Epigenomics AG (ECX) Earnings Call Transcript & Summary
May 11, 2022
Earnings Call Speaker Segments
Operator
operatorLadies and gentlemen, welcome to the Epigenomics AG Conference Call regarding the results for Q1 2022. [Operator Instructions] Let me now turn the floor over to your host, Frederic Hilke.
Frederic Hilke
executiveThank you very much, Heike. 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; and CFO, Jens Ravens. On today's call, we will be discussing the results of first quarter 2022. This call is being webcast for anyone who would like to follow the presentation. The link can be found on the Epigenomics website. 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.
Gregory Hamilton
executiveThanks, Frederic. Good morning, everyone, and thank you for joining our Q1 2022 earnings call. During the first quarter, the company has made good progress on the Next-Gen test, and we are on track to enroll our first patient this summer and to publish preliminary data for the Next-Gen assay still this year. We are optimistic the performance of Next-Gen will be a significant market opportunity in the years to come. The U.S. colon cancer screening market is approximately 100 million patients, and we believe Epi proColon Next-Gen will be ideally positioned as a very effective clinical solution at an attractive price point. In addition to the progress in Next-Gen, we are continuing to pursue reimbursement of our current FDA-approved product via legislation. We continue to enjoy strong bipartisan support for the legislation as we try and identify a viable vehicle to attach our build to. We will provide additional updates as they become available. During the Q1 2022 conversion windows for the mandatory convertible bonds issued in January 2021 and September 2021 were converted approximately 800,000 of new shares, resulting in approximately 16.4 million shares outstanding. As we discussed in our previous call, the company is evaluating numerous financing alternatives, including exchanges with more potential access to capital to arrive the company with the capital necessary to successfully complete the Next-Gen clinical trial and market commercialization. I will now hand the call off to Jens Ravens, our CFO, to review the Q1 financials.
Jens Ravens
executiveWell, thank you very much, Greg, and good afternoon, everyone. The company has executed Q1 cash and financial performance in line with our outlook. Revenue for the quarter increased slightly from EUR 106,000 to EUR 115,000 and adjusted EBITDA decreased from minus EUR 1 million to minus EUR 2.6 million. This is all compared Q1 2021 to Q1 2022. Liquidity as of March 31 of this year was EUR 20 million. Our financial outlook for 2022 saw this year remains unchanged with revenues between EUR 0.3 billion and EUR 0.8 million. Similar, our adjusted EBITDA also remains as announced between minus EUR 15 million to minus EUR 17 million for the year. We expect cash burn similar to our adjusted EBITDA. As mentioned by Greg in previous calls, the anticipated spend for a clinical trial in 2022 will be aligned with the company's ability to raise funds for the remainder of the trial in 2023 and '24. Now if this trial is delayed or patient enrollment is slower than anticipated, then the forecast for the adjusted EBITDA in 2022, so this year, is likely to improve. I will now hand the call back over to Greg.
Gregory Hamilton
executiveThanks, Jens. Epi is on track to achieve our 2022 goals. We are very excited by the Next-Gen test, and we look forward to starting patient enrollment this summer and publish a preliminary data this year. We believe the U.S. colon cancer screening market is a significant opportunity and now more than ever, we think Epi proColon's Next-Gen blood-based test has significant potential to be successful. We look forward to providing additional updates throughout the year. Thank you for joining our Q1 2022 earnings call. I will now open the call for questions.
Operator
operator[Operator Instructions] And the first question comes from Christian Ehmann, Warburg Research.
Christian Ehmann
analystConsidering that the timeline of clinical trials is always very fluid, especially in these times. Could you give us or remind us again about the general milestones during the time until you reached the data readout point? And what kind of risks do you see from potential maybe resurgence in additional Omicron or corona variants in the autumn of 2022?
Gregory Hamilton
executiveThanks, Christian. So for data readouts, there will be -- we anticipate 2. So the first one will not be associated with the trial, but we will publish this year preliminary data on the assay from samples that we have run to give the market an idea of where we expect the performance of the assay to be at. And then the next data readout would be at the end of the trial, so end of enrollment. So the way these trials work is we enroll patients, we are able to see if the patients are positive for cancer because ultimately, what we're trying to hit is a certain number of cancers. And so we anticipate the trial to be 16,000 patients, inherent in that is a certain number of cancers. And if we hit that earlier than anticipated, then in essence, we can close the trial because we've achieved the number of endpoints that we need to do, we would close the trial. And then typically, 4 to 5 months later, we would since open up the database and have the performance data for the assay. So that would be the next -- in essence, the next readout and then we would submit that package to the FDA for review and approval. So the market, we anticipate publishing data early -- sorry, sometime this year, which will give everyone an indication of where we think the assay performance will be at as we enter the trial. And this has been similar to our competitors. So you've seen others in the space do the same thing, whether it's Exact Sciences, Freenome or Guardant, they have all published preliminary assay data as well, either prior to or during their trial. And then your second question is do we expect potential Omicron implications to the trial in the fall? At this point in the U.S., we don't think that's going to be a major impediment. We actually think this trial will run very smoothly. There are other blood-based trials going on. So the market is very aware of these trials. There are enrollment centers, there are centers enrolling for other trials that are going to close soon. So we think there's a significant opportunity to pick up these trial sites and basically really have an accelerated enrollment process for this trial.
Christian Ehmann
analystMight I ask a follow-up?
Gregory Hamilton
executiveSure.
Christian Ehmann
analystYou said you are looking into financing options or additional financing needs. Can you give us an estimate how long your current cash run rate is? And how much cash you would need to finish the trial?
Gregory Hamilton
executiveYes. So we have EUR 20 million as of the end of March in Q1, okay? So we will have enough cash until we get to the next financing round. In essence, we will not spend what we don't have. We will initiate the trial, but the trial pace will be limited by cash we have available. So we do need to raise additional funds for the trial. If you compare our trial costs to others that have publicly stated what their trial expenses are, basically, the trial is going to be tens of millions of dollars. So we do need to raise a good amount of capital to complete these trials. But the reason why you do this is it's a multibillion-dollar market opportunity with 100 million patients. So if you run a 16,000 patient trial, it is going to cost a certain amount and we fully expect that we'll be able to raise the funds. And ultimately, we believe our assay is going to be extremely well positioned in this marketplace. We believe it's going to be from a clinical perspective, extremely effective with good numbers, and it's going to be at a price point that is very attractive in the U.S. market.
Operator
operatorAt the moment, there seem to be no further questions. [Operator Instructions] There are no more questions from the audience.
Gregory Hamilton
executiveOkay. Great. Well, thank you, everyone. We really appreciate you taking the time to participate in our earnings call, and we look forward to giving you an update after Q2. Thank you, everyone, and have a great afternoon. Bye.
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