WAYNE, Pa. and MISGAV, Israel, Feb. 20, 2014 (GLOBE NEWSWIRE) -- Medgenics, Inc. (NYSE MKT: MDGN) (LSE:MEDU) (LSE:MEDG), the developer of a novel platform technology for the sustained production and delivery of therapeutic proteins in patients using ex-vivo gene therapy and their own tissue for the treatment of rare and orphan diseases, today announced financial results for the fiscal year ended December 31, 2013 and the filing with the U.S. Securities and Exchange Commission ("SEC") of the Company's Annual Report on Form 10-K.
2013 and Recent Corporate Highlights
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A new executive management team was appointed to reposition the company as a rare and orphan disease company and to accelerate the development of the Company's gene therapy platform and maximize the potential of the Company's technology assets. The new team includes:
-- President and Chief Executive Officer Michael Cola, formerly of Shire and Safeguard Scientifics.
-- Chief Financial Officer Dr. John Leaman, formerly of Shire and McKinsey & Company.
-- Global Head of Research & Development Dr. Garry Neil, formerly of Johnson & Johnson and Merck KGaA. - Medgenics welcomed to its Board of Directors, biopharmaceutical veteran and former Chief Executive Officer of Ovation Pharmaceuticals and the Pathogenesis Corporation and President of Baxter International, Wilbur "Bill" Gantz.
- The Company announced a new corporate strategy focused on the treatment of orphan and rare diseases using the BiopumpTM technology.
- Results were announced from a second generation viral vector and implantation protocol in a SCID mouse model that showed a 40-50 times increase in the amount of protein produced by the Biopump versus the first generation vector, and a duration of protein expression for greater than six months. Based upon these results, it has been decided to use the second generation viral vector in the Phase 1/2 EPODURE trial aimed to validate the Biopump platform's improved viability in clinical trials. This trial is expected to be initiated in the first half of 2014 with preliminary results expected in the second half of 2014.
Management Discussion
"2013 has been an important transition year for us as we build a foundation and corporate strategy to position the Company for the future," stated Michael Cola, President and Chief Executive Officer of Medgenics. "Based on results to date, we've developed a second generation viral vector and Biopump™ protocol that shows more durable protein production in SCID mice, a model historically predictive of success in human clinical trials. We plan to utilize this new vector and protocol as we realign our research and development focus towards the orphan and rare disease market, where we feel the Biopump's attributes of continuous autologous protein/peptide production would be highly advantageous."
"Our objectives in 2014 will be twofold. First we plan to initiate the Phase 1/2 EPODURE™ trial for human proof-of-concept of the Biopump platform with the second-generation viral vector and protocol, and to replicate the SCID mouse results in humans. Secondly, we intend to obtain in-vitro and in-vivo preclinical data in human tummy-tuck tissue and SCID mice in several rare and orphan disease indications."
"To conclude, I am pleased to be executing this new strategy with a renowned Board of Directors led by Sol Barer, and the new management team we've assembled with the appointment of Garry Neil and John Leaman. I feel confident that with this team in place coupled with a strong balance sheet, we have the framework for a successful year."
2013 Financial Results
Medgenics reported a net loss of $17.13 million for the year ended December 31, 2013 or $0.97 basic loss per share and $1.06 diluted loss per share, compared with a net loss of $15.07 million or $1.37 per share for 2012.
Gross research and development expense for the year ended December 31, 2013 increased to $8.87 million from $7.19 million in 2012. The increase in expense was due to an increase in the use of materials and subcontractors in connection with human EPODURE clinical trials in Israel and preparation for human EPODURE clinical trials in the U.S., including ongoing method development, as well as an increase in research and development personnel.
Net research and development expense for the year ended December 31, 2013 was $7.30 million compared with $5.43 million in 2012. The increase was due to higher gross research and development expenses as detailed above, in addition to participation by the Office of the Chief Scientist of $1.57 million in 2013 compared with $1.76 million in 2012.
General and administrative expense for the year ended December 31, 2013 increased to $10.52 million from $7.20 million in 2012, primarily due to stock-based compensation expense related to equity granted to directors and executives upon their appointment in 2013, increased professional fees and increased activities in the U.S.
Financial expense for the year ended December 31, 2013 was $0.02 million, down from $2.43 million in 2012, mainly due to the change in valuation of the warrant liability due to the fluctuation in the market price of our common stock. Financial income for the year ended December 31, 2013 was $0.73 million, increasing from de minimis in 2012, which was primarily due to the change in valuation of the warrant liability.
As of December 31, 2013, the Company had $22.39 million in cash and cash equivalents, compared with $6.43 million as of December 31, 2012. Net cash used in operating activities during the year was $12.73 million compared with $8.62 million used in 2012. During 2013 the Company received proceeds of $28.86 million from a registered public offering of common stock and warrants.
