Medgenics, Inc. (NYSE Amex: 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 announced financial results
for the year ended December 31, 2011, 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
highlighted 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
March 9, 2012.
2011 Financial Results
For the year ended December 31, 2011, net research and
development (“R&D”) expense increased to $5.05 million from
$1.53 million for the year ended December 31, 2010. This increase
is due to the use of materials and sub-contractors in connection
with the Phase I/II EPODURE™ clinical trial, increased expenses in
developing our Factor VIII Biopump™ and preparations for the
clinical trial of INFRADURE™, including the production of a GMP
vector, as well as an increase in R&D personnel and patent
expenses. These increases were partially offset by $0.94 million
participation from the Israeli Office of the Chief Scientist
(“OCS”) and a third party recorded during 2011, compared with $1.85
million participation from the OCS, a U.S. grant and a third party
during 2010.
General and administrative expense for the year was $4.92
million compared with $4.41 million for 2010. The increase was
largely due to legal and professional services fees in connection
with Medgenics’ IPO and to stock-based compensation expense related
to options granted to consultants.
Other income for 2011 was $0.00 compared with $2.58 million for
2010. Other income in 2010 reflects the excess of the recognized
amount received from the third party collaboration agreement over
the amount of R&D expense incurred during the period in
connection with the agreement.
Financial expenses for 2011 decreased to $0.21 million from
$1.66 million for 2010, mainly due to the decrease in the fair
value of the convertible debentures, which were converted into
common stock in April 2011.
Financial income for 2011 increased to $2.10 million from $0.87
million for 2010, primarily due to the decrease in the fair value
of outstanding warrants.
The Company reported a net loss for 2011 of $8.10 million or
$0.96 per share, compared with a net loss of $4.15 million or $0.95
per share for 2010.
As of December 31, 2011 Medgenics had $5.00 million in cash and
cash equivalents, compared with $2.86 million as of December 31,
2010. In April 2011 the Company raised $13.2 million of gross
proceeds (approximately $10.4 million, net) in its U.S. IPO. Net
cash used in operating activities during the year was $8.02 million
compared with $4.15 million used in 2010.
“2011 was a breakthrough year for Medgenics marked by a number
of important corporate and clinical achievements that position the
Company for growth and expansion in the coming year. We have
exciting clinical development programs underway in a number of
disease indications where the sustained production and delivery of
therapeutic proteins by patients using their own tissue holds
potential to greatly enhance current treatment paradigms,” stated
Andrew L. Pearlman, Ph.D., Chief Executive Officer of
Medgenics.
Highlights of 2011 include:
- Significant enhancement of the
Company’s leadership with the addition of accomplished executives
and physicians with directly relevant experience to its management
team, Board of Directors and Strategic Advisory Board.
- Presentation at the American Society of
Nephrology’s Kidney Week 2011 of positive data from the first two
completed dose groups (low-dose and mid-dose) of our Phase I/II
clinical trial of EPODURE to treat anemia in chronic kidney disease
(“CKD”) patients . These data demonstrated that a single EPODURE
administration maintained hemoglobin levels for six months or more
in most of these patients, and as much as 36 months in one, without
requiring any injections of erythropoietic stimulating agents
(“ESAs”) such as erythropoietin (“EPO”).
- Successful completion of our U.S.
Initial Public Offering (“IPO”) raising net proceeds of
approximately $10.4 million, to fund ongoing development programs
towards Biopump™ applications to treat anemia, hepatitis,
hemophilia and other diseases.
Dr. Pearlman commented further, “We are awaiting clearance from
the Israeli Ministry of Health to begin two Phase I/II clinical
trials of INFRADURE, our next product candidate in the Biopump
pipeline, to provide sustained production and delivery of
interferon-alpha to treat hepatitis. During 2011, our INFRADURE
Biopump technology drew increasing interest from several leading
experts in the field of hepatitis. As a consequence, while our
initial focus is on hepatitis C, we believe INFRADURE can more
broadly address the growing and unmet need in a variety of forms of
hepatitis. To this end, we have added to our Strategic Advisory
Board hepatologist Nezam H. Afdhal, M.D., Chief of Hepatology,
Director of Liver Center, Beth Israel Deaconess Medical Center and
an Associate Professor of Medicine, Harvard School of Medicine. A
world-leading authority in hepatitis, Dr. Afdhal will be
instrumental in guiding this strategy as we advance our clinical
programs to address this worldwide health epidemic,” continued Dr.
Pearlman.
