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Medgenics Reports Second Quarter 2015 Financial Results

20:00 EDT 9 Aug 2015 | Globe Newswire

  • Initiated enrollment in peritoneal dialysis study in U.S.
  • Awarded $3.4 million grant from the Israeli Office of the Chief Scientist
  • Advanced collaboration activities with CHOP

PHILADELPHIA, Aug. 10, 2015 (GLOBE NEWSWIRE) -- Medgenics, Inc. (NYSE:MDGN) (the Company), the developer of a proprietary platform for the sustained production and delivery of therapeutic proteins and peptides in patients using ex vivo gene therapy and their own tissue for the treatment of orphan diseases, today announced financial results for the three and six months ended June 30, 2015.

Management Commentary

"We are very pleased to have recently initiated enrollment in the U.S. for our MDGN-201 trial evaluating the treatment of anemia in a subgroup of end stage renal disease (ESRD) patients undergoing peritoneal dialysis," stated Mike Cola, Chief Executive Officer of Medgenics.

"We are likewise encouraged by the results of our ongoing MDGN-201 study in Israel.  We are continuing enrollment in the mid-dose cohort of the study, and we have seen promising results validating the TARGT platform in the low-dose cohort. All six low-dose patients who received TARGTEPO micro-organs have shown positive initial response to therapy at approximately 100x lower Cmax than rHuEPO (e.g., EPREX). Five of six patients maintained hemoglobin levels within their targeted range due to red blood cell production stimulated by eEPO for at least five months following implantation without receiving any injections of rHuEPO or blood transfusions, and one patient continues to remain stable without receiving any injections of rHuEPO or blood transfusions for 13 months since implantation. The data will be updated at the European Society of Gene and Cell Therapy (ESGCT) in September. Finally, the increased funding from the Israeli OCS is indicative of the positive support for the development of this novel gene therapy approach, and we greatly appreciate their continued support," stated Dr. Garry Neil, Chief Scientific Officer of Medgenics.

Moving forward, the company plans to focus on initiating small proof-of-concept studies in additional renal indications through the remainder of 2015. The initial study of end-stage renal disease (ESRD) patients undergoing peritoneal dialysis is now underway in Israel and the U.S.

"We continue to be encouraged by the breadth of the opportunities provided to us by the Children's Hospital of Philadelphia (CHOP) collaboration we signed last year. Our Precision Medicine approach of targeting therapeutics to distinct genetic populations identified at CHOP is unique and should allow us to quickly place programs into the clinic. We are still on target to announce our initial collaboration program in the 2nd half of the year, and look forward to discussing our Precision Medicine approach further at that time," stated Cola.

Second Quarter Financial Results

The Company reported financial results for the three and six months ended June 30, 2015 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.

Gross research and development (R&D) expenses for the three months ended June 30, 2015 increased to $4.46 million from $1.96 million for the same period in 2014. This increase was due mainly to increased sub-contractor costs and increased stock-based compensation expenses related to options granted to research and development personnel. Net R&D expenses for the three months ended June 30, 2015 increased to $3.03 million from $0.77 million for the same period in 2014 due to the increase in gross research and development expenses offset in part by an increase of $0.25 million in the participation by the OCS.

General and administrative expenses for the three months ended June 30, 2015 were $3.89 million, increasing from $2.86 million for the same period in 2014 primarily due to increased stock-based compensation expenses related to options granted to directors and general and administrative personnel, offset in part by a decrease in professional fees.

Financial expenses for the quarter ended June 30, 2015 were $0.01 million, decreasing from $0.22 million for the same period in 2014. This decrease was mainly due to the change in valuation of the warrant liability.

Financial income for the quarter ended June 30, 2015 was $0.84 million, increasing from $0.02 million for the same period in 2014. This increase was mainly due to the change in valuation of the warrant liability.

The Company reported cash and cash equivalents of $22.01 million as of June 30, 2015.

For the quarter ended June 30, 2015 the Company reported a loss of $6.09 million or $0.24 per share, compared with a loss of $3.84 million or $0.21 per share for the comparative quarter in 2014.

Six Months Financial Results

Gross R&D expenses for the six months ended June 30, 2015 increased to $8.36 million from $4.10 million for the same period in 2014. This increase was due mainly to increased materials and sub-contractor costs and increased stock-based compensation expenses related to options granted to research and development personnel.  Net R&D expenses for the six months ended June 30, 2015 increased to $6.93 million from $2.92 million for the same period in 2014 due to the increase in gross research and development expenses offset in part by an increase of $0.25 million in the participation by the OCS.

