EANS-News: Epigenomics AG Reports First Quarter 2010 Financial Results
Key Figures * Revenue: EUR 0.62 million in Q1 2010 (Q1 2009: EUR 1.24 million) * EBIT: EUR -2.61 million in Q1 2010 (Q1 2009: EUR -2.31 million) * Net loss: EUR -2.59 million in Q1 2010 (Q1 2009: EUR -2.42 million) * Liquid assets: Strengthened balance sheet by financing transaction Highlights of the First Quarter 2010 * Successfully completed prospective PRESEPT colorectal cancer clinical study, presentation of results at Digestive Disease Week * Capital Increase secures funding * Key financials according to plan * Broadened availability of Epi proColon product in Germany and Switzerland * Received Notice of Allowance for patent in Japan for HeavyMethyl? technology * Introduced Epi proLung BL Reflex Assay at major congress in Germany
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3-month report/Molecular diagnostics
Subtitle: Key Figures
* Revenue: EUR 0.62 million in Q1 2010 (Q1 2009: EUR 1.24 million) * EBIT: EUR -2.61 million in Q1 2010 (Q1 2009: EUR -2.31 million) * Net loss: EUR -2.59 million in Q1 2010 (Q1 2009: EUR -2.42 million) * Liquid assets: Strengthened balance sheet by financing transaction
Highlights of the First Quarter 2010
* Successfully completed prospective PRESEPT colorectal cancer clinical study, presentation of results at Digestive Disease Week * Capital Increase secures funding * Key financials according to plan * Broadened availability of Epi proColon product in Germany and Switzerland * Received Notice of Allowance for patent in Japan for HeavyMethyl? technology * Introduced Epi proLung BL Reflex Assay at major congress in Germany
Press release, Berlin, Germany, and Seattle, WA, USA, May 11, 2010 (euro adhoc) - Epigenomics AG (Frankfurt Prime Standard: ECX), a cancer molecular diagnostics company, today reported financial results for the first quarter of 2010, which ended March 31, 2010.
"We are very pleased with the strong start we've had in 2010 and are excited about the significant progress we have made in our product development and commercial partnerships at the end of 2009 and during the first quarter of 2010", commented Geert Nygaard, Chief Executive Officer of Epigenomics. "With the additional 33.1 million Euro in gross proceeds provided by the capital increase in March 2010 and our continued financial discipline, we remain committed to delivering on our business goals and product development as well as commercial milestones. In 2010 our strategy will be dedicated to successfully marketing our colorectal cancer blood test in Europe and the U.S. and further continuing our reimbursement efforts for this test. Upon successful completion of the development of our second IVD product the Epi proLung BL Reflex Assay we expect to launch this test in Europe as a CE marked test kit by midyear 2010", Geert Nygaard added.
Revenue in Q1 2010 decreased by 50% to EUR 0.6 million, from 1.2 million in the corresponding period of 2009. This is mainly the result of the completion of work under several collaboration agreements in particular with Abbott and our biomarker R&D services in Q1 2009 with no equivalent activities in the reporting quarter. Revenue in Q1 2010 was generated from continued collaborations and licensing agreements in the form of R&D payments and licensing fees as well as product sales from the Epi proColon product.
Cost of sales fell significantly to EUR 0.17 million in Q1 2010 (Q1 2009: EUR 0.95 million) and generated a gross profit of EUR 0.45 million (Q1 2009: EUR 0.29 million). R&D costs increased slightly from EUR 1.76 million in the first three months of 2009 to EUR 1.86 million in Q1 2010.
Sales, general and administrative costs increased by 26% from EUR 1.05 million in Q1 2009 to EUR to EUR 1.32 million in Q1 2010 due to intensified marketing, sales and technical sales support activities for the Epi proColon colorectal cancer blood test. Other expenses decreased considerably from EUR 47 thousand in Q1 2009 to EUR 6 thousand in Q1 2010 mainly due to lower foreign exchange rate losses.
In Q1 2010, EBIT was EUR -2.61 million, compared to Q1 2009 EBIT of EUR -2.31 million. Net loss for the first three months 2010 grew by 7% from Q1 2009 (EUR 2.42 million) to EUR 2.59 million.
