GPC Biotech Reports Financial Results for First Quarter 2008

GPC Biotech AG (Frankfurt Stock Exchange: GPC; NASDAQ: GPCB) today reported financial results for the first quarter and three months ended March 31, 2008. First quarter 2008 compared to first quarter 2007 as adjusted* Revenues decreased 58% to € 1.6 million for the first quarter of 2008, compared to € 3.8 million for the first quarter of 2007. The decrease in revenues is primarily due to a decline in payments received under the co-development and license agreement for satraplatin with Celgene Corporation (formerly Pharmion Corporation), as the SPARC Phase 3 trial has been mostly completed. R&D expenses decreased 53% to € 5.7 million for the first three months of 2008 compared to € 12.2 million for the same period in 2007. In the first quarter of 2008, general and administrative (G&A) expenses decreased 63% to € 3.6 million compared to € 9.8 million for the first quarter of 2007. The decrease in R&D and G&A expenses is primarily due to staff reductions and other associated activities as a result of the restructuring plans announced in the second half of 2007 and in the first quarter of 2008 to sharpen the Company’s focus on oncology clinical development efforts and to further reduce costs. Net loss for the first quarter of 2008 improved 60% to € (6.9) million compared to € (17.1) million for the first quarter of 2007. Basic and diluted loss per share was € (0.19) for the first quarter of 2008 compared to € (0.48) for the same quarter in 2007. As of March 31, 2008, cash, cash equivalents, marketable securities and short-term investments totaled € 53.5 million (December 31, 2007: € 65.2 million), including € 1.4 million in restricted cash. Net cash burn for the first quarter of 2008 was € 10.6 million. Net cash burn is derived by adding net cash used in operating activities and purchases of property, equipment and licenses. The figures used to calculate net cash burn are contained in the Company’s unaudited consolidated statements of cash flows for the first quarter ended March 31, 2008. Quarter over quarter results: first quarter 2008 compared to fourth quarter 2007 Revenues for the first quarter of 2008 decreased 27% to € 1.6 million compared to € 2.2 million for the previous quarter. R&D expenses decreased 41% to € 5.7 million for the first quarter of 2008 compared to € 9.7 million for the fourth quarter of 2007. G&A expenses for the first quarter of 2008 decreased 36% to € 3.6 million compared to € 5.6 million for the previous quarter. The Company’s net loss was € (6.9) million in the first quarter of 2008 compared to € (11.9) million for the previous quarter. Basic and diluted loss per share was € (0.19) for the first quarter of 2008 compared to € (0.32) for the previous quarter. "We are focused on re-energizing our employees and rebuilding GPC Biotech,” said Bernd R. Seizinger, M.D., Ph.D., Chief Executive Officer. "Our two key areas of activities are advancing our current drug development programs – satraplatin and two pre-clinical kinase inhibitors, RGB-286638 and RGB-344064 - and exploring various merger and acquisition opportunities.” Torsten Hombeck, Ph.D., Chief Financial Officer, said: "We are confirming our previous financial guidance for 2008. We believe that we have sufficient cash reserves to fund our currently planned business operations until approximately the end of 2010. We believe that our solid cash position gives us important flexibility as we seek to expand our pipeline.” 2008 financial guidance confirmed The Company confirmed its previous financial guidance for 2008 as follows: Revenues: Expected to be between € 5 million and € 7 million. Expenses: Total expenses for 2008 expected to be below € 35 million. Cash Burn: Current cash reserves expected to be sufficient to fund currently planned business operations until approximately the end of 2010. The cash burn for 2008 will include several one-time costs, including severance and other payments related to the corporate restructurings in 2007 and early 2008. This guidance does not include any potential M&A or other major transactions, and, should such an event or events occur this year, the Company’s financial expectations could change significantly. Conference call scheduled As previously announced, the Company has scheduled a conference call to which participants may listen via live webcast, accessible through the GPC Biotech Web site at www.gpc-biotech.com or via telephone. A replay will be available via the Web site following the live event. The call, which will be conducted in English, will be held on May 15th at 14:00 CET/8:00 AM ET. The dial-in numbers for the call are as follows: Participants from Europe: 0049 (0)69 5007 1308 or 0044 (0)20 7806 1956 Participants from the U.S.: 1-718-354-1388 Please dial in 10 minutes before the beginning of the meeting. About GPC Biotech GPC Biotech AG is a publicly traded biopharmaceutical company focused on anticancer drugs. GPC Biotech's lead product candidate is satraplatin, an oral platinum compound. The Company has various anti-cancer programs in research and development that leverage its expertise in kinase inhibitors. GPC Biotech AG is headquartered in Martinsried/Munich (Germany) and has a wholly owned U.S. subsidiary in Princeton, New