Further Reduces Outstanding Convertible Debt in July 2009 Reaches
Agreement to Settle Recent Class Action Lawsuits BRANFORD, Conn.,
July 31 /PRNewswire-FirstCall/ -- CuraGen Corporation (NASDAQ:CRGN)
today reported its financial results for the second quarter of 2009
and announced that it had further reduced its outstanding
convertible debt and reached an agreement in principle, expressed
in a memorandum of understanding, to settle recent shareholder
class action lawsuits filed in the State of Connecticut and the
State of Delaware in connection with the proposed merger between
CuraGen Corporation and Celldex Therapeutics, Inc. The settlement
is subject to documentation and court approval. During the three
and six month periods ended June 30, 2009, CuraGen utilized $3.8
million and $7.8 million, respectively, of cash and investments for
operations, which includes cash paid for legal, audit and strategic
advisor fees of $0.6 million and $0.7 million for the three and six
month periods ended June 30, 2009, respectively. As of June 30,
2009, CuraGen had $76 million of cash and investments and $14.1
million of 4% convertible subordinated notes due February 2011.
CuraGen repurchased $1.64 million of its 4% convertible
subordinated notes for $1.39 million in July 2009 and as of July
31, 2009, had $12.5 million of 4% convertible subordinated notes
outstanding. During 2009, through privately negotiated
transactions, CuraGen has repurchased $6.5 million of convertible
subordinated notes at an average cost of 80% of par. For the three
and six months ended June 30, 2009, CuraGen reported total
operating expenses of $4.7 and $8.3 million, respectively, which
included costs incurred for legal, audit and strategic advisor fees
of $1.5 million and $1.6 million for the three and six month
periods ended June 30, 2009, respectively. CuraGen is continuing to
enroll patients in clinical trials of CR011-vcMMAE, an
antibody-drug conjugate that targets GPNMB. "We continue to be very
positive about the development opportunities for CR011 in breast
cancer and melanoma," commented Dr. Timothy M. Shannon, President
and Chief Executive Officer of CuraGen. "We look forward to
presenting updated data for the breast cancer study in the second
half of 2009." In July 2009, CuraGen also reached an agreement in
principle and signed a memorandum of understanding to settle two
shareholder class action lawsuits that had been filed in connection
with the proposed merger between CuraGen Corporation and Celldex
Therapeutics, Inc. The settlement is subject to documentation and
court approval. "While we continue to deny any wrongdoing or
liability with respect to the claims asserted in the class action
suits, unfortunately, the monthly costs of defending against these
lawsuits far outweighed the benefits of continued litigation.
Therefore, we have agreed to the terms of a settlement, which will
include additional disclosure in the final proxy statement
regarding the merger and, if approved by the court, a payment for
the shareholder plaintiffs' attorneys' fees and expenses. Although
we expect to have some increases to our initial projections of net
cash at closing from the repurchase of debt at a discount as
partial offsets, we now expect that the settlement payment and the
monthly defense costs in connection with these class action suits
will result in a decrease in the net cash at closing from our
original projection of $54.5 million to between $53.5 and $54.0
million," commented Dr. Shannon. The revised projected net cash
figures results in a reduction of the expected purchase price for
CuraGen from $94.5 million or $1.56 per fully diluted share, to
between $93.5 million and $94.0 million or $1.54 - $1.55 per fully
diluted share. The proposed merger is projected to close in the
third quarter of 2009. Forward-Looking Statements Statements in
this press release regarding management's future expectations,
beliefs, intentions, goals, strategies, plans or prospects,
including statements relating to CuraGen's net cash at the closing
of the CuraGen-Celldex merger, the expected aggregate and per share
purchase price for CuraGen in the merger, the proposed settlement
of the shareholder class action lawsuits, development opportunities
for CR011 in breast cancer and melanoma and the expected timing for
presenting updated data for the CR011 breast cancer study, may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by terminology such as "anticipate,"
"believe," "could," "could increase the likelihood," "estimate,"
"expect," "intend," "is planned," "may," "should," "will," "will
enable," "would be expected," "look forward," "may provide,"
"would" or similar terms, variations of such terms or the negative
of those terms. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors, including the
following: the CuraGen-Celldex merger may not be completed in the
expected timeframe or at all; the settlement agreement may not be
approved; net cash at closing of the merger may differ from
CuraGen's estimates due to a number of factors, including higher
than anticipated legal and advisory fees and a delay in the closing
of the merger; any one or more of CuraGen's drug development
programs will not proceed as planned for technical, scientific or
commercial reasons or due to patient enrollment issues or based on
new information from nonclinical or clinical studies or from other
sources; the success of competing products and technologies;
CuraGen's stage of development as a biopharmaceutical company,
government regulation and healthcare reform; technological
uncertainty and product development risks; product liability
exposure; uncertainty of additional funding; CuraGen's history of
incurring losses and the uncertainty of achieving profitability;
reliance on research collaborations and strategic alliances;
competition; patent infringement claims against CuraGen's products,
processes and technologies; CuraGen's ability to protect its
patents and proprietary rights; and uncertainties relating to
