Epigenomics AG reports financial results for the first nine months of 2020

Epigenomics AG reports financial results for the first nine months of 2020

Berlin (Germany) and San Diego, CA (U.S.A.), November 12, 2020 – Epigenomics AG (FSE: ECX, OTCQX: EPGNY, the “Company”) today reported financial results (IFRS, unaudited) for the first nine months of 2020.

Major Events after the End of the Reporting Period

• On October 16, 2020, the U.S. Centers for Medicare and Medicaid Services (CMS) published a preliminary negative reimbursement proposal in connection with the National Coverage Determination (NCD) of Epi proColon, Epigenomics’ blood test for colorectal cancer screening. Following the 30-day public comment period ending on November 15, 2020, which will be used to convince CMS of the scientifically proven benefits of the Epi proColon blood test, CMS will publish its final decision within 60 days.

Greg Hamilton, CEO of Epigenomics AG: “We still do not understand the CMS’ preliminary decision. It is unexplainable to us why our microsimulation studies from CISNET and Harvard Medical School were not taken into account in CMS’ decision making process. Both studies were published in renowned, peer-reviewed scientific journals and clearly show that Epi proColon can reduce the incidence and mortality of colorectal cancer as effectively or better than other approved methods. Ultimately, the CMS’ preliminary decision is thus at the expense of the patients and accepts avoidable deaths. We believe there is a chance that CMS will change its final decision based on these results, as it has done in the past, and we will do everything in our power to change CMS’ preliminary decision.”

• On October 26, 2020, the Executive Board of Epigenomics AG further announced that pursuant to Sec. 92 par. 1 German Stock Corporation Act (“Aktiengesetz”), a cumulative loss of more than half of the nominal share capital of the Company has been incurred. Thus, the Company published the invitation to an Extraordinary General Shareholders’ Meeting in due time on November 5, 2020,which will take place as a virtual event on November 27, 2020.
• In addition, on November 3, 2020, the Company announced the intention to propose to the Extraordinary General Shareholders’ Meeting to reduce the share capital and to authorize the issuance of convertible bonds with a nominal value of up to EUR 5.5 million.

Greg Hamilton: “We strongly believe there is value in both our FDA approved blood test and our future product pipeline. However, our current liquidity reach of Q1 2021 limits our ability to both maximize our chances of reversing CMS’ decision for Epi proColon and identifying and executing strategic alternatives that would maximize shareholder value. The convertible bonds, which include a so-called back-stop agreement of up to EUR 4 million from our largest shareholder Deutsche Balaton Aktiengesellschaft, are an important bridge financing for the company. Each shareholder will receive a subscription right to prevent dilution of his or her shareholding. We ask all shareholders to register for the General Shareholders’ Meeting and to follow our proposals when voting in order to maximize our opportunity for success.”

9M 2020 Financial results

• Total revenue in the first nine months of 2020 was EUR 541 thousand compared to EUR 847 thousand for the same period of the previous year, due to the effects of the Covid-19 pandemic. This was caused by lower product revenue in the U.S., as many eligible patients postponed their medical checkups in the current pandemic situation.
• Research & development costs declined from EUR 5,654 thousand in the prior year to EUR 3,412 thousand in the 9-month period mainly driven by the interruption of almost all clinical studies in the U.S.A., including the post-approval study for Epi proColon, forced by the Covid-19 pandemic.
• Selling, general and administrative costs decreased by EUR 1,429 thousand to EUR 5,442 thousand (9M 2019: EUR 6,871 thousand) in the reporting period, due to the reduction in sales and marketing activities, as virtually all relevant events such as conferences and trade fairs were cancelled due to the pandemic.
• Overall, operating costs fell from EUR 13.4 million to EUR 10.9 million compared to the first nine months 2019 for the reasons mentioned above.
• Adjusted EBITDA (before share-based payment expenses) for the first nine months of 2020 was EUR -8.1 million (9M 2019: EUR -9.7 million).
• The net loss for the period improved to EUR 9.1 million (9M 2019: EUR 10.0 million); the loss per share additionally decreased to EUR 0.20 (9M 2019: EUR 0.28) due to the increased number of shares resulting from the latest capital increases.
• The cash outflow from operating activities fell significantly in the first nine months of 2020 by EUR 3.3 million to EUR 7.5 million (9M 2019: 10.8 million). This is due to the improved operating result (EBIT) compared to the previous year.
• As of September 30, 2020, the Company had cash and cash equivalents (including marketable securities) of EUR 6.6 million compared to EUR 11.0 million at the end of 2019.

Outlook 2020:

Revenue / EBITDA / Cash consumption

• Due to the continued uncertainty surrounding the effects of Covid-19, Epigenomics AG, like many publicly traded companies and as already explained in the H1 2020 report, has pulled its revenue guidance for 2020. Moreover, the Company has now revised its guidance for adjusted EBITDA before share-based payment expenses and cash consumption upward as the cost reduction programs initiated in spring are now showing significant results. EBITDA before share-based payment expenses is expected to be within a range of EUR -10.0 million to EUR -11.0 million (previously: EUR -10.5 million to EUR -12.5 million) and cash consumption is expected to be between EUR 10.0 million and EUR 11.0 million (previously: EUR 10.5 million to EUR 12.5 million).

Further Information

The financial report for the first nine months of 2020 is available on the Epigenomics website: https://www.epigenomics.com/news-investors/financial-reports/.

Furthermore, a letter from the Executive Board to the shareholders of the Company is also available on Epigenomics’ website: https://www.epigenomics.com/news-investors/general-shareholder-meeting-2/
 

About Epigenomics

Epigenomics AG is a molecular diagnostics company focused on blood testing for the early detection of cancer. Based on its proprietary biomarker technology for the detection of methylated DNA, Epigenomics develops and markets blood tests for various cancer indications with high unmet medical need. Epigenomics’ lead product is the blood test Epi proColon(R) for the early detection of colorectal cancer. Epi proColon is approved by the U.S. Food and Drug Administration (FDA) and is marketed in the United States, Europe, China and other selected countries. Epi proLung(R), a blood test for the detection of lung cancer, and HCCBloodTest, a blood test for the detection of liver cancer, have received the CE Mark for marketing in Europe.

For further information please visit www.epigenomics.com.

Contact:
Company
Epigenomics AG, Geneststrasse 5, 10829 Berlin
Tel +49 (0) 30 24345 0, Fax +49 (0) 30 24345 555, e-mail: contact@epigenomics.com

investor relations
IR.on AG, Frederic Hilke, Tel +49 221 9140 970, e-mail: ir@epigenomics.com

Note on future-looking statements

This publication expressly or implicitly contains forward-looking statements concerning Epigenomics AG and its business. These statements involve certain known and unknown risks, uncertainties and other factors that may cause Epigenomics AG’s actual results, financial condition and performance to be materially different from any future results, performance or achievements expressed or implied by such statements. Epigenomics makes this announcement as of the date of this release and does not intend to update any forward-looking statements contained herein as a result of new information or future events or otherwise.