Sequana Medical NV, an innovator in the treatment of diuretic-resistant fluid overload in liver disease, malignant ascites and heart failure, announces its business highlights and financial results for the six-month period ending 30 June 2021 and its outlook for the remainder of the year and beyond.
- alfapump® – Positive results from second interim analysis of POSEIDON pivotal study; awaiting FDA approval on POSEIDON pivotal study expansion
- alfapump® – FDA regulatory submission now expected in mid-2023 due to worldwide supply shortage of electronic components; European commercial activities and clinical studies unaffected
- alfapump DSR® – Strong top-line results from RED DESERT; interim results of SAHARA DESERT study in heart failure patients with persistent congestion expected in Q4 2021
- DSR® – Key patents granted in U.S. and Europe; expansion of DSR development programme with short-term DSR therapy; proprietary DSR Infusate 2.0 development ongoing
- Total liquidity position of €21.8 million provides cash runway into Q2 2022
Conference call with live webcast presentation today at 03:00 pm CET / 09:00 am ET
GHENT, Belgium, Sept. 02, 2021 (GLOBE NEWSWIRE) -- Sequana Medical NV (Euronext Brussels: SEQUA, the “Company”), an innovator in the treatment of diuretic-resistant fluid overload in liver disease, malignant ascites and heart failure, today announces its business highlights and financial results for the six-month period ending 30 June 2021 and its outlook for the remainder of the year and beyond.
Ian Crosbie, Chief Executive Officer at Sequana Medical, commented: “We have continued to deliver outstanding clinical results in H1 2021 with promising data from our POSEIDON and RED DESERT studies demonstrating the potential of our two technology platforms, alfapump and Direct Sodium Removal (DSR).
“We believe that the strong interim results from the POSEIDON Roll-In Cohort significantly de-risk our North American liver programme and demonstrate the potential of the alfapump to provide a safe and efficacious treatment that can dramatically improve the quality of life for patients with recurrent or refractory liver ascites. While we have made strong progress in POSEIDON patient recruitment, we continue to work with the FDA on expanding the number of patients to be enrolled and look forward to updating the market on timing. The delay in planned submission of the PMA due to subcomponent shortages is frustrating but reflects the growing issues facing many high-tech companies in sourcing complex electronic components and we are working tirelessly with our long-term suppliers to further minimise the delay on alfapump PMA submission in the U.S.
“RED DESERT demonstrated that alfapump DSR could not only replace high doses of loop diuretics but also improve the diuretic response and cardio-renal status in patients with diuretic-resistant heart failure. These results indicate the unique capabilities of DSR, which we are further evaluating in the SAHARA DESERT study in decompensated heart failure patients. We expect to report interim results from this trial before the end of the year.
“The continued growth of the NASH-related ascites and decompensated heart failure markets validates our focus on delivering innovative treatments for when diuretics are no longer an effective option in these patients.”
Outlook for the remainder of 2021 and for 2022
POSEIDON – The North American pivotal study of the alfapump in recurrent and refractory ascites due to liver cirrhosis is ongoing. As previously reported, the Company submitted a protocol amendment to the U.S. FDA to extend the patient enrolment due to the higher rate of attrition. Our discussions with the agency on the expansion of patient enrolment are ongoing and the Company will update the market once it has clarity from the FDA on study expansion and expected end of patient enrolment and subsequent primary endpoint read-out.
As a result of recent detailed planning involving discussions with the Company’s suppliers in connection with the verification and validation activities supporting the submission of the Pre-Market Approval (PMA) to the U.S. FDA, it has become clear that the worldwide shortage of electronic components will result in an expected six-months delay of the PMA submission.
SAHARA DESERT – The study of the alfapump DSR in diuretic-resistant heart failure patients with persistent congestion is ongoing and intends to enrol 20 patients. The study will evaluate the ability of alfapump DSR therapy to eliminate persistent congestion, restore correct fluid status (euvolemia) and improve cardio-renal condition for up to 22 weeks. Interim results are expected in Q4 2021 and top-line results in H2 2022.
European commercial production and activities resumed in August 2021. Assuming no further COVID-19 related restrictions, the Company expects to generate 2021 revenues, on a pro rata basis, in line with the periods before the reduced manufacturing supply.