“We continue to make considerable progress with our anemia
program and are now in the process of expanding its application
from the pre-dialysis patients we have treated thus far, to now
address patients on dialysis. In the coming months, we expect to
initiate a Phase IIa clinical study in Israel, evaluating the
safety and efficacy of sustained EPO therapy using the EPODURE
Biopump for the treatment of anemia in dialysis patients with
end-stage renal disease (“ESRD”). ESRD represents the largest
addressable market for anemia and is a logical indication for
EPODURE. We hope this Phase IIa study will build on the positive
Phase I/II results using EPODURE to treat pre-dialysis patients
with CKD. In parallel, we continue our preparations in the United
States towards a larger clinical trial in dialysis patients. We
anticipate filing an Investigation New Drug application with the
U.S. Food and Drug Administration for a Phase IIb clinical trial of
EPODURE in ESRD in the second quarter of 2012. A safe, sustained
delivery of EPO could reduce the risks of hemoglobin variability
while achieving the recommended hemoglobin targets, without the
supraphysiologic EPO concentrations and their attendant risks
associated with the current injections of ESAs. It also could
significantly improve the logistics of anemia management to the
benefit of both patients and payors.”
In closing, Dr. Pearlman stated, “We look forward to an exciting
year ahead, launching multiple clinical trials in the treatment of
kidney disease and hepatitis, which affect millions of people. We
believe that these new trials will provide significant data further
supporting our Biopump platform technology for the autologous
production and sustained delivery of therapeutic proteins via the
patients’ own tissue.”
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 C and hemophilia. 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 (now completing a Phase I/II
dose-ranging trial) to produce and deliver erythropoietin for many
months from a single administration, has demonstrated elevation and
stabilization of hemoglobin levels in anemic patients for six to
more than 36 months;
- INFRADURE (planning to commence a Phase
I/II trial in Israel in 1H12 in hepatitis C) to produce a sustained
therapeutic dose of interferon-alpha for use in the treatment of
hepatitis; and
- HEMODURE is a sustained Factor VIII
therapy for the prophylactic treatment of hemophilia, now in
development.
Medgenics intends to develop its innovative products and 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.
- Tables to Follow –
CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
(except share and per share data) December 31,
2010 2011 ASSETS CURRENT ASSETS: Cash
and cash equivalents $ 2,859 $ 4,995 Accounts receivable and
prepaid expenses 983 1,122 Total
current assets 3,842 6,117
LONG-TERM ASSETS: Restricted lease deposits 46 52 Severance pay
fund 318 259 364
311 PROPERTY AND EQUIPMENT, NET 243
434 DEFERRED ISSUANCE EXPENSES
672 - Total assets $ 5,121 $ 6,862
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) CURRENT LIABILITIES: Trade payables $ 743 $ 903
Other accounts payable and accrued expenses 1,235 1,156 Convertible
debentures 5,460 - Total current
liabilities 7,438 2,059
LONG-TERM LIABILITIES: Accrued severance pay 1,087 1,328 Liability
in respect of warrants 3,670 478
Total long-term liabilities 4,757 1,806
Total liabilities 12,195 3,865
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY
(DEFICIT):
Common stock - $0.0001 par value;
100,000,000 shares authorized; 5,295,531 shares and 9,722,725
shares issued and outstanding at December 31, 2010 and 2011,
respectively 1 1 Additional paid-in capital 34,334 52,501 Deficit
accumulated during the development stage (41,409 )
(49,505 ) Total stockholders' equity (deficit) (7,074 )
2,997 Total liabilities and stockholders' equity
(deficit) $ 5,121 $ 6,862
CONSOLIDATED STATEMENTS
OF OPERATIONS U.S. dollars in thousands (except share and
per share data)
Year endedDecember 31
Period from January 27,
2000 (inception) through December
31,
2010 2011 2011 Research and
development expenses $ 3,377 $ 5,987 $ 30,442 Less -
Participation by the Office of the Chief Scientist (705) (860)
(5,293) U.S. Government Grant (244) - (244) Participation by third
party (902) (75) (1,067) Research and
development expenses, net 1,526 5,052 23,838 General and
administrative expenses 4,405 4,924 26,398 Other income:
Excess amount of participation in research and development from
third party (2,577) - (2,904) Operating
loss (3,354) (9,976) (47,332) Financial expenses (*) (1,664)
(214) (3,280) Financial income (*) 873 2,097
754 Loss before taxes on income (4,145) (8,093) (49,858)
Taxes on income 2 3 76 Loss $
(4,147) $ (8,096) $ (49,934) Basic and diluted loss per
share $ (0.95) $ (0.96) Weighted average number of Common
stock used in computing basic and diluted loss per share
4,374,520 8,447,908
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