Jersey. For additional information, please visit GPC Biotech's Web site at www.gpc-biotech.com. * First quarter 2007 stock-based compensation expenses and additional paid-in capital as of March 31, 2007 have been adjusted based on determination of the requisite service period in accordance with Statement of Financial Accounting Standards No.123(R), Share-Based Payment, (SFAS 123(R)) to recognize the fair value of the Company’s equity-based compensation arrangements over the period. Please see Note 2, Adjustment of Quarterly Financial Statements in the Notes to the Consolidated Financial Statements for the Fiscal Year Ended December 31, 2007 for more information. This press release contains forward-looking statements, which express the current beliefs and expectations of the management of GPC Biotech, including statements about the Company’s future cash position. Such statements are based on current expectations and are subject to risks and uncertainties, many of which are beyond our control, that could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially depending on a number of factors, and we caution investors not to place undue reliance on the forward-looking statements contained in this press release. We direct you to GPC Biotech’s Annual Report on Form 20-F for the fiscal year ended December 31, 2006 and other reports filed with the U.S. Securities and Exchange Commission for additional details on the important factors that may affect the future results, performance and achievements of GPC Biotech. Forward-looking statements speak only as of the date on which they are made and GPC Biotech undertakes no obligation to update these forward-looking statements, even if new information becomes available in the future. GPC Biotech AG   Condensed Consolidated Statements of Operations   Three months ended March 31, in thousand €, except share and per share data   2008 (unaudited)   2007 (unaudited, as revised, Note 2) Collaborative revenues 1,514   3,762 Grant revenues   55   77 Total revenues 1,569 3,839 Research and development expenses 5,749 12,238 General and administrative expenses 3,599 9,807 Amortization of intangible assets 18 91 Total operating expenses   9,366   22,136 Operating loss (7,797) (18,297) Other income, net 276 157 Interest income 605 1,028 Interest expense   (30)   (27) Net loss (6,946) (17,139)   Basic and diluted loss per share, in euro (0.19) (0.48)   Shares used in computing basic and diluted loss per share 36,836,853 35,441,336     See accompanying notes to unaudited condensed consolidated financial statements. GPC Biotech AG   Condensed Consolidated Balance Sheets in thousand €, except share data and per share data   March 31,   December 31, Assets   2008 (unaudited)   2007 Current assets Cash and cash equivalents 48,083 49,681 Marketable securities and short-term investments 4,038 14,077 Accounts receivable 458 984 Prepaid expenses 649 874 Other current assets 2,049 2,229 Restricted Cash   1,196   1,269 Total current assets 56,473 69,114   Property and equipment, net 2,715 3,070 Intangible assets, net 136 164 Other assets, non-current 726 851 Restricted cash   187   187 Total assets 60,237 73,386   Liabilities and shareholders' equity         Current liabilities Accounts payable 1,694 2,826 Accrued expenses and other current liabilities 9,218 10,445 Current portion of deferred revenue   3,994   4,332 Total current liabilities 14,906 17,603   Deferred revenue, net of current portion 13,089 13,989 Convertible bonds 2,181 3,191   Shareholders' equity Ordinary shares, € 1 non-par, notional value: Shares authorized: 70,383,150 at March 31, 2008 and December 31, 2007 Shares issued and outstanding: 36,836,853 at March 31, 2008 and December 31, 2007 36,837 36,837 Additional paid-in capital 368,600 369,521 Accumulated other comprehensive loss (5,715) (5,040) Accumulated deficit   (369,661)   (362,715) Total shareholders' equity   30,061   38,603 Total liabilities and shareholders' equity 60,237 73,386   See accompanying notes to unaudited condensed consolidated financial statements. GPC Biotech AG     Condensed Consolidated Statements of Cash Flows Three months ended March 31,   in thousand €   2008 (unaudited)   2007 (unaudited, as revised, Note 2) Cash flows from operating activities: Net loss (6,946) (17,139)   Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 274 423 Amortization 18 90 Compensation cost/(reversal) for stock option plans, convertible bonds and SAR's (921) 548 Change in accrued interest income on marketable securities and short-term investments - (157) Bond premium amortization 17 52 Gain on disposal of property and equipment (305) (43) Impairment of property and equipment 17 - Changes in operating assets and liabilities: Accounts receivable 642 (1,925) Other assets, current and non-current 441 (86) Accounts payable (1,055) (92) Deferred revenue (1,238) (1,143) Other liabilities and accrued expenses, current and non-current   (1,503)   772 Net cash used in operating activities (10,559) (18,700)   Cash flows from investing activities: Purchases of property, equipment and licenses (1) (657) Proceeds from the sale of property and equipment 207 45 Proceeds from the sale or maturity of marketable securities and short-term investments   10,000   11,000 Net cash provided