The Company continues to monitor the impact of COVID-19 on its activities, particularly in respect to POSEIDON and its European commercial business. While the situation has improved dramatically over the past 12 months, the recent increase in infections due to the delta variant is a potential cause for concern and may impact the Company’s forecasts for milestones.
H1 2021 Operational Highlights
- POSEIDON – The ongoing North American pivotal study of the alfapump in recurrent and refractory ascites due to liver cirrhosis reported the second positive interim analysis. Data from 26 patients in the Roll-In Cohort reconfirmed positive outcomes against all primary endpoints1 and demonstrated (i) over 90% reduction in mean frequency of therapeutic paracentesis (TP) versus baseline, (ii) all patients having at least a 50% reduction in mean frequency of TP per month versus baseline, (iii) clinically important improvement in quality of life maintained even up to 12 months post-implantation and (iv) safety profile in line with expectations. These data substantially exceed the primary endpoints as defined for the Pivotal Cohort in the POSEIDON study.
- RED DESERT – Positive clinical data were reported in this repeated dose proof-of-concept study of the alfapump DSR in diuretic-resistant heart failure patients. The study demonstrated that alfapump DSR (i) is highly effective at replacing high-dose loop diuretics, (ii) dramatically improved diuretic response and the benefit was maintained in long-term follow-up and (iii) significantly improved cardio-renal function. Results were presented as a late-breaker at European Society of Cardiology’s Heart Failure 2021 and selected as one of the congress highlights.
- SAHARA DESERT – Initiated the dose-ranging feasibility study in 20 decompensated heart failure patients with persistent congestion despite high-dose diuretics. Interim results are expected at the end of 2021 and top-line results in H2 2022.
- Key patents for the alfapump DSR granted in the U.S and European Union. The patents cover the alfapump DSR and its method of operation.
- Continued pre-clinical development of the proprietary DSR Infusate 2.0 intended to deliver a superior therapeutic profile as well as a high margin recurring revenue flow to accompany alfapump DSR sales.
- Expanded DSR development programme with Short-Term DSR to support faster adoption of the DSR therapy in the clinical community, support alfapump DSR market entry, expand potential market opportunity and target earlier entry into the U.S. market.
- Resolved the alfapump manufacturing yield issues and brought production volumes back to normal levels. Sequana Medical resumed commercial activity in Europe in August 2021. Due to the limited supply in H1 2021, the Company prioritised the supply of the alfapump to the POSEIDON and RED DESERT clinical studies. This together with the COVID-19 related restrictions on non-essential procedures and access to hospitals in Germany and France, limited the European alfapump sales in H1 2021.
H1 2021 Financial Highlights
- Raised €22.5 million in gross proceeds by means of a private placement via an accelerated bookbuild offering from existing investors and new experienced life sciences investors and industry experts, extending the Company’s cash runway into Q2 2022.
- Total liquidity position of €21.8 million at the end of June 2021 compared to €11.0 million at the end of December 2020.
Post Period Events
- Hosted a Key Opinion Leader webinar with two leading KOLs from the Mayo Clinic, Arizona, Dr. Vargas and Dr. Knuttinen, on “the impact of liver ascites on patients and healthcare systems and the potential of alfapump therapy in NASH-related ascites”.
- Appointed Jackie Fielding, a former Vice President of medical technology company Medtronic with more than 30 years of experience in the healthcare industry, as independent Non-Executive Director of the Company, effective as of 1 September 2021.
