Epigenomics AG (ECX) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Epigenomics Analyst and Investor Conference Call, regarding the half year results 2022. [Operator Instructions] Now, I hand it over to Frederic Hilke.

Thank you very much [ Beatrice. ] Good afternoon, 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 the first half year 2022. 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 Financial Report 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 2022 Earnings Call. During the first half of 2022, the company has made very good progress on the Next-Gen test, and we are on track to enroll our first patient this summer. Our R&D efforts this year have produced very encouraging results and are excited to publish preliminary data this year. We believe the performance of Next-Gen will result in a significant market opportunity in the years to come. The U.S. 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 on Next-Gen, we continued to pursue reimbursement of our current FDA-approved product in legislation. Last month, I was honored to participate with other colorectal cancer business and advocacy leaders at the White House for a meeting with Dr. Danielle Carnival, the White House Cancer Moonshot Coordinator. As a collective group, we were able to stress the importance of colon cancer screening and its ability to save thousands of lives. It is clear the administration wants to make eliminating cancer a priority in the U.S. We are hopeful that our legislation can capitalize on this momentum and be incorporated into law within the session of Congress. It is difficult for us to measure the legislation's likelihood of success, but we do remain hopeful as access to Epi proColon would provide a significant opportunity to save lives. During the first half of 2022, converging windows for the mandatory convertible bonds issued in January 2021, September 2021 were converted by around 818,000 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 provide the company with the capital necessary to successfully complete the Next-Gen trial and market commercialization. I will now hand the call off to Jens Ravens, our CFO, to review the first half year financials.

Thank you very much, Greg. The company has executed first half year cash [indiscernible] performance in line with our operational outlook. Revenue for the first half of 2022 increased slightly from EUR 223,000 to EUR 341,000, and the adjusted EBITDA increased also slightly from minus EUR 3.2 million in 2021 and to minus EUR 3.6 million in the first half of the year 2022. The first, but mainly the second quarter of this year was marked by other income, predominantly due to foreign currency translation gains. This was mainly indirectly related to the increase of the U.S. dollar versus the euro over the course of this year. The other income for the first 6 months amounted to a total of EUR 3.6 million compared to only EUR 1.6 million in the first half of the year of 2021. This explains also our gap between the adjusted EBITDA and the cash consumption of EUR 6.3 million for the first 6 months of 2022. Liquidity as of June 30 stood at EUR 18 million. Under German GAAP accounting and due to our planned financial development in the first half of 2022, a cumulative loss of more than half of the nominal share capital will occur in the very near future. [indiscernible] will publicize accordingly and call for a shareholders' meeting pursuant to Section 92 Paragraph 1 of the German Stock Corporation Act [indiscernible] shareholders set out for loss. Our 2022 financial outlook remains unchanged with revenues between EUR 0.3 million and EUR 0.8 million and an adjusted EBITDA in the range of minus EUR 15 million to minus EUR 17 million. More importantly, and as mentioned previously, the anticipated spend for the clinical trial in the second half of 2022 will be aligned with the company's ability to raise funds for the remainder of the trial in 2023 and '24. If this trial is delayed or enrollment is slower than anticipated, the forecast for the adjusted EBITDA is very likely to improve. I will now hand back the call to Greg. Thank you.

Thanks, Jens. Epi is on track to achieve our 2022 goals, and we expect to have significant updates by our next earnings call in November. We are excited for the remainder of the year as we believe it will be a springboard into a very active 2023 and beyond. . Thank you for joining our first half 2022 earnings call. I will now open the call to questions.

[Operator Instructions] And the first question, Christian Ehmann from Warburg Research.

I have 3, if I may. So can it be a little bit more specific? Or can you elaborate more on how the asset disposal came about? So -- are we talking about asset disposal as selling in this instance for the line of other operating income? The second would be -- and also, is there a trend that some kind of -- some effect of this magnitude could happen also in Q3? The second question would be, could you give us a little more detail about what kind of secondary exchange thing you would prefer? Are we talking about the NASDAQ, for example, or would you be, for example, more eager to list on the [indiscernible] exchange? And the third one would be, if you could be a little more specific on the release of the performance data. Are we talking about still -- about Q3? Or would it be more likely to have those data in Q4?