Key Figures (in EUR thousand)
* Revenues: 1,511 in H1 2008; increased by 13% (H1
2007: 1,343)
* EBIT: -5,888 in H1 2008; improved by 15%
(H1 2007: -6,949)
* Net loss: -5,632 in H1 2008; reduced by 16% (H1
2007: -6,699)
* Liquid assets: 17,753 at end of H1 2008 (Year end
2007: 10,016)
Highlights of the Successful First Half of 2008 and Year to Date
* Solid revenue growth, improved EBIT and reduced net loss
* Secured future funding via capital increase, "Epi 2010"
initiative to evolve the commercial organization
* Signed Septin 9 licensing deal with Quest Diagnostics
* Confirmed new Septin 9 assay for colorectal cancer blood
test in clinical studies
* Received notice of allowance for key Septin 9 patent in
Europe
* Initiated PRESEPT study in colorectal cancer program
* Successfully completed two clinical studies in lung
cancer program
* Generated additional data on tissue and urine samples in
prostate cancer program
* Signed technology licensing deals with OncoMethylome
Sciences and DxS
* Management evolution continues with hire of new Sr. VP
Product Development
BERLIN and SEATTLE, Aug. 5, 2008 (PRIME NEWSWIRE) -- Epigenomics AG (Frankfurt:ECX), a cancer molecular diagnostics company developing tests based on DNA methylation, today reported financial results for the second quarter and first half of 2008, ended June 30, 2008, and provided a corporate update.
Commenting on the first six months, Geert Nygaard, the company's Chief Executive Officer, said: "After the successful financing in the first quarter, we have dedicated ourselves to our product development operations in the second quarter and have made significant progress across the portfolio. In particular I would like to highlight the successes in the clinical evaluation of our improved assay procedure for colorectal cancer blood testing, the timely initiation of the PRESEPT study, and significant progress in our lung cancer program. At the same time we were able to execute on our "Epi 2010" initiative to continuously optimize our organization while reducing net cash consumption and ensure adequate funding for our key value drivers."
First Half of 2008 -- Operational Review and Highlights
During the first half and especially in the second quarter of 2008, all of Epigenomics' product development programs have made significant progress. The company continued to concentrate on its key value drivers, especially the colorectal cancer screening program. To this end, Epigenomics successfully completed two studies on clinical blood specimens that validated the Septin 9 marker's ability to detect colorectal cancer across all stages. In two studies testing more than 500 blood plasma samples for evidence of Septin 9 methylation, the marker demonstrated sensitivities of 74% and 69% at specificities of 92% and 89%, respectively. These studies confirmed the analytical and clinical performance of the Septin 9 marker observed in previous studies from 2006. The new 2008 clinical studies were performed using Epigenomics' improved assay procedure that is compatible with requirements of routine clinical laboratory processes. In total, the Septin 9 biomarker has now been evaluated in numerous case control studies with a total of about 3,500 blood samples.
Quest Diagnostics Inc. and Abbott Molecular Inc., the company's initial Septin 9 licensees, are progressing towards commercialization. In July 2008, Quest Diagnostics reported its portfolio approach to expand their leadership in colorectal cancer screening to include the development of the first blood based test to detect colorectal cancer using the Septin 9 methylated biomarker from Epigenomics. Partner Abbott Molecular expects to launch a CE-marked in vitro diagnostic assay on its m2000 instrument in Europe in 2009. Through these partnerships, Epigenomics will make available to patients and doctors early commercial access to its cancer detection biomarkers in both the United States and Europe.
To further accelerate the development of its colorectal cancer screening test, Epigenomics has initiated the PRESEPT study. PRESEPT is a multi-center study to characterize clinical performance of Septin 9 in a U.S. CRC screening guideline-eligible population. It will enroll individuals who have an average and increased risk according to U.S. guidelines and who undergo a screening colonoscopy. In addition to demonstrating the clinical utility of Septin 9 for colorectal cancer screening, the performance characteristics established in PRESEPT will be used to determine the potential health economic benefit of blood-based colorectal cancer screening using a validated health economic model. Furthermore, Epigenomics will be in a position to provide its industry partners developing Septin 9 IVD tests access to the PRESEPT samples and data to perform their respective pivotal clinical trials necessary to obtain regulatory approvals.