Financial review – Six months ended 30 June 2021
| in Thousand Euros | HY 2021 | HY 2020 | Variance | |
| Revenue | 23 | 595 | -96% | |
| Cost of goods sold | (4) | (126) | -96% | |
| Gross margin | 18 | 469 | -96% | |
| Sales & Marketing | (1,069) | (1,373) | -22% | |
| Clinical | (3,652) | (3,138) | +16% | |
| Quality & Regulatory | (1,558) | (1,023) | +52% | |
| Supply Chain | (1,107) | (806) | +37% | |
| Engineering | (1,539) | (771) | +100% | |
| General & Administration | (2,593) | (2,313) | +12% | |
| Other income | 17 | 27 | -35% | |
| Total operating expenses | (11,501) | (9,397) | +22% | |
| Earnings before interest and taxes (EBIT)2 | (11,483) | (8,928) | +29% | |
| Finance income | 156 | 47 | N.M. | |
| Finance cost | (434) | (570) | -24% | |
| Total net finance expense | (278) | (523) | -47% | |
| Income tax expense | (129) | (103) | +25% | |
| Net loss for the period | (11,890) | (9,554) | +24% | |
| Basic Loss Per Share | (0.66) | (0.62) | +6% | |
| Cash position* at 30 June | 21,772 | 14,882 | +46% | |
N.M.: Not Meaningful (percentage greater than 150%)
* Cash position only includes highly liquid cash and cash equivalents.
Condensed Consolidated Income Statement
Revenue
Revenue limited to €0.02 million compared to the same period last year (€0.59 million) as a result of the reduced supply of the alfapump for the European commercial activities due to lower manufacturing yield and the prioritisation of product supply for the POSEIDON and RED DESERT clinical trials, as well as the impact of COVID-19 on alfapump procedures in France and Germany.
Cost of goods sold
Cost of goods sold of €0.04 million compared to the same period last year (€0.13 million) in line with the decrease in revenue.
Operating expenses
Total operating expenses increased to €11.50 million (HY 2020: €9.40 million) mainly due to i) the preparations for the submissions for marketing approval of the alfapump in the U.S. and Canada, and ii) DSR pre-clinical and clinical development.
Sales and marketing expenses of €1.07 million decreased by 22% compared to the same period last year (€1.37 million) due to reduced European commercial activities.
Clinical expenses increased from €3.14 million to €3.65 million mainly as a result of costs related to the North American pivotal study of the alfapump (POSEIDON) and the repeated dose proof-of-concept study of the alfapump DSR (RED DESERT), the start of the SAHARA DESERT study and DSR infusate pre-clinical development.
Quality and regulatory expenses increased from €1.02 million to €1.56 million, mainly driven by certification costs for the new Medical Devices Regulation (Regulation 2017/745) and Medical Device Single Audit Program (MDSAP) as well as external advice costs for the preparation of the submissions for marketing approval of the alfapump in the U.S. and Canada.
Supply chain expenses increased to €1.11 million (HY 2020: €0.81 million) largely driven by the additional staffing for the preparations for the submissions for marketing approval of the alfapump in the U.S. and Canada.
Engineering expenses increased from €0.77 million to €1.54 million largely driven by external advice and staffing for the preparations for the submissions for marketing approval of the alfapump in the U.S. and Canada.
General and administration expenses increased from €2.31 million to €2.59 million mainly due to the costs related to the equity placement in H1 2021.
EBIT3
As a result of the above, earnings before interest and taxes (EBIT) evolved from a loss of €8.93 million in HY 2020 to a loss of €11.48 million in HY 2021.
Total net finance expenses
Net finance cost (€0.28 million) decreased compared to the same period last year (€0.52 million), mainly resulting from the repayment of the Bootstrap loan in 2020.
Income tax expense
Income tax expense remained at a similar level for HY 2021 (€0.13 million) compared to HY 2020 (€0.10 million).
Net loss for the period
As a result of the above, the net loss increased from €9.55 million in HY 2020 to €11.89 million in HY 2021.
Basic losses per share (LPS)
Basic losses per share remained at a similar level for HY 2021 (€0.66) compared to HY 2020 (€0.62).
Condensed Consolidated Statement of Financial Position
Net debt
Net debt4 at 30 June 2021 improved by €11.18 million, resulting in a positive net cash position of €14.34 million compared to €3.16 million at 31 December 2020, mainly as a result of the proceeds from the February 2021 equity placement.
Working Capital
Working capital5 at 30 June 2021 improved by €0.28 million compared to 31 December 2020, mainly as a result of an increase in trade payables and accrued liabilities.
Condensed Consolidated Statement of Cash Flows
Net cash outflow from operating activities was €11.87 million in HY 2021 compared to a net cash outflow of €9.24 million in HY 2020. The difference mainly relates to an increase in cash relating to working capital primarily due to the increase in the net loss and inventory.
