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EANS-News: Epigenomics AG
Epigenomics AG Reports Financial Results for the
Fiscal Year 2008
Successfully delivering on new partnering deals - PRESEPT clinical trial on track - Product launches expected in 2009 - Financials in line with latest expectations - Two successful financing transactions
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Press Release, Berlin, Germany and Seattle, WA, USA, Tuesday, March 31, 2009 (euro adhoc) - Key Figures and Financial Highlights :
@@start.t2@@. Full year revenue EUR 2.6 million and other income of EUR 1.1 million
. Operational costs reduced by close to EUR 1 million to EUR 16.5 million
. EBIT improved by 6% to EUR (12.8 million) despite one-time write-off
of in-licensed platform and IP of EUR 1.5 million
. Liquidity position of EUR 12.1 million as of December 31, 2008
. Successfully completed rights issue in early 2008 raising EUR 13.5
. EUR 5.2 million PIPE placed at 5% premium in early 2009 secures funding
through end of 2010@@end@@
@@start.t3@@. Abbott Molecular on track for European launch of colorectal cancer blood
test in Q4-2009
. Sysmex Corporation second non-exclusive partner for colorectal cancer
. Licensed GSTP1 prostate cancer biomarker to Quest Diagnostics
. Entered into broad R&D collaboration in cancer molecular diagnostics with
. Delivered results in biomarker collaborations with Johnson & Johnson,
Pfizer, Centocor and others
. PRESEPT Study now co-funded by Abbott and on track with over 3,000
. mSEPT9 research product launched in Europe
. Successfully completed clinical evaluation of lung cancer biomarkers
. Initiated development of IVD test for lung cancer after successful
. mPITX2 biomarker successfully validated for prostate cancer prognosis;
test available in early access program in due course
. Strengthened IP position with key patent grants and new licensing
agreements with OncoMethylome Sciences and DxS Ltd.
. Strengthened commercially oriented organization with several key new
Epigenomics AG (Frankfurt, Prime Standard: ECX), a cancer molecular diagnostics company developing tests based on DNA methylation, today reported its financial results for the fiscal year ending December 31, 2008 and provided an update on strategy and operations.
Geert Nygaard, CEO of Epigenomics, said: "We look back on a very successful year in which we have continued to focus on our key value driver, the blood-based colorectal cancer screening test. We have delivered and expect to continue to deliver on our strategy. Specifically we have executed several new deals such as the Philips and Sysmex partnerships, which are in line with our nonexclusive licensing approach, and we have also expanded both our Abbott Molecular as well as our Quest Diagnostics deals. In addition, we have made progress with PRESEPT, our major clinical study, and have advanced the development of our other cancer products. With the two successful financing transactions in the past 15 months and the licensing agreement with Quest Diagnostics on prostate cancer we have made a very successful start in 2009 and we are now ideally positioned to bring our key products to the market this year."
Operational Review 2008 and recent highlights
2008 and early 2009 have been characterized by continued execution of Epigenomics' nonexclusive partnering strategy as well as the substantial progress made in the Company's product development pipeline with successful clinical study results in colorectal, lung and prostate cancer programs.
In early 2008 Epigenomics confirmed the performance of its colorectal cancer blood test based on the mSEPT9 biomarker in two independent clinical studies with a total of over 500 patient samples tested. These studies used a routine- capable and automatable workflow that has proved to be an excellent model assay and benchmark for the Company's partners developing tests for mSEPT9.
To maximize diagnostic platform access and ultimately the market penetration and therefore the value for Epigenomics and its stakeholders, the Company continued to leverage its biomarkers in a nonexclusive licensing approach. In line with this business model, Epigenomics has initiated and expanded several strategic partnerships. Following the initial licensing of the mSEPT9 biomarker in the autumn of 2007, Abbott has increased its commitment by co-funding Epigenomics' PRESEPT clinical study. Obtaining access to the specimen collected in this study will allow Abbott to conduct its pivotal clinical trials for FDA approval of its mSEPT9 colorectal cancer blood test in a timely and cost effective manner.
