Epigenomics AG (ECX) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Epigenomics AG conference call regarding the half year results 2021. [Operator Instructions] Let me now turn the floor over to Frederic Hilke.

Thank you very much, Chris. Hello, and welcome to Epigenomics investor conference call. My name is Frederic Hilke. I'm the Investor Relations Manager for Epigenomics . With me on the phone is the CEO of Epigenomics AG, Greg Hamilton. On today's call, we will be discussing first half 2021 results. This call is being webcast for anyone who would like to follow the presentation. The link can be found on the Epigenomics website in the Investors section. Before I hand over the presentation to Greg, let me point out some of the usual legal information. The following presentation will contain expressly or implicitly certain forward-looking statements concerning Epigenomics AG and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of Epigenomics AG to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Please find some of these factors described in the safe harbor statement. And now I would like to hand you over to CEO, Greg Hamilton, who will continue with the presentation.

Thanks, Frederic. Good morning, everyone, and thank you for joining our first half 2021 earnings call. The company continues to advance our efforts to achieve Medicare reimbursement for Epi proColon via legislation. The Donald Payne Sr. Colorectal Cancer Detection Act now has 63 cosponsors supporting the bill because this legislation addresses racial disparity and the COVID-19 pandemic as it is a tangible method to increase screen rates among the unscreened population in the United States. The current legislative focus of the Biden administration is physical infrastructure such as roads and bridges. Most experts expect health care and racial equity legislation to be addressed by the Biden administration as part of the budget/reconciliation process still within this year. We will continue to actively pursue inclusion of our legislation as part of this process. The company intends to focus on a legislative path at this time prior to filing an appeal with CMS. If the legislative solution does not materialize within the remainder of the year, we will then look to pursue the appeal process. Epigenomics completed 2 capital raises in the first half of 2021. That generated gross proceeds of approximately EUR 7.5 million. In addition, the company has announced the issuance of convertible bonds that will raise up to EUR 18 million in gross proceeds. This placement is backstopped by our largest shareholder, Deutsche Balaton. As disclosed previously, the company is also in the process of evaluating strategic alternatives, including the sale of the company and/or assets. Due to disclosure requirements, all we can say at this time is the process is ongoing, and we will update everyone at the appropriate time. In order to maximize shareholder value, the company is focused on 3 critical activities for the remainder of the year. First, we continue to actively pursue Medicare reimbursement for Epi proColon via legislation. We believe our efforts in this area have advanced, and our opportunity for success resides in this year. Second, we are preparing for initiation of the clinical trial for Epi proColon Next-Gen in the first half of 2022. It is imperative that the company continues to move forward and create value via continued development of cutting-edge products. In order to accomplish this work, the company must be appropriately funded. Thus, our third area of focus is to close the offering for the convertible bonds in the current quarter. The financial results for the first half of 2021 were within the company's latest estimates. Revenue for the first 6 months was EUR 223,000 compared to EUR 322,000 in the first half of 2020. The adjusted EBITDA improved by approximately EUR 2.5 million, from negative EUR 5.7 million to negative EUR 3.2 million because of continued cost-cutting measures. Liquidity at the end of June was EUR 6.9 million. Our 2022 financial -- 2021 financial outlook remains unchanged at EUR 400,000 to EUR 1 million of revenue, and adjusted EBITDA and cash burn of negative EUR 7 million to negative EUR 9 million. We are focused on accomplishing our 3 key goals for the remainder of 2021. Achieving Medicare reimbursement, preparing for the Next-Gen clinical trial and completing our capital raise. We look forward to future updates this year. Thank you for joining our first half 2021 earnings call. I will now open the call for questions

[Operator Instructions] First question comes from Ulrich Huwald from Warburg Research.

It's Ulrich. I've got a question. You mentioned that the evaluating all options, plan still underway. And does it also include still perhaps the license agreement or a sale of parts of the technology, perhaps for other cancer types. Could you evaluate a little bit on this. And clearly, we've seen still slow sales due to the missing reimbursement and I guess a fewer doctor visits due to the pandemic. Do you expect some improvement in the second half of the year in the U.S.?

Thanks, Ulrich. In regards to some of the options we're looking at, we really can't discuss anything more at this time. All we said is all options were on the table on -- so we continue to move that forward. As soon as we have an announcement, we will let you know. In regards to sales, we're right where we anticipated to be. Regretfully, we don't see a significant increase in screening rates right now in the United States in the second half of the year. COVID is continuing to spike in the United States again as I think it is in the rest of the world. So we continue to see more and more people not getting screened due to the pandemic. So we expect that to kind of continue between now and the end of the year.

The next question comes from Dennis Berzhanin from Pareto.