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Epigenomics AG (OJ:ECX) Key Figures (in EUR thousand)
- Revenues: 1,831 in 9M 2008; (9M 2007: 1,809) - EBIT: -8,536 in 9M 2008; improved by 16% (9M 2007: -10,179) - Net loss: -8,147 in 9M 2008; reduced by 17% (9M 2007: -9,838) - Liquid assets: 15,162 at end of September 2008 (Dec 31, 2007: 10,016)
Highlights of Q3 2008
- Progressed PRESEPT Clinical Study - Executed according to plan in colorectal cancer blood test commercialization - Key patent granted in Europe - Completed clinical study for prognostic prostate cancer tissue test with excellent results - Initiated additional clinical study in lung cancer program - Strengthened management with industry experts in product development and marketing
Berlin, Germany and Seattle, WA, USA, November 4, 2008 - Epigenomics AG (Frankfurt, Prime Standard: ECX), a cancer molecular diagnostics company developing tests based on DNA methylation, today reported financial results for the third quarter and for the first nine months of 2008, ended September 30, 2008, and provided a corporate update.
Commenting on the first nine months, Geert Nygaard, the company's Chief Executive Officer, said: "After the successful financing in the first half, we have focused primarily on our product development operations in the third quarter. In particular I would like to highlight the excellent progress made in the PRESEPT Study, the successful completion of the clinical study validating our prognostic prostate cancer tissue test and the initiation of another clinical study in our lung cancer program. At the same time we continued to execute on our "Epi 2010" initiative continuously optimizing our organization while reducing net cash consumption. I am absolutely convinced that the key additions to our management team with Uwe Staub joining us from QIAGEN to head our product development and Friedericke Gerdes joining us from Agendia to head our marketing will further strengthen our operational and commercial focus and will help us succeed in delivering on our goals."
Q3 2008 - Operational Review and Highlights
PRESEPT. The PRESEPT Clinical Study Steering Committee recently reviewed the substantial progress that has been made in the execution of the PRESEPT Study. In addition, Dr. Timothy R. Church, Professor, School of Public Health, University of Minnesota has been assigned responsibility for study results analysis and Prof. Dr. Thomas Rösch, Director of the Clinic for Interdisciplinary Endoscopy, University Hospital Hamburg-Eppendorf has been added to the Committee as representative of the German sites.
In its recent meeting, the study's steering committee strongly advised Epigenomics, not to undertake an interim analysis of clinical results in early 2009, but rather to only conduct a final analysis when enrollment is complete. The Committee recommended this course to strengthen the overall study design by avoiding the statistical penalty on the study's overall power incurred by conducting an interim analysis.
Since starting the PRESEPT Study in Q2 of 2008, Epigenomics has successfully qualified 17 clinical sites, 12 of which have been initiated, enrolling nearly 500 subjects in the first three months. The increased number of clinical sites is expected to now rapidly ramp up accrual of subjects over the next several months. When the total of up to 20 clinical sites including three in Germany are initiated, PRESEPT will be one of the largest commercially sponsored colorectal cancer screening clinical studies ever conducted. Epigenomics is providing clinical collaborators, medical professionals, and the interested public with study details and regular updates on the progress of the PRESEPT Study on the recently launched website www.presept.net.
Colorectal Cancer Test Commercialization. In both of Epigenomics' key collaborations with Abbott Molecular Inc. and Quest Diagnostics Inc. - each aimed at developing and commercializing a Septin9 colorectal cancer blood test - significant progress was made in the third quarter 2008. All required steps in the transfer of the Epigenomics assay onto the Abbott m2000 platform have been initiated and are on schedule. Quest progressed in the establishment and validation of a laboratory-developed test (LDT) for Epigenomics' Septin9 marker, which is expected to be launched in due course.
Key Patent Grant. Following the notice of allowance in Q3, the European Patent Office granted Epigenomics' Septin 9 biomarker Patent EP 1721992 effective October 8, 2008. This grant significantly strengthens the intellectual property position of Epigenomics' colorectal cancer blood test, the company's leading product in development.
