Highlights of the First Half 2009
•Significantly improved revenue, EBIT and net loss •Progressed PRESEPT colorectal cancer clinical study according to plan •First diagnostic mSEPT9 blood testing service for colorectal cancer launched by Swiss Viollier AG •Development of Abbott mSEPT9 IVD product on track for European product launch in Q4/2009 •Awarded grant by the German Federal Government for further research into colorectal cancer biomarkers •Presented mSEPT9 data and reported on progress of PRESEPT Study at several international conferences •Received allowances for key patents in Europe •Obtained ISO 13485 certification for development, manufacturing and distribution of IVD products.
Press release, Berlin, Germany, and Seattle, WA, U.S.A., August 11, 2009
- Epigenomics AG (Frankfurt Prime Standard: ECX), a molecular diagnostics company focusing on the development and commercialization of in vitro diagnostic products for cancer, today reported financial results for the second quarter and first half of 2009, which ended June 30, 2009.
Commenting on the first six months, Geert Nygaard, the company’s Chief Executive Officer said: “In the first half of 2009 we have made significant progress on moving towards becoming a commercial molecular diagnostics company. The mSEPT9 colorectal cancer blood test is now for the first time available to patients in Europe. Further, we obtained ISO 13485 certification for the development, manufacturing and distribution of IVD products. Both are important milestones on our way to becoming a leading cancer molecular diagnostics company.”
“The significant progress in our partnerships, product development, clinical PRESEPT Study and commercialization efforts are all reflected in our first half financials. We are well on track for meeting all our financial goals and guidance with an expected revenue growth to more than EUR 3 million for fiscal 2009", added Oliver Schacht, the company’s Chief Financial Officer.
First Half 2009 -- Financial Review
Epigenomics’ revenue in the first half of 2009 amounted to EUR 2.1 million, an increase of more than 37% compared to EUR 1.5 million during the same period in 2008. H1 revenue was generated from continued and newly signed collaborations and licensing agreements in the form of R&D payments, licensing fees, reimbursements as well as product sales from Research-Use-Only (RUO) kits.
EBIT for H1 of 2009 of EUR -- 4.8 million was a 19% improvement compared to EBIT for the corresponding period in 2008 of EUR -- 5.9 million.
R&D costs dropped from EUR 4.7 million in the first half of 2008 to EUR
3.4 million in the reporting period primarily resulting from increased resource allocation to Epigenomics’ commercial collaboration projects i.e. to cost of sales, as well as from consolidating all laboratory operations at the Berlin site at the end of the second quarter of 2008.
Costs of sales increased to EUR 1.5 million compared to EUR 0.5 million in H1 2008, mainly as a result of increased product development expenses within the collaboration projects with Abbott Molecular (Abbott) and Philips.
Net loss for the reporting period amounted to EUR -- 4.8 million, a substantial reduction compared to EUR -- 5.6 million in H1 2008. Basic loss per share improved from EUR -- 0.22 in H1 2008 to EUR -- 0.17 in H1 2009.
In the first half of 2009, Epigenomics’ cash flow and its financial position were mainly affected by the continued net cash consumption from operating activities and the successful PIPE financing transaction in February 2009. As of June 30, 2009, liquid assets amounted to EUR 12.1 million, virtually unchanged compared to December 31, 2008.
Cash outflow from operating activities in H1 2009 totaled EUR 5.3 million. Cash inflow from investing activities amounted to EUR 0.4 million, primarily due to a redemption of marketable securities. Cash flow from financing activities was positive at EUR 5.1 million, due to the capital increase in February 2009. Overall, the net cash flow in H1 2009 was positive at EUR 0.2 million.
First Half 2009 -- Operational Review and Highlights
During the first half of 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’ mSEPT9 biomarker and the potential health economic benefit of colorectal cancer screening with mSEPT9 in a U.S. colorectal cancer screening-guideline-eligible population. It enrolls individuals with an average or increased disease risk according to U.S. screening guidelines who undergo a screening colonoscopy. In line with expectations, the 22 participating clinical sites in the U.S. and Germany by the end of H1 2009 had enrolled a total of 4,906 subjects that have yielded about two thirds of the target number of 50 cancer cases. Overall, the study is expected to enroll 7,500 individuals. First study results are expected to be available by the end of 2009.
In particular in the second quarter of 2009, Epigenomics further advanced the commercialization of the mSEPT9 blood test for colorectal cancer. On June 22, the company announced, that one of Switzerland’s largest diagnostics laboratory networks, Viollier AG, launched mSEPT9 testing service on July 1, 2009. This makes the mSEPT9 test the first blood test for colorectal cancer detection ever offered in Europe to patients, general practitioners and gastroenterologists.
Epigenomics further expects several German laboratories to start offering mSEPT9 testing by year-end and Quest to launch a laboratory developed test (LDT) in the U.S. in due course. For broad commercialization, Epigenomics’ collaboration partner Abbott is developing an IVD test kit for mSEPT9. With the development progressing as expected, Epigenomics expects Abbott to launch a CE-marked IVD product for mSEPT9 testing in Europe in Q4 2009.