Cash flow from investing activities resulted in a net outflow of €0.07 million in HY 2021 compared to a net outflow of €0.03 million in HY 2020.
Cash flow from financing activities resulted in a net inflow of €22.63 million in HY 2021, mainly as a result of the proceeds from the equity placement in February 2021, compared to a net inflow of €18.67 million in HY 2020 (equity placement in January 2020).
The Company ended the period with a total liquidity position of €21.77 million (2020: €14.89 million).
Conference Call and Webcast
Sequana Medical will host a conference call with live webcast presentation today at 15:00 CET / 09:00 EST.
- Registration webcast: please click here
- Registration conference call (only if you wish to participate in the Q&A): please click here. Once registered, you will receive dial-in numbers and a confirmation code.
The webcast and conference call will be conducted in English and a replay will be available on Sequana Medical’s website shortly after.
2022 Financial Calendar
| 17 March 2022 | Publication Full Year Results 2021 |
| 27 April 2022 | Online publication of Annual Report 2021 |
| 27 May 2022 | Annual General Meeting 2022 |
| 8 September 2022 | Publication Half Year results 2022 |
For more information, please contact:
Sequana Medical
Lies Vanneste
Director Investor Relations
Tel: +32 498 05 35 79
Email: IR@sequanamedical.com
LifeSci Advisors
Guillaume van Renterghem
Tel: +41 76 735 01 31
Email: gvanrenterghem@lifesciadvisors.com
About Sequana Medical
Sequana Medical is a commercial stage medical device company utilizing its proprietary alfapump® and DSR® (Direct Sodium Removal) technologies to develop innovative treatments for fluid overload in liver disease, malignant ascites and heart failure where diuretics are no longer effective. Fluid overload is a frequent complication of many large diseases including advanced liver disease driven by NASH (non-alcoholic steatohepatitis)-related cirrhosis and heart failure, with diuretic resistance being widespread. The U.S. market for the alfapump resulting from NASH-related cirrhosis is forecast to exceed €3 billion annually within the next 10-20 years. The heart failure market for DSR and the alfapump DSR® is estimated to be over €5 billion annually in the U.S. and EU5 by 2026.
The alfapump is a unique, fully implanted wireless device that automatically pumps fluid from the abdominal cavity into the bladder, where it is naturally eliminated through urination. DSR is Sequana Medical’s proprietary approach to managing sodium and fluid overload through use of a sodium-free infusate administered into the abdominal cavity.
In the U.S., the Company’s key growth market, the alfapump has been granted breakthrough device designation by the FDA for recurrent or refractory ascites due to liver cirrhosis. Interim data from the ongoing North American pivotal study (POSEIDON) showed positive outcomes against all primary endpoints of the study and a rapid and persistent clinically important improvement in quality of life. This study is intended to support a future marketing application of the alfapump in the U.S. and Canada. In Europe, the alfapump is CE-marked for the management of refractory ascites due to liver cirrhosis and malignant ascites and is included in key clinical practice guidelines. Over 850 alfapump systems have been implanted to date.
Sequana Medical has combined its proven alfapump and proprietary DSR therapy, and is developing the alfapump DSR, a breakthrough approach to fluid overload due to heart failure. RED DESERT, the repeated dose alfapump DSR study in diuretic-resistant heart failure patients has demonstrated that repeated DSR therapy is able to both manage the fluid and sodium balance of these patients as well as restore their diuretic response and improve their cardio-renal status. The SAHARA DESERT study of alfapump DSR in decompensated heart failure patients is ongoing.
Sequana Medical is headquartered in Ghent, Belgium. For further information, please visit www.sequanamedical.com.
Important Regulatory Disclaimers
The alfapump® system is not currently approved in the United States or Canada. In the United States and Canada, the alfapump® system is currently under clinical investigation (POSEIDON Study) and is being studied in adult patients with refractory or recurrent ascites due to cirrhosis. For more information regarding the POSEIDON clinical study see www.poseidonstudy.com. The DSR® therapy is still in development and it should be noted that any statements regarding safety and efficacy arise from ongoing pre-clinical and clinical investigations which have yet to be completed. The DSR® therapy is not currently approved for clinical research in the United States or Canada. There is no link between the DSR® therapy and ongoing investigations with the alfapump® system in Europe, the United States or Canada.