Prostate Cancer Prognosis Test. In October 2008 Epigenomics successfully completed a clinical study in prostate cancer that demonstrated that patients with elevated PITX2 gene methylation level had a threefold higher risk of relapse following prostatectomy compared to patients with low PITX2 methylation. Further the study demonstrated that the PITX2 methylation status adds clinical information to established prognostic parameters such as age, Gleason Score, tumor staging, pre-surgical PSA levels and surgical margin status. In each comparison, high PITX2 gene methylation indicated a twofold increase in risk of recurrence. In the group of patients with an intermediate Gleason Score of 7, which present difficult decisions for doctors and patients due to difficulty in determining their prognosis, the PITX2 marker was able to discriminate patients into those with a high and low risk of disease recurrence. Epigenomics currently explores several routes of commercialization to make this test available to doctors and patients as soon as possible. Lung Cancer Program. Following the successful clinical studies in the first half of 2008, Epigenomics during Q3 has initiated a larger clinical study in its lung cancer program using bronchial lavage specimen. With the data of this study at hand by year-end 2008, the company expects to decide on the further development strategy for a bronchial lavage test product. Key Management Changes. On November 1, 2008, Epigenomics' management team was strengthened by adding two senior industry experts in diagnostics R&D and marketing: Dr. Uwe Staub joined Epigenomics as Senior Vice President Product Development. Dr. Staub comes to Epigenomics from his position as Senior Director Program Management for North American R&D at QIAGEN. He managed the human papilloma virus (HPV) product development projects for cervical cancer and lead QIAGEN's program management office in Gaithersburg, MD, U.S.A. Before joining Digene that was later acquired by QIAGEN, Dr. Staub had spent more than eleven years with Abbott Diagnostics in Germany and gained experience in product development, operations and regulatory affairs/compliance. Dr. Staub holds a doctorate degree in biochemistry from the University of Würzburg, Germany.
Further, Dr. Friedericke Gerdes joined Epigenomics as Head of Marketing. Most recently she was Global Marketing Director at Agendia BV (Amsterdam, Netherlands), another cancer molecular diagnostics player. At Agendia, she was responsible for global strategic and tactical marketing, as well as for corporate identity, product branding and product launches. She has over twelve years of relevant experience in various international marketing and sales positions with companies such as Applied Biosystems and GE Healthcare / Biacore. Dr. Gerdes holds a doctorate degree in cell biology from the University of Kiel, Germany. On August 5, 2008, Epigenomics' Supervisory Board and Dr. Kurt Berlin, Chief Scientific Officer (CSO) of Epigenomics AG, agreed that Dr. Berlin would step down as CSO and Executive Board member effective August 31, 2008. Dr. Kurt Berlin, one of the co-founders of the Company, now serves as chairman of Epigenomics' Scientific Advisory Board and is continuing to advise Epigenomics on scientific, technological, licensing and IP-related matters as a consultant throughout 2008 and 2009.
With these management changes, Epigenomics continues to execute on its Epi 2010 initiative introduced earlier this year to continuously streamline operations and evolve the company into a truly commercial organization.
First 9 Months of 2008 - Financial Review Epigenomics' revenue in 9M 2008 amounted to over EUR 1.8 million, in line with the EUR 1.8 million during the same period in 2007. 9M revenues were 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 9M 2008 of EUR -8.5 million was in line with management's expectations and showed a 16% improvement over EBIT for 9M 2007 of EUR -10.2 million. R&D expenses dropped from EUR 7.7 million in 9M 2007 to 6.8 million with increased focus on Epigenomics' lead programs. Cost of sales for partnered R&D programs remained virtually unchanged at EUR 678 thousand during the reporting period compared to EUR 671 thousand in 9M 2007.
Overall operating costs during the first nine months of 2008 amounted to EUR 11.3 million, down 13% from the same period in 2007 (EUR 12.9 million). This improvement is an effect of Epigenomics' "Epi 2010" initiative. At the end of the reporting period Epigenomics employed 92 staff compared to 112 employees at year-end 2007.
Net loss for the reporting period amounted to EUR -8.1 million compared to EUR -9.8 million in 9M 2007. Basic and diluted loss per share improved from EUR -0.56 in 9M 2007 to EUR -0.32 in the reporting period.
Overall, the financial position of Epigenomics has developed favorably: total balance sheet assets amounted to EUR 24.7 million at the end of the reporting period compared to EUR 22.9 million at year-end 2007; liquid assets amounted to EUR 15.2 million as of September 30, 2008, compared to EUR 10.0 million as of December 31, 2007.
In 9M 2008, total net cash flow was positive at EUR 5.6 million, due to the cash inflow from the capital increase realized in February 2008. Cash outflow from operating activities in 9M 2008 amounted to EUR 6.9 million. Cash inflow from investing activities amounted to EUR 1.0 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 three quarters of 2008 have been characterized by stringent fiscal discipline coupled with stable revenue generation. Hence, we are on track for reaching our primary financial goal of reducing cash burn to less than ten million Euros in 2008", commented Oliver Schacht, Chief Financial Officer of Epigenomics.
Outlook
In Q4 2008 and into 2009, 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 continue rapidly ramping up site qualification, site initiation and sample collection towards completion in H2 2009.
In due course, 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 due course. Epigenomics has ongoing IVD partnering discussions and negotiations, and has made significant progress during the first nine months of 2008.
Management expects full year 2008 revenue to increase only slightly compared to 2007 revenue of EUR 2.6 million. The operating result for 2008 is expected to improve significantly and to be around 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.
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 about 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.
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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. Contact
Epigenomics AG Dr. Achim Plum SVP Corporate Development +49 30 24 345 368 achim.plum@epigenomics.com
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