary Signs Exclusive Sugar Cane Paper Agreement
Ecopaper, Inc.'s New, Better Than Recycled Paper Will Help Reduce Dependence On Virgin Tree Paper
SGD Holdings, Ltd. (OTC: SGDH) announced that its wholly-owned subsidiary, Ecopaper, Inc., has obtained an exclusive distribution and marketing agreement for the sale of Sugar Cane Paper in North America.
The North American market for recycled office paper is currently estimated at $5.5 billion. Ecopaper, Inc. anticipates a sharp increase in sales because this multi-purpose copy and print paper will be competitively priced and more environmentally friendly than recycled paper.
"This paper is made from 80% sugar cane waste and 20% Certified Plantation Fiber instead of trees or recycled tree products. It is fully biodegradable and recyclable with improved brightness and print contrast. It is truly a paradigm change," stated Harry Johansing, CEO of SGD Holdings, Ltd. "This exclusive agreement continues to differentiate the Ecopaper brand from our competitors," he added.
Apart from its new products, Ecopaper has also cut costs and streamlined production and efficiencies throughout the company while sustaining our beliefs in fair wages and a great work environment.
ABOUT ECOPAPER, INC.
Ecopaper, Inc. is the first company in the history of the paper industry to create and market treeless paper of a superior quality. Every page of Ecopaper is smooth, acid-free, durable, chemical-free, and made in Costa Rica. Ecopaper, Inc. has developed an innovative and economically feasible option for the removal of 230,000 tons of agro-industrial waste that are dumped yearly in Costa Rica alone. The company's challenge is to invent new processes and create paper from exotic tropical fibers from waste materials in new textures and tones for consumers. The results of processing these exotic tropical fibers are items that both appeal to the consumer and to positively impact the environment.
OPTICAL SYSTEMS INCORPORATED (OTC: OPSY) "Up 1.37% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/OPSY.php
Company Profile: http://www.otcpicks.com/optical-systems/optical-systems.htm
Optical Systems, Inc., through its operating subsidiary, Automotive Software Designers, Inc., develops technology and services for the automotive retail industry designed to maximize productivity and increase profits at auto dealerships. ASDI's flagship technology solution, Save-a-Deal, is a turnkey customer relationship management (CRM) tool for auto dealerships. Our business development center (BDC) provides a variety of services designed to help auto dealerships drive traffic to their showroom or Web site, retain customers and generate new streams of revenue.
OPSY News:
August 13 - Optical Systems, Inc. Achieves Major Milestone in Cutting-Edge remoteCSR Program
Automotive Software Designers, Inc., a leading provider of software and services for the automotive retail industry, and a wholly-owned subsidiary of Optical Systems, Inc. (OTC: OPSY), announced that Ebony Benjamin from Georgia became the 200th remoteCSR to join the company's BDC national team.
ASDI has initiated a high tech project to integrate more than 211 professional customer service representatives (CSR) from 32 states into our Business Development Center programs. This growing list of talented professionals provides phone call, text messaging, e-mail and other digital support for all of ASDI products and services.
The initial assignment for a remoteCSR includes support for ASDI's Identity Theft and Extended Service Agreement products. Each CSR has the option to be promoted as a Team Lead once they gain experience, and to work in other programs including our Sales Manager and Service Manager BDC programs. The remoteCSR work flow process is supported by ASDI with remoteMeetings, remoteTraining, remoteService and remoteSupport anywhere and at any time.
The infrastructure was designed and built by our team with expansion as a primary goal. We are proud to announce that we are now in a position to grow the remoteTeams to more than 1,000 remoteCSRs and Team Leads in 48 states without significant capital investment being required.
Unlike other BDC programs, there are no dialers, robo calls or short cuts in ASDI's BDC. Talking with and communicating with our customers is the way we operate.
ASDI projects that 1,000 remoteCSRs making 85,000 new contacts a day at the standard closing rate of 2 percent, have the potential to generate $50 million in revenue per year for the company's BDC.