commercialization rights, as well as those risks, uncertainties and
factors referred in the section entitled "Risk Factors" in
CuraGen's Annual Report on Form 10-K for the year ended December
31, 2008 and subsequent Quarterly Reports on Form 10-Q , in each
case filed with the Securities and Exchange Commission, as well as
other documents that may be filed by CuraGen from time to time with
the Securities and Exchange Commission. As a result of such risks,
uncertainties and factors, CuraGen's actual results may differ
materially from any future results, performance or achievements
discussed in or implied by the forward-looking statements contained
herein. CuraGen is providing the information in this press release
as of this date and assumes no obligation to update the information
included in this press release or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Additional Information About the Celldex-CuraGen
Merger and Where to Find It In connection with the proposed merger,
Celldex and CuraGen intend to file relevant materials with the SEC,
including a definitive joint proxy statement/prospectus (the "Joint
Proxy Statement/Prospectus"). CuraGen and Celldex have already
filed a preliminary joint proxy statement/prospectus with the SEC
on June 26, 2009. This joint proxy statement/prospectus is only a
preliminary version of the Joint Proxy Statement/Prospectus and
should not be relied upon. INVESTORS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. The Joint
Proxy Statement/Prospectus and other relevant materials (when they
become available) and any other documents filed by Celldex or
CuraGen with the SEC may be obtained free of charge at the SEC's
website at http://www.sec.gov/. In addition, investors may obtain
free copies of the documents filed with the SEC (i) by contacting
CuraGen Corporation, Attn: VP & CFO, 322 East Main Street,
Branford, CT 06405 or CuraGen Investor Relations at (888) 436-6642
or by accessing CuraGen's investor relations website at
http://www.curagen.com/; or (ii) by contacting Celldex's Investor
Relations at (781) 433-0771 or by accessing Celldex's investor
relations website at http://www.celldextherapeutics.com/. Investors
are urged to read the Joint Proxy Statement/Prospectus/prospectus
and the other relevant materials when they become available before
making any voting or investment decision with respect to the
merger. Participants in the Solicitation The directors and
executive officers of Celldex and CuraGen may be deemed to be
participants in the solicitation of proxies from the holders of
Celldex and CuraGen common stock in respect of the proposed merger.
Information about the directors and executive officers of Celldex
are set forth in Celldex's most recent Form 10-K, which was filed
with the SEC on March 2, 2009. Information about the directors and
executive officers of CuraGen are set forth in CuraGen's Form
10-K/A filed with the SEC on April 30, 2009 and proxy statement
filed with the SEC on May 19, 2009. As of July 31, 2009, CuraGen's
directors and executive officers beneficially owned approximately
4.8% of CuraGen's common stock. Investors may obtain additional
information regarding the interests of Celldex and its directors
and executive officers, and CuraGen and its directors and executive
officers, in the proposed transaction by reading the Joint Proxy
Statement/Prospectus regarding the transaction when it becomes
available. This communication shall not constitute an offer to sell
or the solicitation of an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. CRGN-F CURAGEN
CORPORATION CONDENSED STATEMENTS OF OPERATIONS (in thousands,
except per share data) Three Months Ended Six Months Ended June 30,
June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ----
(unaudited) (unaudited) Collaboration revenue $- $1,152 $- $1,174
----- ----- ------ ----- Operating expenses: Research and
development 1,815 3,635 3,497 9,006 General and administrative
2,925 1,443 4,830 3,159 ----- ------ ------ ------ Total operating
expenses 4,740 5,078 8,327 12,165 ----- ------ ------ ------ Gain
on sale of intangible asset - 36,397 - 36,397 ----- ------ ------
------ (Loss) income from operations (4,740) 32,471 (8,327) 25,406
Interest income 224 824 679 1,899 Interest expense (159) (451)
(334) (1,248) Realized (loss) gain on sale of available-for-sale
investments, net (1) (165) 83 (169) Gain on extinguishment of debt
- 6,991 962 6,991 ----- ------ ------ ------ (Loss) income before
income taxes (4,676) 39,670 (6,937) 32,879 Income taxes 16 (412)
740 (394) ----- ------ ------ ------ Net (loss) income ($4,660)
$39,258 ($6,197) $32,485 ===== ====== ====== ====== Basic net
(loss) income per common share ($0.08) $0.68* ($0.11) $0.56* =====
====== ====== ====== Weighted average number of shares used in
computing: Basic net income per share 57,051 56,736 57,027 56,629
====== ====== ====== ====== SELECTED BALANCE SHEET INFORMATION June
30, December 31, 2009 2008 ---- ---- (unaudited) Cash and
investments $76,040 $87,664 ======= ======= Working capital $73,753
$84,044 ======= ======= Total assets $76,866 $88,546 =======
======= 4% Convertible subordinated notes due 2011 $14,142 $18,967
======= ======= Total long-term liabilities $14,142 $18,967 =======
======= Accumulated deficit $468,990 $462,793 ======== ========
Stockholders' equity $59,869 $65,465 ======= ======= * Reflects the
retroactive application of FASB Staff Position EITF 03-06-1 which
requires unvested share based payment awards that contain
non-forfeitable rights to dividends or dividend equivalents be
participating securities and included in the computation of
earnings per share pursuant to the two-class method. Contacts: Sean
Cassidy Vice President and Chief Financial Officer 203 871-4400
DATASOURCE: CuraGen Corporation CONTACT: Sean Cassidy, Vice
President and Chief Financial Officer of CuraGen Corporation,
+1-203-871-4400, Web Site: http://www.curagen.com/
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