MagForce AG Publishes Financial Results for the Year 2018 and Operative Highlights
DGAP-News: MagForce AG / Key word(s): Annual Results
MagForce AG Publishes Financial Results for the Year 2018 and Operative Highlights
Berlin, Germany, and Nevada, USA, June 20, 2019 - MagForce AG (Frankfurt, Scale, XETRA: MF6, ISIN: DE000A0HGQF5), a leading medical device company in the field of nanomedicine focused on oncology, published today its financial results as of and for the year ended December 31, 2018 as well as operative highlights.
European roll-out to enable faster access to treatment after brain cancer diagnosis
The refined strategy was well received with rising interest from clinics from all over Europe and the Company was able to sign its first collaboration agreement outside of Germany in July of 2018 with one of the leading brain tumor centers in Poland - the first European expansion target country. Here, Independent Public Clinical Hospital No. 4 (SPKS4) is now offering NanoTherm therapy as an additional treatment option for brain tumor patients from Poland and surrounding countries after the inauguration of the mobile NanoTherm treatment center in April of 2019. The collaboration with a Polish clinic was a natural progression as immediately when MagForce began treating patients commercially in Germany in late 2015 and early 2016, the Company saw an elevated interest for the therapy in patients from this country. With NanoTherm therapy now available in their home country, these patients will have a significantly reduced economic burden to receive treatment since non-NanoTherm therapy procedures are all reimbursed in Poland and travel will be limited. Consequently, only the NanoTherm therapy will have to be funded by private pay or crowdfunding until MagForce can get reimbursement for the treatment costs.
Post-period, the Company recently announced that it had also entered into an agreement with a further German hospital, the Paracelsus Clinic in Zwickau, where a treatment center is planned to open over the summer. Both new partnerships in Germany and Poland cover geographically important regions, marking another important step in our European roll-out strategy. Throughout 2018, we also continued to see increased interest in our therapy in Italy and Spain, where we are currently in negotiations regarding first treatment centers.
Development of a unique focal treatment option for Intermediate Risk Prostate Cancer in the US
The IDE approval allowed MagForce to commence with its pivotal clinical evaluation with the objective to demonstrate that NanoTherm can ablate prostate cancer lesions with minimal side effects and after having received Institutional Review Board (IRB) approval from the two clinical US sites, CHRISTUS Santa Rosa Hospital - Medical Center in San Antonio, Texas, and University of Washington in Seattle, the clinics started enrolling the first patients in July of 2018.
Building on the whole gland studies previously conducted in Germany more than a decade ago, MagForce USA over the past year has diligently worked to develop clinical procedures to allow accurate instillation of the NanoTherm particles with the latest, cutting-edge biopsy technology available into the targeted human prostate Region of Interest (ROI) at the required concentration that would destroy the cancerous cells without side effects. The Company has successfully developed the clinical procedure and standardized the process such that the instillation of the particles is equal across all study physicians. The most important finding is that with the changes to the NanoActivator and the developed instillation procedure, MagForce has observed side effects that have not only significantly improved over the studies more than a decade ago, but are very similar to the ones associated with a routine biopsy.
Due the processes described above, however, Stage I has taken significantly longer than projected, but with the knowledge acquired the Company will make every effort to accelerate the study and expects to finalize the first stage soon. MagForce is already diligently working towards preparing and accelerating recruitment for the next stage. This includes the extended recruitment of eligible patitients, the addition of a third study site and, the introduction of ambulatory NanoActivator chairs to selected Active Survaillance Programs.
Other operating income increased significantly by EUR 11,280 thousand to EUR 14,909 thousand (previours year: EUR 3,629 thousand). Most of the operating income resulted from the transfer of 975,000 shares in MagForce USA, Inc. to MagForce USA Holding GmbH, with hidden reserves of EUR 13,895 thousand being lifted (previous year: EUR 2,024 thousand).
Personnel expenses, including bonus payments, amounted to EUR 3,921 thousand (previous year: EUR 3,298 thousand). The increase is primarily due to the exercise of stock options (EUR 308 thousand) and regular salary increases . Other operating expenses decreased by EUR 3,931 thousand to EUR 3,174 thousand (previous year: EUR 7,105 thousand), largely due to the decrease in expenses for external financing measures. Furthermore, unlike previous years, in 2018 MagForce AG financed MedTech Engineering via contributions to the capital reserves. Thus, unscheduled amortization of contributions are presented within the financial result.
Consequently, the operating result for the financial year 2018 was positive at EUR 6,828 thousand (previous year: EUR -7,411 thousand). Without this extraordinary effect, mentioned under operating income above, the operating result would have been negative at EUR -7,067 thousand and as forecasted. The year 2018 closed with a net profit for the year of EUR 4,358 thousand (previous year: net loss of EUR 7,465 thousand). Interest and similar expenses increased from EUR 265 thousand to EUR 1,823 thousand in particular due to the first tranche of the EIB loan received in January 2018. The financial result was also impacted by the unscheduled depreciation of the funding granted to the subsidiary MT MedTech Engineering GmbH in the amount of EUR 877 thousand.
Cash outflows from operating activities amounted to EUR -7,106 thousand (previous year: EUR - 5,341 thousand). The higher cash outflow chiefly results from changes in net working capital. The cash outflow from operating activities was derived indirectly from the net profit for the year. Cash outflows were largely related to financing of the operating business.
Cash outflows from investing activities amounted to EUR -1,370 thousand (previous year: EUR - 578 thousand) and related primarily to contributions made in the reporting year to provide financial support for the subsidiary MT MedTech Engineering GmbH and the construction of the mobile NanoActivator therapy center.
Cash flows from financing activities amounted to EUR 9,304 thousand (previous year: EUR 5,970 thousand) and were mainly attributable to the draw-down of the first tranche of the EIB facility as well as proceeds from the exercise of stock options, which were offset by cash outflows from the repayment of previously existing loans and the payments of interest.
Cash and cash equivalents as of December 31, 2018 amounted to EUR 1,494 thousand (previous year: EUR 666 thousand).
In August 2018 a capital increase of the subsidiary MagForce USA, Inc. was successfully completed. The issuance of a total of 866,666 new shares generated gross proceeds of approximately USD 9.0 million for MagForce USA, Inc. Proceeds from the capital increase are used to finance the initiated pivotal clinical trial in the US with NanoTherm therapy for focal tumor ablation in intermediate risk prostate cancer and related business operations.
In the US, MagForce is progressing the clinical study for marketing authorization of NanoTherm therapy for the treatment of prostate cancer. The Company is moving towards completion of Stage I of this pivotal study and in parallel is preparing the next stage by extending patient recruitment and planning to open a third study site in the Western part of the country. In order to prepare for commercialization and hit the ground running after approval, NanoActivator chairs will be placed in selected urology programs where medical professionals will be able to gain experience on training phantoms, commonly used for new urological procedures.
Even if the European expansion strategy should bear first fruit with sales from Poland, a significant operating loss is expected for the financial year 2019, in particular due to the intensified continuation of the expansion strategy and the associated initiation of treatment series to obtain reimbursement as well as the necessary expansion of commercialization activities.
In the case of financing the expanded business activity by drawing additional tranches from the EIB loan or other loans, the financial result will continue to be more negative than in the previous year.
NanoTherm(R), NanoPlan(R), and NanoActivator(R) are components of the therapy and have received EU-wide regulatory approval as medical devices for the treatment of brain tumors. MagForce, NanoTherm, NanoPlan, and NanoActivator are trademarks of MagForce AG in selected countries.
Barbara von Frankenberg
Communications & Investor Relations
20.06.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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