Key Figures
-- Revenue: EUR 0.9 million in Q1 2008, up by 12% (Q1 2007: EUR 0.8
million)
-- EBIT: EUR -3.0 million in Q1 2008, improved by 13% (Q1 2007: EUR
-3.4 million)
-- Net loss: EUR -2.9 million in Q1 2008, improved by 12% (Q1 2007:
EUR -3.3 million)
-- Liquid assets: Strengthened at EUR 21.2 million as of 31/03/2008
(31/12/2007: EUR 10.0 million)
Highlights of the First Quarter 2008
-- All key financials within expectations: Revenue, EBIT and net loss
improved
-- Successful capital increase secures funding and provides financial
framework for further strategy execution
-- Launch of "Epi 2010", a management initiative to extend cash
resources: Focus entirely on cancer screening products and further
streamlining of organization
-- Strategic partnership signed with Quest Diagnostics
-- Licensed key technologies to OncoMethylome Sciences
-- Launch of first RUO products with partner TIB MOLBIOL
-- Optimized assay for colorectal cancer screening test clinically
validated and novel biomarkers in prostate cancer program identified
-- Final preparation of major colorectal cancer screening study
PRESEPT to start in Q2 2008
BERLIN and SEATTLE, May 6, 2008 (PRIME NEWSWIRE) -- Epigenomics AG (Frankfurt:ECX) (Prime Standard), a cancer molecular diagnostics company developing tests based on DNA methylation, today reported financial results for the first quarter of 2008, which ended March 31, 2008.
"We have started with great confidence into 2008 and are very excited about the progress we made in our product development and our commercial partnerships in the first quarter. With the additional liquidity provided by the capital increase in early 2008 and continued financial discipline, we remain committed to delivering on our goals and milestones, and in the process, to building shareholder value. This year will be dedicated to further speed up our key value drivers and set the path for commercialization," commented Geert Nygaard, Chief Executive Officer of Epigenomics, on the first quarter 2008.
Financial Review
Overall, all key financials for the reporting period were fully in line with expectations.
Revenue in Q1 2008 increased by 12% to EUR 916 thousand from EUR 820 thousand in the comparable period of 2007. This increase was due to higher licensing revenue and reimbursements, which are a result of new partnerships, closed in Q1 2008 and successful execution of several ongoing R&D collaborations. With EUR 620 thousand the licensing business contributed 68% to the total revenues, significantly more than in the same period of the previous year (Q1 2007: EUR 61 thousand). The Diagnostics business contributed EUR 106 thousand (Q1 2007: EUR 498 thousand) to total revenues while the contribution of Biomarker Solutions business amounted to EUR 190 thousand (Q1 2007: EUR 260 thousand) mainly through execution of projects partnered with Centocor, Johnson & Johnson, Pharmion, and Pfizer.
Cost of sales amounted to EUR 160 thousand in the reporting period (Q1 2007: EUR 357 thousand) and a more than 63% higher gross profit of EUR 756 thousand (Q1 2007: EUR 463 thousand) was generated. R&D costs decreased from EUR 2.5 million in the first three months of 2007 to EUR 2.4 million in Q1 2008.
Marketing and business development costs decreased from EUR 474 thousand in Q1 2007 to EUR 225 thousand in Q1 2008, and general and administrative costs of EUR 917 thousand by 16% compared to EUR 1,092 thousand in Q1 2007. Other expenses increased to EUR 303 thousand in Q1 2008 from EUR 1 thousand in Q1 2007 mainly due to foreign exchange rate effects.
In Q1 2008, EBIT amounted to EUR -3.0 million, 13% better than the Q1 2007 EBIT of EUR -3.4 million. Net loss for the first three months in 2008 has been reduced by 12% from Q1 2007 (EUR 3.3 million) to EUR 2.9 million in the reporting period. The improvement is mainly explained by the decrease in operating costs, which resulted from the continued strict financial discipline.