Epigenomics' balance sheet total increased from EUR 16.35 million as of December 31, 2009, to a total of EUR 44.26 million as of March 31, 2010. This increase was due to a successful capital increase, which significantly strengthened Epigenomics' cash flow and financial position. In March 2010, the company successfully placed 14,697,361 new ordinary bearer shares within a rights offering representing the entire authorized capital available. The new shares were placed at the subscription price of EUR 2.25 per new share resulting in gross proceeds of about EUR 33.1 million and in expected net proceeds of about EUR 30.3 million. With the registration of the capital increase on March 31 2010, the total issued share capital of Epigenomics has increased from EUR 29,394,724.00 to EUR 44,092,085.00. Epigenomics intends to use the proceeds from this transaction to complete the transformation into an integrated molecular diagnostics industry player. Focus will be on the commercial execution together with partners and licensees as well as driving direct product sales in the home markets. To that end Epigenomics in 2010 expects to grow the marketing and sales team in Europe by a handful of key additions and new hires.
In sum, the financial position has improved substantially with liquid assets amounting to EUR 18.88 million as of March 31, 2010, compared to EUR 6.14 million as of December 31, 2009. Total net cash flow in Q1 2010 was positive at EUR 12.54 million, due to increased cash flow of EUR 14.35 million resulting from the capital increase. Liquid funds from the agio on the newly issued shares in the gross amount of EUR 18.37 million were received on April 1, 2010. Cash outflow from operating activities in Q1 2010 was EUR 1.58 million, a significant improvement compared to Q1 of 2009 (EUR 2.27 million).
During the first quarter of 2010, Epigenomics focused on its strategy of transforming the company into a product-driven company and further pursuing its dual business model. Main goal was driving market acceptance and sales for the company's Septin9 blood test Epi proColon for colorectal cancer on the one hand, and of Epigenomics' partners' colorectal cancer blood based tests based on Septin9 on the other hand.
In January 2010 Epigenomics informed that its partner Quest Diagnostics Inc., Madison, NJ, U.S.A. introduced its laboratory developed blood test ColoVantage? for aiding in the detection of colorectal cancer in the United States in December 2009. The introduction followed the launch of Abbott's blood test for colorectal cancer in Europe and Asia/Pacific under the brand name Abbott RealTime mS9 in late 2009. Both tests are based on Epigenomics' proprietary Septin9 biomarker and certain proprietary technologies entitling Epigenomics to significant royalties on its partners' future test sales. Therefore, Septin9 tests have been commercially available since late 2009 in the U.S.A., Europe and in the Asia/Pacific region.
Following the launch of Epi proColon as a CE-marked IVD product in Europe Epigenomics has grown its laboratory customer base from a handful in Q4-2009 to 18 customer laboratories in Germany and Switzerland in the first quarter 2010, including synlab with its 55 German sites, one of Europe's largest laboratory networks.
During Q1 2010 Epigenomics received a Notice of Allowance by the Japanese Patent Office stating that they intend to grant a patent for Epigenomics' HeavyMethyl? technology. This notification is equivalent to a "Rule 71(3) notification" by the European Patent Office. Patent application 2002-571930 titled "Highly sensitive method for the detection of cytosine methylation patterns", claims very broadly a method for the detection of DNA methylation by means of amplification that employs blockers to prevent the amplification of background DNA while not affecting the amplification of target DNA. The patent is already granted in the US, Europe, China, Russia, Australia, South Korea, and New Zealand.
During the first quarter 2010, Epigenomics' R&D activities have continued to finalize and evaluate the data from the PRESEPT Study. After the release of preliminary data in January 2010, Epigenomics reported updated top-line PRESEPT Study data on March 8, 2010 showing that the Septin9 biomarker in this academic medicine study detected colorectal cancer cases with a sensitivity of approximately 63% and a specificity of around 89%. Since then final data from the PRESEPT Study has been presented at the DDW conference in New Orleans, USA, showing a sensitivity of 66.7% at a specificity of 88.4%.
In February 2010, Epigenomics introduced its novel lung cancer test Epi proLung BL Reflex Assay at the German Cancer Congress in Berlin, Germany. The diagnostic test is being developed as an aid in diagnosis for lung cancer and may help pathologists to confirm the diagnosis of malignant lung disease when current diagnostic procedures fail to establish the presence of malignancy in patients with suspected lung cancer.
