GENTICEL ANNOUNCES ITS 2016 ANNUAL RESULTS

• Revenues of €1.3 million associated with a milestone payment from Serum Institute of India Private Ltd.


• Cash position of €12.9 million at December 31, 2016

Genticel (Euronext Paris & Brussels: FR00011790542 – GTCL presents today its 2016 full year results in accordance with International Financial Reporting Standards (IFRS). Genticel's 2016 Annual Financial Report including the Management Report is available on the company website (www.genticel.com - Investors/Financial information section) in French. An English version will be made available before mid-March.

euros in thousands
2016
2015


Revenues associated with the SIIL contract
1,304
178


Research & Development expenses
(7,178)
(10,935)


Research Tax Credit & Subsidies
3,705
2,940


General & Administration expenses
(5,242)
(3,599)


Operating Loss
(7,411)
(11,417)


Net Loss of the period
(7,241)
(11,193)


Loss per share (in euros)
(0.47)
(0.72)


Cash and liquid investments
12,937
32,803

Income statement

In 2016, Genticel again recorded revenues from its agreement with Serum Institute of India Ltd (SERUM INSTITUTE) for a total of €1.3 million, resulting mainly from a milestone payment (US$ 1.2 million) as Genticel's proprietary, reengineered adenylate cyclase “GTL003” fulfilled its predetermined objectives in preclinical in vivo experiments.

SERUM INSTITUTE is evaluating the use of Vaxiclase in the development of acellular multivalent combination vaccines against a variety of infectious diseases, including whooping cough. The license agreement, limited to the authorized indications in emerging markets, includes development and sales upfront and milestones payments depending on the criteria defined within the agreement for potentially up to $57 million, as well as single-digit royalties on net sales.

On December 31, 2016, Genticel had an operating loss of €7.4 million compared with a loss of €11.4 million in 2015. This reduction in operating loss is mostly due to:

• a €1.1 million increase in the Company's revenues in 2016 versus 2015;


• the cancellation of €0.7 million of the Company's financial debt, increasing the total indicated under “Research Tax Credit & Subsidies”;


• a €3.7 million reduction in R&D investment (€7.2 million, versus €10.9 million in 2015):
  
  
  
  • a €2.5 million reduction in study and service charges associated with the discontinuation of the GTL001 manufacturing process scaling-up project and expenses relating to its GTL002 program.
  
  
  • a €0.6 million reduction in research personnel costs associated with a cut in its workforce.
  
  


• A €0.8 million reduction in ‘General & Administration expenses' (resulting from the operating expense-reduction program put in place by Genticel in early 2016) following the announcement of the initial results of the phase 2 clinical trial undertaken on the GTL001 product.

These reductions in expenses were partly offset by one-time restructuring costs (€2.2 million) and €0.2 million of expenses incurred in the preparation of the transaction with Genkyotex, i.e. a total of €2.4 million of non-recurrent expenses.

After taking into account 2016 financial revenues, the 2016 net loss of €7.2 million (vs. €11.2 million in 2015) is consistent with the Company's expectations.

Balance sheet and cash at the end of 2016

Genticel completed 2016 with cash & cash equivalents and liquid investments of €12.9 million consisting of €8.3 million in current financial assets and €4.7 million in cash and cash equivalents.

This cash and liquid investments balance, versus the €21.8 million at the end of 2015, is mostly explained by the cash consumed by the operations in 2016 (€8.2 million). This is fully in line with Genticel's expectations and the expected impact on the Company's burn rate of the restructuring process initiated after the publication of disappointing results obtained in the clinical phase 2 trial on the GTL001 product.

Registration of Document E pertaining to the planned strategic combination between Genticel and Genkyotex

The French financial market authority (Autorité des Marchés Financiers - AMF) has registered under reference number E.17-004 on January 31, 2017 the information document (Document E) drawn up in relation to the planned strategic combination between Genticel and Genkyotex's shareholders announced on December 22, 2016.

Shareholders meeting at 11 am on February 28, 2017

The Genticel Shareholders' Meeting scheduled for 11 am today is primarily to approve the contribution of all Genkyotex shares to Genticel and the issue of new shares by Genticel to Genkyotex's shareholders in remuneration of their contributed shares. Within the framework of the merger, shareholders will notably also be asked to approve certain structural modifications (adoption of a mode of governance with a Board of Directors, change in the Company's name to “Genkyotex”), certain delegations to the Board of Directors and the appointment of new Board members. Today's meeting will not examine Genticel's annual accounts as reported in this press release – these will be submitted to a subsequent Shareholders' Meeting.

