News

Medigene reports positive financial results and pipeline progress for the first six months of 2012

 

Analysts' telephone conference with webcast (English) today, 2:30 p.m. (CEST)

  • Growing revenue:
    • total revenue from continued operations increased to EUR 3.3 million (6M 2011: EUR 1.9 million)
    • total Veregen® revenue increased by 82%
  • Positive EBITDA:
    • from continued operations improved to EUR -4.2 million (6M 2011: EUR -5.1 million)
    • total (including one-time effects): EUR 0.8 million (6M 2011: EUR 17.0 million)
  • Balanced net result:
    • from continued operations improved to EUR -5.0 million (6M 2011: EUR -5.8 million)
    • total (including one-time effects): EUR 0 million (6M 2011: EUR 14.4 million)

 

  • Increased cash position:
    • Doubled to EUR 25.4 million (June 30, 2012) (Dec. 31, 2011: 12.8 million)

 

  • Strong pipeline progress
    • EndoTAG®-1: development and marketing partnership for Asia closed
    • RhuDex®: formulation study successfully completed; plan to start phase II study by year-end

 

  • Confirmation of 2012 financial guidance

Martinsried/Munich, August 3, 2012. Medigene AG (Frankfurt, Prime Standard; MDG) reports the financial results and operating progress for the first six months of 2012. The company improved revenue as well as EBITDA and net result from continued operations. Medigene increased total revenue from continued operations to EUR 3.3 million (6M 2011: EUR 1.9 million) and reduced EBITDA-loss from continued operations to EUR -4.2 million (6M 2011: EUR -5.1 million) as well as net loss from continued operations to EUR -5.0 million (6M 2011: EUR -5.8 million).  

Last year's reporting period included a non-recurring item of EUR 20 million, and the first half year of 2012 included a non-recurring item of EUR 5 million, both related to the sale of the Eligard® rights to Medigene's marketing partner Astellas, which was realized as "discontinued operations" according to IFRS. Combining continued and discontinued operations, Medigene achieved revenue of EUR 8.3 million (6M 2011: EUR 29.6 million), a positive EBITDA result of EUR 0.8 million (6M 2011: EUR 17.0 million) and a balanced net result for the period (6M 2012: EUR 0 million; 6M 2011: EUR 14.4 million).  

Important events since the beginning of 2012:

  • Eligard®:
    • Final milestone payment of EUR 5 million received from Astellas
    • Contract signed with Cowen for the transfer of Medigene's 2% royalty share against payment of EUR 14.1 million

 

  • Veregen®:
    • Positive decision on market approval of Veregen® in 17 European countries
    • Market launch in Spain
    • Market approvals granted in France, Switzerland, Norway, Sweden, Denmark, Serbia, Poland, Slovakia and Israel
    • Agreements signed for the commercialization of Veregen® in Turkey and the Nordic     Countries
  • EndoTAG®-1:
    • Co-development and commercialization agreement for Asia signed with SynCore
    • US patent granted for the use of EndoTAG®-1 in combination with taxanes for the treatment of triple-negative breast cancer (TNBC)

 

  • RhuDex®:
    • Clinical formulation study of RhuDex® for oral treatment of autoimmune diseases initiated and successfully completed  
    • Positive formulation study results and plan for further clinical development announced (phase II proof-of-concept study in PBC to start by year-end)
  • AAVLP:
    • Positive preclinical data presented at the World Vaccine Congress, USA

Dr. Frank Mathias, CEO of Medigene AG, comments: "Medigene has had an extremely dynamic start to the year and is delivering on its strategy. Veregen® revenues are significantly growing; RhuDex® has successfully completed a clinical formulation trial, and we are planning to start a phase II proof-of-concept trial by year-end. We have signed an EndoTAG®-1 development and marketing partnership with SynCore, who will finance a substantial part of the planned phase III trial. Additionally, we presented positive data with our AAVLP technology. The strong progress in our pipeline is a good prerequisite for future growth".