"The company's cost effective software and services are continuing to gain traction in the automotive retail industry," said B.J. Grisaffi, Chief Executive Officer of Optical Systems, Inc. "We are currently evaluating numerous opportunities to license our software to companies in other high-growth industries, which require quality sales support and customer service."
SUNERGY INCORPORATED (OTCBB: SNEY)
Detailed Quote: http://www.otcpicks.com/quotes/SNEY.php
Company Profile: http://www.otcpicks.com/sunergy-inc/sunergy-inc.htm
The Company is an aggressive junior mining exploration and development Company that is production oriented at the earliest possible profitable opportunity. We control 100% of the 150 SQ. Km. Nyinahin mining concession with a full prospecting license. The concession is surrounded by several operating mines and is adjacent to Newmont Mining's property. This concession has the Ofin river flowing through our eastern portion and there are numerous artisan pits ready for testing and evaluation for near term production. The Ofin river is known for good alluvial gold production. Artisans usually recover about 30% of the available gold through primitive hand methods, leaving 60-70% to be recovered by modern mechanical operations.
SNEY News:
August 13 - Sunergy Reports Update on Operations on Its 150 sq. km. Ghana Mining Concession
Sunergy Inc. (OTCBB: SNEY) (the "Company") reports the following update on the planning and preparation for operations on our 150 sq. km. Nyinahin mining concession, located in Ghana, West Africa. During Q'4 2009 we plan to test and evaluate the alluvial gold recovery potential along the Ofin River which runs through the eastern portion of the concession for about 45 km. We plan to do this by bulk sampling the numerous existing artisan pits along the river on our concession. Our planned budget is around $300,000.00 US which could recover an estimated 1,000 oz./gold generating around $900,000.00 of revenue from the program. Our plan involves either leasing a suitable gold recovery plant or joint venturing with another operator with suitable equipment. The permitting for the operation will commence shortly.
The Ofin River is an easterly-flowing waterway in Ghana. It flows through the Tano Ofin Reserve in Ghana's Atwima District. The Ofin riverbed is 90 meters above mean sea level. The Ofin and the Pra rivers form the boundary between Ghana's Asahanti and central regions. Dunkwa-on-Ofin is a major town on the river. Gold is mined from the river's sediment. The Ofin tributaries also offer good gold and diamond recovery historically.
Karl Baum, Manager of West African Development, said, "Since this concession already has a full prospecting license, permitting is very straight forward and inexpensive. The artisan pits have no overburden and are considered high grade targets by the industry in Ghana. Many alluvial projects in Ghana have from 2-15 meters of overburden, so our excavation costs should be very economic. I am excited about the opportunity for early cash flow."
Company President Joseph Guerrero said: "This cornerstone project offers both immediate gold recovery opportunities through the numerous abandoned Artisan pits along the Ofin River as well as substantial hard rock exploration in three large anomalies that warrant a vigorous exploration effort. Some larger mining Companies operating in the area have already expressed interest in evaluating the mineral potential on this concession and we are currently evaluating 2 immediate gold production acquisition opportunities to establish immediate cash flow and aggressively advance our shareholder value."
August 12 - Sunergy Appoints Karl A. Baum Manager of West African Business Development
Sunergy, Inc. (OTCBB: SNEY) (the "Company") announced the appointment of Mr. Karl A. Baum as Manager of West African Business Development to further advance the Company's Nyanhin Project within the Republic of Ghana and other business and mining interests in the region.
Mr. Baum brings with him a background in Business Management from Arizona State University and International Management Studies from Thunderbird School of Global Management. He has over 5 years of experience within West Africa serving as the General Manager for (2) small-scale exploration and gold mining operations within The Republic of Ghana with 7,000 ton/day capacity. As International Procurements and Logistics Manager he has overseen the shipment of over USD 15 Million worth of capital equipment from the United States and imported into Ghana. He has led the permitting activities for the operating mines in Ghana and enjoys a good working relationship with the local and national authorities. Prior to his positions within Ghana, Mr. Baum served as Permitting Coordinator on several gold mining projects in Colorado working with the EPA and Division of Minerals and Geology to ensure regulatory compliance.
