Medgenics Reports 2012 Financial Results
Medgenics Reports 2012 Financial Results
MISGAV, Israel & SAN FRANCISCO--(BUSINESS WIRE)-- Medgenics, Inc. (NYSE MKT: MDGN and AIM: MEDU, MEDG) (the "Company" or "Medgenics"), the developer of a novel platform technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue, today announced financial results for the fiscal year ended December 31, 2012 and the filing with the U.S. Securities and Exchange Commission ("SEC") of the Company's Annual Report on Form 10-K. The Form 10-K includes audited annual consolidated financial statements containing the information presented below, as well as additional information regarding the Company. The Form 10-K is available at www.sec.gov and at www.medgenics.com. It will be mailed to shareholders on or about April 2, 2013.
2012 and Recent Highlights
Welcomed financial industry veteran and former Chairman of UBS Financial Services Inc. Joseph J. Grano, Jr. to the Board of Directors
Appointed Sol J. Barer, Ph.D. as Chairman of the Board. Dr. Barer is the former Chairman and CEO of Celgene Corporation
Raised gross proceeds of $29.4 million in a public offering of common stock and warrants
Commenced a first-in-man Phase I clinical trial in Israel of INFRADURE™, sustained interferon alpha therapy, for the treatment of hepatitis C
Fortified the Company's intellectual property portfolio with the addition of key patents in the U.S. and Japan covering EPODURE™, sustained erythropoietin ("EPO") therapy, and INFRADURE, respectively
Convened a roundtable of 15 top liver experts and regulatory advisors from the U.S., Europe, Israel and Australia to discuss INFRADURE for the treatment of hepatitis, specifically for its potential applications in the treatment of hepatitis B and hepatitis D
Management Discussion
"During 2012 we achieved a number of milestones under our strategic plan," stated Andrew L. Pearlman, Ph.D., Chief Executive Officer of Medgenics. "We remain focused on advancing our proprietary Biopump technology for the sustained production and delivery of therapeutic proteins from a patient's own tissue in our lead indications of anemia and hepatitis.
"Our objective with EPODURE is to achieve recommended hemoglobin targets in patients for months, while avoiding the risks of supraphysiologic EPO concentrations associated with injections of erythropoietin stimulating agents ("ESA"). U.S. Food and Drug Administration ("FDA") black box warnings and the recent product recall of a commercial ESA drug underscore the need for safer, more effective therapies in anemia management. EPODURE also has the potential to improve the safety, efficacy and 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 believe, and key opinion leaders in hepatitis recently concurred, that the foremost opportunity for INFRADURE is in orphan-designated hepatitis D, where oral drugs are ineffective, and in hepatitis B, where oral drugs do not clear the disease but only contain it. Also, in hepatitis B these oral drugs must be taken on a lifelong basis, with mounting costs and health risks over time. Only sustained interferon therapy of a year or longer has been shown to clear the hepatitis B virus. As such, INFRADURE Biopumps may be able to provide a far more compliant alternative to weekly interferon injections. Our strategy in hepatitis is to develop proof-of-concept and safety data for INFRADURE in hepatitis C, which represents a large and accessible patient population, and then use the results to help develop and calibrate INFRADURE dosing and method of use for these other strains of hepatitis.
"Our goals for the balance of 2013 will be to continue to advance the clinical development of EPODURE and INFRADURE in Israel and the U.S., to expand our leadership with experienced industry executives, to optimize our manufacturing process, to pursue potential partnership and licensing opportunities and to explore potential new indications for our Biopump autologous tissue technology," concluded Dr. Pearlman.
2012 Financial Results
Gross research and development ("R&D") expense for 2012 increased to $7.19 million from $5.99 million in 2011 due to an increase in the use of materials and sub-contractors in connection with the Company's ongoing Phase II EPODURE clinical trial in Israel, the preparations for the INFRADURE trial in Israel and the phase II EPODURE clinical trials in the U.S; ongoing method development, and an increase in R&D personnel.
Net R&D expense for 2012 was $5.43 million compared with $5.05 million in 2011. The increase was due to higher gross R&D expenses as detailed above, which were partially offset by participation by the Israeli Office of the Chief Scientist of $1.76 million in 2012 and $0.86 million in 2011.
General and administrative expense for 2012 increased to $7.20 million from $4.92 million in 2011, primarily due to stock-based compensation expense related to equity granted to the Chairman of the Board upon his appointment and increased legal fees and professional services.