by investing activities 10,206 10,388   Cash flows from financing activities: Proceeds from issuance of shares, net of payments for cost of transaction - 32,632 Proceeds from issuance of convertible bonds - 262 Repayments of convertible bonds (445) (4) Proceeds from exercise of stock options and convertible bonds - 2,143 Cash received for subscribed shares   -   330 Net cash (used in) provided by financing activities (445) 35,363   Effect of exchange rate changes on cash (786) (467) Changes in restricted cash   (14)   (17) Net (decrease) increase in cash and cash equivalents (1,598) 26,567 Cash and cash equivalents at the beginning of the period   49,681   38,336 Cash and cash equivalents at the end of the period 48,083 64,903     See accompanying notes to unaudited condensed consolidated financial statements. GPC Biotech AG Consolidated Statements of Changes in Shareholders' Equity (in thousand €, except share data)     Ordinary shares           Shares   Amount Subscribed Shares Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shareholders' Equity   Balance at December 31, 2006 33,895,444   33,895   334   328,171   (1,755)   (293,470)   67,175 Components of comprehensive loss: Net loss (17,139) (17,139) Change in unrealized gain/(loss) on available-for-sale securities 72 72 Accumulated translation adjustments (429) (429) Total comprehensive loss (17,496) Issuance of shares 1,564,587 1,565 31,068 32,633 Exercise of stock options and conversion of convertible bonds 488,417 488 330 1,842 2,660 Compensation cost for stock options and convertible bonds             328           328 Balance at March 31, 2007 (unaudited, as revised, Note 2) 35,948,448   35,948   664   361,409   (2,112)   (310,609)   85,300                             Balance at December 31, 2007 36,836,853   36,837   -   369,521   (5,040)   (362,715)   38,603 Components of comprehensive loss: Net loss (6,946) (6,946) Change in unrealized gain/(loss) on available-for-sale securities (22) (22) Accumulated translation adjustments (653) (653) Total comprehensive loss (7,621) Compensation cost for stock options and convertible bonds             (921)           (921) Balance at March 31, 2008 (unaudited) 36,836,853   36,837   -   368,600   (5,715)   (369,661)   30,061   See accompanying notes to unaudited condensed consolidated financial statements. GPC Biotech AG Notes to the Unaudited Condensed Consolidated Financial Statements 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of GPC Biotech AG (the "Company”) have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP”), applicable to interim financial reporting, specifically Accounting Principles Board Opinion No. 28 "Interim Financial Reporting". These unaudited condensed consolidated financial statements do not include all information and disclosures required for a complete set of financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2008, are not necessarily indicative of results to be expected for the full year ending December 31, 2008. The balance sheet at December 31, 2007, has been derived from the audited consolidated financial statements at that date, but does not include all of the information required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2007. 2. Adjustment of First Quarter 2007 As discussed in detail in Note 2 to the consolidated financial statements as of December 31, 2007 and for the year then ended, in the fourth quarter of 2007, the Company determined that based on Statement of Financial Accounting Standards No.123(R), Share-Based Payment, ("SFAS 123(R)”), it was not able to use the explicit service period but that it had to use the longer derived service period. Based on this determination, the Company was required to adjust previously reported share-based compensation expense to reduce the amount previously charged to expense and to recognize the related fair value of the awards over the derived service period. Below is a summary of the adjustments and their impact on the relevant line items (in thousand €, except for per share data) for the quarter ended March 31, 2007: As previously reported   2007   Q1 R&D expense 13,040 G&A expense 11,023 Total operating expense 24,154 Operating loss (20,315) Net loss (19,157) Loss per share (0.54) Compensation cost for stock option plans and convertible bonds as included in the statement of cash flows 2,566 Compensation cost for stock options and convertible bonds as included in the statement of changes in shareholders’ equity 2,346   As revised 2007 Q1 R&D expense 12,238 G&A expense 9,807 Total operating expense 22,136 Operating loss (18,297) Net loss (17,139) Loss per share (0.48) Compensation cost for stock option plans and convertible bonds as included in the statement of cash flows 548 Compensation cost for stock options and convertible bonds as included in the statement of changes in shareholders’ equity 328 Q1 2007 "As revised” numbers in the table above include a reduction of share-based compensation expense applicable to the 2006 financial statements, which management determined to not be material to both the 2006 annual and 2007 interim periods. In addition to the above, the presentation of cash flows from operating activities in the consolidated statement of cash flows for the quarter ended March 31, 2007, was reclassified to conform with current period presentation as it relates to changes in accounts receivable and deferred revenue. This reclassification had no effect on the Company’s net cash used in operating activities. 