Since this expansion of the Abbott partnership, Epigenomics has entered into new R&D and licensing collaborations with Philips and Sysmex as second and third IVD partners. Under the agreement with Philips announced in late 2008, both companies collaborate in R&D for DNA methylation analysis on a fully integrated IVD platform. This is an alliance that, if successful, could potentially cover multiple cancer molecular diagnostic tests. The R&D agreement with Sysmex closed in early 2009 is targeted at the development of a colorectal cancer blood test based on mSEPT9, initially for the Japanese market. Further, Epigenomics expanded its licensing alliance with Quest Diagnostics to also include the rights to commercialize a prostate cancer test based on the GSTP1 DNA methylation biomarker. This is in addition to the mSEPT9 colorectal cancer blood test which we continue to expect Quest to launch in due course.
Throughout 2008 and during 2009 to date Abbott and Epigenomics have made excellent progress in the development of the mSEPT9 test (which will be run on the Abbott m2000 platform) leading to the approval and freeze of the assay design for the final stages of development and clinical validation. Market launch for Abbott's colorectal cancer blood test based on mSEPT9 is on track for Q4-2009 in Europe followed by the filing for US approval that is planned for 2010. For the necessary pivotal clinical trial in the U.S., Abbott will make use of specimen collected by Epigenomics in the PRESEPT Study.
The PRESEPT Study is a multi-center clinical study to characterize mSEPT9 performance and health economic benefit in a US colorectal cancer screening guideline-eligible population. The study, which is expected to enroll approximately 7,500 subjects (the target is to include 50 previously undetected cancer cases), has progressed according to plan and expectations. A total of 21 clinical sites (17 in the USA and 4 in Germany) have enrolled more than 3,000 subjects to date. Reporting of the first study results continues to be expected by late 2009. Epigenomics has established a high-profile Medical Advisory Board as well as a fully independent clinical study steering committee under the chairmanship of Prof. David Ransohoff (University of North Carolina School of Medicine and with Prof. Timothy R. Church (University of Minnesota) as Principal Investigator. Details on the PRESEPT Study and its progress can be found on at www.clinicaltrials.gov as well as www.presept.net.
In early 2008 Quest Diagnostics obtained the rights to commercialize Epigenomics' mSEPT9 biomarker as a laboratory-developed test (LDT) to aid in the early detection of colorectal cancer in the US. Quest is expected to launch this LDT in due course, making Epigenomics' mSEPT9 biomarker commercially available for the first time to patients and doctors in the US. In Europe an mSEPT9 research kit has been successfully developed, manufactured and released and is currently being used by several clinical laboratories to establish and launch laboratory developed tests.
Epigenomics' further programs in lung cancer and prostate cancer have made very good progress over the last year, with advanced product opportunities in both indications. In lung cancer the Company completed the clinical evaluation of its proprietary biomarkers in an application to aid in the diagnosis of lung cancer using bronchial lavage samples and entered the product development phase for a CE marked IVD test. This is expected to be ready for commercial launch in Europe in H1-2010. Data from the clinical evaluation will be presented by Prof. John Field (University of Liverpool/UK), one of the collaborators in the clinical evaluation, at the 100th Annual Meeting of the American Association for Cancer Research in Denver, Colorado, USA, on April 21, 2009.
In its prostate cancer program the Company has confirmed in an independent population that its mPITX2 biomarker is an independent prognostic factor in prostate cancer and can be utilized to assess the risk of recurrence after radical prostatectomy. Through an Early Access Program mPITX2 will be made available in several clinical laboratories in Germany in H1-2009 while the Company is in negotiation with potential industry partners to commercialize IVD tests based on this biomarker.
In its R&D collaborations with pharma and biotech companies including Centocor, Johnson & Johnson, Pfizer, and Merck & Co., Epigenomics has delivered high quality results and has signed new R&D collaboration agreements with undisclosed industry and academic research partners.
As part our drive towards the goal of establishing a unified technology standard for DNA methylation-based diagnostics, during 2008 Epigenomics licensed the non-exclusive rights to several proprietary core technologies for body fluid and tissue testing to OncoMethylome Sciences and entered into a strategic cross-licensing agreement with DxS for DxS' proprietary Scorpions® technology. Along with the granting of key patents such as the mSEPT9 biomarker patent issuing in Europe, the IP position of Epigenomics has been further improved and broadened. Epigenomics continues to leverage its IP portfolio in DNA methylation via licensing deals such as the agreements with QIAGEN for preanalytics and our MethyLight real-time PCR technology.
