EXHIBIT 99.1
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GENELABS TECHNOLOGIES, INC. REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2004
AND PROVIDES COMPANY UPDATE
REDWOOD CITY, Calif. - November 4, 2004 - Genelabs Technologies, Inc.
(Nasdaq:GNLB) today reported contract revenues of $0.4 million and a net loss
of $4.4 million, or $0.05 per share, for the third quarter of 2004. This
compares to revenues of $0.7 million and a net loss of $4.8 million, or $0.08
per share, for the third quarter of 2003. Revenues for the nine month period
ended September 30, 2004 were $1.8 million and the net loss was $12.0 million,
or $0.14 per share, compared to revenues of $2.2 million and a net loss of
$13.3 million, or $0.23 per share, for the same period in 2003. During the
second quarter of 2004, the company recorded a gain of $2.0 million upon
completion of the sale of its diagnostics business, which had been accounted
for as a discontinued operation. This gain did not impact the financial
results for the third quarter of 2004, but it reduced the net loss for the
nine months ended September 30, 2004 by $2.0 million.
At September 30, 2004, Genelabs had $19.5 million in cash and cash
equivalents.
Outlook for year-end 2004
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We currently estimate our cash and cash equivalents will be approximately $24
to $25 million at December 31, 2004.
Prestara(TM) Program for Systemic Lupus Erythematosus
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In 2000, we submitted our New Drug Application, or NDA, for Prestara
(prasterone) to the U.S. Food and Drug Administration, or FDA. In 2002 we
received an approvable letter from the FDA which, among other things, required
an additional clinical trial on the effect of Prestara on the bone mineral
density of women with lupus who were receiving glucocorticoids. A positive
effect had been noted in a nested study contained in our previous Study
GL95-02. After receiving the approvable letter, we conducted a Phase III
clinical trial, designated Study GL02-01, at 26 sites in the United States and
Mexico that was designed to evaluate the positive effect of Prestara on bone
mineral density. On October 5, 2004 we announced that a preliminary analysis
of the data from this trial indicated that Prestara did not demonstrate a
statistically significant difference between the bone mineral density of the
group of patients taking Prestara and the group taking placebo. Separately,
the trial was not powered to demonstrate, and in fact did not demonstrate, a
statistically significant benefit in secondary endpoints such as amelioration
of lupus symptoms. We are continuing to analyze the data in an attempt to
determine the reasons why the trial did not detect a difference in bone
mineral density between the Prestara and placebo treatment groups; however, it
is not likely that the cause or causes of the trial results can be identified
with certainty.
All patients who completed Study GL02-01 were eligible to enroll into a
one-year open-label follow-on study, which we have designated Study GL03-01.
GL03-01 is designed to dose all patients with Prestara and all patients are
scheduled to have additional bone mineral density measurements at six months
and twelve months. Approximately 115 patients from our double-blind Study
GL02-01 elected to enroll into Study GL03-01. This study is ongoing and we
cannot predict whether the data from GL03-01 will be positive or will have any
positive effect on our Prestara NDA.
Separately, there is also a clinical trial of prasterone being conducted by
Genovate Biotechnology Co., Ltd., a Taiwan-based company that has licensed
Prestara from us for most Asian countries. The Genovate study is a
double-blind, placebo-controlled clinical trial similar in design to our Study
GL02-01 with bone mineral density as its primary endpoint, but has a longer
treatment duration of nine months, compared to six months for our study. While
the Taiwan trial is not being conducted under a U.S. Investigational New Drug
application, commonly referred to as an IND, we believe it is designed to
comply with Good Clinical Practices, or GCPs, under the International
Conference on Harmonization. The Genovate trial has enrolled 88 patients and
the last patient visit currently is scheduled to occur in the first quarter of
2005. We do not know if the Taiwan study will be positive, and even if the
results of the Taiwan trial are positive, we do not know whether it would be
useful for our plans to develop Prestara or whether it could overcome the
failure of our U.S. trial to reach its endpoints. If the results of the Taiwan
trial are positive, we intend to submit them to the FDA to support our
Prestara NDA, however, we do not know if the FDA would consider such data.
Hepatitis C Virus Drug Discovery Programs
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On September 29, 2004 we signed an agreement with Gilead Sciences, Inc. to
collaborate in the research, development and commercialization of novel
nucleoside compounds for the treatment of infection caused by the hepatitis C
virus, or HCV, beginning October 1, 2004. On October 6, 2004, under the terms
of the agreement, Gilead paid us a nonrefundable $8.0 million upfront payment
and $0.9 million as the first installment of its research funding obligation.
In return we will devote a specified number of scientists to the program and
provide Gilead with exclusive access to certain compounds developed by
Genelabs in the program.