Mr. Baum has also provided assistance in developing several large scale contracts for mining services within The Republic of Liberia and Sierra Leone; giving him a working knowledge of the customs and concerns of performing within the West African business climate. This hands on experience within the region has assisted him in providing turn-key supply chain management solutions which are vital to successful operations in this part of the world.
Karl commented, "I am excited to join the Sunergy family because we share the same vision and goals for developing a large diversified Company throughout West Africa. This economic downturn has uncovered several opportunities that are available now for those ready to do business in Ghana and West Africa. I will return to Ghana shortly and start implementing our business plan for near term gold production and cash flow and keep my eyes open for opportunities."
Company Chairman P.K. Rana Medhi said, "We now have an area manager with local knowledge and substantial connections in Ghana. With our debt settled, we are now in position to begin work in earnest on our 150 sq. km. Nyinahin mining concession and Karl is the perfect manager to take us through permitting to production."
President Joseph Guerrero commented, "Our aggressive approach to developing our projects and evaluating expansion projects can now proceed rapidly. With Karl's assistance and leadership, we are committed to building a diverse revenue base taking advantage of the business opportunities that Ghana offers."
CHINA GRENTECH CORPORATION LIMITED (NASDAQ: GRRF) "Up 40.54% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/GRRF.php
GrenTech is a leading developer of radio frequency ("RF") technology in China and a leading provider of wireless coverage products and services in China. The Company uses RF technology to design and manufacture wireless coverage products, which enable telecommunication operators to expand the reach of their wireless communication networks to indoor and outdoor areas, such as buildings, highways, railways, tunnels and remote regions. GrenTech's wireless coverage services include design, installation and project warranty services. The Company also tailors the design and configuration of its wireless coverage products to the specific requirements of its customers. Based on its in-house RF technology platform, the Company also develops and produces base station RF parts and components sold to base station manufacturers. GrenTech is a qualified supplier of RF parts and components to the global and domestic major base station manufacturers including Huawei Technologies and ZTE Corporation.
GRRF News:
August 13 - China GrenTech Corporation Limited Announces Second Quarter 2009 Results
Total revenue increased by 127.1%; gross profit increased by 70.4% Positive Operating income and net income
China GrenTech Corporation Limited (Nasdaq: GRRF) ("the Company" or "GrenTech"), a leading China-based radio frequency ("RF") technology and product developer and a leading wireless coverage products and services provider, today announced its unaudited financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Financial Highlights:
* Total revenue increased by 127.1% year-over-year to RMB423.2 million (US$62.0 million). (1)
* Revenue from wireless coverage products and services increased by 116.7% year-over-year to RMB340.4 million (US$49.8 million).
* Revenue from base station RF products increased by 182.9% year-over-year to RMB82.9 million (US$12.1 million).
* Gross profit increased by 70.4% year-over-year to RMB105.9 million (US$15.5 million).
* Operating income was RMB29.6 million (US$4.3 million), compared to operating loss of RMB4.9 million in the second quarter 2008.
* Net income attributable to the equity shareholders of GrenTech was RMB13.3 million (US$2.0 million), compared to net loss attributable to the equity shareholders of GrenTech of RMB17.0 million in the second quarter 2008.
* Basic and diluted net income per ADS (2) was RMB0.56 (US$0.08).
(1) The Company's reporting currency is Renminbi ("RMB"). The translation of amounts from RMB to United States dollars is solely for the convenience of the reader. RMB numbers included in this press release have been translated into U.S. dollars at the noon buying rate for U.S. Dollars in effect on June 30, 2009 in the City of New York for cable transfers in RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York, which was US$1.00 = RMB6.8302. No representation is made that RMB amounts could have been, or could be, converted into U.S. Dollars at that rate or at any other rate on June 30, 2009.
(2) Each ADS represents 25 of our ordinary shares.
