OvaScience Reports Third Quarter 2016 Financial Results

OvaScience SM (NASDAQ: OVAS), a global fertility company focused on the discovery, development and commercialization of new female infertility treatments, today reported its third quarter 2016 financial results and highlighted recent accomplishments.

"OvaScience is focused on laying the clinical and operational foundation necessary to support the successful launch of AUGMENT in key international regions," said Harald Stock, Ph.D., President and Chief Executive Officer of OvaScience. "To that end, we are working expeditiously to further build clinical evidence supporting AUGMENT's use in a broader patient population, and to enter into additional agreements in Canada and Japan. We also continue to progress our efforts with OvaPrime and OvaTure, and look forward to providing updates on both programs by year-end."

Third Quarter and Recent Highlights

AUGMENT SM Treatment: The AUGMENT treatment is designed to improve egg health and with that, in vitro fertilization (IVF) success rates, by using mitochondria from a woman's own egg precursor (EggPC SM) cells during IVF. Improved egg health is essential for fertilization and embryo development.
  • Continued developing robust clinical dataset for AUGMENTOvaScience received central Institutional Review Board (IRB) approval for a Company-sponsored, multi-center, controlled, double-blind, prospective, randomized, egg allocation trial to evaluate the efficacy of AUGMENT in a broad patient population. OvaScience expects to begin enrolling patients in the first quarter of 2017 and to announce initial data in the second half of 2017.At the 24 th World Congress on Controversies in Obstetrics, Gynecology & Infertility (COGI) in Amsterdam, Netherlands, taking place on November 10-13, 2016, a poster, "Live Birth Rates Following a Single Cycle of the AUGMENT Treatment," will be presented. The poster includes a retrospective data analysis of live birth rates and safety profile following a single cycle of the AUGMENT treatment in women with one to five prior failed IVF cycles.OvaScience continues to work with the IVI Group in Valencia, Spain, to progress the ongoing, investigator-initiated, egg allocation trial of AUGMENT in poor prognosis women, defined by at least one prior failed IVF cycle with embryo transfer and no pregnancy due to low embryo quality. OvaScience remains on track to announce data from this adaptive, controlled, double-blind, prospective and randomized trial in the second half of 2017.
  • Expanded commercial infrastructure to prepare for comprehensive launches in key international regionsSupporting the Company's deep and narrow regional expansion strategy, in the third quarter OvaScience entered into agreements with two new Canadian clinics, Victory and OriginElle, and finalized its agreement with the IVF Japan Group, a network that includes three clinics. New clinics will join existing clinics in offering the AUGMENT treatment following the completion of on-boarding and qualification activities, such as obtaining IRB or preceptorship approval and completing preceptorship training programs, which currently take approximately six to nine months. This quarter, four clinics offered the AUGMENT treatment on a commercial scale, two of which completed on-boarding and qualification activities in late September. Given the necessary required ramp-up time, OvaScience expects the other clinics to become commercially active by the second quarter of 2017.OvaScience continues to work diligently to determine the necessary conditions that will enable the marketing of AUGMENT in the United States (U.S.), and has engaged with the U.S. Food and Drug Administration (FDA). The Company remains on track to provide an update on progress toward determining a U.S. market entry strategy by year-end.

OvaPrime SM Treatment: Diminished ovarian reserve affects approximately 30% of those seeking fertility treatment. 1 OvaPrime, a potential fertility treatment that could enable a woman who makes too few or no eggs to increase her egg reserve, is designed to transfer a woman's EggPC cells to her own ovary, where they may mature into fertilizable eggs, as shown in preclinical studies.
  • Progressed OvaPrime clinical programPatients are being enrolled in the second clinical trial of OvaPrime conducted at TRIO Fertility in Ontario, Canada. The trial is designed to evaluate the safety of OvaPrime and changes in a patient's hormone levels and follicular development as measured by ultrasound.The OvaPrime clinical trial in the UAE continues to move forward and OvaScience intends to make a go/no-go decision on the future clinical development path for OvaPrime by year-end, based on an internal review of preliminary data.

OvaTure SM Treatment: The OvaTure treatment, a potential next-generation IVF treatment that could help a woman produce healthy, young, fertilizable eggs without hormone injections by maturing EggPC cells into eggs in-vitro, may be an option for women with compromised eggs, who are unable to make eggs or may be unwilling or unable to undergo hormone treatment.
  • Advanced preclinical development of OvaTureIn the third quarter, OvaScience together with its development partner Intrexon, identified a preferred media that supports early EggPC to oocyte maturation. The Company is now focused on furthering the culture process for late-stage oocyte maturation.

Corporate:
  • In September 2016, OvaScience announced the appointments of Christophe Couturier as Chief Financial Officer and Karen Long as Executive Vice President, Clinical and Regulatory Affairs and Quality Assurance, and the promotion of James Luterman to Executive Vice President, Research and Development.

Expected Milestones:

OvaScience remains on track to achieve the following milestones by year-end:
  • Further expand patient access to AUGMENT in Canada and Japan, by partnering with additional clinics in those markets;
  • Begin enlisting sites for multi-center trial and progress IVI Group trial;
  • Provide an update on path forward for OvaPrime and OvaTure; and
  • Provide an update on progress toward determining a U.S. market entry strategy for AUGMENT.

Third Quarter Financial Results
  • Revenue for the quarter ended September 30, 2016 was $197,000, compared to $75,000 for the same period in 2015. Revenue for the nine months ended September 30, 2016 was $532,000, compared to $120,000 for the same period in 2015. The Company recognized revenue related to 33 AUGMENT treatments in the third quarter of 2016, and related to 91 AUGMENT treatments in the first nine months of 2016. In 2015, OvaScience recognized revenue related to 22 AUGMENT treatments for the full fiscal year.
  • Net loss for the quarter ended September 30, 2016 was $19.3 million, or ($0.54) per share, compared to net loss of $17.9 million or ($0.66) per share, for the same period in 2015. The increase in net loss was primarily attributable to planned higher personnel costs and costs associated with the commercial expansion of the AUGMENT treatment in certain international IVF clinics.
  • Research and development expense for the quarter ended September 30, 2016 was $5.0 million, compared to $4.0 million for the same period in 2015. This increase was primarily driven by a $0.9 million increase in employee compensation and related benefits driven by the hiring of additional research and development personnel, a $0.6 million increase in costs associated with certain ongoing research agreements, clinical studies, and other costs, partially offset by $0.5 million of stock-based compensation expense for certain senior executives that did not recur in 2016 as a results of executive leadership changes since the third quarter of 2015.
  • Selling, general and administrative expense for the quarter ended September 30, 2016, was $12.6 million, compared to $12.9 million for the same period in 2015. This decrease was mainly the result of a $0.9 million decrease in costs related to the establishment of certain legal entities as part of our international expansion during the third quarter of 2015, $0.8 million of stock-based compensation expense for certain senior executives that did not recur in 2016 as a result of executive leadership changes since the third quarter of 2015, partially offset by a $1.4 million increase in employee compensation and related benefits driven by the hiring of additional selling, general and administrative personnel.

As of September 30, 2016, OvaScience had cash, cash equivalents, and short-term investments of $131.0 million, compared to $126.7 million on December 31, 2015. The increase reflects the net proceeds of $53.9 million received from the completion of OvaScience's follow-on offering in the second quarter of 2016.

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