About Medgenics
Medgenics is developing and commercializing Biopump™, a proprietary platform for the sustained production and delivery of therapeutic proteins using ex-vivo gene therapy and the patient's own tissue for the treatment of orphan and rare diseases. For more information, visit the Company's website at www.medgenics.com.
Forward-looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995, which include all statements other than statements of historical fact, including (without limitation) those regarding the Company's financial position, its development and business strategy, its product candidates and the plans and objectives of management for future operations. The Company intends that such forward-looking statements be subject to the safe harbors created by such laws. Forward-looking statements are sometimes identified by their use of the terms and phrases such as "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will," "will likely," "should," "could," "would," "may" or the negative of such terms and other comparable terminology. All such forward-looking statements are based on current expectations and are subject to risks and uncertainties. Should any of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may differ materially from those included within these forward-looking statements. Accordingly, no undue reliance should be placed on these forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements contained in this release may not occur.
| MEDGENICS, INC. AND ITS SUBSIDIARY | ||||||
| (A Development Stage Company) | ||||||
| CONSOLIDATED STATEMENTS OF LOSS | ||||||
| US Dollars in thousands (except share and per share data) | ||||||
| Period from | ||||||
| January 27, | ||||||
| 2000 | ||||||
| (inception) | ||||||
| Year ended | through | |||||
| December 31, | December 31, | |||||
| 2011 | 2012 | 2013 | 2013 | |||
| Research and development expenses | $ 5,987 | $ 7,187 | $ 8,870 | $ 46,499 | ||
| Less: | ||||||
| Participation by the Office of the Chief Scientist | (860) | (1,756) | (1,573) | (8,622) | ||
| U.S. Government Grant | -- | -- | -- | (244) | ||
| Participation by third party | (75) | -- | -- | (1,067) | ||
| Research and development expenses, net | 5,052 | 5,431 | 7,297 | 36,566 | ||
| General and administrative expenses | 4,924 | 7,197 | 10,521 | 44,116 | ||
| Other income: | ||||||
| Excess amount of participation in research and development from third party | -- | -- | -- | (2,904) | ||
| Operating loss | (9,976) | (12,628) | (17,818) | (77,778) | ||
| Financial expenses | (214) | (2,429) | (20) | (4,608) | ||
| Financial income | 2,097 | 5 | 726 | 364 | ||
| Loss before taxes on income | (8,093) | (15,052) | (17,112) | (82,022) | ||
| Taxes on income | 3 | 19 | 17 | 112 | ||
| Loss | $ (8,096) | $ (15,071) | $ (17,129) | $ (82,134) | ||
| Basic loss per share | $ (0.96) | $ (1.37) | $ (0.97) | |||
| Diluted loss per share | $ (0.96) | $ (1.37) | $ (1.06) | |||
| Weighted average number of shares of Common stock used in computing basic loss per share | 8,447,908 | 11,023,881 | 17,629,436 | |||
| Weighted average number of shares of Common stock used in computing diluted loss per share | 8,447,908 | 11,023,881 | 17,683,510 | |||
| MEDGENICS, INC. AND ITS SUBSIDIARY | ||
| (A Development Stage Company) | ||
| CONSOLIDATED BALANCE SHEETS | ||
| U.S dollars in thousands (except share and per share data) | ||
| December 31, | ||
| 2012 | 2013 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 6,431 | $ 22,390 |
| Accounts receivable and prepaid expenses | 539 | 202 |
| Total current assets | 6,970 | 22,592 |
| LONG-TERM ASSETS: | ||
| Restricted lease deposit | 62 | 42 |
| Severance pay fund | 283 | 96 |
| Property and equipment, net | 352 | 357 |
| Deferred issuance expenses | 40 | -- |
| Total long-term assets | 737 | 495 |
| Total assets | $ 7,707 | $ 23,087 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Trade payables | $ 877 | $ 1,062 |
| Other accounts payable and accrued expenses | 1,473 | 1,952 |
| Total current liabilities | 2,350 | 3,014 |
| LONG-TERM LIABILITIES: | ||
| Accrued severance pay | 1,492 | 439 |
| Liability in respect of warrants | 1,931 | 1,211 |
| Total long-term liabilities | 3,423 | 1,650 |
| Total liabilities | 5,773 | 4,664 |
| STOCKHOLDERS' EQUITY: | ||
| Common stock--$0.0001 par value; 100,000,000 shares authorized; 12,307,808 and 18,497,307 shares issued and outstanding at December 31, 2012 and 2013, respectively | 1 | 2 |
| Additional paid-in capital | 66,509 | 100,126 |
| Deficit accumulated during the development stage | (64,576) | (81,705) |
| Total stockholders' equity | 1,934 | 18,423 |
| Total liabilities and stockholders' equity | $ 7,707 | $ 23,087 |