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EANS-News: Epigenomics AG: Financial Results for the Fiscal Year 2009
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Financial Figures/Balance Sheet/Molecular diagnostics
Press release, Berlin, Germany, and Seattle, WA, U.S.A., March 12, 2010 (euro adhoc) - Key Figures and Financial Highlights:
* Full year revenue increased to EUR 4.3 million * Operational costs reduced by close to EUR 1.5 million to EUR 15.0 million * EBIT improved by 20% to EUR -10.2 million * Net loss improved by 17% to EUR -10.2 million * Liquidity position of EUR 6.1 million as of December 31, 2009 * EUR 5.2 million PIPE placed at 5% premium in early 2009
* Launched first IVD product Epi proColon * Partner Abbott Molecular launched Septin9 test mS9 in Europe and Asia/Pacific * Partner Quest Diagnostics introduced laboratory developed Septin9 test ColoVantage * Completed PRESEPT Study enrollment in 2009; topline study data published on March 8, 2010 * Significantly progressed lung cancer program * Signed collaboration agreements for Septin9 with Sysmex and ARUP Laboratories * Obtained ISO 13485 certification for quality management system * Strengthened intellectual property position by cross licensing and portfolio maturation
Epigenomics AG (Frankfurt, Prime Standard: ECX), a cancer molecular diagnostics company, today reported its financial results for the fiscal year ending December 31, 2009. The complete annual report will be released, as planned, on March 31, 2010.
"The year 2009 marked the start of a new era for Epigenomics as an emerging player in molecular diagnostics", said Geert Nygaard, CEO of Epigenomics. "The introduction of our first IVD product, the Epi proColon blood test for colorectal cancer early detection, was a transforming event for the company. With first products launched by us and our licensees in Europe, Asia/Pacific and the U.S. by the end of 2009, the focus now is on demonstrating commercial success."
Oliver Schacht, CFO of Epigenomics AG commented: "All our 2009 key financials reflect the clear emphasis on commercial execution. We have delivered strong revenue growth through multiple partnership deals and kept our costs tightly managed despite running one of the largest colorectal cancer screening trials."
Financial Review 2009
In 2009, Epigenomics recognized total revenue of EUR 4.3 million, a significant increase of 65% compared to EUR 2.6 million in 2008. This strong improvement is mainly due to progress made in the company's collaboration with Abbott, which also resulted in revenue recognition of certain milestone payments and revenue recognized for certain aspects related to the PRESEPT Study as well as to revenue recognition under the collaboration agreements with Philips and Sysmex and the licensing agreements with Quest, ARUP, OncoMethylome Sciences and Qiagen/DxS.
Cost of sales increased significantly as expected by 65% from EUR 1.7 million to EUR 2.8 million as a result of increased collaboration-driven product development expenses and especially due to the acquisition of clinical samples under Epigenomics' collaboration with Abbott.
Other income decreased to EUR 0.5 million in 2009 from EUR 1.1 million in 2008, when high income from a one-time reversal of provisions affected the total number in profit or loss.
In 2009, R&D costs decreased significantly by approximately EUR 2.7 million from EUR 10.0 million in 2008 to EUR 7.3 million at the end of 2009. This significant drop by 27% is mainly due to increased resource allocation to the Company's commercial collaboration projects and a corresponding shift of such partnered R&D activities to "cost of sales" as well as from the closing of all laboratory operations at Epigenomics Inc. in Seattle only at the end of the second quarter of 2008 with corresponding full-year effects in 2009.
Marketing and business development costs significantly increased by 39% from EUR 0.9 million in 2008 to EUR 1.2 million in 2009, as a result of increased pre-marketing, sales and technical support activities for the launch of Epigenomics' Epi proColon colorectal cancer blood test. General and administrative costs decreased from EUR 3.4 million in 2008 to EUR 3.3 million at the end of 2009, mainly due to decreased staff costs. Other expenses amounted to EUR 0.4 Mio (2008: EUR 0.4 Mio).
In 2009, EBIT amounted to EUR -10.2 million, a significant improvement by 20% compared to previous year's EUR -12.8 million as a result of our strict fiscal discipline coupled with solid revenue growth. Due to the lower average liquidity of the Company in the past year compared to 2008 and the simultaneously low interest level on the capital markets worldwide, the financial result decreased from EUR 0.7 million in 2008 to EUR 0.2 million in the reporting year. Income tax expenses amounted to EUR 0.2 million. In the reporting period net loss for the full year 2009 therefore amounted to EUR 10.2 million (2008: net loss of EUR 12.3 million). Hence, the result could be improved by 17%.
Net cash flow in 2009 amounted to EUR -5.9 Mio. (2008: EUR 3.2 Mio.). While cash flow from operating activities and net cash flow from investing activities amounted to EUR -10.6 Mio. resp. EUR 0.2 Mio. (2008: EUR -9.8 Mio. resp. EUR 1.5 Mio.) in 2009, a net cash inflow of EUR 5.0 Mio. (2008: EUR 11.5 Mio.) was generated from financing activities.
The balance sheet total of the Company has shortened to EUR 16.4 million as of December 31, 2009 (Dec 31, 2008: EUR 20.3 million). This effect was mainly caused by the decrease in current assets from EUR 14.4 million as of the 2008 reporting date to EUR 10.6 million as of December 31, 2009. This decrease again was due to the net cash flow of EUR -5.9 million and the resulting reduction of cash and cash equivalents. The increase in trade receivables to EUR 2.0 million at the reporting date (Dec 31, 2008: EUR 0.7 million) had a compensating effect.
As of December 31, 2009, the company's financial position including marketable securities showed a total liquidity amounting to EUR 6.1 million (31.12.2008: EUR 12.1 Mio.).
In February 2009, Epigenomics successfully completed a PIPE transaction and capital increase at a 5% premium to the prevailing market price at that time for its stock. Epigenomics issued 2,671,088 new shares at a price of EUR 1.94 per share for gross proceeds of EUR 5.2 million. Therebythe total number of shares outstanding has increased to 29,394,724. The transaction was lead by a fund of the BB MEDTECH Group (Schaffhausen/Switzerland), now Bellevue Funds (Lux) SICAV, Luxemburg, which thereby at the time became Epigenomics' second largest investor after Federated Investors (Pittsburgh, PA, U.S.A.).
Hence, total equity as reported as of balance sheet date dropped despite a net loss for the year of EUR 10.2 million only to EUR 12.1 million (Dec 31, 2008: EUR 16.6 million), corresponding to an equity ratio of 73.9% (Dec 31, 2008: 81.7%).
Operational Review 2009 and Recent Highlights
2009 and early 2010 have been characterized by continued focusing on Epigenomics' commercialization of the lead product Epi proColon, on the enrollment completion into the PRESEPT Study as well as the substantial progress made in the company's product development pipeline. In October 2009 and as the most important milestone in Epigenomics' history the company launched its first IVD product in Europe. The Epi proColon test, which is based on Epigenomics' proprietary biomarker Septin9, is the world's first ever CE-marked test for the early detection of colorectal cancer in a simple blood draw. Epi proColon is marketed directly by Epigenomics to molecular diagnostics laboratories in Europe. As of today, the test is offered by 16 laboratories in Germany and Switzerland making it available to doctors and patients nationwide in both countries.
During 2009, Epigenomics' R&D activities continued to focus on executing the PRESEPT Study. PRESEPT is a multicenter study to characterize the clinical performance of Epigenomics' Septin9 biomarker and the potential health economic benefit of colorectal cancer screening with Septin9 in a U.S. colorectal cancer screening-guideline-eligible population. In December 2009 enrollment into the PRESEPT Study was completed reaching a number of 7,941 subjects at 32 clinical sites in the U.S.A. and Germany. 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%. The Clinical Study Steering Committee overseeing the Study will submit detailed and final results of the PRESEPT Study for publication in a peer-reviewed journal and presentation on major medical conferences in due course.
In December 2009 Abbott launched its blood test for colorectal cancer in Europe and Asia/Pacific under the brand name Abbott RealTime mS9. Also in late 2009 Quest Diagnostics introduced its laboratory developed blood test ColoVantage? for aiding in the detection of colorectal cancer in the United States. 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.
During 2009 Epigenomics continued executing its non-exclusive partnering and commercialization strategy by entering into new collaborations regarding the Septin9 biomarker for colorectal cancer with the Japanese IVD company Sysmex Corp. and the U.S. Reference Laboratory ARUP Laboratories in Salt Lake City, UT.
Moving forward in transforming the company into a fully integrated molecular diagnostics company Epigenomics has made significant progress in its lung cancer program throughout 2009. After the successful clinical evaluation of the mSHOX2 biomarker in bronchial lavage specimen from patients with suspected lung cancer in Q1-2009, Epigenomics initiated the formal product development of an IVD test for lung cancer. The diagnostic test is currently 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. Under the brand name Epi proLung BL Reflex Assay, the Company's second in vitro diagnostic product, is expected to be launched as a CE-marked diagnostic test kit in Europe. Epigenomics intends to market the test directly to molecular pathology laboratories in the home market - Germany, Austria and Switzerland - and address further European markets through distributors.
Epigenomics obtained ISO 13485 certification for its quality management system in June 2009. This certification was granted for both the headquarters in Berlin, Germany, and the wholly owned subsidiary Epigenomics, Inc. in Seattle, and is an important prerequisite for the design, development, manufacture and distribution of in vitro diagnostic (IVD) products in compliance with regulatory requirements.
Epigenomics' IP position was further strengthened by two Rule 71 (3) notifications stating that the European Patent Office intends to grant patents protecting the company's PITX2 DNA methylation biomarker (mPITX2), a biomarker with prognostic utility in prostate and breast cancer. These notifications are equivalent to "Notices of Allowance" by the United States Patent and Trademark Office.
Epigenomics also further strengthened its technology position by cross-licensing certain technologies with its partner DxS Ltd. enabling both partners to use DxS' Scorpions® technology for DNA methylation research and IVD products. In 2009 DxS has been acquired by Qiagen, also a long-term partner of Epigenomics.
Shortened versions of the FY 2009 consolidated financial statements can be found at Epigenomics' website at: http://www.epigenomics.com/e n/investor_relations/Financial_Information/
The complete Annual Report 2009, which will be released on March 31, 2010, can be obtained from Epigenomics' website at: http://www.epigen omics.com/en/investor_relations/Financial_Information/
Epigenomics will host a press conference in Frankfurt/ Main, Germany in German language on March 31, 2010. On the same day the management will host a conference call for analysts in English language. Details of both events will be made available prior to March 31, 2010 in a note to the press and on Epigenomics' website.
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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