Epigenomics' balance sheet total increased from EUR 22.9 million as of December 31, 2007, to a total of EUR 31.7 million as of March 31, 2008. This increase was due to a successful capital increase completed in February 2008 strengthening Epigenomics' cash flow and financial position and overcompensating the continued net cash consumption from operations. In Q1 2008 Epigenomics successfully completed a capital increase initiated in 2007 despite a very difficult market environment. Epigenomics placed the maximum number of 8,458,062 new shares at a price of EUR 1.60 each. As a result of issuing the new shares Epigenomics' subscribed capital as of March 2008 amounted to EUR 26.7 million and the equity ratio rose from 77.8% to 82.8%.
In sum, the financial position has improved in line with expectations with liquid assets amounting to EUR 21.2 million as of March 31, 2008, compared to EUR 10.0 million as of December 31, 2007. Total net cash flow in Q1 2008 was positive at EUR 11.3 million, due to the gross proceeds of EUR 13.5 million resulting from the capital increase. Cash outflow from operating activities in Q1 2008 amounted to EUR 1.7 million.
Operational Highlights
In the first quarter of 2008 Epigenomics successfully completed a capital increase initiated in 2007. The resulting liquidity position provides the financial framework for the years 2008 to 2010. Consequently, Epigenomics' management will assign the highest priority on the clinical development and commercialization of the cancer screening tests as key value drivers and allocate resources accordingly. To secure appropriate funding of the respective product development programs, the management has launched the initiative "Epi 2010" with the goal of extending the Company's cash to reach well into 2010. As a result of an initial review, immediate focus will be set entirely on the development of body-fluid based cancer screening tests, in particular the most advanced colorectal cancer blood test. To reflect this focus, the Company has started to adapt its R&D organization accordingly. Total staff was reduced to 104 at March 31, 2008 from 112 at year-end 2007 as responsibilities of positions vacated mainly by natural fluctuation were reassigned to existing staff. In the process, Christian Piepenbrock, formerly COO, has decided to resign from his Executive Board position and to leave Epigenomics to pursue other career opportunities, effective on April 30, 2008. Dr. Kurt Berlin, CSO, has assumed overall responsibility for all R&D operations with immediate effect.
In line with its non-exclusive licensing and partnering model Epigenomics entered into a further key strategic collaboration with a diagnostics industry partner in Q1 2008. Quest Diagnostics Inc., the leading provider of diagnostic testing, information, and services in the U.S. has obtained the rights to commercialize Epigenomics' Septin 9 biomarker as a laboratory-developed test to aid in the early detection of colorectal cancer. The agreement with Quest Diagnostics complements Epigenomics' licensing agreement with Abbott Molecular, Inc. closed in September 2007 for worldwide non-exclusive IVD rights for colorectal cancer blood testing based on Septin 9.
Further, Epigenomics licensed certain non-exclusive rights to several proprietary core technologies for body fluid and tissue testing to OncoMethylome Sciences S.A. and entered into a strategic cross-licensing agreement with DxS Ltd for their proprietary Scorpions(r) technology. This licensing strategy provides Epigenomics with revenues through down-payments and could provide mid to long term upside through participation in the partners' commercial success via significant royalties on product sales.
All R&D programs for Epigenomics' cancer test products progressed with good success in the first quarter of 2008.
R&D efforts in the colorectal cancer screening test development in Q1 2008 focused on the clinical validation of the technically improved assay and an enhanced testing algorithm for the detection of colorectal cancer with Epigenomics' biomarker Septin 9 in two independent clinical case control studies. The studies were successfully completed in April 2008 and confirmed that the assay optimized for routine molecular diagnostic laboratory use detects colorectal cancer in blood plasma statistically equivalent to the previously used research assay. The improved assay marks a significant milestone towards the development and commercialization of Septin 9 DNA methylation biomarker assays, as it provides a reference for the development of Septin 9 based diagnostic products for colorectal cancer.