A Clinical Study Steering Committee for PRESEPT has been established and first subjects have already been enrolled. As of today there are three clinical sites that have initiated sample collection with a total of 19 German and U.S. sites having been successfully qualified or are in the process of qualification. Overall, Epigenomics expects that approximately 7,500 individual subjects will be required to yield the 50 colorectal cancer cases called for in the PRESEPT study design. Study results are expected to become available in 2009.
In Q2 2008, Epigenomics successfully completed two clinical studies in its lung cancer program. Both studies were run in close collaboration with the Charite -- Universitatsmedizin Berlin, Germany. The first clinical study demonstrated that a panel of two proprietary biomarkers detected 79% of lung cancer patients using bronchial lavage specimens at a specificity of 95%. The second study that was performed with blood plasma samples showed that a panel of two biomarkers correctly identified two-thirds of all lung cancers (66% sensitivity) at a false positive rate of only 12% (88% specificity). This study demonstrated comparable performance to a smaller study in blood plasma in 2007 but was enriched for the particular relevant early stages of lung cancer. With these data in hand, Epigenomics is now evaluating several opportunities to develop and commercialize products for the early detection and diagnostic work-up in lung cancer indications.
In H1 Epigenomics prostate cancer program reported the discovery of several novel biomarkers which demonstrated performance in urine comparable to the best characterized prostate cancer DNA methylation marker. A poster was presented at AACR (American Association for Cancer Research) Annual Meeting 2008 in San Diego in Q2 which provided data validating these novel markers in prostate cancer, benign prostatic hypertrophy, and normal prostate tissue.
In the first half of 2008, Epigenomics closed two significant licensing agreements. The company licensed several of its core technologies to OncoMethylome Sciences S.A. and cross-licensed rights to DNA methylation applications of Scorpions(r) technology with DxS Ltd. Both deals included an upfront fee to Epigenomics as well as potential future royalties if our technologies are part of products developed by our licensees or their respective partners.
In its Biomarker Services Business, Epigenomics executed on a number of collaborative biomarker R&D collaborations with partners such as Centocor, Johnson & Johnson, Pfizer, and Pharmion as well as with a number of leading academic institutions such as the Karolinska Institute, Stockholm, Sweden.
In late July Epigenomics received a notice of allowance for its key patent covering the biomarker Septin 9 in Europe. This marker constitutes the core of Epigenomics colorectal cancer screening product and will entitle Epigenomics to receive significant royalties from its licensees and partners. It also adds a layer of additional protection as it states that not only are Epigenomics' technologies proprietary, but so is the company's biomarker content.
Management Changes
Today the Supervisory Board and Dr. Kurt Berlin, Chief Scientific Officer of Epigenomics, have agreed that Dr. Berlin will step down as CSO and executive board member, effective August 31 2008. Kurt Berlin, one of the co-founders of the company, has decided to accept a board position in a non-competing company. Dr. Berlin will serve as chairman of Epigenomics' Scientific Advisory Board effective immediately and will continue to advise Epigenomics on scientific, technological, licensing and IP-related matters as a consultant throughout 2008 and 2009.
Dr. Berlin's responsibilities for product development will be taken over by a recently hired Senior Vice President Product Development on November 1, 2008. The designated Sr. Vice President Product Development will join Epigenomics from his current senior management position with one of the world's leading molecular diagnostics companies where he currently manages cancer molecular diagnostics product development projects in the U.S. Previously he spent more than 10 years with Abbott Diagnostics and gained experience in product development, operations and regulatory affairs/compliance.
"I would like to take the opportunity to thank Kurt Berlin for his outstanding contributions to Epigenomics over the last ten years. We are pleased that we can still leverage his expertise in DNA methylation science and technology as well as intellectual property in the future," commented Geert Nygaard, Chief Executive Officer of Epigenomics. "We believe that with our choice of Senior VP Product Development we won the ideal successor to take over Kurt's responsibilities, and to lead our product development programs into the next phase of Epigenomics' corporate development. He will bring in the perfect mix of qualifications, expertise and experience to drive the late stage development of our lead products through to commercialization. Due to a mutual understanding on confidentiality with his current employer we cannot disclose more details at this point but will do so as soon as possible."
As previously communicated, and as part of the "Epi 2010" initiative, Christian Piepenbrock, formerly Chief Operating Officer, decided to resign from his Executive Board position and to leave Epigenomics to pursue other career opportunities.