Mr. Yingjie Gao, Chairman and Chief Executive Officer of GrenTech, commented, "During the past quarter, one of the key drivers of our growth was the strong demand from all three telecommunications operators in China as they need to upgrade their existing wireless coverage systems to simultaneously support both 2G and 3G networks. As a result, our total revenue in the second quarter grew by 127.1% over the same period last year, resulting in the strongest second quarter in our history from a revenue perspective. Revenue from China Unicom was particularly robust as demand was bolstered by the quick pace of the operator's network coverage construction. We believe that with our leading position in the market and our long-term relationship with China Unicom, we have been able to capture this growth opportunity and our revenue from China Unicom increased by 325.6% over the same period last year. I am very pleased that our strategy to drive rapid revenue growth and implement more stringent cost control measures has again successfully delivered a quarter of positive results."
Second Quarter 2009 Unaudited Financial Results:
Revenue
Revenue for the second quarter 2009 increased by RMB236.9 million (US$34.7 million), or 127.1%, to RMB423.2 million (US$62.0 million) from RMB186.3 million in the second quarter 2008. Revenue from wireless coverage products and services increased year-over-year by RMB183.3 million (US$26.8 million), or 116.7%, to RMB340.4 million (US$49.8 million), primarily due to increased revenue from all three telecommunications operators in China. Revenue from China Unicom increased by RMB130.0 million (US$19.0 million) and revenue from China Mobile and China Telecom increased by RMB15.9 million (US$2.3 million) and RMB48.4 million (US$7.1 million), respectively. At the same time, revenue from base station RF products increased year-over-year by RMB53.6 million (US$7.8 million), or 182.9%, to RMB82.9 million (US$12.1 million), primarily as a result of 3G network construction in China.
Cost of Revenue
Cost of revenue in the second quarter 2009 increased by RMB193.1 million (US$28.3 million), or 155.5%, to RMB317.3 million (US$46.5 million) from RMB124.2 million in the second quarter 2008, primarily due to a higher sales volume.
Operating Expenses
Research and development expenses decreased by RMB5.3 million (US$0.8 million), or 29.5%, to RMB12.6 million (US$1.8 million) from RMB17.8 million in the second quarter 2008. After the Company's large initial investment in research and development for 3G products over the last year, the outcome of which is now part of the Company's existing product offering, research and development expenses in this quarter were reduced.
Sales and distribution expenses increased by RMB13.7 million (US$2.0 million), or 44.1%, to RMB44.7 million (US$6.5 million) from RMB31.0 million in the second quarter 2008, primarily as a result of an increase in sales activities and distribution expenses driven by the increased sales volume. An increase in bonus payments for sales and marketing employees has also contributed to the year-over-year increase. However, as percentage of revenue, sales and distribution expenses decreased to 10.6% from 16.6% in the second quarter 2008.
General and administrative expenses increased by RMB0.8 million (US$0.1 million), or 4.3%, to RMB19.0 million (US$2.8 million) from RMB18.2 million in the second quarter 2008. The year-over-year increase was primarily driven by a share-based compensation expense related to the granting of the Company's share options to the Group's employees and directors in March 2008 and December 2008, and was partially offset by decrease in most of the Company's other expense items.
Accordingly, total operating expenses increased by RMB9.2 million (US$1.4 million), or 13.8%, to RMB76.3 million (US$11.2 million) from RMB67.1 million in the second quarter 2008.
Other Expense/Income
Interest income increased by RMB3.2 million (US$0.5 million), or 67.6%, to RMB8.0 million (US$1.2 million) from RMB4.8 million in the second quarter 2008, primarily due to an increase in interest income related to long-term accounts receivable.
Interest expense remained relatively stable year-over-year.
Foreign currency exchange loss decreased by RMB2.2 million (US$0.3 million), or 76.8%, to RMB0.7 million (US$0.1 million) from RMB2.9 million in the second quarter 2008, primarily due to the relatively stable RMB to U.S. dollar exchange rate and a reduction in U.S. dollar-denominated deposits.
