News

Medigene reports progess in financial results and operations for the first nine months of 2012

 

Analysts' telephone conference with webcast (English) today,
2:30 p.m. (CET, Munich) / 8:30 a.m. (ET, New York)

  • Financial highlights of continued operations:  

 

  • Total revenue increased by 60% to EUR 4.8 million (9M 2011: EUR 3.0 million) 

  • EBITDA improved to EUR -6.3 million (9M 2011: EUR -7.6 million) 

  • Net loss EUR -7.4 million (9M 2011: EUR -5.7 million) 

 

  • Cash and cash equivalents EUR 22.2 millon (YE 2011: EUR 12.8 million) 

  • 2012 guidance confirmed  

  • Pipeline progress: 

 

  • Veregen®: further market launches, market approvals, and marketing partnerships 

  • EndoTAG®-1: entered co-development and marketing partnership for Asia 

  • RhuDex®: phase II clinical trial in primary biliary cirrhosis (PBC) in preparation 

 

Martinsried/Munich, November 9, 2012. Medigene AG (Frankfurt, Prime Standard; MDG) reports the financial results and pipeline progress achieved during the first nine months of 2012. Total revenue from continued operations increased by 60% to EUR 4.8 million (9M 2011: EUR 3.0 million), with total Veregen® revenue increasing by 86 % to EUR 2.5 million. The EBITDA loss from continued operations was reduced to EUR -6.3 million (9M 2011:
EUR -7.6 million), despite increasing expenses for the development of the drug candidates RhuDex® and EndoTAG®-1. The net loss for the 9M 2012 period from continued operations totaled EUR -7.4 million (9M 2011: EUR -5.7 million).

In the first nine months of 2012 and 2011, Medigene received milestone payments of EUR 5 million (9M 2012) and EUR 20 million (9M 2011) from Astellas for the sale of the rights to Eligard®, which were reported as "discontinued operations", pursuant to the International Financial Reporting Standards (IFRS). Thus revenue from continued and discontinued operations totaled EUR 9.8 million (9M 2011: EUR 30.7 million), the EBITDA result amounted to EUR -1.3 million (9M 2011: EUR 14.5 million), and the net loss for the period was
EUR -2.4 million (9M 2011: EUR 14.4 million).

Major events since the beginning of the third quarter of 2012:

  • Veregen®:  

    • Market launch in Switzerland  

    • Market approvals granted in France, Norway, Sweden, Denmark, Poland, Slovakia, Israel, Finland, the Netherlands, Belgium, Hungary, Slovenia, Romania, Bulgaria, and Cyprus  

  • EndoTAG®-1: 

    • Co-development and commercialization agreement for Asia signed with SynCore  

    • Decision to upscale the manufacturing process prior to the start of the planned phase III study 

  • RhuDex®:  

    • Preparation of phase II proof-of-concept clinical trial in PBC  

  • Change to the executive management board: 

    • Peter Llewellyn-Davies appointed as Chief Financial Officer  

Dr. Frank Mathias, CEO of Medigene AG, comments: "In the last months, we completed our refocusing and restructuring process and successfully concentrated on three core programs. Veregen® sales are significantly rising, RhuDex® is being prepared for a phase II clinical trial initiation, and an EndoTAG®-1 phase III study is being planned in cooperation with our new partner, SynCore. With an increasing revenue driver, and two clinical drug candidates Medigene is well positioned with an attractive and balanced portfolio."

Peter Llewellyn-Davies, member of the Executive Management Board of Medigene AG, adds: "Medigene has taken key steps towards repositioning. I am pleased to have the opportunity to contribute in shaping the company's strategy and development going forward. The sound financial status of Medigene allows for additional investment in our pipeline and the achievement of important upcoming milestones."

Outlook:

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

Eligard®
As a result of the transfer of Medigene's two percent royalty share to Cowen, all Eligard® income, the related interest expenses and amortization amounts accrued since April 1, 2012 are not cash-relevant.  

Veregen®
On the basis of the regulatory decision in March 2012 to grant marketing authorization for Veregen® in numerous European countries, the respective national marketing authorizations for the Czech Republic, Greece, and Luxembourg are expected within the next few months. Furthermore, Medigene anticipates marketing authorizations and market launches in additional countries worldwide. For the global commercialization of Veregen®, Medigene is planning to continue its licensing strategy. Medigene expects an increase in Veregen® sales revenue in 2012.