Financial expense for 2012 was $2.43 million, up from $0.21 million in 2011, mainly due to the change in valuation of the warrant liability. Financial income for 2012 was de minimis, compared with $2.10 million for 2011, which was primarily due to the change in valuation of the warrant liability.
The Company reported a net loss for 2012 of $15.07 million or $1.37 per share, compared with a net loss of $8.10 million or $0.96 per share for 2011.
As of December 31, 2012, Medgenics had $6.43 million in cash and cash equivalents, compared with $5.00 million as of December 31, 2011. Net cash used in operating activities during the year was $8.61 million compared with $8.02 million used in 2011. During 2012 the Company received proceeds of $8.41 million from a private placement of common stock and warrants and $1.71 million from the exercise of options and warrants. In February 2013 Medgenics raised gross proceeds of $29.4 million in a public offering of common stock and warrants.
About Medgenics
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. For more information, visit the Company's website at www.medgenics.com.
Forward-looking Statements
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.
Tables to Follow
Medgenics, Inc. and its Subsidiary Consolidated Balance Sheet | ||||||||
31-Dec-11 | 31-Dec-12 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 4,995 | $ | 6,431 | ||||
Accounts receivable and prepaid expenses | 1,122 | 539 | ||||||
Total current assets | 6,117 | 6,970 | ||||||
LONG-TERM ASSETS: | ||||||||
Restricted lease deposit and prepaid expenses | 52 | 62 | ||||||
Severance pay fund | 259 | 283 | ||||||
311 | 345 | |||||||
PROPERTY AND EQUIPMENT, NET | 434 | 352 | ||||||
DEFERRED ISSUANCE EXPENSES | - | 40 | ||||||
Total assets | $ | 6,862 | $ | 7,707 | ||||
LIABILITIES AND STOCKHOLDERS' | ||||||||
DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | 903 | 877 | ||||||
Other accounts payable and accrued expenses | 1,156 | 1,473 | ||||||
Total current liabilities | 2,059 | 2,350 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Accrued severance pay | 1,328 | 1,492 | ||||||
Liability in respect of warrants | 478 | 1,931 | ||||||
Total long-term liabilities | 1,806 | 3,423 | ||||||
Total liabilities | 3,865 | 5,773 | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common shares | 1 | 1 | ||||||
Additional paid-in capital | 52,501 | 66,509 | ||||||
Accumulated Deficit | (49,505) | -64,576 | ||||||
Total stockholders' deficit | 2,997 | 1,934 | ||||||
Total liabilities and stockholders' deficit | $ | 6,862 | $ | 7,707 | ||||
Medgenics, Inc. and its Subsidiary Consolidated Statements of Operations US Dollars in thousands (except share and per share data) | ||||||||||
31-Dec-11 | 31-Dec-12 | |||||||||
Research and development expenses | $ | 5,987 | $ | 7,187 | ||||||
Less - Participation by the Office of the Chief Scientist | (860 | ) | (1,756 | ) | ||||||
U.S. Government Grant | 0 | |||||||||
Participation by third party | (75 | ) | ||||||||
Research and development expenses, net | 5,052 | 5,431 | ||||||||
General and administrative expenses | 4,924 | 7,197 | ||||||||
Other income: | ||||||||||
Excess amount of participation in research and | - | - | ||||||||
Operating loss | (9,976 | ) | (12,628 | ) | ||||||
Financial expenses | (214 | ) | (2,429 | ) | ||||||
Financial income | 2,097 | 5 | ||||||||
Loss before taxes on income | (8,093 | ) | (15,052 | ) | ||||||
Taxes on income | 3 | 19 | ||||||||
Loss | $ | (8,096 | ) | $ | (15,071 | ) | ||||
Basic and diluted loss per share | $ | (0.960 | ) | $ | (1.37 | ) | ||||
Weighted average number of shares of Common stock used | 8,447,908 | 11,023,881 | ||||||||
Medgenics, Inc.
Dr. Andrew L. Pearlman, +972 4 902 8900
andrew.pearlman@medgenics.com
or
LHA
Anne Marie Fields, 212-838-3777
afields@lhai.com
@LHA_IR_PR
or
Abchurch Communications
Adam Michael/Joanne Shears/Jamie Hooper
+44 207 398 7719
jamie.hooper@abchurch-group.com
or
Nomura Code Securities (NOMAD & Joint Broker)
Jonathan Senior/Giles Balleny,
+44 207 776 1200
or
SVS Securities plc (Joint Broker)
Alex Mattey/Ian Callaway
+44 207 638 5600
KEYWORDS: United States North America California Middle East Israel
INDUSTRY KEYWORDS:
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