OncoMethylome Sciences S.A. Reports 2010 Half-Year Results and Announces New Strategy
Published: Aug 26, 2010
Cervical cancer triage test partnered with Self-Screen BV
Initiated Roche (Avastin) trial to use MGMT testing services for brain cancer
Stool-based colorectal cancer biomarkers partnered with Exact Sciences (July)
Net cash flows improved by 48% from H1 2009
Net result and EPS improved by 21% from H1 2009
Commercial revenues improved by 55% from H1 2009
Strengthened Board of Directors
Consolidated lab operations
Obtained ISO certification for the company's commercial lab
"Our commercial, financial and operational results for the first half of 2010 are much improved compared to the same period in 2009, and we expect results for the second half of 2010 to follow the same path," said Dr. Jan Groen, CEO of OncoMethylome Sciences.
"Furthermore," continued Dr. Groen, "since I joined OncoMethylome, management has worked very closely with the Board of Directors to define a sustainable path of accelerated growth and, capitalizing on our unique DNA methylation platform, positioning OncoMethylome as a leader in the rapidly growing market of molecular diagnostics. The cornerstone of our new strategy will be the development and commercialization of high-value predictive and prognostic laboratory developed tests - a step that will move OncoMethylome away from its historical, long-term focus on basic research for cancer screening applications and out-licensing of biomarkers to third parties for eventual product development and commercialization. The aim of this new strategy is to forge a company that can determine its own fate, is less dependent on priorities and timelines of licensing partners, and operates in a space with high-end products in terms of pricing and reimbursement. First and foremost, it is our goal to reap the full benefits of our proprietary DNA methylation platform by developing stand-alone molecular diagnostic products for rapid commercialization.
Management and the Board of Directors believe that the new business model will improve cash flows, while allowing the company to out-license the validated biomarkers related to screening programs. Management and Board of Directors are confident that the new course they are plotting for OncoMethylome should create improved shareholder value in the short, medium and long-term."
• Cervical cancer
OncoMethylome and its new partner, SelfScreen BV are developing a test to identify/triage those HPV-positive women that really have cancer and thus need a follow-up examination with a gynaecologist. Many women screened for cervical cancer are found to have the HPV virus, but few of them actually have cervical cancer. The partners are seeking a worldwide licensing partner to commercialize the test.
• F. Hoffmann-La Roche Ltd., -- Avastin in brain cancer
OncoMethylome has entered into an agreement with Roche for MGMT gene promoter methylation testing in a Phase III clinical trial for the use of Avastin in newly diagnosed glioblastoma (GBM) brain tumors. OncoMethylome's MGMT assay helps to predict those brain cancer patients that will respond to therapy and so is useful in patient stratification in the clinical trial. Following treatment, GBM patients whose tumors are positive for MGMT gene promoter methylation have demonstrated improved overall survival compared to patients with unmethylated or normally functioning MGMT. This new trial expands on the numerous other trials of other pharmaceutical companies that already use OncoMethylome's proprietary MGMT methylation test.
• Stool-based Colorectal cancer screening biomarkers
OncoMethylome has partnered its stool-based colorectal cancer biomarkers with Exact Sciences Corporation. Exact Sciences is developing a colorectal cancer test and has announced an intention to seek FDA approval for the test in 2012 and to commercialize it as an IVD kit.
Key Figures (EUR thousands, except number of shares and per share data):
June 30, 2010 June 30, 2009 Revenues 1,258 1,268 Operating loss (EBIT) -5,152 -6,529 Net loss -4,996 -6,340 Earnings per share, basic and diluted (€) -0.38 -0.48 Number of outstanding shares 13,185,614 13,185,614 Cash and cash equivalents 14,437 23,745
Revenues Total revenues remained stable at EUR 1.3 million. The commercial revenues, as a component of total revenues, increased by 55% due to higher testing volume. Grant revenues decreased by 31% due to the company's focus on development and commercialization efforts rather than on subsidized basic research projects.
Costs and Profitability Total research and development expenses for the first half of 2010 were EUR 4.4 million compared with EUR 5.6 million for the first half of 2009. This 22% decrease resulted from a reduction in both internal and external R&D expenses. As part of the optimization efforts commenced at the end of 2009, the company spent less in 2010 on basic research projects with external parties and internally the company consolidated its R&D facilities.
Selling, general and administrative expenses decreased by 7% to EUR 2 million in the first half of 2010 from EUR 2.1 million in H1 2009.
The decrease in R&D and SG&A expenses achieved in H1 2010 allowed the total operating costs to decrease by 19% compared to the same period in 2009. Excluding one-time restructuring charges, the adjusted total operating charges therefore reflect a decrease of 24% compared to H1 2009.
