Medgenics Reports Third Quarter 2012 Financial Results
MISGAV, Israel & SAN FRANCISCO--(BUSINESS WIRE)-- Medgenics, Inc. (NYSE Amex: MDGN and AIM: MEDU, MEDG) (the Company), the developer of a novel technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue, today reported financial results for three and nine months ended September 30, 2012.
Business Highlights of the Third Quarter and Subsequent Weeks
- Received approval from Israels Ministry of Health to initiate two Phase I/II studies to assess the safety and efficacy of INFRADURE" to treat hepatitis C. These will be the first clinical proof-of-concept studies for the INFRADURE Biopump.
- Enrolled the first patients in a Phase IIa trial in Israel with EPODURE" to treat anemia in patients with end-stage renal disease who are on dialysis, and presented preliminary data at the American Society of Nephrologys Kidney Week 2012.
- Expanded the executive management team with the addition of Marvin Garovoy, M.D., as Chief Medical Officer. Dr. Garovoy is a biotechnology and pharmaceutical industry executive with considerable drug development experience at Genentech, XOMA, Hyperion Therapeutics, and Arriva Pharmaceuticals.
- Appointed Sol J. Barer, Ph.D. as Chairman of the Board. Dr. Barer is the former Chairman and Chief Executive Officer of Celgene Corporation.
We made important progress during the third quarter towards our strategic and clinical goals, stated Andrew L. Pearlman, Ph.D., Chief Executive Officer of Medgenics (MDGN).
Specifically, we received approval from the Israel Ministry of Health for our Phase I/II trials in hepatitis C, with an objective of enrolling up to 16 untreated patients with hepatitis C genotype 3. This represents the first proof of concept study of INFRADURE in man. We expect to use data from this study to advance our broader INFRADURE hepatitis clinical development program, starting in the U.S., where we have received Orphan Drug Designation for hepatitis D from the U.S. Food and Drug Administration (FDA). Hepatitis D is a rare and aggressive form of hepatitis whose standard treatment today consists of weekly injections of interferon-alpha for a year or more, where oral antiviral treatments have not been effective. In addition, we are investigating the application of INFRADURE for hepatitis B towards addressing the emerging need for a practical, shorter treatment alternative to years of expensive oral antivirals. Hepatitis B is the most prevalent form of hepatitis, with an estimated 350 million people infected worldwide, according to the World Health Organization.
We have also initiated a Phase IIa EPODURE study in Israel to treat anemia in dialysis patients with end-stage renal disease ("ESRD"), and have recently presented early data from that study in a poster at the 2012 Kidney Week of the American Society of Nephrology. We continue preparations to initiate a Phase II clinical trial in the U.S. in early 2013 with EPODURE in ESRD patients on dialysis, as cleared by the FDA in May under an Investigational New Drug (IND) application. Our objective with this EPODURE study is to achieve recommended hemoglobin targets for months, while avoiding the risks of supraphysiologic EPO concentrations associated with injections of erythropoietin stimulating agents, It also has the potential to improve the logistics of anemia management in a range of settings, whether in the clinic, home or elsewhere, to the benefit of both patients and payors.
We are in the process of performing a comprehensive pipeline review to assess clinical applications we believe could benefit from our versatile Biopump platform and to update our list of targeted indications that will maximize our business development prospects, added Dr. Pearlman.
We are very pleased to have strengthened Medgenics leadership with the addition of Dr. Sol Barer as Chairman of the Board, and to have bolstered our clinical team with the appointment of Dr. Marvin Garovoy as Chief Medical Officer, concluded Dr. Pearlman.
Third Quarter Financial Results
Gross research and development (R&D) expense for the third quarter of 2012 increased to $1.89 million from $1.79 million for same period in 2011 due to an increase in R&D personnel. Net R&D expense for the 2012 third quarter was $1.61 million compared with net R&D expense of $1.35 million for the prior years third quarter.
General and administrative expense for the third quarter of 2012 was $1.47 million compared with $1.88 million for the third quarter of 2011, primarily due to a decrease in compensation for professional services.
Financial expense for the third quarter of 2012 decreased to nil from $0.27 million for the same period in 2011, mainly as a result of changes in valuation of the warrant liability.
For the quarter ended September 30, 2012, the Company reported a net loss of $3.03 million or $0.25 per share, compared with a net loss of $3.42 million or $0.35 per share in the comparable 2011 period.
Nine Month Financial Results
Gross R&D expense for the nine months ended September 30, 2012 was $5.13 million, up from $4.50 million for the same period in 2011 due to an increase in the use of materials and sub-contractors in connection with preparations for the Companys ongoing Phase II EPODURE clinical trial in Israel and planned Phase II clinical trial in the U.S., preparations for the trials of INFRADURE in Israel and an increase in R&D personnel. For the nine months ended September 30, 2012, net R&D expense decreased to $3.36 million from $3.57 million for the comparable prior-year period due to the participation by the Israeli Office of the Chief Scientist of $1.77 million in the 2012 period compared with $0.86 million for the 2011 period, which was partially offset by higher gross R&D expenses as detailed above. General and administrative expense for the first nine months of 2012 was $5.60 million compared with $3.71 million for the first nine months of 2011 primarily due to increased fees for legal and professional services and stock-based compensation granted to consultants and directors. The Companys net loss for the first nine months of 2012 was $12.69 million or $1.20 per share, compared with a net loss of $6.09 million or $0.76 per share for the same period of 2011.
