11.11.2014 | 141111_Press_release_Epigenomics_AG_Q3_2014_results
Berlin (Germany) and Germantown, MD (U.S.A.) – Epigenomics AG (Frankfurt Prime Standard: ECX, OTCQX: EPGNY), the German-American cancer molecular diagnostics company, today announced its financial results for the third quarter and the nine months 2014 ending September 30.
- 9M 2014 revenue increased by 14% year-on-year to EUR 1.1 million, mainly driven by an increase in product sales of more than 25%
- Earnings prognosis for 2014 remains unchanged; prognosis of year-end liquidity position increased to EUR 6.0 million at the end of 2014 following recently announced share capital increase
- Design of ADMIT study requested by the U.S. FDA for the approval decision for Epi proColon® completed, site initiation ongoing
- Epigenomics’ commercialization partners reiterate commitment to support Epi proColon®; share capital increase of EUR 4.2 million subscribed by Chinese partner BioChain (after period-end)
“Our activities in the third quarter of 2014 were clearly focused on fulfilling the requirements outlined by the U.S. Food and Drug Administration (FDA) in relation to the premarket approval (PMA) application for Epi proColon®. We completed the design of the requested ADMIT study (Adherence to Minimally Invasive Testing), were granted an Investigational Device Exemption (“IDE”) from the FDA, received ethical approval and are meanwhile initiating the clinical trial and laboratory testing sites.”, said Dr. Thomas Taapken, CEO/CFO of Epigenomics AG. “After very busy summer months, we are now ready to embark on the final steps of the approval and commercialization of our test in the U.S. and China. We have also secured the financial resources necessary for the execution of this important next phase in our development. During such a critical time we are particularly delighted with both of our partners’ support and their firm confidence in Epi proColon®, our partnerships and our exciting plans for the future of colorectal cancer (CRC) screening.”
Q3/9M 2014 Financial Results
- Total Q3 2014 revenue increased by 8% to EUR 284 thousand (Q3 2013: EUR 263 thousand) and 9M 2014 revenue was up 14% to EUR 1,095 thousand (9M 2013: EUR 961 thousand), mainly driven by an increase in product revenues, which were up more than 25% year-on-year from EUR 438 thousand to EUR 551thousand.
- Operating costs in Q3 2014 amounted to EUR 2.3 million and remained nearly unchanged to Q3 2013. 9M 2014 operating costs increased slightly to EUR 6.9 million (9M 2013: EUR 6.6 million).
- In line with this development, Q3 2014 EBIT amounted to EUR -1.8 million (Q3 2013: EUR -1.9 million); 9M 2014 EBIT amounted to EUR -5.4 million (9M 2013: EUR -5.2 million). Net loss amounted to EUR 1.8 million in Q3 2014, slightly improved compared to Q3 2013 (EUR 1.9 million), and increased to EUR 5.9 million for 9M 2014 (9M 2013: EUR 5.2 million), primarily due to interest expenses attributable to issued convertible notes.
- Due to an increased number of shares outstanding at the end of Q3 2014, net loss per share for this period dropped to EUR 0.14 from EUR 0.16 in Q3 2013 and decreased marginally to EUR 0.44 for 9M 2014 from EUR 0.45 for 9M 2013.
- Cash outflow from operating activities was EUR 5.3 million in 9M 2014 – nearly unchanged compared to 9M 2013 (EUR 5.2 million). Cash outflow from investing activities increased to EUR 0.7 million (9M 2013: EUR 0 million) due to capital expenditures related to the refurbishment of the Company’s new facilities.
- Liquid assets (including marketable securities) amounted to EUR 3.9 million at the reporting date (Dec 31, 2013: EUR 8.0 million), not yet reflecting the EUR 4.2 million raised in the share capital increase after the reporting date.
- Update on U.S. Regulatory Status of Epi proColon®: Throughout the third quarter 2014, Epigenomics worked closely with the U.S. FDA to complete the design of the ADMIT study which was requested by the agency in relation to the PMA application for Epi proColon®. This additional study aims to demonstrate that Epi proColon® will increase CRC screening participation in patients being offered this convenient blood-based test as compared to those being offered a stool-based fecal immunochemical test (FIT).
- Design of ADMIT Study Completed, Site Initiation Ongoing: The study design of the ADMIT study has now been finalized, an IDE received by the FDA and it was approved by the independent ethics committees of the trial sites. Initiation of the clinical and laboratory testing sites is now underway. To identify appropriate patients to be enrolled, Epigenomics is conducting the study with two major U.S. health care systems, who actively manage CRC screening programs and who through their electronic medical records will be able to quickly identify patients for the study meeting the enrollment criteria. The study will be conducted in average risk, screening eligible patients that have been historically non-compliant to CRC screening according to current guidelines. Once enrolled, patients will be randomized equally into two study arms to be offered either the FIT stool test kit for home use or a blood draw for the Epi proColon® test. The rates of adherence between each arm will be measured and the primary objective of the study will be to show increased adherence for Epi proColon®. The study’s secondary endpoint is a measurement of compliance to colonoscopy in those patients with positive test results with Epi proColon® or FIT.
Epigenomics is convinced that generating the additional data requested by the agency can be done quickly and that the approval of the test remains very likely. The Company expects completion of enrollment in the trial within a few months. Once the study has been completed, the PMA will be amended with the results once these become available. The costs for the study are expected not to exceed EUR 1.0 million.