Note:alfapump® is a registered trademark. DSR® and alfapump DSR® are registered trademarks in the Benelux.
Forward-looking statements
This press release may contain predictions, estimates or other information that might be considered forward-looking statements. Such forward-looking statements are not guarantees of future performance. These forward-looking statements represent the current judgment of Sequana Medical on what the future holds, and are subject to risks and uncertainties that could cause actual results to differ materially. Sequana Medical expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements in this press release, except if specifically required to do so by law or regulation. You should not place undue reliance on forward-looking statements, which reflect the opinions of Sequana Medical only as of the date of this press release.
Financial information
The condensed consolidated financial statements have been prepared in accordance with IAS 34, as adopted by the EU. The financial information included in the press release is an extract from the Condensed Consolidated Financial Statements.
The Condensed Consolidated Financial Statements for the six months ending 30 June 2021 are available on the website of Sequana Medical: https://www.sequanamedical.com/investors/financial-information/
Condensed Consolidated Income Statement
| in Thousand Euros (if not stated otherwise) | Half Year ended 30 June | |
| 2021 | 2020 | |
| Revenue | 23 | 595 |
| Cost of goods sold | (4) | (126) |
| Gross margin | 18 | 469 |
| Sales & Marketing | (1,069) | (1,373) |
| Clinical | (3,652) | (3,138) |
| Quality & Regulatory | (1,558) | (1,023) |
| Supply Chain | (1,107) | (806) |
| Engineering | (1,539) | (771) |
| General & Administration | (2,593) | (2,313) |
| Other income | 17 | 27 |
| Total operating expenses | (11,501) | (9,397) |
| Earnings before interests and taxes (EBIT)6 | (11,483) | (8,928 ) |
| Finance income | 156 | 47 |
| Finance cost | (434) | (570) |
| Total net finance expense | (278) | (523) |
| Income tax expense | (129) | (103) |
| Net loss for the period | (11,890) | (9,554 ) |
| Basic losses per share (in Euro) | (0.66) | (0.62 ) |
Condensed Consolidated Statement of Comprehensive Income
| in Thousand Euros (if not stated otherwise) | Half Year ended 30 June | |
| 2021 | 2020 | |
| Net loss for the period | (11,890) | (9,554) |
| Components of other comprehensive income (OCI) items that will not be reclassified to profit or loss: | ||
| Remeasurements of defined benefit plans | - | - |
| Items that may be reclassified subsequently to profit or loss: | ||
| Currency translation adjustments | (9) | 78 |
| Total other comprehensive income/(loss)-net of tax | (9) | 78 |
| Total comprehensive income | (11,899) | (9,476 ) |
| Attributable to Sequana Medical shareholders | (11,899) | (9,476) |
Condensed Consolidated Statement of Financial Position
| in Thousand Euros | As at period ended | |
| 30 June 2021 | 31 December 2020 | |
| ASSETS | ||
| Property, plant and equipment | 666 | 705 |
| Laboratory | 64 | 66 |
| Information Technology | 239 | 235 |
| R&D tools | - | 1 |
| Right-of-use assets | 357 | 393 |
| Other tangible fixed assets | 6 | 11 |
| Assets under construction | - | - |
| Financial Assets | 79 | 67 |
| Financial assets – rental deposits | 79 | 67 |
| Total non-current assets | 745 | 772 |
| Trade receivables | - | 24 |
| Other receivables | 1,225 | 930 |
| Inventory | 1,963 | 1,472 |
| Cash and cash equivalents | 21,772 | 11,016 |
| Total current assets | 24,960 | 13,441 |
| Total assets | 25,705 | 14,213 |
| EQUITY AND LIABILITIES | ||
| Share capital | 1,925 | 1,635 |
| Share premium | 142,430 | 119,333 |
| Reserves | (2,951) | (2,250) |
| Loss brought forward | (130,970) | (119,080) |