Accordingly, total other expense decreased by RMB6.1 million (US$0.9 million), or 50.9%, to RMB5.9 million (US$0.9 million) from RMB12.0 million in the second quarter 2008.
Earnings
Gross profit increased by RMB43.8 million (US$6.4 million), or 70.4%, to RMB105.9 million (US$15.5 million) from RMB62.1 million in the second quarter 2008, primarily due to the significant increase in total revenue.
Gross margin decreased to 25.0% in the second quarter 2009 from 33.3% in the same period last year, primarily due to a decrease in the average selling price of wireless coverage equipment and the increased revenue contribution from base station RF products which have a lower gross margin.
Operating income was RMB29.6 million (US$4.3 million) in the second quarter 2009, compared to an operating loss of RMB4.9 million in the second quarter 2008.
Net income attributable to the equity shareholders of GrenTech was RMB13.3 million (US$2.0 million) in the second quarter 2009, compared to a net loss attributable to the equity shareholders of GrenTech of RMB17.0 million in the second quarter 2008.
Diluted net income per ADS was RMB0.56 (US$0.08) in the second quarter 2009.
Balance Sheet
Cash, cash equivalents and pledged time deposits decreased by RMB83.6 million (US$12.2 million), or 20.1%, to RMB332.1 million (US$48.6 million) from RMB415.7 million as of December 31, 2008, primarily attributable to working capital outflow for raw material purchases to meet increased sales demand and operating overhead.
Total accounts receivable increased by RMB237.6 million (US$34.8 million), or 18.6%, to RMB1,517.1 million (US$222.1 million) from RMB1,279.5 million as of December 31, 2008, primarily because the majority of sales generated in the second quarter 2009 have not yet entered into the collection period.
Inventories increased by RMB296.7 million (US$43.4 million), or 57.0%, to RMB817.3 million (US$119.7 million) from RMB520.6 million as of December 31, 2008, primarily due to increased raw material purchases to meet forthcoming sales orders and a higher level of finished goods that were installed in customer sites but have not yet been recognized as revenue as completion certificates have not been received.
Total assets increased by RMB495.3 million (US$72.5 million), or 17.4%, to RMB3,334.2 million (US$488.2 million) from RMB2,839.0 million as of December 31, 2008, primarily due to increases in inventory and total accounts receivable.
Total liabilities increased by RMB479.6 million (US$70.2 million), or 34.2%, to RMB1,881.0 million (US$275.4 million) from RMB1,401.4 million as of December 31, 2008. Current liabilities increased by RMB499.7 million (US$73.2 million), or 39.4%, to RMB1,766.3 million (US$258.6 million) from RMB1,266.6 million as of December 31, 2008. The increase in liabilities was primarily due to an increase of RMB397.5 million (US$58.2 million) in accounts payable for the purchase of raw materials, and an increase of RMB80.7 million (US$11.8 million) in short-term bank loans.
GENTA INCORPORATED (OTCBB: GETA) "Up 9.09% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/GETA.php
Genta Incorporated is a biopharmaceutical company with a diversified product portfolio that is focused on delivering innovative products for the treatment of patients with cancer. Two major programs anchor the Company's research platform: DNA/RNA-based Medicines and Small Molecules. Genasense (oblimersen sodium) Injection is the Company's lead compound from its DNA/RNA Medicines program. The leading drug in Genta's Small Molecule program is Ganite (gallium nitrate injection), which the Company is exclusively marketing in the U.S. for treatment of symptomatic patients with cancer related hypercalcemia that is resistant to hydration. The Company has developed G4544, an oral formulation of the active ingredient in Ganite, which has recently entered clinical trials as a potential treatment for diseases associated with accelerated bone loss. The Company is also developing tesetaxel, a novel, orally absorbed, semi-synthetic taxane that is in the same class of drugs as paclitaxel and docetaxel. Ganite and Genasense are available on a "named-patient" basis in countries outside the United States.