In May 2009, Epigenomics received notice that the German Federal Ministry of Education and Research (BMBF -- Bundesministerium für Bildung und Forschung) will fund a clinical research project to be realized in an alliance with scientists from the 2nd Medical Clinic of the University Hospital rechts der Isar of the Munich Technical University and the Association of Statutory Health Insurance Doctors in Bavaria (KVB -- Kassenärztliche Vereinigung Bayerns). The project aims at identifying further biomarkers that in combination with mSEPT9 have a utility in early stage cancer and potentially polyp detection. The total project budget is expected to be around EUR 1.3 million and has been successfully started in July.
To further support the adoption of colorectal cancer blood testing with mSEPT9, Epigenomics during the second quarter of 2009 presented mSEPT9 data and reported on the progress of the PRESEPT Study at several scientific and medical conferences in the U.S. and Europe including the Digestive Disease Week (DDW) in Chicago, IL, U.S.A., and the 11th World Congress on Gastrointestinal Cancer in Barcelona, Spain.
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 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, U.S.A., and is an important prerequisite for the design, development, manufacture and distribution of in vitro diagnostic (IVD) products in compliance with regulatory requirements.
Outlook H2 2009
In the second half of 2009, Epigenomics’ focus will continue to be driving the mSEPT9 blood test through the final stages of clinical validation and product development. Therefore, a significant part of the operational activities will continue to be directed towards executing the PRESEPT Study and delivering clinical results from that trial. Also, the company will continue working with Abbott to support them in completing the final phases of their product development with the strategic goal of having Abbott launch a CE-marked IVD test kit based on mSEPT9 in Europe in Q4 2009. Independently, the company will work on broadening the number of laboratories in Europe and the U.S.A. that offer mSEPT9 testing. The first launch of the mSEPT9 test in July 2009 by Viollier AG is expected to considerably support the sales and marketing activities in this area.
The key strategic focus in Epigenomics’ marketing and business development activities in 2009 and 2010 will be on closing additional non-exclusive licensing deals for mSEPT9 similar to the partnership with Sysmex Corporation initiated in the first quarter of 2009. However, to maximize value in any future arrangement, the company will carefully coordinate the timing of mSEPT9 licensing agreements with expected results from the PRESEPT Study as well as the expected Abbott product launch in Europe.
The company’s further research and development activities will be focused on progressing pipeline programs in colorectal, lung and prostate cancer.
Management expects solid growth in revenue to more than EUR 3 million for fiscal year 2009 to come from current partnering activities in diagnostics as milestones are expected to be reached including the launch of a CE-marked mSEPT9 test kit by Abbott in Europe and the launch of an LDT by Quest Diagnostics in the U.S., as RUO kit sales for our mSEPT9, mPITX2 and mGSTP1 kits gain some traction, and as revenue from new partnerships is introduced. As the bulk of the PRESEPT expenses will influence 2009 operating expenses, Epigenomics expects EBIT and net loss for 2009 to correspond to 2008 actuals despite the increased revenue. Cash burn for fiscal 2009 should be at a very similar level compared to 2008, i.e. around EUR 10 million.
Further Information
The full 6-Months Report 2009 can be obtained from Epigenomics’ website at:
http://www.epigenomics.com/en/investor_relations/Financial_Information/
Epigenomics’ management will host a conference call on the second quarter and half year 2009 results at 3pm CET today, Tuesday 11th August.
About Epigenomics
Epigenomics is a molecular diagnostics company with a focus on the development of novel products for cancer. Using DNA methylation biomarkers, Epigenomics’ tests in development aim at diagnosing cancer at an early stage before symptoms occur and thereby may reduce mortality from this dreaded disease.
Epigenomics’ product pipeline contains a validated biomarker for the early detection of colorectal cancer in blood plasma, and further proprietary DNA methylation biomarkers at various stages of development for prostate and lung cancer detection in urine, blood and bronchial lavage specimens. Epigenomics’ biomarker mSEPT9 for the early detection of colorectal cancer in a simple blood sample has demonstrated continuously highest performance in multiple clinical studies with in total more than 3,000 individuals tested. A large prospective clinical study -- PRESEPT -- for evaluation of mSEPT9 in a screening population is currently under way (www.presept.net).
For development and global commercialization of in vitro diagnostic test products, Epigenomics pursues a non-exclusive partnering strategy.
Strategic diagnostics industry partners include Abbott Molecular, Philips, Sysmex Corporation and Quest Diagnostics Incorporated, for diagnostics test products and services, and QIAGEN N.V. for sample preparation solutions and research products.
Partners in the health care industry and the biomedical research community can access Epigenomics’ portfolio of proprietary DNA methylation technologies and biomarkers protected by more than 150 patent families through research products, Biomarker Services, IVD Development Collaborations, and Licensing. The company is headquartered in Berlin, Germany, and has a wholly owned subsidiary in Seattle, WA, U.S.A. For more information, please visit Epigenomics’ website at www.epigenomics.com.
Epigenomics’ Disclaimer. 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.
