Key Figures and Financial Highlights :
Full year revenue EUR2.6 million and other income of EUR1.1 million
Operational costs reduced by close to EUR1 million to EUR16.5 million
EBIT improved by 6% to EUR(12.8 million) despite one-time write-off of in-licensed platform and IP of EUR1.5 million
Liquidity position of EUR12.1 million as of December 31, 2008
Successfully completed rights issue in early 2008 raising EUR13.5 million
EUR5.2 million PIPE placed at 5% premium in early 2009 secures funding through end of 2010
Operational Highlights:
Abbott Molecular on track for European launch of colorectal cancer blood test in Q4-2009
Sysmex Corporation second non-exclusive partner for colorectal cancer blood test
Licensed GSTP1 prostate cancer biomarker to Quest Diagnostics
Entered into broad R&D collaboration in cancer molecular diagnostics with Philips
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 subjects enrolled
mSEPT9 research product launched in Europe
Successfully completed clinical evaluation of lung cancer biomarkers
Initiated development of IVD test for lung cancer after successful clinical evaluation
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 hires
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, chief executive officer 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 non-exclusive 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.”
Financial Review 2008 & Successful Financing Transactions
Oliver Schacht, chief financial officer of Epigenomics AG, commented:
“We have successfully closed two financing transactions since January 2008, raising gross proceeds of EUR13.5 million in early 2008 and another EUR5.2 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 EUR1 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 EUR10 million, and are now very well placed to drive the business forward”.
In 2008, Epigenomics recognized total revenue of EUR2.6 million, a small increase of 1% from the previous year. Revenues from our biomarker services business contributed EUR0.9 million and licensing revenues were EUR1.2 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 EUR1.1 million in 2008.
Cost of sales from the execution of partnered programs increased by EUR0.8 million to EUR1.7 million compared to EUR0.9 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 EUR10.5 million in 2007 to EUR10.0 million.
Stringent financial discipline and the implementation of our “Epi 2010” initiative have led to a further reduction of the operating cost basis by EUR1.0 million. Marketing and business development costs fell from EUR1.3 million in 2007 to EUR0.9 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 EUR3.4 million – significantly below the previous year’s figure (EUR4.3 million).
In 2008, EBIT amounted to EUR(12.8 million), a significant 6% improvement compared to previous year’s EUR(13.5 million). At EUR12.3 million, net loss for the full year 2008 also showed a substantial improvement over the previous year’s figure (EUR13.2 million). These losses include a one-time non-cash related depreciation of EUR1.5 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 EUR11.5 million. This was due to the rights issue financing in Q1 of 2008, compared to EUR4.5 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 EUR12.1 million compared with EUR10.0 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 EUR1.60 each resulting in gross proceeds of about EUR13.5 million. Primarily driven by this capital increase the total issued share capital of Epigenomics increased from EUR18,252,824 as of December 31, 2007 to EUR26,723,636 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 EUR1.94 per share for gross proceeds of EUR5.2 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).
Future Outlook
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 EUR3 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 EUR11 million for the fiscal year 2009. Cash burn will be closely monitored and is expected remain below EUR10 million for 2009 despite the investments being made in PRESEPT, the lung cancer IVD development, ongoing clinical studies and the pre-launch marketing activities.