Balance Sheet Highlights
As of September 30, 2012, Medgenics had cash and cash equivalents of $9.00 million, compared with $5.00 million as of December 31, 2011. For the nine months ended September 30, 2012, the Company used $5.87 million in net cash to fund operating activities, compared with $5.46 million for the nine months ended September 30, 2011.
Full results may be viewed in the Companys Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC). The Form 10-Q includes unaudited consolidated financial statements containing the information highlighted in this press release, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov and at www.medgenics.com.
Medgenics is developing and commercializing Biopump", a proprietary tissue-based platform technology for the sustained production and delivery of therapeutic proteins using the patient's own tissue for the treatment of a range of chronic diseases including anemia, hepatitis and hemophilia, among others. Medgenics believes this approach has multiple benefits compared with current treatments, which include regular and costly injections of therapeutic proteins.
Medgenics has three long-acting protein therapy products in development based on this technology:
- EPODURE" to produce and deliver erythropoietin from a single administration, which has demonstrated elevation and stabilization of hemoglobin levels in anemic patients for periods of six months to more than 36 months in a Phase I/II dose-ranging trial in Israel and is currently in a Phase IIa trial in dialysis in Israel. An IND application has been cleared by the FDA to initiate a Phase IIb study to evaluate the safety and efficacy of EPODURE in the treatment of anemia in dialysis patients in the U.S.
- INFRADURE" for sustained production and delivery of interferon-alpha for use in the treatment of hepatitis, which has received approval for two Phase I/II trials in hepatitis C from the Israeli Ministry of Health with the first slated to commence in Q4 2012; and has received Orphan Drug Designation from the FDA for the treatment of hepatitis D.
- HEMODURE" for sustained production and delivery of clotting Factor VIII therapy for the sustained prophylactic treatment of hemophilia, which is now in development.
Medgenics is focused on the development and manufacturing of its innovative Biopumps, aiming to bring them to market via strategic partnerships with major pharmaceutical and/or medical device companies.
In addition to treatments for anemia, hepatitis and hemophilia, Medgenics plans to develop and/or out-license a pipeline of future Biopump products targeting the large and rapidly growing global protein therapy market, which is forecast to reach $132 billion in 2013. Other potential applications for Biopumps include multiple sclerosis, arthritis, pediatric growth hormone deficiency, obesity and diabetes.
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.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
|September 30,||December 31,|
|Cash and cash equivalents||$||8,999||$||7,570||$||4,995|
|Accounts receivable and prepaid expenses||619||1,298||1,122|
|Total current assets||9,618||8,868||6,117|
|Restricted lease deposits||59||59||52|
|Severance pay fund||279||346||259|
|Total long-term assets||338||405||311|
|PROPERTY AND EQUIPMENT, NET||380||428||434|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Other accounts payable and accrued expenses||1,395||1,413||1,156|
|Total current liabilities||2,164||2,341||2,059|
|Accrued severance pay||1,585||1,252||1,328|
|Liability in respect of warrants||3,373||1,429||478|
|Total long-term liabilities||4,958||2,681||1,806|
Common stock - $0.0001 par value;
100,000,000 shares authorized; 12,236,570,
9,690,117 and 9,722,725 shares issued and
outstanding at September 30, 2012, September 30,
2011 and December 31, 2011, respectively
|Additional paid-in capital||65,403||52,172||52,501|
|Deficit accumulated during the development stage||(62,190||)||(47,494||)||(49,505||)|
|Total stockholders' equity||3,214||4,679||2,997|
|Total liabilities and stockholders' equity||$||10,336||$||9,701||$||6,862|
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Nine months ended
Three months ended
|Period from January 27, 2000 (inception) through|
|2012||2011||2012||2011||September 30, 2012|
|Research and development expenses||$||5,125||$ 4,503||$||1,894||$||1 ,785||$||35,567|
|Less - Participation by the Office of the Chief Scientist||(1,769||)||(860||)||(283||)||(357||)||(7,062||)|
|U.S. Government grant||-||-||-||-||(244||)|
|Participation by third party||-||(75||)||-||(75||)||(1,067||)|
|Research and development expenses, net||3,356||3,568||1,611||1,353||27,194|
|General and administrative expenses||5,603||3,709||1,470||1,877||32,001|
|Excess amount of participation in research and development from third party||-||-||-||-||(2,904||)|
|Loss before taxes on income||(12,676||)||(6,082||)||(3,026||)||(3,423||)||(62,534||)|
|Taxes on income||9||3||1||1||85|
|Basic and diluted loss per share||$||(1.20||)||$ (0.76||)||$||(0.25||)||$||(0.35||)|
|Weighted average number of shares of Common stock used in computing basic and diluted loss per share||10,604,924||8,020,348||12,013,153||9,657,659|
Dr. Andrew L. Pearlman, +972 4 902 8900
Anne Marie Fields, 212-838-3777
Adam Michael/Joanne Shears/Jamie Hooper
+44 207 398 7719
Nomura Code Securities (NOMAD & Joint Broker)
Jonathan Senior/Giles Balleny
+44 207 776 1200
SVS Securities plc (Joint Broker)
Alex Mattey/Ian Callaway
+44 207 638 5600
Source: Medgenics, Inc.Copyright Business Wire 2012