About Genticel

Genticel's versatile platform, Vaxiclase, is well suited for the development of various immunotherapies. A partnership on the use of Vaxiclase as an antigen per se (GTL003) has been established with Serum Institute of India Pvt. Ltd. (Serum Institute), the largest producer of vaccine dose worldwide. This agreement covers territories in emerging markets only, and could generate up to $57 million in revenues for Genticel, before royalties on sales. It will enable Serum Institute to develop acellular multivalent combination vaccines against a variety of infectious diseases, including whooping cough. The last preclinical milestone foreseen by the agreement was reached in Novermber 2016, opening the path to formal preclinical testing prior to clinical development and subsequent commercialization.

On 22 December 2016, Genticel signed a contribution agreement with the shareholders of Genkyotex pursuant to which, subject to the approval of today's Genticel Shareholders' Meeting, Genkyotex's shareholders will contribute in kind 100% of the Genkyotex share capital (on a fully diluted basis) to Genticel, which will issue new shares in remuneration for the contribution. Upon completion of the proposed transaction, Genkyotex's shareholders will hold 80% of Genticel's share capital & voting rights (on a non-diluted basis).

Genkyotex is developing a portfolio of NADPH oxidase (NOX) oral small molecule inhibitors, which have therapeutic potential for the treatment of multiple significant clinical indications with substantial unmet need, including fibrosis, inflammatory pain, angiogenesis, cancer growth, and neurodegeneration. Genkyotex is currently developing two clinical stage, first-in-class NOX inhibitors and is conducting research on several other pre-clinical molecules.

For more information, visit us at www.genticel.com

Disclaimer

This press release and the information it contains does not constitute an offer or solicitation to buy, sell or hold Genticel shares in any country. This press release may contain forward-looking statements by the company with respect to its objectives. These statements are based on the current estimates and forecasts of the company's management and are subject to risks and uncertainties such as the company's ability to implement its chosen strategy, customer market trends, changes in technologies and in the company's competitive environment, changes in regulations, clinical or industrial risks and all risks linked to the company's growth. These factors as well as other risks and uncertainties may prevent the company from achieving the objectives outlined in the press release.
No guarantee is given on forward-looking statements which are subject to a number of risks, notably those described in the registration document filed with the French Markets Authority (the AMF) on 1 April 2015 under number R.15-015, as updated in the Document E filed with the AMF on 31 January 2017 under number E.17-004, and those linked to changes in economic conditions, the financial markets, or the markets on which Genticel is present. Genticel products are currently used for clinical trials only and are not otherwise available for distribution or sale.

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Appendix: detailed financial information 2016

The following financial statements have been prepared in accordance with IFRS, as adopted by the European Union, and are taken from the financial information contained in Genticel's 2016 annual financial report, which can be found on the Company's website, www.genticel.com, in the Investors/Financial information section[1].

IFRS financial statements for the year to December 31, 2016 have been audited by Grant Thornton and Sygnatures.

Statement of Financial Position

Genticel
 
 
31/12/2016
 
31/12/2015


Statement of Financial Position
Notes
 
 
 
 


 
 
 
€
 
€


 
 
 
 
 
 


ASSETS
 
 
 
 
 


Intangible assets
 3.1
 
41 664
 
54 017


Property, plant and equipment
 3.2
 
41 766
 
155 874


Other non-current financial assets
 4
 
140 268
 
 5 290 657


Total non-current assets
 
 
223 698
 
 5 500 549


Inventories
 5
 
-
 
52 560


Trade receivables and related accounts
 6.1
 
53 342
 
-


Other receivables
 6.2
 
 3 512 354
 
 3 653 694


Current financial assets
 4
 
 8 274 109
 
 5 021 938


Cash and cash equivalents
 7
 
 4 663 013
 
11 659 829


Total current assets
 
 
16 502 817
 
20 388 021


Total Assets
 
 
16 726 515
 
25 888 570


LIABILITIES
 
 
 
 
 


Shareholders' equity
 
 
 
 
 


Capital
 8
 
 1 557 006
 
 1 554 109


Additional paid-in capital
 
 
48 348 830
 
48 420 039


Other comprehensive income
 
 
43 413
 
 4 948


Reserves - Group share
 
 
 (29 409 020)
 
 (18 451 210)


Result - Group share
 
 
(7 240 271)
 
 (11 193 323)


Shareholders' equity, Group share
 
 
13 299 958
 
20 334 563


Non-controlling interests
 
 
-
 
-


Total shareholders' equity
 
 
13 299 958
 
20 334 563


Non-current liabilities
 
 
 
 
 


Employee benefit obligations
11
 
111 767
 
322 060


Non-current financial debt
10
 
335 638
 
 1 900 781


Non-current liabilities
 
 
447 405
 
 2 222 842


Current liabilities
 
 
 
 
 


Current financial debt
10
 
597 933
 
621 347


Provisions
12
 
720 061
 
-


Trade payables and related accounts
 
 
571 262
 
 1 886 424


Tax and social security liabilities
 13.1
 
 1 081 497
 
821 340


Other creditors and miscellaneous liabilities
 13.2
 
 8 398
 
 2 055


Current liabilities
 
 
 2 979 151
 
 3 331 166


Total Liabilities
 
 
16 726 515
 
25 888 570


 