3. New Accounting Pronouncements Accounting Pronouncements Adopted in First Quarter 2008 In September 2006, the Financial Accounting Standards Board ("FASB”) issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, ("SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, ("SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain items at fair value that are not currently required to be measured at fair value. The Company adopted these two standards as of January 1, 2008. SFAS 157 affected the Company only to the extent of its marketable securities and short-term investments carried at fair value, as detailed below. The Company did not elect to measure other financial instruments and certain items at fair value that were not currently required to be measured at fair value, therefore, the adoption of SFAS 159 did not have a material impact on its consolidated financial statements. The Company’s marketable securities and short-term investments are measured at fair value on a recurring basis using quoted prices in active markets for identical assets, which is the Level 1 input in the SFAS 157 hierarchy. As of March 31, 2008, the fair value of the marketable securities and short-term investments amounted to € 4.0 million as included in the consolidated balance sheet. On June 14, 2007, the FASB ratified Emerging Issues Task Force 07-3, Accounting for Non-Refundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities, ("EITF 07-3”). EITF 07-3 requires that all non-refundable advance payments for research and development activities that will be used in future periods be capitalized until used. In addition, the deferred research and development costs need to be assessed for recoverability. EITF 07-3 is applicable for fiscal years beginning after December 15, 2007 and is to be applied prospectively for new contracts entered into on or after the effective date of this Issue. The Company adopted this issue as of January 1, 2008 and it did not have a material impact on its consolidated financial statements. Accounting Pronouncements Not Yet Adopted On December 12, 2007, the FASB ratified Emerging Issues Task Force 07-1, Accounting for Collaborative Arrangements, ("EITF 07-1”). EITF 07-1 requires participants in a collaborative arrangement to present the results of activities for which they act as the principal on a gross basis and to report any payments received from (made to) other collaborators based on other applicable GAAP or, in the absence of other applicable GAAP, based on analogy to authoritative or a reasonable, rational, and consistently applied accounting policy election. Significant disclosures of the collaborative agreements are also required. EITF 07-1 will be effective for annual periods beginning after December 15, 2008 and is to be applied retrospectively for collaborative arrangements existing at December 15, 2008 as a change of accounting principle. The Company does not expect this issue to have a material effect on its consolidated financial statements. 4. Contingencies From time to time, the Company may be party to certain legal proceedings and claims which arise during the ordinary course of business. Legal proceedings are subject to various uncertainties and the outcomes are difficult to predict. GPC Biotech may incur significant expense in defending these or future lawsuits. However, in the opinion of management, the ultimate outcome of these matters will not have material adverse effects on the Company’s financial position, results of operations or cash flows. In accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, ("SFAS 5”), the Company makes a provision for a liability when it is both probable that a liability has been incurred and when the amount of the loss is reasonably estimable. Shareholder Litigation In July 2007, the Company and certain of its current and former officers were sued in the United States District Court for the Southern District of New York in three separate securities fraud class action lawsuits on behalf of all persons who purchased the securities of GPC Biotech between December 5, 2005 and July 24, 2007, inclusive. The suits have since been consolidated and a lead plaintiff has been appointed. The lead plaintiff's consolidated complaint was filed on March 12, 2008. The consolidated complaint alleges that GPC Biotech violated U.S. federal securities laws by making misleading public statements relating to the prospects of its most advanced product candidate, satraplatin, and thereby artificially inflating the price of GPC Biotech securities. The consolidated complaint also names Bernd R. Seizinger (CEO) and three former members of the Company's Management Board, Mirko Scherer, Elmar Maier, and Sebastian Meier-Ewert, as defendants. The Company filed a motion to dismiss the consolidated complaint on May 14, 2008. The plaintiff has the opportunity to file an opposition to the motion to dismiss on or before June 30, 2008. If the plaintiff files such an opposition, the Company will then have the opportunity to reply thereto on or before August 8, 2008. The