| Cumulative translation adjustment | 485 | 476 |
| Total equity | 10,919 | 113 |
| Long term financial debts | 7,089 | 7,473 |
| Long term lease debts | 138 | 123 |
| Retirement benefit obligation | 612 | 539 |
| Total non-current liabilities | 7,839 | 8,135 |
| Short term financial debts | - | - |
| Short term lease debts | 205 | 264 |
| Trade payables | 3,107 | 2,802 |
| Other payables | 1,640 | 1,523 |
| Accrued liabilities | 1,995 | 1,376 |
| Total current liabilities | 6,947 | 5,966 |
| Total equity and liabilities | 25,705 | 14,213 |
Condensed Consolidated Statement of Cash Flows
| in Thousand Euros | Half Year ended 30 June | |
| 2021 | 2020 | |
| Net loss for the period | (11,890) | (9,554) |
| Income tax expense | 129 | 103 |
| Financial result | 299 | 390 |
| Depreciation | 52 | 145 |
| Change in defined benefit plan | 73 | - |
| Share-based compensation | 350 | 69 |
| Changes in trade and other receivables | (271) | 63 |
| Changes in inventories | (492) | 214 |
| Changes in trade and other payables/provisions | (31) | (667) |
| Taxes paid | (85) | (6) |
| Cash flow used in operating activities | (11,866) | (9,244) |
| Investments in tangible fixed assets | (56) | (26) |
| Investments in financial assets | (13) | - |
| Cash flow used in investing activities | (69) | (26) |
| Proceeds from capital increase | 22,768 | 19,000 |
| (Repayments)/Proceeds from leasing debts | (138) | (131) |
| (Repayments)/Proceeds from financial debts | - | - |
| Interest paid | - | (194) |
| Cash flow from financing activities | 22,630 | 18,675 |
| Net change in cash and cash equivalents | 10,695 | 9,405 |
| Cash and cash equivalents at the beginning of the period | 11,016 | 5,586 |
| Net effect of currency translation on cash and cash equivalents | 60 | (110) |
| Cash and cash equivalents at the end of the period | 21,772 | 14,882 |
Condensed Consolidated Statement of Changes in Equity
| in Thousand Euros | Share capital | Other equity | Share premium | Reserves | Loss brought forward | Currency translation differences | Total shareholder equity |
| Balance at 1 January 2020 | 1,307 | - | 100,661 | (1,652) | (99,974) | 584 | 926 |
| Net loss for the period | (19,106) | (19,106) | |||||
| Other comprehensive income | (15) | (108) | (123) | ||||
| January 2020 Equity Placement | 328 | - | 18,672 | 19,000 | |||
| Transaction costs for equity instruments | (840) | (840) | |||||
| Share-based compensation | 256 | 256 | |||||
| Balance at 31 December 2020 | 1,635 | - | 119,333 | (2,251) | (119,080) | 476 | 113 |
| Balance at 1 January 2021 | 1,635 | - | 119,333 | (2,251) | (119,080) | 476 | 113 |
| Net loss for the period | (11,890) | (11,890) | |||||
| Other comprehensive income | 9 | 9 | |||||
| February 2021 Capital increase Placement | 274 | - | 22,226 | 22,500 | |||
| Capital increase ESOP | 6 | 263 | 268 | ||||
| Capital increase convertible loan to shares | 10 | 609 | 619 | ||||
| Transaction costs for equity instruments | (1,050) | (1,050) | |||||
| Share-based compensation | 350 | 350 | |||||
| Balance at 30 June 2021 | 1,925 | - | 142,430 | (2,951) | (130,970) | 485 | 10,919 |
1 Pre- and post-implant periods for this analysis of the Roll-In Cohort differ from those that will be used for the Pivotal Cohort analysis
2 EBIT is defined as Revenue less Cost of goods sold and Operating Expenses.
3 EBIT is defined as Revenue less Cost of goods sold and Operating Expenses.
4 Net debt is calculated by adding short-term, long-term financial and lease debt and deducting cash and cash equivalents.
5 The components of working capital are inventories plus trade receivables and other receivables minus trade payables (including contract liabilities) and other payables, and accrued liabilities.
6 EBIT is defined as Revenue less Cost of goods sold and Operating Expenses.