As an important next step in the development of Epigenomics colorectal cancer screening test, the Company is in preparation of its PRESEPT study, a multi-center study that aims at demonstrating that Septin 9-based colorectal cancer blood testing satisfies latest U.S. screening guideline requirements and provides a health economic benefit. In Q1 2008, the PRESEPT study protocol was finalized in collaboration with Epigenomics' Medical Advisory Board that was recently strengthened by the appointment of Richard Wender, M.D., Alumni Professor and Chair of the Department of Family and Community Medicine at Thomas Jefferson University in Philadelphia, PA.
During Q1 2008, Epigenomics also made progress in its prostate and lung cancer screening programs. As an interim result from Epigenomics' prostate cancer development program the company reported on the validation of 26 novel biomarkers in a tissue study. Clinical results from further body fluid studies in prostate and lung cancer are expected for the second half of 2008.
In addition, Epigenomics further leveraged its proprietary biomarker and technology-portfolio in the research market in collaboration with TIB MOLBIOL, a high quality German research products company. First test kits were recently launched into the research market in order to encourage ancillary studies by academic and clinical researchers using Epigenomics proprietary biomarkers. Further product launches are scheduled to follow throughout the year.
Outlook
Throughout the year 2008 Epigenomics' most advanced colorectal cancer blood test and key value driver will remain the focus of the Company's development and commercialization efforts.
Epigenomics expects doctors and patients in the U.S. to get first access to Septin 9 blood testing for colorectal cancer through a laboratory-developed test (LDT) to be launched by Quest Diagnostics in the second half of 2008. In Europe, the Company expects to launch a LightMix(r) research product for Septin 9 testing in collaboration with TIB MOLBIOL in Q2 2008.
To further support the market introduction of Septin 9-based colorectal cancer tests, Epigenomics now dedicates significant resources to the PRESEPT study. The qualification of initial clinical sites is already in progress with the recruitment of the first participant scheduled for Q2 2008. First results of an interim analysis may be available as early as Q1 2009 while the final results are to be presented at major conferences later in 2009.
After the recent successful clinical validation of the optimized blood assay for methylated Septin 9 DNA, detailed clinical performance data will be presented at several conferences in Q2 2008.
Throughout 2008, additional clinical data on Epigenomics' test development programs in prostate and lung cancer are expected.
As Epigenomics is in discussions with potential future IVD partners it expects to close another IVD licensing and partnering deal in 2008. Apart from the company's focus on screening products it anticipates closing further deals with biotechnology and pharmaceutical partners throughout the year.
As part of its initiative "Epi 2010", the company will continue to review operations and alternative options to leverage assets outside its clear cancer screening focus and plans to implement potential measures throughout 2008.
Epigenomics' management expects full-year 2008 revenue to grow to EUR 3 to EUR 4 million compared to 2007 revenue of EUR 2.6 million. EBIT for 2008 is also expected to improve and range between EUR -11.5 to EUR -12.5 million compared to 2007 EBIT of EUR -13.5 million. Net cash consumption for 2008 is expected to stay below EUR 10 million and thus be significantly better than the 2007 cash burn of EUR 12 million.
Further Information
The full 3-Months Report 2008 can be obtained from Epigenomics' website at:
http://www.epigenomics.com/en/investor_relations/Financial_Information/
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 cancer at an early stage and thereby may reduce mortality from this dreaded disease.
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 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. For development and global commercialization as in vitro diagnostic test kits, Epigenomics pursues a non-exclusive partnering strategy with diagnostics industry companies. As a first strategic partner, Abbott Molecular Inc. licensed the worldwide non-exclusive IVD rights to Epigenomics' proprietary Septin 9 biomarker for colorectal cancer. Epigenomics also aims at giving patients and doctors early access to these biomarkers through reference laboratory testing services. As a first reference laboratory partner, Quest Diagnostics Inc., the leading provider of diagnostic testing, information and services, obtained the license to commercialize a laboratory-developed test (LDT) for Septin 9 in the U.S.
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.
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.