The Company anticipates traction of all Septin9-based tests that are commercially available to increase sales gradually during 2010 and to accelerate in 2011 and beyond. The management expects direct product sales of the Epi proColon test in Germany, Switzerland and Austria as well as distributor sales in other key European markets to add to revenue growth. Furthermore Epigenomics expects to maintain a solid base of R&D collaboration, licensing and partnering based revenue generation at similar levels to the previous years, which assumes the closing of one additional IVD partnership in 2010. Royalty income from sales of Abbott's RealTime mS9 Colorectal Cancer product and Quest's ColoVantage? testing service should also gradually start to contribute in 2010 with accelerated growth expected in 2011 and beyond. The expected launch of ARUP's Septin9 testing service in 2010 should add to the royalty income going forward.
On the product development and pipeline progress Epigenomics' management awaits the launch of the CE marked Epi proLung BL Reflex Assays by midyear 2010. In line with the commercial strategy in colorectal cancer the company intends to market and sell directly in home markets and work with distributors in other countries. It also plans to initiate a clinical trial for regulatory approval of the Epi proColon test using the PRESEPT cohort in 2010 with a view to obtaining such regulatory approval in the USA ideally still in 2011. Epigenomics also expect its partner Abbott to complete its clinical trial for regulatory approval of the Abbott RealTime mS9 Colorectal Cancer test and to seek such regulatory approval for the U.S. by 2011.
R&D going forward will focus on enhancement and expansion of Epi proColon product. As an example, the company has recently launched an updated version of the product which can now be used on two real-time PCR devices, the Roche LightCycler? 480 and AB7500 Fast Real Time PCR System. Further R&D in the colorectal cancer program focuses on enhanced clinical characteristics for colorectal cancer early detection as well as expansion of the clinical utility into disease monitoring and adenoma detection. Lung cancer test development will take second priority with prostate cancer taking third priority and requiring current and future partners to commercialization.
Financials for the fiscal year 2010 are expected to be characterized by continued fiscal discipline and focus on commercialization. Epigenomics anticipates 2010 revenue of at least EUR 5 million, with the potential to double in each of the following two years towards achieving profitability by the end of 2012 at the earliest. This will depend on successful commercialization of own products as well as current and new partners being successful in their test commercialization. 2010 EBIT is expected to be similar to 2009 with a target of around EUR -10 million. Cash burn will be closely monitored and is expected remain around EUR 10 million for 2010 despite the completion of PRESEPT and the lung cancer IVD development, as marketing and sales spending will increase. Further, the Company expects to fund a clinical trial and a filing for regulatory approval in the U.S. in 2010 and 2011 before eventually commercializing a regulatory approved Epi proColon product in the U.S.
The full 3-Months Report 2010 can be obtained from Epigenomics' website at: www.epigenomics.com/en/investor_relations/Financial_Information
Epigenomics is a molecular diagnostics company with a focus on the development of novel products for cancer. Using DNA methylation biomarkers, Epigenomics' tests on the market and in development aim at diagnosing cancer at an early stage before symptoms occur and thereby may reduce mortality from this dreaded disease.
Epigenomics' product portfolio contains the CE-marked IVD test Epi proColon, the world's first regulatory cleared molecular diagnostic test for the detection of colorectal cancer in blood that is based on the biomarker Septin9, and further proprietary DNA methylation biomarkers and IVD products at various stages of development for colorectal, lung and prostate cancer. For development and global commercialization of IVD test products, Epigenomics pursues a dual business strategy in which direct commercialization of proprietary diagnostic test products is combined with non-exclusive licensing to diagnostic industry players with broad customer access. Strategic diagnostics industry partners include Abbott Molecular, Sysmex Corporation, Quest Diagnostics Incorporated, and ARUP Laboratories, Inc. for diagnostics test products and services, and QIAGEN N.V. for sample preparation solutions and research products. The company is headquartered in Berlin, Germany, and has a wholly owned subsidiary, Epigenomics Inc., in Seattle, WA, U.S.A. For more information, please visit Epigenomics' website at www.epigenomics.com
Epigenomics legal disclaimers. This communication expressly or implicitly contains certain forward-looking statements concerning Epigenomics AG and its business. Such statements involve certain known and unknown risks, uncertainties and other factors which could cause the actual results, financial condition, performance or achievements of Epigenomics AG to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Epigenomics AG is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.
The information contained in this communication does not constitute nor imply an offer to sell or transfer any product, and no product based on this technology is currently available for sale in the United States. The analytical and clinical performance characteristics of any product based on this technology which may be sold at some future time in the U.S. have not been established.
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