Medgenics Reports Second Quarter Financial Results

Medgenics Reports Second Quarter Financial Results

MISGAV, Israel & SAN FRANCISCO--(BUSINESS WIRE)-- Medgenics, Inc. (NYSE MKT: 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 the three and six months ended June 30, 2013 and the filing with the U.S. Securities and Exchange Commission (SEC) of the Company's Quarterly Report on Form 10-Q. The Form 10-Q includes unaudited interim consolidated financial statements containing the information presented below, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov and at www.medgenics.com.

Management Commentary


"The first half of 2013 was an active and productive period during which we made progress in a number of significant areas and positioned the Company to address important near term milestones," stated Andrew L. Pearlman, Ph.D., President and Chief Executive Officer of Medgenics. "We advanced our clinical programs, fortified our patent portfolio, were awarded a grant of approximately $2 million from the Israeli Office of the Chief Scientist (OCS) and raised substantial capital in a public offering to support the forward momentum of our programs.

"In April 2013 we reported interim data from our Israeli Phase IIa clinical study of EPODURE to treat anemia in patients with end-stage renal disease who are on dialysis, which showed sustained hemoglobin levels in patients for months without the need for injections of erythropoietin. We completed a number of key preparations and continue to be on target to initiate our U.S. Phase II study of EPODURE in similar patients. This will be our first U.S. clinical study for the Biopump technology. We reported the launch and enrollment of the first patient in our Phase I/II proof-of-concept clinical study of INFRADURE in the treatment of hepatitis C in Israel, and look forward to reporting interim data from this study before year-end. We expect to use data from this trial to support the clinical development and regulatory strategy for INFRADURE to treat hepatitis D, an indication for which we have U.S. orphan drug designation. We are exploring its role in treating hepatitis B as well.

"In addition, we continue to make advances in optimizing our Biopump platform through a number of developments that include enhancements to the protein expression technology and Biopump processing methods, as well as to improvements in patient administration. These developments have the potential to further increase production and delivery of protein and to extend the duration of clinical effect," added Dr. Pearlman.

Second Quarter Financial Results

Gross research and development (R&D) expense for the second quarter of 2013 increased to $2.07 million from $1.64 million for same period in 2012. Net R&D expense for the 2013 second quarter was $0.86 million compared with net R&D expense of $1.18 million for the prior year's second quarter. The decrease in net R&D expense was due to the participation by the OCS of $1.22 million in the three months ended June 30, 2013, compared with $0.46 million in the same period in 2012, somewhat offset by the increase in the gross R&D expense.

General and administrative expense for the second quarter of 2013 decreased to $1.59 million compared with $2.77 million for the comparative quarter in 2012, due primarily to lower stock-based compensation expense related to options and restricted shares granted to directors and consultants.

Financial expenses for the quarter ended June 30, 2013 were $0.03 million, compared with $2.97 million for the same period in 2012. This decrease was mainly due to the change in valuation of the warrant liability.

Financial income for the quarter ended June 30, 2013 was $0.37 million, increasing from $0.02 million for the same period in 2012. This increase was primarily due to the change in valuation of the warrant liability.

For the second quarter of 2013 the Company reported a net loss of $2.10 million or $0.11 per share, compared with a net loss of $6.91 million or $0.69 per share for the second quarter of 2012.

Six Month Financial Results

Gross R&D expense for the first half of 2013 increased to $4.10 million from $3.23 million for same period in 2012 due to an increase in R&D personnel. Net R&D expense for the first half of 2013 was $2.89 million compared with net R&D expense of $1.75 million for the first half of 2012. The increase in net R&D expense was due to the participation by the OCS of $1.22 million in the six months ended June 30, 2013 compared with $1.49 million in the same period in 2012, and by the increase in the gross R&D expense as explained above.

General and administrative expense for the six months ended June 30, 2013 of $4.13 million was consistent with the prior-year period.

Financial income for the six months ended June 30, 2013 of $1.29 million was primarily due to the change in valuation of the warrant liability.