Separate from the Gilead collaboration, under our ongoing program to discover
non-nucleoside HCV compounds we have synthesized molecules that demonstrate
activity against HCV in our assays. We believe these compounds are promising
and are in the process of evaluating their pharmacokinetics and toxicity. We
believe our non-nucleoside HCV discovery program is at nearly the same stage
of development as our HCV nucleoside program that is the subject of the
license and collaboration agreement with Gilead.
About Genelabs
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Genelabs Technologies, Inc. is a biopharmaceutical company pioneering the
discovery and development of novel pharmaceutical products to improve human
health. We are concentrating our clinical development capabilities on
Prestara(TM), an investigational drug for women with systemic lupus
erythematosus. We are concentrating our drug discovery capabilities on novel
antiviral compounds for treatment of hepatitis C virus infections.
NOTE ON FORWARD LOOKING STATEMENTS AND RISKS: This press release contains
forward-looking statements including statements regarding the preliminary
results of our clinical trial for Prestara, further analysis of the data from
the clinical trial, future discussions with the FDA and further actions which
might be taken regarding the clinical trial, progress and possible results or
utility of our follow-on trial and the Taiwan trial. Additional
forward-looking statements include the progress of our HCV research programs
and collaboration with Gilead, and any payments that might be made under the
Gilead agreement. Our financial outlook for year-end 2004 is also a
forward-looking statement. These forward-looking statements are based on
Genelabs' current expectations and are subject to uncertainties and risks that
could cause actual results to differ materially from the statements made.
Uncertainties and risks include, without limitation, errors, omissions or
adverse events in the just-completed Prestara(TM) clinical trial and ongoing
clinical trials; whether the results of Genelabs' or Genovate's clinical
trials and other supporting information will be sufficient to support the
approval of Prestara(TM) by the FDA, the European Agency for Evaluation of
Medicinal Products and other regulatory authorities; delays regarding the
regulatory approval process including the timing and scope of approval
received, if any; the possibility of delay, failure or additional expense in
our research programs; possible problems which may arise in our collaboration
with Gilead including decisions by Gilead to abandon, advance or delay
development of Genelabs' drug candidates; unexpected expenses and Genelabs'
capital requirements and history of operating losses. There can be no
assurance that Genelabs will continue development of Prestara(TM) or that
Genovate will not terminate or delay its clinical trial, or withhold the trial
results from Genelabs. The company currently does not have regulatory
applications submitted for review of Prestara(TM) outside the U.S. In
addition, neither U.S. nor other regulatory authorities have made a
determination as to the safety or efficacy of Prestara(TM) for SLE. Please see
the information appearing in the company's filings with the Securities and
Exchange Commission, including the most recent Quarterly Report on Form 10-Q
and Annual Report on Form 10-K, under the captions "Risk Factors," "Business
Risks" and "Forward-Looking Statements" for more discussion regarding these
uncertainties and risks and others associated with the company's research
programs, early stage of development and other risks which may affect the
company or cause actual results to differ from those included in the
forward-looking statements. Genelabs does not undertake any obligation to
update these forward-looking statements or risks to reflect events or
circumstances after the date of this release.
GENELABS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2004 2003
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(Unaudited) Note 1
ASSETS
Cash and cash equivalents $ 19,502 $ 26,530
Other current assets 810 1,456
Property and equipment, net 954 920
Long-term investments 960 960
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$ 22,226 $ 29,866
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LIABILITIES AND SHAREHOLDERS' EQUITY
Total liabilities $ 7,971 $ 7,051
Shareholders' equity 14,255 22,815
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$ 22,226 $ 29,866
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Note 1: Derived from audited financial statements
GENELABS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
For the three months ended For the nine months ended
September 30, September 30,
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2004 2003 2004 2003
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Contract revenue $ 399 $ 698 $ 1,755 $ 2,201
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Operating expenses:
Research and development 3,284 4,428 11,411 11,465
General and administrative 1,545 1,244 4,797 4,415
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Total operating expenses 4,829 5,672 16,208 15,880
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Operating loss (4,430) (4,974) (14,453) (13,679)
Interest income, net 59 4 163 35
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Loss from continuing operations (4,371) (4,970) (14,290) (13,644)
Discontinued operations:
Income from diagnostics business - 133 262 327
Gain on sale of diagnostics business - - 2,020 -
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Net loss $ (4,371) $ (4,837) $ (12,008) $(13,317)
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Loss per share from continuing operations $ (0.05) $ (0.08) $ (0.16) $ (0.23)
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Net loss per share - basic and diluted $ (0.05) $ (0.08) $ (0.14) $ (0.23)
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Weighted average shares outstanding 88,313 62,745 88,007 58,252
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