EndoTAG®-1
Medigene plans to conduct a pivotal global phase III trial of EndoTAG®-1 in triple-negative breast cancer (TNBC), with the objective 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 co-finance this clinical trial. Furthermore, Medigene is eligible for payments from SynCore dependent on the achievement of specified development and regulatory milestones, as well as royalties. Medigene retains all US, European, and rest-of-the-world (ROW) rights to EndoTAG®-1, with the opportunity to grant further licenses. Medigene is currently preparing the upscaling of the established manufacturing process (spray drying) for EndoTAG®-1, as it is intended to use commercially viable material for the planned phase III clinical trial. Provided that the trial results will be positive, 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) within the next few months, to verify both the mode of action and the overall clinical profile of RhuDex® in autoimmune diseases. Subject to regulatory approvals of this trial, approximately 60 patients are to be enrolled. The clinical trial is designed as a multicenter, randomized, open-label phase IIa pilot trial with the objective of obtaining initial efficacy data as well as safety data of RhuDex® in three different dosages, administered over a period of three months. The trial results could also serve as a basis for the drug's further clinical development in rheumatoid arthritis.

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

Consolidated income statement (abbreviated)

 

In EUR thousand Q3 2012 Q3 2011 Change 9M 2012 9M 2011 Change
Total revenue 1,463 1,093 34% 4,759 2,975 60%
   thereof Veregen® revenue 829 427 94% 2,483 1,336 86%
Cost of sales -361 -125 189% -775 -399 94%
Gross profit 1,102 968 14% 3,984 2,576 55%
Selling, general and administrative expenses -1,872 -2,039 -8% -5,728 -5,603 2%
Research and development expenses -1,533 -1,643 -7% -5,169 -5,217 -1%
Operating result -2,303 -2,714 -15% -6,913 -8,244 -16%
Result from continued operations
before tax
-2,352 -374 >200% -7,318 -6,724 9%
Result from continued operations -2,421 100 - -7,387 -5,704 30%
Revenue from discontinued operations 5 48 -90% 5,028 27,750 -82%
Result from discontinued operations 5 -44 - 5,007 20,127 -75%
Net result for the period -2,416 56 - -2,380 14,423 -

Detailed financial results for the first nine months and the third quarter of 2012:
 
Product sales and other income

In the first nine months of 2012, total revenue from continued operations increased to EUR 4,759 thousand (9M 2011: EUR 2,975 thousand), and in the third quarter of 2012 to EUR 1,463 thousand (Q3 2011: EUR 1,093 thousand). This comprises product sales, license fees and milestone payments for Veregen®, which increased to EUR 2,483 thousand in the first nine months of 2012 (9M 2011: EUR 1,336 thousand) and to EUR 829 thousand in the third quarter of 2012 (Q3 2011: EUR 427 thousand). Total revenue also includes other operating income for the first nine months of 2012 of EUR 2,276 thousand (9M 2011: EUR 1,639 thousand) and of EUR 634 thousand for the third quarter of 2012 (Q3 2011: EUR 666 thousand).

Other operating income primarily consists of the 2% share of the Eligard® net sales. Effective April 1, 2012, this share of net sales was transferred to Cowen Healthcare Royalty Partners 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 account interest expense. Other non-cash income resulting from this totals EUR 623 thousand per quarter over the patent term. Additionally, in the first quarter of 2012, Medigene received EUR 390 thousand compensation for costs incurred from a service provider.

Revenue from discontinued operations decreased to EUR 5,028 thousand in the first nine months of the year (9M 2011: EUR 27,750 thousand), and to EUR 5 thousand in the third quarter of 2012 (Q3 2011: EUR 48 thousand). In last year's reporting period, apart from the milestone payments, net revenue from Eligard® product sales and royalties up to the end of February 2011 was reported under product sales from discontinued operations.

Cost of sales
Cost of sales from continued operations totaled EUR 775 thousand in the first nine months of 2012 (9M 2011: EUR 399 thousand) and EUR 361 thousand in the third quarter of 2012 (Q3 2011: EUR 125 thousand). These costs were incurred for the purchase of Veregen® and royalties for Veregen®. Since January 2012, no cost of sales from discontinued operations was incurred (9M 2011: EUR 5,362 thousand).