- Polymedco Reiterates Commitment to Support Epi proColon® in the U.S. (after Period-end): In parallel to Epigenomics working towards fulfilling the requirements outlined by the FDA, its partner Polymedco is continuing to diligently prepare for commercializing Epi proColon® once the product is approved. The partner has started to undertake the internal training measures and to establish customer and technical support. In addition, Polymedco strongly supports Epigenomics with continued logistics and personnel support in the upcoming ADMIT study. This strong support of Epigenomics’ partner is further underpinned by the commitment of Polymedco’s President and CEO, Drew Cervasio, who with a significant personal investment has meanwhile increased his ownership of Epigenomics to approximately 180,000 shares.
- Approval Decision for Epi proColon® in China Awaited Soon: In addition, Epigenomics is working closely with its partner BioChain towards the approval of Epi proColon® for the Chinese market, where CRC is a rapidly growing problem also. Since the initiation of the approval process in April this year, the Company has constantly supported the data generation and technical documentation efforts of BioChain. In addition, data generated in China have confirmed the clinical performance of the Epi proColon® test in the Chinese population. These data were included in the formal submission to the China Food and Drug Administration (CFDA). Based on the information provided and the promising results of BioChain’s clinical trial announced in April 2014, the company expects an approval decision in the foreseeable future.
- Share Capital Increase of EUR 4.2 Million, Subscribed by BioChain (after Period-end): In a share capital increase announced on October 16, 2014, BioChain will invest EUR 4.2 million in Epigenomics; by subscribing a total of 1,351,089 Epigenomics shares which will be issued under exclusion of the statutory subscription right of the shareholders. The issue price has been set at EUR 3.08 per share, based on the XETRA closing price of the day prior to the announcement. After registration of the capital increase on or around November 21, 2014, the subscribed capital of Epigenomics AG will increase from currently EUR 13,517,558 to EUR 14,868,647.
The new investment reinforces and deepens the joint commitment to the successful launch of Epi proColon® throughout the major markets of the U.S.A. and China and is clear evidence of the shared commitment in the future success of the product and the Company. The secured funds are very important for Epigenomics to keep its financial flexibility and extend its cash reach for the execution of the next important steps in the approval and commercialization of Epi proColon®.
- Conversion of Bearer Shares to Registered Shares: To facilitate direct communication with its shareholders and to increase transparency of the shareholder structure, Epigenomics converted its 13,510,892 bearer shares into registered shares at a ratio of 1:1 effective September 22, 2014. In this context, the international security identification number (ISIN) changed to DE000A11QW50 while the national security code number (WKN) now reads A11QW5. The ticker symbol remained unchanged with ECX.
- Relocation of Berlin Headquarters Completed: In August, Epigenomics successfully completed the relocation of its Berlin headquarters to a new facility within the city. The new headquarters, located in Berlin Tempelhof-Schöneberg, are more adept to efficiently house the Company’s operations and better allow flexibility for our long-term planning.
- The most significant near term milestones for Epigenomics remain the start of the ADMIT study with Epi proColon® to address FDA’s outstanding requests for the approval decision in the U.S.A. as well as the approval of Epi proColon® in China.
- With regard to the earnings prognosis for the current fiscal year, Epigenomics expects no significant changes compared to the Company’s earlier statements. Although, the expected market approval for Epi proColon® in the U.S.A. is affected by a delay, the earnings prognosis for 2014 remains unaltered, as the initial guidance did not include any significant product revenues from the U.S. market. Epigenomics expects revenue in 2014 to slightly increase from 2013’s level. Net loss for 2014 is expected to be in the range of EUR 7.5 to 8.5 million. In line with the expected net loss range, cash consumption for the fiscal year 2014 is projected at a slightly increased level compared to 2013 in the range of EUR 7.0 to 8.0 million.
- The financial prognosis has to be adjusted after Epigenomics secured additional liquidity after the end of the reporting period. However, it is hardly predictable at this point in time if and when the outstanding convertible notes will be converted by their holders or if they have to be redeemed. Apart from these uncertainties Epigenomics expects its liquidity position at the end of 2014 to be around EUR 6.0 million, which should be sufficient to bring the Company well over the ADMIT study and the long-awaited FDA approval decision. However, Epigenomics will continue to diligently explore and potentially execute all strategic options available to the Company. These options explicitly include further capital market transactions.
The full 2014 Third Quarter and Nine Month Financial Report can be obtained from Epigenomics’ website at:
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Epigenomics (www.epigenomics.com) is a molecular diagnostics company developing and commercializing a pipeline of proprietary products for cancer. The Company’s products enable doctors to diagnose cancer earlier and more accurately, leading to improved outcomes for patients. Epigenomics’ lead product, Epi proColon®, is a blood-based test for the early detection of colorectal cancer, which is currently marketed in Europe and is under regulatory review by the FDA for the U.S.A. and the Chinese Food and Drug Administration for China. Additionally, the company markets its tissue assay for use in lung cancer diagnosis, Epi proLung®, in Europe. The Company’s technology and products have been validated through multiple partnerships with leading global diagnostic companies and testing laboratories. Epigenomics is an international company with operations in Europe and the U.S.A.
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