First Half of 2008 -- Financial Review
Epigenomics' revenue in H1 2008 amounted to over EUR 1.5 million, an increase of almost 13% over the EUR 1.3 million during the same period in 2007. H1 revenue was generated from existing as well as newly signed collaborations and licensing agreements in the form of R&D payments, licensing and royalty income.
EBIT for H1 2008 of EUR -- 5.9 million was in line with management's expectations and showed a 15% improvement over EBIT for H1 2007 of EUR -6.9 million.
R&D expenses dropped from EUR 5.3 million in H1 2007 to 4.7 million reflecting the increased focus in Epigenomics' product development efforts. Cost of sales for partnered R&D programs remained virtually unchanged at EUR 465 thousand during the reporting period compared to EUR 478 thousand in H1 2007.
Overall operating costs during the first six months of 2008 amounted to EUR 7.9 million, down 11% from the same period in 2007 (EUR 8.8 million). This improvement is an effect of Epigenomics' "Epi 2010" initiative, which was introduced earlier this year. As part of this initiative, Epigenomics' management intends to further streamline operations and is currently in the process of centralizing all laboratory R&D operations in Berlin. The laboratory operations at Epigenomics Inc. in Seattle will be closed during H2 2008. Going forward the Seattle organization will entirely focus on managing clinical trials such as the ongoing PRESEPT study. At the end of the reporting period Epigenomics employed 96 staff compared to 112 employees at year-end 2007 and 120 at the same time last year.
Net loss for the reporting period amounted to EUR -5.6 million compared to EUR -6.7 million in H1 2007. Basic loss per share improved from EUR -0.39 in H1 2007 to EUR -0.22 in the reporting period.
Overall, the financial position of Epigenomics has developed favorably: total balance sheet assets amounted to EUR 27.6 million at the end of the reporting period compared to EUR 22.9 million at year-end 2007; liquid assets amounted to EUR 17.8 million as of June 30, 2008, compared to EUR 10.0 million as of December 31, 2007.
In H1 2008, total net cash flow was positive at EUR 7.9 million, due to the cash inflow from the capital increase realized in February 2008. Cash outflow from operating activities in H1 2008 amounted to EUR 4.5 million. Cash inflow from investing activities amounted to EUR 0.9 million, primarily due to a premature redemption of securities held to maturity. Cash flow from financing activities was positive at EUR 11.5 million, due to the rights issue in February 2008 in which 8,458,062 new shares were placed at EUR 1.60 per share.
"In addition to the significant progress we have made on the operational and product development side, the first half has been characterized by stringent fiscal discipline coupled with revenue growth. Hence, all our financials are in line with our expectations," commented Oliver Schacht, Chief Financial Officer of Epigenomics. "Our "Epi 2010" initiative is off to a good start, is effective and clearly works."
Outlook
In H2 2008, Epigenomics' most advanced colorectal cancer blood test and key value driver will remain the focus of the Company's development and commercialization efforts. The PRESEPT study is expected to rapidly ramp up site qualification, site initiation and sample collection to support an interim analysis in Q1 2009 and completion in H2 2009.
In late 2008, the company expects its partner Quest Diagnostics to launch a laboratory developed test (LDT) for the detection of methylated Septin 9 DNA in blood plasma to aid in the early detection of colorectal cancer. It is the company's goal to enter into an additional IVD partnership in the second half of 2008. Epigenomics has ongoing IVD partnering discussions and negotiations, and progress during the first half of 2008 has been in line with expectations.
Management continues to expect full-year 2008 revenue to increase to between EUR 3 million and EUR 4 million compared to 2007 revenue of EUR 2.6 million. The operating result for 2008 is also expected to improve and is expected to range between EUR -11.5 million to EUR -12.5 million compared to 2007 EBIT of EUR -13.5 million. Epigenomics expects net cash consumption for 2008 to remain below EUR 10 million and therefore to be significantly better than the 2007 cash burn of EUR 12 million.
Further Information
The full 6-Months Report 2008 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 2008 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): 1-480-629-1990
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 in development aim at diagnosing cancer at an early stage before symptoms occur and thereby may reduce mortality from this dreaded disease.
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 urine, blood and bronchial lavage specimens. Epigenomics' biomarker Septin 9 for the early detection of colorectal cancer in a simple blood sample demonstrated continuously highest performance in multiple clinical studies with in total more than 3,500 individuals tested.
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.