Arnd Christ, CFO of Medigene AG, adds: "Doubling our cash in the first half of 2012 provides us with a strong financial profile and enables us to invest in further strengthening of our pipeline."

Financial results for the first six months and for the second quarter of 2012 in detail:

Product sales and other income
In the first six months of 2012, total revenue from continued operations increased to EUR 3,296 thousand (6M 2011: EUR 1,882 thousand), and in the second quarter of 2012 to EUR 1,674 thousand (Q2 2011: EUR 1,233 thousand). This comprises product sales, license fees and milestone payments for Veregen®, which increased to EUR 1,654 thousand in the first half of 2012 (6M 2011: EUR 909 thousand) and to EUR 1,050 thousand in the second quarter of 2012 (Q2 2011: EUR 529 thousand). Total revenue also includes other operating income for the first six months of 2012 of EUR 1,642 thousand (6M 2011: EUR 973 thousand) and of EUR 624 thousand for the second quarter of 2012 (Q2 2011: EUR 704 thousand).

Other operating income consists of the 2% share of the Eligard® net sales. With effect from April 1, 2012, this share of net sales was transferred to Cowen for EUR 14.1 million. The corresponding income will be recognized pro rata as income over the life of the Eligard® patent of approximately ten years, and the resultant financial liabilities will be amortized taking into interest expense. Additionally, in the first quarter of 2012, Medigene received compensation of EUR 390 thousand from a service provider for costs incurred.

Revenue from discontinued operations decreased to EUR 5,023 thousand in the first six months of the year (6M 2011: EUR 27,702 thousand), and increased to EUR 5,006 thousand in the second quarter of 2012 (Q2 2011: EUR 406 thousand) as a result of the final milestone payment of EUR 5 million for the sale of the Eligard® rights to Astellas (6M 2011: EUR 20 million). In the same period of the previous year, in addition to the milestone payments, revenue Eligard® net sales and royalties up to the end of February 2011 was reported as product sales from discontinued operations.

Cost of sales
Cost of sales from continued operations totaled EUR 414 thousand in the first six months of 2012 (6M 2011: EUR 273 thousand) and EUR 136 thousand in the second quarter of 2012 (Q2 2011: EUR 193 thousand). These costs were incurred for the purchase of Veregen® and royalty payments for the sale of Veregen®. In the first half of 2012, no cost of sales was incurred from discontinued operations (6M 2011: EUR 5,362 thousand).

Gross profit
Gross profit from continued operations increased to EUR 2,882 thousand in the first half of 2012 (6M 2011: EUR 1,609 thousand) and to EUR 1,538 thousand in the second quarter of 2012 (Q2 2011: EUR 1,040 thousand). The amount of gross profit is determined by the ratio of revenue from product sales to license and milestone payments.

Selling, general and administrative expenses
Compared to the previous reporting period, selling, general and administrative expenses from continued operations increased on a six-month basis from EUR 3,564 thousand (6M 2011) to EUR 3,856 thousand (6M 2012) and on a quarterly basis from EUR 1,919 thousand (Q2 2011) to EUR 2,095 thousand (Q2 2012). This amount comprises selling expenses of EUR 1,074 thousand (6M 2011: EUR 991 thousand) and general and administrative expenses of EUR 2,782 thousand (6M 2011: EUR 2,573 thousand). The higher expenses were incurred for the commercialization of Veregen® as well as consultancy fees.

Research and development expenses
Research and development expenses were up to EUR 3,635 thousand in the first half of 2012 (6M 2011: EUR 3,574 thousand) and to EUR 1,795 thousand in the second quarter of 2012 (Q2 2011: EUR 1,546 thousand). The rise in these expenses was mainly attributable to the continuing clinical and non-clinical development and higher regulatory expenses. Conversely, personnel expenses and rent expenses were down.

