MagForce AG Publishes Financial Results for the First Half of 2020 and Operative Highlights
DGAP-News: MagForce AG
/ Key word(s): Half Year Results
MagForce AG Publishes Financial Results for the First Half of 2020 and Operative Highlights
- Very significant increase in European patient inquiries for NanoTherm therapy system for the treatment of glioblastomas
- U.S. focal prostate cancer treatment study: positive findings of Stage 1 confirmed during current Stage - positive treatment results also with the streamlined procedure
- Flexible commercialization models for focal cancer treatment centers in the U.S. in place
Berlin, Germany and Nevada, USA, October 30, 2020 - 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 for the first half of 2020, ending on June 30, 2020, and operative highlights.
"During the first half of 2020, we have continued to pass several major milestones and have made significant progress both in Europe with our roll-out strategy and the U.S. with the start of the next stage in our pivotal clinical study for the focal ablation of intermediate risk prostate cancer. MagForce continues to cope with the ever-evolving situation around COVID-19, nevertheless I am steadfast in my belief that by pursuing a strategy of expansion with sustainable partnerships in Europe and providing NanoTherm therapy in the U.S. to patients suffering from prostate cancer, MagForce is well positioned for the future." commented Ben Lipps, CEO of MagForce AG and MagForce USA, Inc. "At the same time, MagForce today is in a better operational position than ever before in the company's history - the number of brain tumor treatments in Europe is increasing significantly and sustainably, the interest of clinics is really high, and in the U.S. our pivotal study for the focal treatment of prostate cancer proves that our therapy is achieving the very good treatment results we had hoped for."
Europe - Brain Cancer Treatment
In the first half of 2020 we received a very significant increase in patient inquiries for NanoTherm therapy - a strong indication of how convinced MagForce's partner clinics are of the therapeutic option and its use for the treatment of glioblastomas. It can be assumed that the number of treatments will continue to increase sustainably. The global opportunity for treating glioblastoma is approximately 160,000 patients per year - indicating that this procedure has a significant global market opportunity of approximately four billion Euros per year for this treatment.
All company activities in Europe are aimed at further increasing awareness of the NanoTherm therapy system and making it available to patients. For example, the MagForce's 'NanoTherm Therapy School', a practice-oriented, unique and versatile application training course for the use of the NanoTherm therapy system for the treatment of glioblastoma, continues to be very successful. The goal of the comprehensive application training is to certify surgeons in the use of our innovative NanoTherm technology. Just this month, the third session, Module B - Part II, in the training was concluded. As seen in the registration numbers and also in participant feedback, interest in MagForce's innovative therapy is greater than ever before.
As part of the Company's European roll-out strategy, further installations of NanoActivator devices in partner hospitals in Spain and Italy are planned. The opening of these additional centers, which were planned for the second half of 2020, will be further delayed due to the enormous impact that the COVID-19 pandemic is unfortunately currently having again in these countries. However, interest from other European countries has been seen and MagForce will continue its roll-out strategy in the coming months. In addition, in Germany, the official opening of the latest NanoTherm therapy center at the Hufeland clinic in Mühlhausen is scheduled for November and, MagForce is planning another NanoTherm treatment center in Germany. All this will help us to achieve the treatment goal for 2021 and triple the number of commercial treatments compared to 2020.
Commercial Model for Brain Cancer Treatments in Europe: 'Plug-and-Treat'
To make the NanoTherm therapy system more assessable to clinics, MagForce has developed a container 'plug-and-treat' solution, which has become the delivery standard in Germany as well as in European countries. The pre-installed containers only require a dedicated outdoor space and a standard three phase current connection and are transported to the clinic by truck. MagForce delivers complete regulatory and technical documentation to the clinic administration in advance so that official approvals can be issued quickly. With this mobile 'plug-and-treat' solution the Company has been able to significantly shorten the time to start patient treatment in new centers. Currently, no more than three months from the date of order placement to commission a new NanoTherm treatment center in Germany or other European countries is expected. MagForce currently still has materials in stock for the new production of three additional devices, which will be manufactured on schedule, if required.
USA - Focal Prostate Cancer Treatment
Mirroring results on the first stage of the focal prostate cancer treatment study, treatment results in the current stage of the study, with the streamlined procedure, show only minimal treatment-related side effects that are tolerable and similar to those of biopsies. The ablation analysis showed a very well-defined ablation and cell death in the area of the nanoparticle depot, as observed in previous preclinical studies. This was expected, but is nevertheless very encouraging, as patients can be treated much faster. It is obvious that the streamlined study protocol will benefit patients by completing the entire treatment within one day, thus minimizing the burden of repeated visits to the treating physician.
We continue to expect to generate sufficient data in the fourth quarter of 2020 to confirm that our streamlined procedure has minimal side effects for patients and to gain the necessary 80 percent confidence to meet the clinical objectives needed for FDA approval. The big challenges that the COVID-19 pandemic poses to the health care system mean for our study, among other things, that for several weeks now every patient has to be tested, undergo a two-week quarantine and then be tested again. This brings an unavoidable delay to the almost completed current Stage 2a of the study, and by now we expect to complete the current stage still this year and start the final Stage 2b in January.