GETA News:
August 14 - Genta Incorporated Announces Second Quarter 2009 Financial Results
* AGENDA Phase 3 trial in melanoma passes post-accrual futility analysis
* AGENDA results expected Fourth Quarter 2009
* Genasense in novel combination shows promising activity in melanoma
* Genasense 1-hour infusion initiated in melanoma
* Additional core patents issued for Genasense
* Tesetaxel trial shows early efficacy and safety
Genta Incorporated (OTCBB: GETA) announced financial results for the quarter ended June 30, 2009.
"The last several months have been extraordinarily important", said Dr. Raymond P. Warrell, Jr., Genta's Chief Executive Officer. "We now believe we will have sufficient financing that will enable release of primary data in our Phase 3 Genasense trial in melanoma. Certainly, past and recent studies of other drugs in melanoma have proved repeatedly disappointing. We believe our biomarker-directed approach, coupled with our uniquely targeted new drug, may transform the treatment of this illness and finally offer meaningful benefit for patients. We expect to release results from our Phase 3 study within the next 3 months, which if positive should comprise the basis for worldwide regulatory applications."
Genta management will host a conference call and live audio webcast to discuss the Company's financial results and recent corporate activities today at 8:00 am EST. Participants can access the live call by dialing (877) 634-8606 (U.S. and Canada) or (973) 200-3973 (International). The access code for the live call is Genta Incorporated. The call will also be webcast live at http:www.genta.com/investorrelation/events.html.
For investors unable to participate in the live call, a replay will be available approximately two hours after the completion of the call, and will be archived for 30 days. Access numbers for this replay are: (800) 642-1687 (U.S. and Canada) and (706) 645-9291 (International); conference ID number is: 22633873.
Highlights of the preceding quarter ended June 30, 2009 included the following:
AGENDA: Phase 3 Trial of Genasense in Advanced Melanoma
AGENDA is a Phase 3, randomized, double-blind trial that has completed accrual of 315 patients with advanced melanoma. The study is designed to confirm certain safety and efficacy results from a prior randomized trial of Genasense (oblimersen sodium) Injection combined with dacarbazine. AGENDA employs a biomarker to define patients who derived maximum benefit during the preceding study. Such patients are characterized by low-normal levels of lactate dehydrogenase (LDH), a tumor-derived enzyme that is readily detected in blood.
During the prior quarter, the Company released demographic information that showed good concordance of relevant patient characteristics between the prior trial and AGENDA. Moreover, the importance of LDH levels as a key factor associated with survival in advanced melanoma was independently confirmed by a publication from the leading European oncology cooperative group. An independent data monitoring committee completed its post-accrual analysis for safety and futility, and has recommended that AGENDA continue to completion.
Genasense Plus Novel Chemotherapy Yields Promising Activity in Melanoma
At the annual meeting of the American Society of Clinical Oncology (ASCO) in June 2009, investigators reported a high response rate and potentially extended survival in a pilot study of Genasense plus temozolomide and Abraxane (paclitaxel protein-bound particles for injectable suspension) (albumen bound). Of 18 patients with stage 4 melanoma and normal LDH, 7 (39%) had achieved major responses: one with complete response (CR) and 6 with partial response. Five other patients had maintained stable disease (SD) after at least 3 treatment cycles for a disease control rate of 68%. The most common side-effects were similar to those associated with the chemotherapy drugs used alone. Median survival was 14.7 months and 50% of patients had survived longer than 1 year. These data compared favorably with median survival reported in the prior Phase 3 trial of Genasense in melanoma with similar LDH criteria for dacarbazine alone (9.7 months) or dacarbazine plus Genasense (11.4 months).
This trial has recently been amended to incorporate the new 1-hour IV infusion schedule of Genasense administered twice weekly, instead of the 5-day continuous IV infusion schedule used in the Phase 3 trials. Initial results are expected in the Fourth Quarter 2009.
