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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended September 30, 2003

or

For the transition period from           to

Commission File Number:

000-50425

Genitope Corporation

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

On November 30, 2003, there were 16,820,191 shares of common stock, par value $.001 per share, of Genitope Corporation outstanding.

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GENITOPE CORPORATION

FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003

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     The terms “Genitope,” “we,” “us” and “our” as used in this report refer to Genitope Corporation.

     Genitope, Hi-GET, our logo and MyVax are our trademarks. In addition to Hi-GET, we have applied to register Genitope, MyVax and our logo with the United States Patent and Trademark Office. Other service marks, trademarks and trade names referred to in this report, such as Rituxan are the property of their respective owners.

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)

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GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

The accompanying notes are an integral part of these financial statements.

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GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

The accompanying notes are an integral part of these financial statements.

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GENITOPE CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company

     Genitope Corporation (the “Company”) is a development stage enterprise focused on the research and development of novel immunotherapies for the treatment of cancer. Immunotherapies are treatments that utilize the immune system to combat diseases. The Company’s lead product candidate, MyVax personalized immunotherapy, is a patient-specific active immunotherapy that is based on the unique genetic makeup of a patient’s tumor and is designed to activate a patient’s immune system to identify and attack cancer cells. MyVax is currently in a pivotal Phase 3 clinical trial and additional Phase 2 clinical trials for the treatment of B-cell non-Hodgkin’s lymphoma. The Company was incorporated in the State of Delaware on August 15, 1996 and has incurred significant losses since its inception.

Basis of Presentation

     The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair presentation of the financial statements, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period. Further, the preparation of condensed financial statements requires management to make estimates and assumptions that affect the recorded amounts reported therein. A change in facts or circumstances surrounding the estimate could result in a change to estimates and impact future operating results.

     The financial statements and related disclosures have been prepared with the presumption that users of the interim financial statements have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Amendment No. 4 of the registration statement on Form S-1, declared effective by the Securities and Exchange Commission on October 29, 2003.

Liquidity

     To date, the Company has not generated any revenues, and except for the recently completed initial public offering, the Company has financed its operations and internal growth almost exclusively through private placements of common and preferred stock. The Company is a development stage enterprise and has incurred significant operating losses and operating cash flow deficiencies since its inception in 1996 as the Company has devoted substantially all of its efforts to research and development activities, including clinical trials. The Company incurred a net loss attributable to common stockholders of $19,864,000 and negative operating cash flow of $16,583,000 for the year ended December 31, 2002. For the nine months ended September 30, 2003, the Company incurred a net loss attributable to common stockholders of $40,570,000 and negative operating cash flow of $13,884,000. As of September 30, 2003, the Company had an accumulated deficit of $79,463,000.

     The Company anticipates working on a number of long-term development projects which will involve experimental and unproven technology. The projects may require many years and substantial expenditures to complete and may ultimately be unsuccessful. The Company will need operating funds to continue its research and development activities, clinical trials, pursue regulatory approvals and build production, sales and marketing capabilities, as necessary.

     Since 1996, the Company has been successful in completing several rounds of private equity financing. In 2002, the sale of Series E convertible preferred stock (“Series E”) generated $20,702,000 of cash proceeds. In April and May of 2003, the Company raised $6,551,000 through the sale of additional Series E, convertible notes (which converted into Series E during the quarter ended September 30, 2003) and warrants.

     On October 29, 2003, the Company’s registration statement filed with the Securities and Exchange Commission for an initial public offering became effective. The Company’s common stock commenced trading on the NASDAQ National Market on October 30, 2003 under the trading symbol “GTOP”. The Company sold 4,179,860 shares of common stock in the offering, including shares that were issued upon the partial exercise by the underwriters of their over-allotment option, at $9.00 per share, for aggregate gross

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proceeds of $37,619,000. After deducting the underwriters’ commission and offering expenses, the Company received net proceeds of $33,735,000. Upon the closing of the initial public offering, all of the outstanding convertible preferred stock automatically converted into approximately 10,592,000 shares of common stock. Management believes that the net proceeds from the recently completed initial public offering, together with the interest thereon, will be sufficient to meet the Company’s projected operating requirements for the next 18 months.

Stock split

     On October 24, 2003, the Company effected a one for three reverse stock split. All share and per share amounts for all periods presented in the accompanying financial statements have been retroactively adjusted to give effect to the reverse stock split.

Stock-based compensation

     The Company accounts for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and complies with the disclosure provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” Under APB No. 25, unearned stock compensation is based on the difference, if any, on the date of grant, between the fair value of the Company’s common stock and the exercise price.

     In July and August 2003, the Company granted options to purchase a total of 554,000 shares of common stock to certain employees at a weighted average exercise price of $2.56 per share. As a result, the Company will recognize $3,564,000 in deferred compensation expense that will be amortized to expense over the vesting period, which is four years.

     All stock compensation is amortized and expensed in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 28, an accelerated vesting model. Amortization of stock-based compensation for employees and non-employees is as follows: