MediGene AG Reports on Fiscal Year 2010
In 2010, MediGene generated product sales from continued operations (Veregen®) of EUR 2.2 million (2009: EUR 1.2 million), and product sales from discontinued operations (Eligard®) of EUR 47.4 million (2009: EUR 36.7 million). Other operating income totaled EUR 0.1 million (2009: EUR 1.6 million). Combined, revenues from continued and discontinued operations totaled EUR 49.7 million in 2010, compared to EUR 39.5 million in 2009. MediGene previously guided to revenue totaling EUR 47 to 49 million for 2010. As also previously announced, all Eligard®-generated revenue will be reported as "Revenue from discontinued operations", pursuant to IFRS. This changes the portrayal of the individual items in the consolidated income statement, but has no impact on EBITDA and the net result for the year.
MediGene reduced its EBITDA loss by 32% to EUR -12.8 million in 2010, compared to EUR -18.8 million in the preceding year. MediGene guided to an EBITDA loss of between EUR -12 and -14 million in 2010. The net loss has also been reduced significantly, from EUR -2.0 million in 2009 to EUR -17.9 million in 2010.
The closing balance of cash and cash equivalents at December 31, 2010 was EUR 4.8 million (2009: EUR 12.3 million). Subsequently, on March 3, 2011, MediGene received EUR 15 million in connection with the Eligard® contract with Astellas, significantly improving the Company's current cash and cash equivalent balance.
The average monthly cash burn rate from operating activities was reduced by 39% to EUR 1.0 million (2009: EUR 1.6 million).
Based on its present product portfolio, MediGene expects revenue from continued and discontinued operations to total between EUR 32 and 38 million and a positive EBITDA result of between EUR 10 and 16 million in 2011.
Major events in 2010:
• European Eligard® rights sold to Astellas Pharma for near-term cash payments totaling EUR 25 million and ongoing royalties
• Arnd Christ appointed as new Chief Financial Officer of MediGene AG
• Corporate restructuring and reorganization measures successfully undertaken
• Market launch in Germany and Austria
• Nycomed's US marketing activities expanded
• Additional partnerships signed
o Teva for Israel
o Meditrina for Greece and Cyprus
o GC-Rise for China
o JS Bio Pharm for South Korea
• Successful completion of phase II clinical trial in triple negative breast cancer (TNBC)
• Development of significantly more cost-effective manufacturing process
• Additional US patent granted
• Initiation and execution of a preclinical program to specify the range of therapeutic dosages, optimizing the clinical development program
Dr. Frank Mathias, Chief Executive Officer of MediGene AG, commented: "In 2010, we pursued a new path and implemented a variety of measures that will create a new shape for MediGene. These have made MediGene a focussed company with lower costs and a solid financial base from which to grow, driven initially by on-going product sales. Looking forward, we intend to expand our drug pipeline and we are well positioned to do so, both financially and organizationally."
Arnd Christ, Chief Financial Officer of MediGene AG, added: "Our financial results have improved dramatically. We exceeded the guidance for increased revenues, hit the guidance for decreased EBITDA loss, and significantly reduced our average monthly operating cash burn rate. These results have put us in a solid position to implement our next strategic steps."
Financial report 2010:
Product sales and other income
In 2010, total revenue from continued operations amounted to EUR 2.3 million (2009: EUR 2.8 million). This revenue was principally generated from the commercialization of Veregen®in the USA, Germany, and Austria, along with Veregen® milestone payments and government grants. Product sales from Veregen® totaled EUR 2.2 million, which corresponds to an 88% increase compared to the preceding year (2009: EUR 1.2 million).
Revenue from discontinued operations increased to EUR 47.4 million in 2010 (2009: EUR 36.7 million). These were generated by Eligard® product sales and license payments received.
Other operating income amounted to EUR 0.1 million (2009: EUR 1.6 million), substantially all of which was from government grants. In the previous year, other operating income consisted mainly of a compensation payment.
Selling, general, and administrative expenses
Selling, general, and administrative expenses from continued operations rose year-on-year from EUR 8.7 million (2009) to EUR 9.4 million (2010). This increase was due mainly to increased consulting costs and severance payments. Selling expenses from discontinued operations totaled EUR 0.4 million in the reporting period (2009: EUR 0.4 million).
Research & development expenses
Total expenses for research and development decreased to EUR 13.5 million (2009: EUR 18.5 million). A large part of these expenses were spent on clinical trials of the drug candidate EndoTAG®-1 in triple negative breast cancer.
MediGene uses the term EBITDA to describe the result for the year excluding taxes, financial result, depreciation, amortization, and impairment. As it provides a proxy for approximate cash flow its use, rather than EBIT or operating result, should enable a more accurate and meaningful comparison across different periods. In 2010, MediGene reduced the EBITDA loss by 32% to EUR -12.8 million (2009: EUR -18.8 million).