Genasense Market Protection Expected to Extend up to 10 Years from Launch
Assuming AGENDA results are both positive and sufficient to secure approval in Europe and the U.S., Genta currently expects to hold exclusive marketing positions for up to 10 years from potential anticipated launch dates. In the U.S., the Company expects to file for extensions of its core composition patent up to the maximum allowable times pursuant to Hatch-Waxman legislation. The Company has also filed and/or received patents or patent applications that are expected to raise additional barriers to entry for generic competitors. In addition to these patents, the Company expects to receive up to 10 years of market protection pursuant to applicable rules in Europe for new chemical entrants.
Tesetaxel Dosing Trial Confirms Preliminary Efficacy and Safety Tesetaxel, the leading oral taxane in clinical development, is completing a confirmatory study of dosing on a once every 3-weeks schedule. Data presented at ASCO showed a favorable safety profile with a low incidence of serious adverse events, along with objective responses that have been observed at less than the maximally tolerated dose. The trial is expected to conclude accrual in the third quarter of 2009. Genta intends to explore additional dosing schedules while examining efficacy in diseases that are prioritized in the Company's clinical development plan.
Financial Information
For the second quarter of 2009, the Company reported a net loss of $43.1 million or $(0.63) per share, compared with a net loss of $738.4 million, or $(1,004.84) per share, for the second quarter of 2008. For the six months ended June 30, 2009, the Company reported a net loss of $54.1 million, or $(1.24) per share, compared with a net loss of $748.0 million, or ($1,060.69) per share, for the six months ended June 30, 2008. Net product sales of $69,000 and $131,000 for the second quarter and six months ended June 30, 2009 declined from their comparison period figures of $131,000 and $248,000, respectively, due to the continued absence of promotional support.
In June 2008 and in April 2009, the Company entered into convertible note and warrant transactions (described below). At the time of both transactions, the Company did not have sufficient authorized shares to allow for the conversion of the convertible notes and related warrants. The June 2008 transaction required that the Company seek stockholder approval to increase the number of authorized shares of common stock. The April 2009 transaction required that the Company effect a reverse stock split in order to accommodate the required number of shares. While the Company's stockholders approved an increase in the number of authorized shares of common stock in October 2008 and authorized a reverse stock split in April 2009, the results that are being reported today reflect that the Company was required to mark-to-market the liabilities for the conversion feature of its notes and warrants issued as part of the transactions up until the Company's stockholders approved the changes in the corporate structure. These liabilities change with the price of Genta's common stock, and these fluctuations have caused us to report significant expense in both reporting periods. All share and per share data included in this press release have been retroactively adjusted to account for the effect of a 1-for-50 reverse stock split for all periods presented prior to June 26, 2009.
Research and development expenses were $3.7 million for the second quarter of 2009, compared with $4.5 million for the second quarter of 2008. Expenses in 2009 declined primarily due to lower expenses on the AGENDA clinical trial and lower payroll costs, resulting from lower headcount as we reduced our workforce in April 2008 and May 2008 to conserve cash. Research and development expenses were $6.0 million for the six months ended June 30, 2009, compared with $10.9 million for the six months ended June 30, 2008. In March 2008, we entered into a worldwide license agreement for tesetaxel. Pursuant to this agreement, we recognized $2.5 million for license payments. Expenses in 2009 also declined primarily due to lower payroll costs, resulting from lower headcount, as well as lower expenses on the AGENDA clinical trial.
Selling, general and administrative expenses were $2.0 million for the second quarter of 2009 and $4.1 million for the six months ended June 30, 2009, compared with $2.6 million for the second quarter of 2008 and $6.2 million for the six months ended June 30, 2008. These decreases were primarily due to lower office rent, resulting from our termination of a lease for one floor of office space in May 2008 and lower payroll costs, resulting from the two reductions in workforce. In May 2008, to reduce its ongoing expenses, the Company reduced its office space. The Company's landlord received a termination payment of $1.3 million, comprised of security deposits, and will receive a future payment of $2.0 million on January 1, 2011. This agreement resulted in an incremental $3.3 million in expenses for the second quarter and six months ended June 30, 2008.
