2006 Corporate Progress and Outlook

?Several important accomplishments were made in 2006,? said Dan Denney, Jr., Ph.D., Genitope Corporation's Chairman and Chief Executive Officer. ?We initiated a clinical trial for MyVax® personalized immunotherapy for the treatment of chronic lymphocytic leukemia, we made important advancements with our monoclonal antibody program, and several key hires were made that strengthened our organization. Additionally, in February of 2007, we released updated information on our pivotal phase 3 clinical trial using MyVax® personalized immunotherapy. We are encouraged by the update as it demonstrated a positive trend toward progression free survival based on the observed slowing of the rate of cancer progressions in the patients in the still blinded study. Results from the 287 patient trial are expected by year end.?

John Vuko, Genitope's Chief Financial Officer, commented that, "We have completed the move into our new manufacturing and corporate headquarters facility located in Fremont, California. Additionally, cash flow for the first quarter of 2007 will reflect the majority of the remaining payments for the completion of our new facility. We believe that our cash, cash equivalents and marketable securities at the end of 2006 are sufficient to fund operations and capital spending through at least the end of 2007."

Financial Results

For the fourth quarter of 2006, Genitope Corporation reported total operating expenses of $13.9 million and a net loss of $14.3 million, or $0.40 per share. This compares to total operating expenses of $9.7 million and a net loss of $8.8 million, or $0.31 per share, for the fourth quarter of 2005. For the year ended December 31, 2006, Genitope Corporation reported total operating expenses of $51.6 million and a net loss of $48.9 million, or $1.39 per share. This compares to total operating expenses of $33.5 million and a net loss of $30.4 million, or $1.08 per share, for the year ended December 31, 2005. During the first quarter of 2006, Genitope adopted the provisions of, and began to account for stock-based compensation in accordance with, the Financial Accounting Standards Board's Statement of Financial Accounting Standard No. 123--revised 2004 ("SFAS 123R"), "Share-Based Payment." The increased operating expenses reported for the fourth quarter of 2006 and year ended December 31, 2006 were due in part to $1.2 million and $5.2 million, respectively, of stock option expense recognized as a result of the adoption of SFAS 123R. The decrease in net interest income reported for the fourth quarter of 2006 and year ended December 31, 2006 was primarily due to $1.1 million of non-cash interest expense related to the new manufacturing facility and corporate headquarters. The remainder of the increase in net loss was primarily due to higher staffing levels and other operating costs required to support Genitope's ongoing preparations to commercialize MyVax® personalized immunotherapy and advance our monoclonal antibody program, as well as recognition of higher rent and depreciation expenses associated with the Genitope's new manufacturing facility and corporate headquarters.

As of December 31, 2006, Genitope Corporation had cash and cash equivalents and marketable securities of $61.3 million, including $9.6 million that secures letters of credit related to the construction build-out of Genitope's new manufacturing facility and corporate headquarters and was restricted as to its use. Cash, cash equivalents and marketable securities at December 31, 2006 decreased by $19.8 million from the comparable balance at December 31, 2005 of $81.1 million (including $38.8 million that secured letters of credit and was restricted as to its use). The cash usage in 2006 was partially offset by the completion, in February of 2006, of a follow-on public offering of 7,360,000 shares of common stock at a price of $8.50 per share, with net proceeds to Genitope of approximately $58.5 million.

About Genitope Corporation

Genitope Corporation (Fremont, Calif.) is a biotechnology company focused on the research and development of novel immunotherapies for the treatment of cancer. Genitope Corporation's lead product candidate, MyVax® personalized immunotherapy, is a patient-specific active immunotherapy based on the unique genetic makeup of a patient's tumor and is designed to activate the patient's immune system to identify and attack cancer cells. For more information on the company, please log on to http://www.genitope.com.

Forward-Looking Statements

This news release contains "forward-looking statements." For this purpose, any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements, including but not limited to statements about the sufficiency of the Company's current cash, cash equivalents and marketable securities to fund operations and capital spending through at least the end of 2007 and the timing of the results from the Company's pivotal phase 3 clinical trial for follicular non-Hodgkin's lymphoma. Words such as "believes," "anticipates," "plans," "expects," "will," "intends" and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause Genitope Corporation's results to differ materially from those indicated by these forward-looking statements, including without limitation, risks related to the progress, timing and results of Genitope Corporation's clinical trials, difficulties or delays in obtaining regulatory approval, unanticipated expenditures or liabilities, competition from other pharmaceutical or biotechnology companies, the risks of growth and dependence on key personnel, risks relating to the manufacturing of MyVax® personalized immunotherapy, intellectual property matters, and other risks detailed in Genitope Corporation's filings with the Securities and Exchange Commission, including its Quarterly Report for the fiscal quarter ended September 30, 2006. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Genitope Corporation undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Cumulative Period from

August 15, 1996

(date of inception)

to December 31,

 

 

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2006  2005  2006  2005  2006 
Operating expenses:
Research and development $ 11,378  $ 7,370  $ 40,241  $ 25,867  $ 141,174 
Sales and marketing 586  1,116  2,740  2,704  10,167 
General and administrative   1,971    1,211    8,627    4,938    26,149 
Total operating expenses   13,935    9,697    51,608    33,509    177,490 
Loss from operations (13,935) (9,697) (51,608) (33,509) (177,490)
 

Loss on extinguishment of convertible notes and cancellation of Series E convertible preferred stock warrants

-  -  -  -  (3,509)
Interest income (expense), net   (365)   934    2,696    3,085    5,281 
Net loss (14,300) (8,763) (48,912) (30,424) (175,718)
 

Dividend related to issuance of convertible preferred shares and the beneficial conversion feature of preferred stock

  -    -    -    -    (18,407)
Net loss attributable to common stockholders $ (14,300) $ (8,763) $ (48,912) $ (30,424) $ (194,125)
 

Basic and diluted net loss per common share attributable to common stockholders

$ (0.40) $ (0.31) $ (1.39) $ (1.08)
 

Shares used in computing basic and diluted net loss per share attributable to common stockholders

  36,011    28,384    35,081    28,271 
GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED CONDENSED BALANCE SHEETS
(in thousands, except per share and share data)
 

December 31,

2006

December 31,

2005

ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 51,682  $ 42,358 
Prepaid expenses and other current assets   3,312    2,210 
Total current assets 54,994  44,568 
 
Restricted cash and marketable securities 9,579  38,762 
Property and equipment, net 93,479  31,065 
Other assets   2,371    1,000 
Total assets $ 160,423  $ 115,395 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,551  $ 4,084 
Accrued and other current liabilities 4,814  4,128 
Lease financing liabilities - current -  4,400 
Current lease obligations -  24 
Current portion of credit line   1,662    - 
Total current liabilities 12,027  12,636 
 
Lease financing liabilities - noncurrent 40,203  14,997 
Accrued interest - noncurrent 1,738  790 
Noncurrent lease obligations -  24 
Noncurrent portion of credit line   3,609    - 
Total liabilities   57,577    28,447 
Stockholders' equity

Common stock, $0.001 par value, 65,000,000 shares authorized; Issued and outstanding: 36,052,685 shares at December 31, 2006 and 28,454,385 shares at December 31, 2005

36  28 
Additional paid-in capital 296,962  232,620 
Deferred stock compensation (19) (166)
Accumulated other comprehensive loss (8) (321)
Deficit accumulated during development stage   (194,125)   (145,213)
Total stockholders' equity   102,846    86,948 
Total liabilities and stockholders' equity $ 160,423  $ 115,395