Key Figures (in EUR thousand) * Revenues: 1,343 in H1 2007; increased by 23% (H1 2006: 1,096) * EBIT: -6,949 in H1 2007; improved by 18% (H1 2006: -8,431) * Net loss: -6,699 in H1 2007; reduced by 18% (H1 2006: -8,199) * Liquid assets: 16,647 as of 30/06/2007 (31/12/2006: 17,341) Highlights of the First Half 2007 * Executed on realigned strategy under leadership of new CEO Geert Nygaard * Elected Heino von Prondzynski to Supervisory Board * Successfully optimized assay procedure for cancer screening tests * Demonstrated proof-of-concept for blood-based lung cancer screening test * Expanded strategic alliance with Qiagen * Closed several biomarker service deals with Centocor, Myriad Genetics, Merck Inc.; co-promotion agreement with Cogenics (Clinical Data Inc.) * Restructuring and strict financial discipline showing positive effects on cash burn and operating result (EBIT) * Raised net proceeds of EUR 4.7 million in successful PIPE-financing * Prepared to be able to raise new equity capital in the coming 12 months
BERLIN and SEATTLE, Aug. 2, 2007 (PRIME NEWSWIRE) -- Epigenomics AG (Frankfurt:ECX) (Prime Standard:ECX), a cancer molecular diagnostics company developing tests based on DNA methylation, today reported financial results for the second quarter/ first half of 2007, which ended June 30, 2007.
Commenting on the first six months, Geert Nygaard, the company's new CEO, said: "In the few months since I've joined Epigenomics, we were able to make significant progress towards the commerzialisation of our cancer molecular diagnostic tests in development. We are operating in a sector with, in our view, market potentials comparable to blockbuster drugs but a much more favorable risk profile. The development of molecular diagnostics is, in our view, less complex than medical drug development, with shorter development times, lower regulatory hurdles, and higher success rates. To speed up our time-to-market, we focused on the key value drivers, in particular our colorectal cancer screening test, and optimized our screening assay procedure for routine use. This fuels our negotiations with diagnostics industry and reference laboratory partners on the future commercialization of our tests."
First Half 2007 -- Financial Review
Epigenomics' revenue in H1 2007 amounted to over EUR 1.3 million, an increase of almost 23% over the EUR 1.1 million during the same period in 2006. A total of EUR 0.51 million of revenue (H1 2006 EUR 0.75 million) were generated under a collaboration agreement with Roche Diagnostics, which ended in March 2007. The Clinical Solutions business contributed EUR 0.38 million to overall H1 revenue (H1 2006 EUR 0.27 million) with the remainder of EUR 0.45 million coming from licensing contracts such as the two Qiagen licensing agreements (H1 2006 EUR 0.04 million).
EBIT for H1 2007 of EUR -6.9 million was very well in line with management's expectations and showed an 18% improvement over EBIT for H1 2006 of EUR -8.4 million.
While R&D costs increased from EUR 4.3 million in H1 2006 to 5.3 million, costs of sales for partnered R&D programs dropped from EUR 2.4 million to EUR 0.5 million. Thus, overall costs for R&D activities in H1 2007 dropped by 14% compared to H1 2006.
The overall operating cost base in H1 2007 at EUR 8.8 million was significantly below H1 2006 operating costs of EUR 10.5 million, i.e. year on year savings of around EUR 1.7 million for the first six months were achieved.
Net loss for the reporting period amounted to EUR -6.7 million compared to EUR -8.2 million in H1 2006. Basic loss per share improved from EUR -0.50 in H1 2006 to EUR -0.39.
Epigenomics' cash flow and financial position in the first half of 2007 were mainly affected by the continued net cash consumption from operations. Overall, the financial position has developed better than expected with total balance sheet assets amounting to EUR 28.8 million at the end of the reporting period compared to EUR 30.1 million at year-end 2006 and liquid assets amounting to EUR 16.6 million as of June 30, 2007, compared to EUR 17.3 million as of December 31, 2006.
Total net cash flow (currency-adjusted) in H1 2007 was positive at EUR 0.4 million. Net cash outflow from operating activities in H1 2007 amounted to 5.3 million, an improvement of 27% compared to the same period in 2006 (EUR 7.2 million). Cash inflow from investing activities amounted to EUR 0.9 million, primarily driven by the sale of securities. Cash flow from financing was positive at EUR 4.7 million, due to the successful PIPE (Private Investment in Public Equity) financing.
During H1 2007 a total of 1,335,526 new shares were issued from authorised capital and a total of 1,173 new shares were created from exercised stock options. The free float increased to approximately 66% by the end of H1 2007.
"The restructuring in fall 2006 as well as stringent financial discipline are taking their effect. We successfully lowered our cost base and improved the net cash outflow", commented Oliver Schacht, Chief Financial Officer of Epigenomics. "Together with the proceeds from the successful placement of 1.3 million new shares with high quality investors in the US and Europe, liquid assets will take us into the second half of 2008."
First Half 2007 -- Operational Review and Highlights
Under the leadership of the new CEO Geert Nygaard, who joined in February 2007, Epigenomics' corporate strategy was realigned and focused on key value drivers. As a result, Epigenomics' operations in H1 2007 focused on progressing the most advanced product development programs, in particular the colorectal cancer screening test development, towards commerzialisation. Considerable improvements were made to the assay procedure for this and other blood- and urine-based screening tests in terms of simplicity, processing time, costs and automation potential. As a result, the colorectal cancer screening test is now ready for a planned reference laboratory transfer. The new and improved assay procedure is also the basis for future in-vitro diagnostics (IVD) -test kit development together with IVD industry partners currently being identified.