Depreciation, amortization and impairment
In total, depreciation, amortization and impairment rose from EUR 0.8 million (2009) to EUR 10.1 million (2010). Regular amortization relates to intangible assets, including patents and product licenses. Regular depreciation relates to property, plant, and equipment. The impairment of goodwill of EUR 9.2 million occurred in connection with the transfer of the oHSV program to the newly founded Catherex, Inc. MediGene's ongoing interest from the transfer of the oHSV program amounts to EUR 3.0 million. Therefore, the loss resulting from this transaction amounted to EUR 6.2 million.
The financial result, consisting mainly of foreign currency gains/losses and interest result, amounted to EUR 0.4 million in the reporting period (2009: EUR -0.1 million). The financial result from discontinued operations includes a gain from the financial derivative amounting to EUR 1.5 million (2009: EUR -0.6 million).
Result for the year
The net loss for the year from continued operations totaled EUR -27.2 million in 2010 (2009: EUR -27.0 million) while discontinued operations generated a net profit of EUR 9.3 million (2009: EUR 5.1 million). In total, the net loss for the year was reduced by 19% from EUR -22.0 million to EUR -17.9 million.
Earnings per share
Net loss per share decreased from EUR -0.64 in the preceding year (weighted average number of shares: 34,231,294) to EUR -0.49 in fiscal year 2010 (weighted average number of shares: 36,563,966).
Change in cash reserves
MediGene reduced the amount of net cash used by operating activities by 39% to EUR -1.4 million (2009: EUR -18.8 million). The largest part of the cash used by operating activities resulted from expenses for research and development. Other non-cash income resulted mainly from the acquisition of the share in the associate Catherex, Inc., totaling EUR 3.0 million.
Cash and cash equivalents showed a total net decrease by EUR 7.5 million in the 2010 reporting period (2009: EUR 12.9 million). The closing balance of cash and cash equivalents in the reporting period was EUR 4.8 million (2009: EUR 12.3 million).
On March 3, 2011, MediGene received EUR 15 million in connection with the Eligard® contract with Astellas. A further EUR 5 million in milestone payments arising from this contract are likely to be received at the end of 2011 or early in 2012. MediGene still has EUR 14.4 million from its SEDA (Standby Equity Distribution Agreement) program at its disposal, but does not intend to make further use of funding from the SEDA program at this time.
Financial outlook for 2011:
In 2011, and based on the current product portfolio, MediGene expects a positive EBITDA result of between EUR 10 and 16 million. This result includes the one-time effects of the milestone payments of EUR 20 to 25 million from Astellas related to Eligard®. These milestones also contribute to 2011 revenue guidance (from continued and discontinued operations) of between EUR 32 and 38 million.
Outlook on development projects:
Effective March 1, 2011, MediGene transferred the EU marketing rights for the cancer drug Eligard® to Astellas. The transfer of rights for non-EU countries is expected by the end of 2011 or early in 2012. Both events trigger milestone payments. Starting March 1, 2011, MediGene is entitled to receive an ongoing participation from Astellas, amounting to 2% of European Eligard® net sales.
In 2011, MediGene plans to submit applications for the market approval of Veregen®in additional European countries. Germany will serve as reference member state in the Mutual Recognition Procedure. MediGene intends to conclude further partnership agreements to continue its global licensing strategy and has already concluded several contracts early in 2011. MediGene anticipates further growth in Veregen® sales in 2011.
MediGene continues to target one or more partnerships with pharmaceutical or biotech companies for EndoTAG®-1, and envisages the partner or partners taking over the drug candidate's further development and subsequent marketing.
The preclinical investigations initiated in 2010 have been completed as scheduled. Upon full data analysis, MediGene will finalize a development plan to prepare for clinical trials.
Further preclinical studies are to be conducted in 2011 in connection with MediGene's AAVLP vaccine technology. Thereafter, MediGene will decide on further development and strategic options for the AAVLP project.
Press conference and analyst conference call:
A press conference on the Annual Report 2010 and forecast for 2011 will take place in Frankfurt today at 10.00 a.m. (CET).
An analyst conference call in English will take place today at 2.30 p.m. (CET), and will be webcast live. The webcast and synchronized presentation slides can be accessed at www.medigene.com. A recording of the live presentation will also be available thereafter.
The full Annual Report 2010 is available at http://www.medigene.de/reports
This press release contains forward-looking statements representing the opinion of MediGene as of the date of this release. The actual results achieved by MediGene may differ significantly from the forward-looking statements made herein. MediGene is not bound to update any of these forward-looking statements. MediGene®, EndoTAG®, RhuDex®, and Veregen® are registered trademarks of MediGene AG. Eligard® is a registered trademark of Tolmar Therapeutics, Inc. These trademarks may be owned or licensed in select locations only.
MediGene AG is a publicly listed (Frankfurt: MDG, prime standard) biotechnology company headquartered in Martinsried/Munich, Germany. MediGene is the first German biotech company to have revenues from marketed products. It has several drug candidates in clinical development and possesses innovative platform technologies. MediGene focuses on clinical research and development of novel drugs, with a focus on oncology.
Contact at MediGene AG Julia Hofmann analysts, institutional investors, press
Kerstin Langlotz retail investors, press
Phone: +49 - 89 - 85 65 - 33 01
Fax: +49 - 89 - 85 65 - 29 20