On April 2, 2009, the Company issued approximately $6 million of April 2009 Notes, and corresponding warrants to purchase common stock, issued our private placement agent a warrant and incurred financing fees of $0.7 million. The April 2009 Notes bear interest at an annual rate of 8% payable semi-annually in other senior secured convertible promissory notes to the holder, and are convertible into shares of the Company's common stock at a conversion rate of 10,000 shares of common stock for every $1,000.00 of principal amount outstanding. The deferred financing costs are being amortized over the term of the convertible notes. At the time the April 2009 Notes were issued, the Company recorded a debt discount (beneficial conversion) relating to the conversion feature in the amount equal to the proceeds of $6.0 million and is amortizing the resultant debt discount over the term of the notes through their maturity date.
On June 9, 2008, the Company issued $20 million of 2008 Notes, issued our private placement agent a warrant and incurred financing fees of $1.2 million. The 2008 Notes bear interest at an annual rate of 15% payable at quarterly intervals in notes of equivalent terms, and are presently convertible into shares of Genta common stock at a conversion rate of 10,000 shares of common stock for every $1,000 of principal. The deferred financing costs are being amortized over the term of the convertible notes. At the time the notes were issued, the Company recorded a debt discount (beneficial conversion) relating to the conversion feature in the amount of $20.0 million and is amortizing the resultant debt discount over the term of the notes through their maturity date.
On April 2, 2009, based upon a Black-Scholes valuation model, the Company calculated a fair value of the conversion feature of the April 2009 Notes of $67.8 million and expensed $61.8 million, the amount that exceeded the proceeds of the $6.0 million from the closing. With implementation of the reverse stock split, the Company had sufficient shares of common stock in order to permit conversion of all the April 2009 Notes. The Company re-measured the conversion feature liability at $25.0 million, resulting in expense for the second quarter of 2009 of $19.0 million and credited the conversion feature liability to permanent equity. On June 9, 2008, based upon a Black-Scholes valuation model, the Company had calculated a fair value of the conversion feature of the 2008 Notes of $380.0 million and expensed $360.0 million, the amount that exceeded the proceeds of the $20.0 million from the closing. On June 30, 2008, the Company expensed an additional $380.0 million to mark the conversion feature liability of the June 2008 Note to market, resulting in a total expense in June 2008 of $720.0 million.
The warrants that were issued with the 2008 Notes and the April 2009 Notes were also treated as liabilities, due to the insufficient number of authorized shares of common stock at the time that they were issued. On April 2, 2009, the Company calculated a fair value of $1.125 per warrant for the warrants issued with the April 2009 Notes, or a total of $20.8 million. With the reverse stock split, the Company re-measured the warrants at a fair value per warrant of $0.415 per warrant, or $7.7 million, resulting in expense of $7.7 million, and credited the warrant liability to permanent equity. The warrants issued with the 2008 Notes were initially recorded at a fair value of $7.6 million and were also re-measured, resulting in expense of $7.2 million in June 2008.
At June 30, 2009, Genta had cash and cash equivalents totaling $0.7 million compared with $4.9 million at December 31, 2008. During the first six months of 2009, cash used in operating activities was $9.5 million compared with $14.4 million for the same period in 2008, reflecting the reduced size of the Company.
On July 7, 2009, the Company entered into a securities purchase agreement with certain accredited institutional investors to place up to $10 million in aggregate principal amount of units consisting of (i) 70% unsecured subordinated convertible notes, or the July 2009 Notes, and (ii) 30% common stock. In connection with the sale of the units, the Company also issued to the investors two-year warrants to purchase common stock in an amount equal to 25% of the number of shares of common stock issuable upon conversion of the July 2009 Notes purchased by each investor. The Company closed on $3 million of such July 2009 Notes, common stock and warrants on July 7, 2009. On August 6, 2009, we entered into an amendment whereby, among other matters, certain accredited institutional investors who were parties to the July 2009 securities purchase agreement agreed to purchase $10 million of additional notes and warrants having the same terms of the July 2009 Notes, as well as shares of common stock, increasing their aggregate investment to $13 million. The terms of the April 2009 Notes enable those noteholders, at their option, to purchase additional notes with similar terms.
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