In the lung cancer screening test program, Epigenomics reached clinical proof-of-concept-stage by detecting non-small cell lung cancer from blood plasma with a sensitivity of 69% at no more than 9% false positives (91% specificity) using a single proprietary biomarker.
Furthermore in H1 2007 Epigenomics together with its clinical advisor Prof. Matthias Ebert presented recent data from the colorectal cancer screening program at leading scientific conferences in the U.S. (e.g. AACR, DDW).
Significant achievements were also made in the Licensing and Biomarker Service businesses. In the first half of 2007 Qiagen acquired a worldwide exclusive license to Epigenomics' preanalytics solution for the IVD market as well as for applied testing. New R&D collaboration agreements were signed with Centocor, Inc., Myriad Genetics, Inc., and Merck, Inc.. With Cogenics (Clinical Data, Inc.), Epigenomics entered into an agreement under which both companies promote each others' biomarker services to their respective customers. Through Cogenics, Epigenomics can also provide its customers with DNA methylation analysis under GLP (Good Laboratory Practice) quality standards required for data submission to the FDA.
Epigenomics is currently involved in several ongoing partnering negotiations with IVD companies for the test kit development and broad commercialization of the cancer screening tests.
In May, Epigenomics successfully raised EUR 4.86 million in gross proceeds in a PIPE (net proceeds of EUR 4.7 million)-transaction strengthening the company's balance sheet and providing additional flexibility in the ongoing IVD partnering negotiations.
At this year's annual general shareholder meeting (AGM) on May 29, 2007 all decision proposals made by the management were supported by a vast majority of shareholder votes. This included the election of Heino von Prondzynski, former CEO of Roche Diagnostics and one of the recognized leaders in the global diagnostics industry, to Epigenomics' Supervisory Board. Also, the creation of a new authorized capital of EUR 8,458,062 was approved by the AGM providing Epigenomics with additional flexibility for its medium and longer term financing.
Outlook
Commenting on the next steps at Epigenomics, CEO Geert Nygaard explained: "In the second half of the year our main priority will now be to enter into a reference laboratory partnership for the colorectal cancer biomarkers and in particular to sign a first non-exclusive partnership with a diagnostics industry partner. Here, we are currently in advanced negotiations with several potential partners."
Epigenomics anticipates entering into strategic partnerships during the second half of 2007, including a reference laboratory partnership and a first IVD alliance for the development of its blood- and urine-based cancer screening tests. Furthermore, Epigenomics expects the Clinical Solutions and Licensing businesses to contribute significantly to 2007 revenue.
Management expects full-year 2007 revenue to be similar to 2006 revenue of EUR 3.5 million. EBIT for 2007 is also expected to be broadly in line with 2006 EBIT of EUR -15.8 million. Net cash consumption for operating activities in 2007 is expected to be around EUR 12 million. Year-end liquidity for 2007 will be a function of timing, size and structure of any potential additional financing.
In H1 2007 Epigenomics has completed preparations to be able to raise new equity capital in the coming 12 months. The exact timing will depend upon Epigenomics' progress in executing the strategy and delivering on its plans, in particular the structuring of an IVD deal, as well as prevailing market conditions.
Further Information
The full 6-Months Report 2007 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 2007 results at 3pm CET today. The dial-in numbers for the conference call are:
Dial-in number (within Germany): +49 (0) 6103 485 3001
Dial-in number (outside Germany): +1 480 293 1744
Participants are kindly requested to dial in 10 minutes prior to the start of the call.
The presentation accompanying the conference call will be available for download on the Epigenomics website: http://www.epigenomics.com/en/down_loads/corporate_material/
A recording of the conference call will be provided on Epigenomics' website subsequently: http://www.epigenomics.com/en/down_loads/corporate_material/
About Epigenomics AG
Epigenomics is a molecular diagnostics company with a focus on the development of novel products for cancer. Using DNA methylation biomarkers, Epigenomics' tests can potentially diagnose disease at an early stage and help guide physicians to select an appropriate therapy. Epigenomics' defined business strategy covers two complementary core business areas:
The company develops diagnostic screening tests for the early detection of cancer. Based on body fluid samples (e.g. blood and urine), these tests are aimed at finding cancer at an early stage before symptoms occur. Epigenomics' product pipeline contains a validated biomarker panel 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 body fluids. Epigenomics aims at giving patients and doctors early access to these biomarkers through reference laboratory testing services. For development and global commercialization as in vitro diagnostic test kits, Epigenomics pursues a non-exclusive partnering strategy with diagnostics industry players.
As a second core business area, Epigenomics develops specialty diagnostics for individuals at high risk for cancer and cancer patients. These tests include surveillance applications of our colorectal cancer biomarkers and a tissue-based prognostic cancer molecular classification test for prostate cancer patients. Our tissue-based prostate cancer application is developed in strategic partnerships with Qiagen (pre-analytics) and Affymetrix (diagnostic device platform). The biomarkers for cancer specialty diagnostic applications will be made available through testing services in centralized reference laboratories. Epigenomics retains the flexibility to decide on further commercialization as in vitro diagnostic test kits in Europe.
Pharma, diagnostics and biotech partners can access Epigenomics' portfolio of proprietary DNA methylation technologies and biomarkers protected by more than 190 patent families through Biomarker Services, IVD Development Collaborations, and Licensing. The company is headquartered in Berlin, Germany, and has a wholly owned subsidiary in Seattle, WA, USA. For more information, please visit Epigenomics' website at www.epigenomics.com.
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.