EBITDA
Medigene's EBITDA is derived from the result for the period excluding taxes, financial result, result from investments in associates, and depreciation and amortization. The result from continued operations on an EBITDA basis amounted to EUR -4,184 thousand in the first half of 2012 (6M 2011: EUR -5,100 thousand) and to EUR -2,137 thousand in the second quarter of 2012 (Q2 2011: EUR -2,212 thousand). The result from continued and discontinued operations on an EBITDA basis totaled EUR 818 thousand in the first six months of the year (6M 2011: EUR 17,000 thousand) and EUR 2,867 thousand in the second quarter of 2012 (Q2 2011: EUR -2,211 thousand). The result on an EBITDA basis was influenced by a non-recurring item, income of EUR 5 million (6M 2011: EUR 20 million) for the sale of the Eligard® rights.

Financial result
The financial result, which consists mainly of foreign exchange gains/losses and interest income or expense, amounted to EUR -330 thousand in the reporting period (6M 2011: EUR 186 thousand) and to EUR -331 thousand in the second quarter of 2012 (Q2 2011: EUR 26 thousand). The financial result includes (calculatory) non-cash interest expenses totaling EUR 421 thousand from financial liabilities owed to Cowen. In last year's reporting period, the financial result from discontinued operations included a gain of EUR 226 thousand from a financial derivative.  

6-months result 2012
The net result achieved for the period amounted to EUR 37 thousand (6M 2011: EUR 14,367 thousand) and for the second quarter of 2012 to EUR 2,314 thousand (Q2 2011: EUR -2,618 thousand). Compared with the first six months of the previous year, the loss for the period from continued operations shrank to EUR -4,965 thousand (6M 2011: EUR -5,803 thousand) and on a quarterly basis to EUR -2,690 thousand (Q2 2011: EUR -2,699 thousand). The result from discontinued operations for the period declined to EUR 5,002 thousand (6M 2011: EUR 20,170 thousand), and increased to EUR 5,004 thousand in the second quarter of 2012 (Q2 2011: EUR 81 thousand). The milestone payments received for the sale of the Eligard® rights mainly contributed to profits in the respective periods.

Cash flow from operating activities
In the first six months of 2012, Medigene had a cash outflow from operating activities of EUR -1,266 thousand (6M 2011: cash inflow of EUR 11,513 thousand). Medigene received a milestone payment of EUR 5 million from Astellas in May 2012 (6M 2011: EUR 15 million).

Average monthly cash flow from operating activities
The average monthly net cash used by operating activities in the first half of 2012 totaled EUR - 0.2 million (6M 2011: cash inflow of EUR 1.9 million). Adjusted for the above-mentioned non-recurring items of milestone payments and changes in working capital, the cash burn rate relating to operating activities was EUR -1.0 million (6M 2011: EUR -0.6 million). Net cash used by operating activities is only of limited informative value with regard to future developments, since it is significantly influenced by non-recurring payments received under partnership agreements as well as research and development expenses, the amount of which depends on the status of projects, and changes in working capital.

Cash position
As of the reporting date of June 30, 2012, cash and cash equivalents totaled EUR 25,376 thousand.

Consolidated income statement (abbreviated)

 

In EUR thousand Q2 2012
Q2 2011 Change 6M 2012 6M 2011 Change
Total revenue 1,674 1,233 36% 3,296 1,882 75%
   thereof Veregen® 1,050 529 98% 1,654 909 82%
Cost of sales -136 -193 -30% -414 -273 52%
Gross profit 1,538 1,040 48% 2,882 1,609 79%
Selling, general, and administrative expenses
-2,095

-1,919

9%

-3,856

-3,564

8%
Research and development
expenses

-1,795

-1,546

16%

-3,635

-3,574

2%
Operating result -2,352 -2,425 -3% -4,609 -5,529 -17%
Result from
continued operations
before tax


-2,690


-2,884


-7%


-4,965


-6,349


-22%
Result from continued
operations

-2,690

-2,699

0%

-4,965

-5,803

-14%
Product sales from discontinued operations
5,006

406

>200%

5,023

27,702

-82%
Result from discontinued
operations

5,004

81

>200%

5,002

20,170

-75%
Net result for the period 2,314 -2,618 - 37 14,367 -100%

Outlook:

Financial forecast 2012
Medigene confirms its financial guidance for fiscal year 2012. The company expects revenue from continued operations to be greater than EUR 5 million. In addition, Medigene has earned revenue from discontinued operations of EUR 5 million, relating to the sale of the Eligard® rights. Higher expenses in the further development of RhuDex® and EndoTAG®-1 are expected to lead to a loss on an EBITDA basis in the mid-single digit million euro range. Based on current business planning and scenarios developed on the basis of this planning, the management expects the company funding to be secured beyond the end of 2013.  

