UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-19635
GENTA INCORPORATED
(Exact name of Registrant as specified in its charter)
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Delaware |
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33-0326866 |
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(State or other jurisdiction of |
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(I.R.S.
Employer |
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Two Connell Drive |
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Berkeley Heights, NJ |
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07922 |
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(Address of principal executive offices) |
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(Zip Code) |
(908) 286-9800
(Registrant’s telephone number, including
area code)
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 Securities Exchange Act of 1934).
Yes x No o
As of July 30, 2004, the registrant had 80,358,215 shares of common stock outstanding.
Genta Incorporated
INDEX TO FORM 10-Q
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Page |
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements: |
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Consolidated Balance Sheets at June 30, 2004 and December 31, 2003 |
3 |
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Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003 |
4 |
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Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 |
5 |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
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Item 3. |
21 |
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Item 4. |
21 |
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PART II. |
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Item 1. |
22 |
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Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
22 |
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Item 4. |
22 |
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Item 6. |
23 |
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25 |
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28 |
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2
GENTA INCORPORATED
CONSOLIDATED BALANCE SHEETS
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(In thousands, except par value data) |
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June 30, |
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December 31, |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents (Note 2) |
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$ |
44,429 |
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$ |
25,153 |
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Marketable securities (Note 3) |
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5,758 |
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57,776 |
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Accounts receivable - net |
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8,574 |
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16,675 |
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Notes receivable |
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200 |
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200 |
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Inventory (Note 4) |
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1,728 |
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518 |
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Prepaid expenses and other current assets |
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781 |
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3,313 |
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Total current assets |
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61,470 |
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103,635 |
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Property and equipment, net |
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5,296 |
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4,917 |
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Notes receivable |
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4,348 |
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3,542 |
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Intangibles, net (Note 5) |
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574 |
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863 |
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Prepaid royalties |
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1,268 |
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1,268 |
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Other assets |
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1,627 |
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450 |
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Total assets |
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$ |
74,583 |
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$ |
114,675 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
19,747 |
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$ |
15,319 |
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Notes payable |
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- |
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748 |
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Deferred revenues, current portion |
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5,277 |
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5,287 |
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Short-term debt (Note 6) |
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35,000 |
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- |
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Total current liabilities |
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60,024 |
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21,354 |
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Deferred revenues |
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33,458 |
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36,067 |
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Convertible debt (Note 7) |
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10,000 |
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10,000 |
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Long-term debt (Note 6) |
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- |
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35,000 |
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Total liabilities |
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103,482 |
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102,421 |
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Commitments and contingencies |
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Stockholders’ (deficit) equity: |
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Series
A convertible preferred stock, $.001 par value; 5,000 shares authorized, |
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- |
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- |
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Common
stock, $.001 par value; 150,000 and 120,000 shares authorized, |
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80 |
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76 |
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Additional paid-in capital |
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336,189 |
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335,713 |
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Deferred financing costs |
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(33 |
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- |
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Accumulated deficit |
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(364,986 |
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(323,299 |
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Deferred compensation |
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(117 |
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(261 |
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Accumulated other comprehensive (loss) income |
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(32 |
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25 |
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Total stockholders’ (deficit) equity |
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(28,899 |
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12,254 |
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Total liabilities and stockholders’ (deficit) equity |
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$ |
74,583 |
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$ |
114,675 |
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See accompanying notes to consolidated financial statements
3
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended |
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Six Months Ended |
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(In thousands, except per share data) |
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2004 |
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2003 |
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2004 |
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2003 |
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(Unaudited) |
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(Unaudited) |
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Revenues: |
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Product sales - net |
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$ |
251 |
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$ |
- |
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$ |
624 |
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$ |
- |
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License fees and royalties |
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261 |
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276 |
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522 |
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542 |
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Development funding |
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1,049 |
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1,044 |
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2,097 |
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2,087 |
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Total revenues |
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1,561 |
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1,320 |
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3,243 |
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2,629 |
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Cost of goods sold |
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52 |
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- |
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146 |
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- |
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Gross margin |
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1,509 |
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1,320 |
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3,097 |
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2,629 |
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Costs and expenses: |
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Research
and development (including non-cash compensation |
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28,945 |
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18,163 |
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41,297 |
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33,672 |
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Selling,
general and administrative (including non-cash compensation |
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10,284 |
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6,223 |
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19,507 |
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11,095 |
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Total costs and expenses - gross |
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39,229 |
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24,386 |
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60,804 |
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44,767 |
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Aventis reimbursement |
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(8,531 |
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(19,433 |
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(15,964 |
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(28,590 |
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Total costs and expenses - net |
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30,698 |
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4,953 |
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44,840 |
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16,177 |
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Other income |
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34 |
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215 |
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56 |
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527 |
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Net loss |
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$ |
(29,155 |
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$ |
(3,418 |
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$ |
(41,687 |
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$ |
(13,021 |
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Net loss per basic and diluted share |
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$ |
(0.37 |
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$ |
(0.05 |
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$ |
(0.53 |
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$ |
(0.18 |
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Shares used in computing
net loss per |
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79,016 |
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74,442 |
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77,945 |
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74,338 |
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See accompanying notes to consolidated financial statements
4
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six Months Ended |
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(In thousands) |
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2004 |
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2003 |
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(Unaudited) |
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Operating activities: |
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Net loss |
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$ |
(41,687 |
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$ |
(13,021 |
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Items reflected in net loss not requiring cash: |
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Depreciation and amortization |
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1,626 |
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1,040 |
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Compensation expense related to stock options (Note 2) |
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143 |
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288 |
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Changes in operating assets and liabilities: |
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