Cash Position OncoMethylome's cash and cash equivalents amounted to EUR 14.4 million at June 30, 2010. Total net cash consumed in the first 6 months of 2010 decreased to EUR 3.6 million compared to a total net cash consumption of EUR 6.9 million in the same period of 2009. This 48% improvement in cash flow was the result of efforts launched at the end of 2009 to reduce the cash burn, to accelerate collection of receivables, and from the sale of some financial assets.
Management and Board Highlights
• In April, the Board of Directors appointed Dr. Jan Groen as CEO. Dr. Groen has more than 25 years of experience in the clinical diagnostic industry, with a focus on emerging technologies, product development and commercialization. He was previously the president of Agendia Inc. and COO of Agendia B.V., and was responsible for their U.S. and European diagnostic operations. Prior to this he was vice president of research and development at Focus Diagnostics Inc., a subsidiary of Quest Diagnostics, in California. He has held numerous management and scientific positions at ViroClinics B.V., the Erasmus Medical Center, and Akzo-Nobel. Dr. Groen is a supervisory board member of IBL International B.V.
• On May 28, 2010, Ms. Hilde Windels, Mr. Edward L. Erickson, and Mr. Mark Myslinski were elected to the Board of Directors, adding three seasoned industry professionals to the Board.
• Recently OncoMethylome's Board of Directors elected Mr. Edward L. Erickson as Chairman of the company. He has served as President, CEO and Director of a number of US life sciences companies.
• Effective August 25, 2010, Mr. Alain Parthoens has stepped down from the board to focus on his venture capital activities. The company thanks Mr. Parthoens for his valuable contribution to the company and to the Board.
• OncoMethylome is in the process of consolidating all European activities in Belgium and thus will close its Netherlands facility by the end of 2010.
• OncoMethylome obtained ISO certification for its Liege based laboratory. This facility is the main research and development facility and commercial testing lab of the company and also provides clinical testing services for its pharmaceutical partners.
• An assessment of the ongoing validation studies of the company's colorectal cancer (CRC) blood-based screening program has demonstrated comparable performance to a competing test already on the market. While CRC will constitute one of the important areas of OncoMethylome's new strategy, this blood-based screening test and its associated biomarkers are no longer a strategic fit. Therefore the company will out-license these biomarkers as soon as practical.
Outlook for H2 2010
For the full year 2010 OncoMethylome expects:
• Revenues to remain stable compared to 2009, with an increase in commercial revenues off-setting the decrease in grant revenues.
• Total operating costs are expected to decrease by 20%, although these may be impacted by one-time charges in connection with the consolidation of our facilities and related operations.
• The net result is expected to improve by more than 20%.
The company intends to announce its new strategy in more detail in 4-6 weeks. Furthermore, in line with the company's transition from a basic research company to a commercial clinical diagnostic entity, the company intends to propose a new corporate name to its shareholders that better captures its commercial ambitions. As a consequence, the company plans to convene an extraordinary shareholders' meeting.
Statutory Auditor's Limited Review Report
"We have reviewed the accompanying consolidated statement of financial position of OncoMethylome Sciences S.A. and its subsidiaries, as of 30 June 2010 and the related consolidated income statement, statement of comprehensive income, changes in equity and cash flows for the six month period then ended, as well as the condensed explanatory notes. The board of directors is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34 as adopted by the European Union. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.
We conducted our review in accordance with the recommendation of the Belgian Institute of Company Auditors related to the performance of reviews. Accordingly, it involved principally analysis, comparison and discussion of the condensed consolidated interim financial information and, accordingly, was less extensive in scope than an audit of that information.
Our review did not reveal any matters requiring correction of the condensed consolidated interim financial information for it to have been prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union."
Zaventem - August 25, 2010 The Statutory Auditor BDO Atrio Réviseurs d'Entreprises Soc. Civ. SCRL Represented by Bert Kegels
Complete Financial Statements:
To download the 2010 interim report, go to http://www.oncomethylome.com/investors/documents
About OncoMethylome Sciences
OncoMethylome Sciences is a leading molecular diagnostics company that commercializes and develops cancer tests to assist physicians in personalizing cancer treatment. The company's tests are based on proprietary DNA methylation technology invented at Johns Hopkins University and are designed to help the physician accurately identify cancer and its aggressiveness, predict a patient's response to drug therapy, and predict the likelihood of cancer recurrence. OncoMethylome Sciences collaborates with leading cancer research centers, such as Johns Hopkins, in Baltimore, MD, and has a number of commercial and collaborative partnerships with LabCorp, Schering-Plough, GlaxoSmithKline Biologicals, F. Hoffmann-La Roche, Merck Serono and Qiagen.
For more information: Dr. Jan Groen CEO Telephone (+32) 4.364.20.70