Gross profit
Gross profit from continued operations rose to EUR 3,984 thousand in the first nine months of 2012 (9M 2011: EUR 2,576 thousand) and to EUR 1,102 thousand in the third quarter of 2012 (Q3 2011: EUR 968 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 year's reporting period, selling, general, and administrative expenses from continued operations increased on a nine-month basis from EUR 5,603 thousand (9M 2011) to EUR 5,728 thousand (9M 2012), and, on a quarterly basis, they decreased from EUR 2,039 thousand (Q3 2011) to EUR 1,872 thousand (Q3 2012). This amount comprises selling expenses of EUR 1,592 thousand (9M 2011: EUR 1,545 thousand) and general and administrative expenses of EUR 4,136 thousand (9M 2011: EUR 4,058 thousand). The increased expenses in the first nine months of 2012 were incurred for consultancy fees, mainly in the course of the Cowen deal.

Research and development expenses
Research and development expenses decreased to EUR 5,169 thousand in the first nine months of 2012 (9M 2011: EUR 5,217 thousand) and to EUR 1,533 thousand in the third quarter of 2012 (Q3 2011: EUR 1,643 thousand). On the one hand, personnel and rental expenses where reduced, whereas the expenses for clinical and nonclinical development as well as regulatory expenses and consultancy fees increased.

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 improved to EUR -6,276 thousand in the first nine months of 2012 (9M 2011: EUR -7,606 thousand), and to EUR -2,091 thousand in the third quarter of 2012 (Q3 2011: EUR -2,505 thousand). The result from continued and discontinued operations on an EBITDA basis totaled EUR -1,269 thousand in the first nine months of the year (9M 2011: EUR 14,460 thousand) and EUR -2,086 thousand in the third quarter of 2012 (Q3 2011: EUR -2,540 thousand). The result on an EBITDA basis was influenced by income from discontinued operations of EUR 5 million (9M 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 -364 thousand in the reporting period (9M 2011: EUR 331 thousand) and to EUR -34 thousand in the third quarter of 2012 (Q3 2011: EUR 145 thousand). The financial result includes (calculative) non-cash interest expenses totaling EUR 836 thousand from financial liabilities owed to Cowen as part of the Eligard® deal. In last year's reporting period, the financial result from discontinued operations included a gain of EUR 226 thousand from a financial derivative.  

9-months result 2012
The net result achieved for the period amounted to EUR -2,380 thousand (9M 2011: EUR 14,423 thousand) and for the third quarter of 2012 to EUR -2,416 thousand (Q3 2011: EUR 56 thousand). Compared with the first nine months of the previous year, the loss for the period from continued operations increased to EUR -7,387 thousand (9M 2011:
EUR -5,704 thousand) and on a quarterly basis to EUR -2,421 thousand (Q3 2011: EUR 100 thousand). The result for the period from discontinued operations declined to EUR 5,007 thousand (9M 2011: EUR 20,127 thousand), and to EUR 5 thousand in the third quarter of 2012 (Q3 2011: EUR -44 thousand). The milestone payments received for the sale of the Eligard® rights mainly contributed to this result. In last year's reporting period, the result was also influenced positively by the sale of Immunocore shares.
 
Cash flow from operating activities
In the first nine months of 2012, Medigene had a cash outflow from operating activities of
EUR -4,391 thousand (9M 2011: cash inflow of EUR 9,476 thousand). Medigene received a EUR 5 million milestone payment from Astellas in May 2012 (9M 2011: EUR 15 million).

Average monthly cash flow from operating activities
The average monthly net cash used by operating activities in the first nine months of 2012 totaled EUR -0.5 million (9M 2011: cash inflow of EUR 1.1 million). Adjusted for non-recurring items consisting of milestone payments and the sale of Immunocore Ltd. shares in last year's reporting period, the cash burn rate from operating activities was EUR -1.0 million (9M 2011: EUR -0.8 million). This increase was due mainly to changes in working capital. Net cash used by operating activities is only of limited informative value regarding 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 on changes in working capital.

Cash and cash equivalents
As of reporting date September 30, 2012, cash and cash equivalents totaled
EUR 22,243 thousand.

Analysts' conference call
An analysts' conference call (in English) will be held today at 2:30 p.m. CET / 8:30 a.m. ET and will be webcast live. Please access the synchronized presentation slides and a recording via Medigene's website, www.medigene.com.

The detailed 9-months report is available at http://www.medigene.com/media-investors/reports-presentations/

 

Medigene AG is a publicly listed (Frankfurt: MDG, prime standard) biotechnology company headquartered near Munich, Germany. Medigene focuses on clinical research and development of novel drugs against cancer and autoimmune diseases. Medigene was 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, EndoTAG®-1 and RhuDex®; and is developing an innovative vaccine technology.

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.

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Contact Medigene AG
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Julia Hofmann
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