To further strengthen the IVD development and commercialization capabilities of the Company, Epigenomics hired Dr. Uwe Staub as a SVP Product Development and Dr. Friederike Gerdes as Head of Marketing & Sales. Both of these new hires come with substantial track records in the diagnostics industry. Financial Review 2008 & Successful Financing Transactions
Oliver Schacht, CFO of Epigenomics AG, commented: "We have successfully closed two financing transactions since January 2008, raising gross proceeds of EUR 13.5 million in early 2008 and another EUR 5.2 million in February this year. We were able to complete these capital increases in the midst of what arguably is the worst global financial crisis in decades. This is testament to our solid fundamentals, strategic execution, excellent operational progress and our fiscal discipline. Last year we successfully managed to further reduce operational costs by EUR 1 million despite a one-time write-off of certain in-licensed IP and platform assets. As promised, we successfully achieved our primary goal of reducing cash-burn in 2008 to less than EUR 10 million, and are now very well placed to drive the business forward".
In 2008, Epigenomics recognized total revenue of EUR 2.6 million, a small increase of 1% from the previous year. Revenues from our biomarker services business contributed EUR 0.9 million and licensing revenues were EUR 1.2 million. Neither the Philips deal nor the expansion of the Abbott Molecular deal have yet contributed significantly to 2008 revenues. Other income amounted to an additional EUR 1.1 million in 2008.
Cost of sales from the execution of partnered programs increased by EUR 0.8 million to EUR 1.7 million compared to EUR 0.9 million in 2007 as Epigenomics' diagnostic co-development with Abbott shifted some costs from 'R&D' to 'Cost of Sales'. R&D costs consequently decreased from EUR 10.5 million in 2007 to EUR 10.0 million.
Stringent financial discipline and the implementation of our "Epi 2010" initiative have led to a further reduction of the operating cost basis by EUR 1.0 million. Marketing and business development costs fell from EUR 1.3 million in 2007 to EUR 0.9 million. This decrease was partly attributable to a more focused utilization of external services and the build-up of Epigenomics' in- house marketing & sales team in late 2008. General and administrative costs amounted to EUR 3.4 million - significantly below the previous year's figure (EUR 4.3 million).
In 2008, EBIT amounted to EUR (12.8 million), a significant 6% improvement compared to previous year's EUR (13.5 million). At EUR 12.3 million, net loss for the full year 2008 also showed a substantial improvement over the previous year's figure (EUR 13.2 million). These losses include a one-time non-cash related depreciation of EUR 1.5 million of some of Epigenomics' in-licensed IP and diagnostic platform assets that are no longer part of our core strategy, illustrating an even stronger underlying improvement over last year.
Net cash inflow from financing activities amounted to EUR 11.5 million. This was due to the rights issue financing in Q1 of 2008, compared to EUR 4.5 million in 2007, which was mainly the result of a PIPE transaction in Q2 2007. Liquid assets including marketable securities on December 31, 2008 totaled EUR 12.1 million compared with EUR 10.0 million at the end of the previous year. The liquidity position was mainly affected by the continued cash consumption by operations, especially for Epigenomics' product development.
In Q1 2008 Epigenomics successfully completed a capital increase despite a very difficult market environment. Epigenomics successfully placed 8,458,062 new shares at a price of EUR 1.60 each resulting in gross proceeds of about EUR 13.5 million. Primarily driven by this capital increase the total issued share capital of Epigenomics increased from EUR 18,252,824 as of December 31, 2007 to EUR 26,723,636 as of December 31, 2008.
In February 2009 Epigenomics successfully completed a PIPE transaction and capital increase at a 5% premium to then prevailing market prices for its stock. Epigenomics issued 2,671,088 new shares at a price of EUR 1.94 per share for gross proceeds of EUR 5.2 million. Thereby, as of February 27, 2009 the total number of shares outstanding has increased to 29,394,724. The transaction was lead by a fund of the BB MEDTECH group (Schaffhausen/Switzerland) which thereby became Epigenomics' second largest investor after Federated Investors (Pittsburgh, PA, USA).