Eligard®
Due to the agreed transfer of Medigene's two percent royalty share to Cowen, all future Eligard® income, the related notional interest expense and amortization are not cash-relevant.

Veregen®
On the basis of the regulatory decision in March 2012 to grant marketing authorization of Veregen® in numerous European countries, the respective national marketing authorizations for Belgium, Bulgaria, Cyprus, the Czech Republic, Finland, Greece, Hungary, Luxembourg, the Netherlands, Romania, and Slovenia are expected within the next few months. Furthermore, Medigene anticipates positive decisions in 2012 on marketing authorizations in further countries outside the EU, as well as market launch in additional countries. For the global commercialization of Veregen®, Medigene is planning to continue its licensing strategy. Medigene expects increasing Veregen® sales revenue in 2012, which should accelerate as a result of the anticipated market launches in numerous countries in 2013.

EndoTAG®-1
Medigene plans to conduct a pivotal global phase III trial of EndoTAG®-1 in triple-negative breast cancer (TNBC), with the aim of achieving market approvals worldwide. Based on the agreement signed in July 2012, granting exclusive rights for EndoTAG®-1 in Asia, Australia and New Zealand, SynCore will fund the Asian part of the clinical trial, representing about 50% of the total number of patients to be included. Subject to clinical trial approval, approximately 400 patients are expected to be enrolled in the global pivotal phase III trial in TNBC. Furthermore, Medigene receives an upfront payment from SynCore, and is eligible to payments upon certain development and approval milestones, as well as royalties. Medigene retains all US, European, and rest-of-the-world (ROW) rights to EndoTAG®-1, with the ability to grant further licenses. Medigene anticipates submission for market approval for EndoTAG®-1 in 2018.

RhuDex®
Medigene plans to initiate a phase II clinical proof-of-concept study with RhuDex® for the treatment of primary biliary cirrhosis (PBC) at the end of 2012, to verify both the mechanism of action and the overall clinical profile of RhuDex® for the treatment of autoimmune diseases. The study results are expected to build a basis for its further development in rheumatoid arthritis.

AAVLP vaccine technology
Additional preclinical studies will be conducted in 2012 in connection with Medigene's proprietary AAVLP vaccine technology.

Analysts' conference:
An analysts' conference call (in English) will be held today at 2:30 p.m. CEST and will be webcast live. It will be possible to access the synchronized presentation slides and a recording via Medigene's website, www.medigene.com.

The complete 6-months report can be found online under http://www.medigene.com/media-investors/reports-presentations/.

This press release contains forward-looking statements representing the opinion of Medigene as of the date of this release. The actual results achieved by Medigene may differ significantly from the forward-looking statements made herein. Medigene is not bound to update any of these forward-looking statements. Medigene®, EndoTAG®, RhuDex® and Veregen® are registered trademarks of Medigene AG. Eligard® is a trademark of Tolmar Therapeutics, Inc. These trademarks may be owned or licensed in select locations only.

- ends -

Medigene AG is a publicly listed (Frankfurt: MDG, prime standard) biotechnology company headquartered in Martinsried/Munich, Germany. Medigene focuses on clinical research and development of novel drugs against cancer and autoimmune diseases. Medigene is the first German biotech company to have revenues from marketed products, which are distributed by partner companies. It has two drug candidates in clinical trials and is developing an innovative vaccine technology.

Contact Medigene AG
Julia Hofmann, Kerstin Langlotz
Investor & Public Relations
Tel.: +49 - 89 - 20 00 33 - 33 01
Fax: +49 - 89 - 20 00 33 - 29 20
Email: investor@medigene.com

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