plaintiffs seek monetary damages in an unspecified amount. GPC Biotech believes the allegations to be without merit and intends to vigorously defend the Company. GPC Biotech cannot predict the outcome of the suit and is not currently able to estimate the possible cost to the Company from this suit. Contingencies related to the approval of the Marketing Authorization Application ("MAA”) for satraplatin in second-line HRPC by the European Medicines Agency ("EMEA”) The Company has contingent commitments related to payments pending on the marketing approval of satraplatin by the EMEA. As of March 31, 2008, for accounting purposes, the Company assessed the probability of these contingent liabilities relating to the approval of satraplatin in second-line HRPC in Europe. Due to uncertainties in the regulatory approval process of satraplatin, the Company assessed the probability of these contingent liabilities as less than probable. Under the Company’s agreement with Spectrum Pharmaceuticals, Inc. ("Spectrum”), GPC Biotech is obligated to make a milestone payment in the amount of $3.0 million or approximately € 1.9 million to Spectrum, which is contingent upon the approval of the MAA by the EMEA. In addition, the Company has a cash bonus plan to retain the Company’s employees and if EMEA approval is obtained, the total payout under this plan may lead to an increase in personnel expense of up to € 235,000. The Company also issued stock appreciation rights (SARs) to senior management, the members of the Supervisory Board, and certain employees. These SARs would entitle the holder to cash payments if the performance condition were to be met. Please refer to Note 15 to the consolidated financial statements as of December 31, 2007 and the year then ended, for a description of SARs’ performance conditions. No new SARs were issued during the first quarter of 2008. Due to uncertainties in the approval process of satraplatin, there were no liabilities and expenses recognized as of March 31, 2008, with respect to such contingent payments triggered by the approval of satraplatin by the EMEA. Contingent Gain The Company is entitled to receive a milestone payment from Celgene Corporation (net of licensing fee paid to Spectrum) of approximately € 10.5 million upon the approval of the MAA for satraplatin with the EMEA. Gross receipt will be recognized as revenue upon milestone achievement. 5. Loss per Share Basic loss per ordinary share is computed using the weighted average number of ordinary shares outstanding during the period. Diluted net loss per ordinary share is computed using the weighted average number of ordinary and dilutive ordinary equivalent shares from stock options and convertible debt where the dilutive effect of options and warrants was calculated using the treasury stock method. For all periods presented, diluted net loss per share is the same as basic net loss per share, as the inclusion of weighted average shares of ordinary stock issuable upon the exercise of stock options and convertible debt would be antidilutive. 6. Comprehensive Loss Comprehensive loss was € 7.6 million and € 17.5 million for the three months ended March 31, 2008 and 2007, respectively. Comprehensive loss is composed of net loss, unrealized gains and losses on available-for-sale securities and cumulative foreign currency translation adjustments. Accumulated other comprehensive loss on March 31, 2008 and 2007 reflected € 0.2 million of unrealized losses and € 0.5 million of unrealized gains on marketable securities and short-term investments and € 5.5 million and € 2.6 million of cumulative foreign currency translation loss adjustments, respectively. 7. Additional Disclosures Convertible Bonds Convertible bonds for the three months ended March 31, 2008, decreased 29.4% to € 2.4 million compared to € 3.4 million as of December 31, 2007. The decrease in convertible bonds is primarily due to the Company’s cancellation of convertible bonds as a result of the restructuring plans implemented in 2007 and the first quarter of 2008; as described in detail in Note 10 of the consolidated financial statements as of December 31, 2007 and for the year then ended, and below. As of March 31, 2008 and December 31, 2007, approximately € 0.2 million of convertible bonds are in other current liabilities due to the cancellation of these bonds. Revenue Revenues for the three months ended March 31, 2008, decreased 59.1% to € 1.6 million compared to € 3.8 million for the same period in 2007. The decrease in revenues is due to decreased payments from Celgene relating to the co-development and license agreement for satraplatin as the SPARC Phase 3 trial was mostly completed in 2007. Research and Development Expense Research and development (R&D) expenses for the three months ended March 31, 2008, decreased 53.0% to € 5.7 million compared to € 12.2 million for the same period in 2007. The decrease in R&D expenses is primarily due to staff reductions as a result of the restructuring plans implemented in 2007 and the first quarter of 2008; as described in detail in Note 10 of the consolidated financial statements as of December 31, 2007 and for the year then ended, and below. General and Administrative Expenses General and administrative (G&A) expenses for the three months