Epigenomics will build on last year's successes and will continue to focus on driving forward the clinical development and commercialization of its colorectal cancer test. The Company expects to complete the PRESEPT study to demonstrate clinical performance and health economic benefit in a US colorectal cancer screening guideline-eligible population by the end of 2009 and expects Quest Diagnostics to launch a laboratory-developed blood test to aid in the early detection of colorectal cancer in due course. This will mark an important milestone in Epigenomics' commercialization strategy, as patients and doctors in the U.S. will for the first time be given access to a commercial test based on Epigenomics' proprietary mSEPT9 biomarker.
Most importantly and unchanged from our previous guidance, the Company expects Abbott, its first non-exclusive IVD partner for mSEPT9, to launch a blood test for colorectal cancer as a CE-marked IVD product in Europe towards the end of 2009.
Epigenomics will continue to execute on its non-exclusive licensing strategy and is seeking further diagnostic industry partners for the commercialization of its cancer screening programs. Management will carefully weigh the benefit of adding a partner ahead of PRESEPT data versus the incremental value that would be created and captured following a successful PRESEPT Study and an Abbott product launch in Europe in Q4-2009.
In its product development program for a lung cancer diagnostic test, Epigenomics anticipates generating additional clinical data through 2009 and to be ready for the launch of a CE marked IVD kit in Europe in H1-2010.
Financials for the fiscal year 2009 are expected to be characterized by continued fiscal discipline and focus on the colorectal and lung cancer programs. Epigenomics anticipates 2009 revenue of at least EUR 3 million, and to be above 2008 revenue. This will depend on current R&D collaborations and partnerships as well as potential new partnerships as outlined above. EBIT loss is expected to continue to improve over 2008, with a target to no greater than EUR 11 million for the fiscal year 2009. Cash burn will be closely monitored and is expected remain below EUR 10 million for 2009 despite the investments being made in PRESEPT, the lung cancer IVD development, ongoing clinical studies and the pre-launch marketing activities.
The complete Annual Report 2008 published today can be downloaded from Epigenomics' website.
Epigenomics will host a press conference and analyst meeting in German today at 10 am CET at the premises of the Villa Bonn - Frankfurter Gesellschaft für Handel Industrie und Wirtschaft in Frankfurt am Main:
Villa Bonn Frankfurter Gesellschaft für Handel Industrie und Wirtschaft Siesmayerstrasse 12 60323 Frankfurt am Main Room: Vortragsraum (OG)
Epigenomics' management will also host a conference call at 3 pm CET / 9 am EST today to discuss 2008 financial results and outlook for 2009. The conference call will be conducted in English.
Dial-in number (within Germany.): +49 (0) 30 868 71 790 Dial-in number (outside Germany): +1 212 444 0297
Please note that the dial-in details changed since the invitation to the conference call was first posted on March 11, 2009.
Please dial-in at least 10 minutes prior to commencement of the conference call.
To follow the presentation, Epigenomics kindly ask all participants of the call to download the slide set from the Company website prior to the call where it will be made available as a PDF file at 10 am CET (4 am EST) on the same day.
Internet link: http://www.epigenomics.com/en/down_loads/corporate_material/
The conference call will be recorded and also made available on the Company website web as an audio file after the call. Internet link: http://www.epigenomics.com/en/down_loads/corporate_material/
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 earlier stage or more accurately 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 mSEPT9 for the early detection of colorectal cancer in a simple blood sample has repeatedly demonstrated excellent performance in multiple clinical studies with in total about 3,500 individuals tested. A large prospective clinical study - PRESEPT - for evaluation of mSEPT9 in a screening population is currently under way (www.presept.net).
For development and global commercialization of in vitro diagnostic test products, Epigenomics pursues a non-exclusive partnering strategy. Strategic diagnostics industry partners include Abbott Molecular, Philips, Sysmex Corporation and Quest Diagnostics for diagnostics test products, and QIAGEN N.V. for sample preparation solutions and research products.
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, USA. For more information, please visit Epigenomics' website at www.epigenomics.com.
Epigenomics' legal 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.
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ots Originaltext: Epigenomics AG
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Dr. Achim Plum
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Tel: +49 30 24345 368
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