General and administrative expenses for the six months ended June 30, 2015 were $7.84 million, up from $5.96 million for the same period in 2014 primarily due to increased stock-based compensation expenses related to options granted to directors and general and administrative personnel, offset in part by a decrease in professional fees.

Financial expenses for the six months ended June 30, 2015 decreased to $0.26 million from $0.34 million for the same period in 2014, mainly due to the change in valuation of the warrant liability.

Financial income for the six months ended June 30, 2015 was $0.02, similar to the comparative period in 2014.

For the second quarter of 2015 the Company reported a net loss of $15.01 million or $0.60 per share, compared with a net loss of $9.20 million or $0.49 per share for the second quarter of 2014.

   MEDGENICS, INC. AND ITS SUBSIDIARY  
CONSOLIDATED BALANCE SHEETS
U.S dollars in thousands (except share and per share data)
     
  June 30, December 31,
  2015 2014
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
     
Cash and cash equivalents  $ 22,012  $ 33,288
Accounts receivable and prepaid expenses  2,104  315
     
Total current assets  24,116  33,603
     
LONG-TERM ASSETS:    
     
Restricted lease deposits  87  83
Severance pay fund  99  99
Property and equipment, net  454  495
     
Total long-term assets  640  677
     
Total assets  $ 24,756  $ 34,280
     
LIABILITIES AND STOCKHOLDERS' EQUITY     
     
CURRENT LIABILITIES:    
     
Trade payables  $ 742  $ 1,076
Other accounts payable and accrued expenses  1,844  2,562
     
Total current liabilities  2,586  3,638
     
LONG-TERM LIABILITIES:    
     
Accrued severance pay  354  368
Liability in respect of warrants  826  612
     
Total long-term liabilities  1,180  980
     
Total liabilities   3,766  4,618
     
     
STOCKHOLDERS' EQUITY:    
     
Common stock-$0.0001 par value; 100,000,000 shares authorized; 24,937,443 shares issued and 24,928,943 shares outstanding at June 30, 2015; 24,851,075 shares issued and 24,818,075 shares outstanding at December 31, 2014 3  3
Additional paid-in capital 136,133  129,797
Accumulated deficit  (115,146)  (100,138)
     
Total stockholders' equity  20,990  29,662
     
Total liabilities and stockholders' equity  $ 24,756  $ 34,280
     
   MEDGENICS, INC. AND ITS SUBSIDIARY  
CONSOLIDATED STATEMENTS OF OPERATIONS
US Dollars in thousands (except share and per share data)
         
         
  Six months ended
June 30,
Three months ended
June 30,
  2015 2014 2015 2014
  Unaudited
         
Research and development expenses  $ 8,359  $ 4,097  $ 4,458  $ 1,955
         
Less:        
Participation by the Office of the Chief Scientist (1,430) (1,182) (1,430) (1,182)
         
Research and development expenses, net 6,929 2,915 3,028 773
         
General and administrative expenses 7,836 5,957 3,889 2,864
         
Operating loss (14,765) (8,872) (6,917) (3,637)
         
Financial expenses  (262)  (337)  (8)  (217)
Financial income  24  18  843  15
         
Loss before taxes on income (15,003) (9,191) (6,082) (3,839)
         
Taxes on income 5 6 4 1
         
Loss  $ (15,008)  $ (9,197)  $ (6,086)  $ (3,840)
         
Basic loss per share  $ (0.60)  $ (0.49)  $ (0.24)  $ (0.21)
         
Diluted loss per share  $ (0.63)  $ (0.49)  $ (0.28)  $ (0.21)
         
Weighted average number of common stock used in computing basic loss per share  24,875,344  18,664,544  24,906,823  18,715,541
         
Weighted average number of common stock used in computing diluted loss per share  24,969,314  18,664,544  25,094,763  18,715,541

About Medgenics

Medgenics is developing the TARGT (Transduced Autologous Restorative Gene Therapy) system, a proprietary platform for the sustained production and delivery of therapeutic proteins and peptides using ex vivo gene therapy and the patient's own tissue for the treatment of orphan and rare diseases. 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.

CONTACT: Medgenics, Inc.
         John Leaman
         john.leaman@medgenics.com
         
         Medgenics, Inc.
         Brian Piper
         240-899-5554
         brian.piper@medgenics.com
         
         Stern Investor Relations
         Beth DelGiacco
         212-362-1200
         Beth@sternir.com

Medgenics, Inc. logo

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