Income Statement

Genticel
 
 
31/12/2016
 
31/12/2015


Income Statement
Notes
 
12 months
 
12 months


 
 
 
€
 
€


Sales
15
 
-
 
-


Cost of sales
 
 
-
 
-


Gross margin
 
 
-
 
-


 
 
 
 
 
 


Other income
15
 
 1 304 060
 
177 742


 
 
 
 
 
 


Net R&D expenses
 
 
 
 
 


R&D expenses
 16.1
 
(7 177 808)
 
 (10 935 343)


Subsidies
 16.1
 
 3 705 131
 
 2 940 037


 
 
 
 
 
 


General and administrative expenses
 16.2
 
(5 242 354)
 
(3 599 155)


 
 
 
 
 
 


Operating profit (loss)
 
 
(7 410 971)
 
 (11 416 719)


 
 
 
 
 
 


Financial expenses
17
 
 (47 874)
 
 (64 535)


Financial income
17
 
218 574
 
287 931


Pre-tax profit (loss)
 
 
(7 240 271)
 
 (11 193 323)


 
 
 
 
 
 


Tax expense
 
 
-
 
-


Net income
 
 
(7 240 271)
 
 (11 193 323)


Group share
 
 
(7 240 271)
 
(11 193 323)


Non-controlling interests
 
 
-
 
-


 
 
 
 
 
 


Earnings per share
Notes
 
31/12/2016
 
31/12/2015


Weighted average number of outstanding shares
 
 
15 561 352
 
15 463 263


Basic earnings per share (€/share)
20
 
(0.47)
 
(0.72)


Diluted earnings per share (€/share)
20
 
(0.47)
 
(0.72)


 

Statement of Comprehensive Income

Genticel
 
 
31/12/2016
 
31/12/2015


Statement of Comprehensive Income
Notes
 
12 months
 
12 months


 
 
 
€
 
€


Profit (loss) for the year
 
 
(7 240 271)
 
 (11 193 323)


Actuarial gains (losses)
11
 
38 465
 
122 504


Items not recyclable in income
 
 
38 465
 
122 504


 
 
 
 
 
 


Items recyclable in income
 
 
-
 
-


 
 
 
 
 
 


Other items of comprehensive income (net of tax)
 
 
38 465
 
122 504


 
 
 
 
 
 


Comprehensive income
 
 
(7 201 806)
 
 (11 070 819)


Group share
 
 
(7 201 806)
 
(11 070 819)


Non-controlling interests
 
 
-
 
-

Change in Shareholders' Equity

Genticel
Notes
Capital
Capital
Premiums linked to capital
Reserves and profit
Actuarial gains (losses)
Shareholders' equity, Group share
Non-controlling interests
Shareholders' equity


Change in Shareholders' Equity
 
Number of shares
 
 
 
 
 
 
 


 
 
€
€
€
€
€
€
€


At 31 December 2014
 
15 440 235
1 544 024
48 112 032
 (19 321 595)
(117 555)
30 216 905
-
30 216 905


Net income 2015
 
 
 
 
 (11 193 323)
 
(11 193 323)
-
(11 193 323)


Other comprehensive income
 
 
 
 
 
122 504
122 504
-
122 504


Comprehensive income
 
 
-
-
 (11 193 323)
122 504
(11 070 819)
-
(11 070 819)


BSPCE exercised
 
100 851
10 085
308 007
 
 
318 092
-
318 092


Liquidity contract
 
 
 
 
 29 689
 
29 689
-
29 689


Share-based payments
 
 
 
 
840 695
 
840 695
-
840 695


At 31 December 2015
 
15 541 086
1 554 109
48 420 039
 (29 644 533)
4 948
20 334 563
-
20 334 563


Net income 2016
 
 
 
 
(7 240 271)
 
(7 240 271)
-
(7 240 271)


Other comprehensive income
 
 
 
 
-
38 465
38 465
-
38 465


Comprehensive income
 
 
-
-
(7 240 271)
38 465
(7 201 806)
-
(7 201 806)


BSPCE exercised
8
28 969
2 897
87 399
 
 
90 296
-
90 296


Liquidity contract
 
 
 
 
3 704
 
3 704
-
3 704


Share-based payments
9
 
 
 
231 810
 
231 810
-
231 810


Capital increase transaction expenses (1)
 
 
 
(158 608)
 
 
(158 608)
-
(158 608)


At 31 December 2016
 
15 570 055
1 557 005
48 348 830
 (36 649 291)
43 413
13 299 958
-
13 299 958

(1) As part of the strategic merger with Genkyotex, the Company incurred costs amounting to €383K as at 31 December 2016, including €159K premiums in accordance with IAS 32 (see Note 2.3).