For the six months ended June 30, 2013, the Company reported a net loss of $5.78 million or $0.42 diluted loss per share, compared with a net loss of $9.66 million or $0.98 per share in the comparable 2012 period.

The Company ended the second quarter with cash and cash equivalents of $28.98 million, compared with $6.43 million as of December 31, 2012. Medgenics raised gross proceeds of approximately $32 million in a public offering of common stock and warrants during the first quarter of 2013. The Company used $6.18 million in net cash to fund operating activities during the first half of 2013, compared with $4.34 million for the first half of 2012.

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, among others. For more information, please visit 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.

Medgenics, Inc. and its Subsidiary      
Balance Sheet
in thousands of US Dollars

30-Jun-13

30-Jun-12

31-Dec-12

 
ASSETS
CURRENT ASSETS:
 
Cash and cash equivalents$28,979$9,040$6,431
Accounts receivable and prepaid expenses1,8181,702539
   
Total current assets 30,797  10,742  6,970 
 
LONG-TERM ASSETS:
 
Restricted lease deposit and prepaid expenses435762
Severance pay fund243264283
Property and equipment, net 410  407  352 
Total long-term assets 696  728  697 
DEFERRED ISSUANCE EXPENSES -  -  40 
 
Total assets$31,493 $11,470 $7,707 
 
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
 
Trade payables$901$917$877
Other accounts payable and accrued expenses 1,425  1,249  1,473 
Total current liabilities 2,326  2,166  2,350 
 
LONG-TERM LIABILITIES:
 
Accrued severance pay1,4461,3871,492
Liability in respect of warrants 654  4,107  1,931 
Total long-term liabilities 2,100  5,494  3,423 
 
Total liabilities 4,426  7,660  5,773 
 
STOCKHOLDERS' EQUITY:

Common stock-$0.0001 par value; 100,000,000 shares

authorized; 18,481,308, 11,746,251 and 12,307,808

shares issued and outstanding at June 30, 2013, June


30, 2012 and December 31, 2012, respectively

211
Additional paid-in capital97,41962,97266,509
Deficit accumulated during the development stage (70,354) (59,163) (64,576)
Total stockholders' equity 27,067  3,810  1,934 
 
Total liabilities and stockholders' equity$31,493 $11,470 $7,707 
Medgenics, Inc. and its Subsidiary        
Consolidated Statements of Operations
US Dollars in thousands ( except share and per share data)
 
Period from
Six months ended June 30,Three months ended June 30,inception through
 2013  2012  2013  2012 June 30, 2013
 
Research and development expenses$4,104$3,231$2,073$1,639$41,733
Less - Participation by the Office of the Chief Scientist(1,218)(1,486)(1218)(464)(8,267)
U.S. Government Grant----(244)
 
Participation by third party -  -  -  -  (1,067)
Research and development expenses, net2,8861,745855$1,17532,155
General and administrative expenses4,1344,1331,5882,77437,729
Other income:

Excess amount of participation in research and

development from third party

 -  -  -  -  (2,904)
Operating loss(7,020)(5,878)(2,443)(3,949)(66,980)
Financial expenses(39)(3773)(25)(2972)(4,072)
Financial income 1,286  1  371  17  369 
Loss before taxes on income(5,773)(9,650)(2,097)(6,904)(70,683)
Taxes on income 5  8  2  8  100 
Loss$5,778 $9,658 $2,099 $6,912 $70,783 
Basic loss per share$(0.34)$(0.98)$(0.11)$(0.69)
Diluted loss per share$(0.42)$(0.98)$(0.11)$(0.69)

Weighted average number of Common stock used in

computing basic loss per share

 16,850,657  9,893,072  18,410,951  10,032,760 

Weighted average number of Common stock used in

computing diluted loss per share

 16,895,741  9,893,072  18,410,951  10,032,760 



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 Brearley
+44 207 638-5600

KEYWORDS:   United States  North America  California  Middle East  Israel

INDUSTRY KEYWORDS:

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