ended March 31, 2008, decreased 63.3% to € 3.6 million compared to € 9.8 million for the same period in 2007. The decrease in G&A expenses is primarily due to staff reductions and other associated activities as a result of the restructuring plans implemented in 2007 and the first quarter of 2008; as described in detail in Note 10 to the consolidated financial statements as of December 31, 2007 and for the year then ended, and below. Share-Based Compensation For the three months March 31, 2008 and 2007, the Company recorded a credit to share-based compensation cost of € (0.9) million and incurred € 0.5 million in costs, respectively. This decrease is the result of the termination of stock options and convertible bonds relating to the restructuring plans implemented during 2007 and the first quarter of 2008. Upon termination, compensation expense for awards in which the requisite service period has not been rendered is reversed. Product Candidate Licensing Activities As it is disclosed in Note 4 to the consolidated financial statements as of December 31, 2007 and for the year then ended, in June 2007, the Company entered into a license agreement with Yakult Honsha Co. Ltd. for development and commercialization of satraplatin in Japan. The upfront license payment of € 7.4 million was included in deferred revenue, non-current, as of March 31, 2008 and December 31, 2007, as the Company was not able to estimate the period of substantial involvement as of these balance sheet dates. The Company will continue to defer the revenue until the timing of the satraplatin development plan, which approximates the period of substantial involvement, can be reliably determined. Restructuring Activities In February 2008, the Company announced a corporate restructuring to sharpen its focus on oncology clinical development and to further reduce costs. The restructuring was mainly focused on the Company’s early-stage research activities in Munich and resulted in a reduction in the total workforce of approximately 38% or 38 employees. The Company recognized a restructuring charge of € 1.7 million during the first quarter of 2008. These charges primarily consisted of employee severance and termination benefits and were included in both research and development and general and administrative expenses. The Company expects to incur an additional charge of € 0.3 million in 2008 relating to the February 2008 restructuring plan. In addition, the Company announced that, by mutual consent, Elmar Maier, Ph.D., Chief Operating Officer/Martinsried and Senior Vice President, Business Development, and Sebastian Meier-Ewert, Ph.D., Senior Vice President and Chief Scientific Officer retired from their positions on the Management Board of the Company to allow for an appropriate resizing of the Board, given the reduced size of the Company. Both Dr. Maier and Dr. Meier-Ewert remain dedicated to the Company as advisors. Included in the restructuring charge of € 1.7 million during the first quarter of 2008, as mentioned above, is the accrual relating to severance for these former Board members which was paid in April 2008. A summary of the significant components of the restructuring liability at March 31, 2008, is as follows (in thousand €):   Employee   Lease     Termination Termination Benefits Costs Total       January 1, 2008 Balance 2,327 2,214 4,541   Amortization of Lease Loss - (71) (71)   Restructuring Charges 1,673 - 1,673   Restructuring Payments (1,762) (682) (2,444)   Exchange Differences (96) (121) (217)       March 31, 2008 Balance 2,142 1,340 3,482 A restructuring liability of € 3.5 million and € 4.5 million as of March 31, 2008 and December 31, 2007, respectively, is included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. For further information, please refer to Note 10 to the consolidated financial statements and footnotes thereto for the year ended December 31, 2007. Gain on Disposal of Property and Equipment During the first quarter of 2008, the Company sold some of its assets (mainly laboratory equipment and office furniture) at both the Princeton and Munich facilities. These assets had a historical cost of approximately € 0.4 million and a net book value of approximately less than € 0.1 million. The Company recorded a gain of approximately € 0.3 million relating to the sale of these assets. 8. Disclosures Required by the Frankfurt Stock Exchange Number of Employees As of March 31, 2008 and 2007, the number of employees totaled 106 and 261, respectively. Shareholdings of Management As of March 31, 2008, the members of the Management Board and Supervisory Board held shares, stock options, convertible bonds and stock appreciation rights in the amounts set forth in the table below:     Number of Shares   Number of Stock Options   Number of Convertible Bonds   Number of Stock Appreciation Rights Management Board                 Bernd R. Seizinger, M.D., Ph.D. (Chairman)   111,499   789,000   1,413,501   - Torsten Hombeck, Ph. D. - 172,700 45,000 -   Supervisory Board                 Jürgen Drews, M.D. (Chairman) 26,900 10,000 12,500 80,000 Michael Lytton (Vice Chairman) 7,500 10,000 31,500 60,000 Metin Colpan, Ph.D. 19,400 10,000 10,000 45,000 Donald Soltysiak - - - 10,000 James Frates 1,000 - - 60,000 Peter Preuss 87,500 - 22,500 50,000