Medgenics Announces Second Quarter 2012 Financial Results

Medgenics, Inc. (NYSE Amex: MDGN and AIM: MEDU, MEDG) (the “Company”), the developer of Biopump™, a novel technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue, today announced financial results for three and six months ended June 30, 2012, 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 consolidated financial statements containing the information highlighted below, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov and at www.medgenics.com.

Second Quarter Financial Results

Gross research and development (“R&D”) expense for the second quarter of 2012 increased to $1.64 million from $1.54 million for same period in 2011. Higher R&D expense is due to an increase in the use of materials and sub-contractors in connection with preparations for the Company’s planned Phase II EPODURE clinical trials in Israel and the U.S., preparations for the trials of INFRADURE in Israel and an increase in R&D personnel. Net R&D expense for the 2012 second quarter was $1.18 million compared with net R&D expense of $1.04 million for the prior year’s second quarter.

General and administrative expense for the second quarter of 2012 was $2.77 million compared with $1.05 million for the second quarter of 2011, reflecting higher legal and professional services fees, increased activities in the U.S. and stock-based compensation expenses related to shares granted to consultants and to the newly appointed Chairman of the Board.

Financial expense for the second quarter of 2012 increased to $2.97 million from $0.23 million for the same period in 2011, mainly a result of changes in valuation of the warrant liability. Financial income for the second quarter of 2012 increased to $17,000 from $4,000 in the same period of 2011.

The Company reported a net loss for the second quarter of 2012 of $6.91 million or $0.69 per share, compared with a net loss for the second quarter of 2011 of $2.32 million or $0.26 per share.

“The past several months have been transformative for Medgenics and featured a number of accomplishments delivering key milestones in our 2012 plan, and enhancing Medgenics’ ability to move forward on strategic priorities,” stated Andrew L. Pearlman, Ph.D., Chief Executive Officer of Medgenics. “We substantially advanced our clinical development program for EPODURE TM and INFRADURE TM in both the U.S. and Israel, launched our first U.S. Biopump processing center, expanded our management team with seasoned professionals and strengthened our balance sheet to provide the financial support to allow us to continue to execute to our plan. These are greatly augmented by the addition of our new Chairman, Dr Sol Barer, whose accomplishments and experience will significantly help accelerate the company’s efforts towards execution of our strategic plan. We look forward to building on the momentum of the first half of the year, particularly with important clinical progress in the months to come.”

Six Month Financial Results

Gross R&D expense for the six months ended June 30, 2012 was $3.23 million, up from $2.72 million for the same period in 2011. For the six months ended June 30, 2012, net R&D expense decreased to $1.75 million from $2.22 million for the comparable prior-year period due to the participation by the Israeli Office of the Chief Scientist of $1.49 million in the 2012 period compared with $0.50 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 six months of 2012 was $4.13 million compared with $1.83 million for the first six months of 2011. The Company’s net loss for the first six months of 2012 was $9.66 million or $0.98 per share, compared with a net loss of $2.66 million or $0.37 per share for the same period of 2011.

Medgenics ended the second quarter of 2012 with $9.04 million in cash and cash equivalents, compared with $5.00 million as of December 31, 2011. For the six months ended June 30, 2012, the Company used $4.34 million in net cash to fund operating activities, compared with $3.00 million for the six months ended June 30, 2011. In June 2012 the Company raised $9.50 million of gross proceeds (approximately $8.40 million, net) in a Private Placement.

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 skin biopsy 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 for many months 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 has launched a Phase IIa trial in dialysis patients in Israel. An Investigational New Drug 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 is awaiting final approval of the Israeli Ministry of Health of two Phase I/II trials in Israel in hepatitis C, slated to commence Q3 2012; and which 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 is 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.

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.
           
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
June 30, December 31,
  2012     2011     2011  
(Unaudited)
 
ASSETS
 
CURRENT ASSETS:
 
Cash and cash equivalents $ 9,040 $ 10,116 $ 4,995
Accounts receivable and prepaid expenses   1,702     1,026     1,122  
 
Total current assets   10,742     11,142     6,117  
 
LONG-TERM ASSETS:
 
Restricted lease deposits 57 49 52
Severance pay fund   264     353     259  
 
Total long-term assets   321     402     311  
 
 
PROPERTY AND EQUIPMENT, NET   407     378     434  
 
Total assets $ 11,470   $ 11,922   $ 6,862  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
 
Trade payables $ 917 $ 869 $ 903
Other accounts payable and accrued expenses   1,249     1,272     1,156  
 
Total current liabilities   2,166     2,141     2,059  
 
LONG-TERM LIABILITIES:
 
Accrued severance pay 1,387 1,146 1,328
Liability in respect of warrants   4,107     1,321     478  
 
Total long-term liabilities   5,494     2,467     1,806  
 
Total liabilities   7,660     4,608     3,865  
 
STOCKHOLDERS' EQUITY:
 
Common stock - $0.0001 par value;

 

 

 

100,000,000 shares authorized; 11,746,251, 9,638,948 and 9,722,725 shares issued and outstanding at June 30, 2012, June 30, 2011 and December 31, 2011, respectively

1

1

1
Additional paid-in capital 62,972 51,383 52,501
Deficit accumulated during the development stage  

(59,163

)
 

(44,070

)
 

(49,505

)
 
Total stockholders' equity   3,810     7,314     2,997  
 
Total liabilities and stockholders' equity $ 11,470   $ 11,922   $ 6,862  
 
             
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
 

Six months ended

June 30,
Three months ended

June 30,

Period from January 27, 2000 (inception) through
  2012     2011     2012     2011   June 30, 2012

 
     

Unaudited
       
 
Research and development expenses $ 3,231 $ 2,718 $ 1,639 $ 1,544 $ 33,673
 
Less - Participation by the Office of the Chief Scientist (1,486 ) (503 ) (464 ) (503 ) (6,779 )
U.S. Government grant - - - - (244 )
Participation by third party   -     -     -     -     (1,067 )
 
Research and development expenses, net 1,745 2,215 1,175 1,041 25,583
 
General and administrative expenses 4,133 1,832 2,774 1,052 30,531
 
Other income:
Excess amount of participation in research and development from third party   -     -     -     -     (2,904 )
 
Operating loss (5,878 ) (4,047 ) (3,949 ) (2,093 ) (53,210 )
 
Financial expenses (3,773 ) (133 ) (2,972 ) (232 ) (7,053 )
Financial income   1     1,521     17     4     755  
 
Loss before taxes on income (9,650 ) (2,659 ) (6,904 ) (2,321 ) (59,508 )
 
Taxes on income   8     2     8     2     84  
 
Loss $ (9,658 ) $ (2,661 ) $ (6,912 ) $ (2,323 ) $ (59,592 )
 
Basic and diluted loss per share $ (0.98 ) $ (0.37 ) $ (0.69 ) $ (0.26 )
 
Weighted average number of shares of Common stock used in computing basic and diluted loss per share   9,893,072     7,212,074     10,032,760     9,033,672  

Copyright Business Wire 2010

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