Commercial Model for Focal Cancer Treatment Centers in the U.S.: Lease Back Partnership
While completing the study, MagForce will begin preparations for commercialization, which is still expected to start in mid or second half of 2021. Our three MagForce USA owned and operated locations in San Antonio, Texas; Seattle, Washington; and Sarasota, Florida will be our primary locations. All three participating clinical trial sites are already fully equipped with the NanoActivator devices, a dedicated and trained staff, and would be in a position to start commercial treatments immediately. Upon completion of the study, the Company plans to have two additional proprietary treatment centers in place. Additional sites will then be opened in strategic locations in the U.S. to enable the treatment of patients locally. MagForce is already in contact with the most important "Active Surveillance Programs" throughout the country to evaluate their desire for an ambulatory NanoActivator.
MagForce USA's commercial model considers two marketing channels: 1) stand-alone Focal Cancer Treatment Centers owned and staffed by MagForce USA. This would allow MagForce USA to bill for the entire procedure as it is standard with for example dialysis treatments; 2) placement of ambulatory NanoActivators in urology clinics, providing the NanoTherm therapy system to the respective clinical site. To facilitate either channel, MagForce USA has established a sale and lease back partnership for U.S. NanoActivators with three-year term each. This will allow MagForce USA to accelerate its commercial plan.
Considering the potential global market, over 500,000 prostate cancer patients could be treated per year and benefit from an effective focal treatment with minimal side effects. The market potential would lie between 3.5 and 12.5 billion USD per year depending on the business model.
Results of operations, net assets and financial position
Revenues amounted to EUR 384 thousand, a strong increase compared to EUR 26 thousand in the previous year. The revenues were generated from the commercial treatment of patients with NanoTherm therapy in Germany in the amount of EUR 212 thousand (previous year: EUR 23 thousand) and NanoTherm and catheter deliveries to subsidiaries in the amount of EUR 173 thousand (previous year: EUR 3 thousand). A total of 11 patients were treated at the German centers and 6 patients in Lublin, Poland in the first half of 2020.
Other own work capitalized amounting to EUR 196 thousand (previous year: EUR 0 thousand) relates to capitalized expenses for preparing the product files for MagForce AG's medical products in accordance with the requirements of the new Medical Device Regulation (MDR).
Other operating income amounted to EUR 332 thousand in the reporting period and was largely at the previous year's level (EUR 329 thousand).
Cost of materials increased from EUR 194 thousand to EUR 286 thousand. The cost of raw materials, supplies and purchased goods as well as purchased services increased to the same extent.
Personnel expenses increased to EUR 2,097 thousand (previous year: EUR 1,846 thousand).
At EUR 1,667 thousand, other operating expenses were EUR 59 thousand higher than in the previous year (EUR 1,608 thousand) and were thus largely at the previous year's level.
The operating result for the first half of 2020 was EUR -3,432 thousand (previous year: EUR -3,610 thousand). The strong increase in revenues contributed significantly to the improved result.
While interest income remained constant at EUR 108 thousand (previous year: EUR 108 thousand), interest expenses rose from EUR 949 thousand to EUR 1,030 thousand due to the expansion of external financing. Write-downs on financial assets increased by EUR 61 thousand and amounted to EUR 521 thousand (previous year: EUR 460 thousand) which relates to the contributions made to finance the operating activities of the subsidiary MT MedTech Engineering GmbH.
The first half of 2020 closed with a net loss of EUR -4,877 thousand. Due to the increased revenues, the result for the period improved by EUR 35 thousand compared to the previous year (EUR -4,912 thousand).
Cash flow from operating activities amounted to EUR -2,290 thousand (previous year: EUR -2,856 thousand). The cash outflow from operating activities was derived indirectly from the net loss for the period. The cash outflows mainly relate to the financing of operating activities.
Cash flow from investing activities amounted to EUR -1,850 thousand (previous year: EUR -785 thousand) and primarily related to the contributions made to provide financial support to the subsidiary MT MedTech Engineering GmbH and payments for the construction of mobile NanoActivators as well as the expenses incurred in preparing the technical documentation for MagForce products.
Cash flow from financing activities amounted to EUR 5,653 thousand (previous year: EUR 3,325 thousand) and is mainly attributable to the payments received in connection with the external financing measures implemented. The payments received were in part offset by cash outflows in the form of interest payments.
At the end of the reporting period, the freely available liquidity amounted to EUR 1,680 thousand (December 31, 2019: EUR 167 thousand). The increase is due to the drawing of the second tranche of the EIB loan and the issue of new convertible bonds.
Outlook and financial prognosis 2020 and beyond
The outlook for the year 2020, as reported in the 2019 annual report, published on June 30, 2020 was reaffirmed by management.
About MagForce AG and MagForce USA, Inc.
This release may contain forward-looking statements and information which may be identified by formulations using terms such as "expects", "aims", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or "will". Such forward-looking statements are based on our current expectations and certain assumptions, which may be subject to a variety of risks and uncertainties. The results actually achieved by MagForce AG may substantially differ from these forward-looking statements. MagForce AG assumes no obligation to update these forward-looking statements or to correct them in case of developments, which differ from those, anticipated.
Barbara von Frankenberg
Communications & Investor Relations
30.10.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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