Press release Biocartis Group NV: BIOCARTIS ANNOUNCES H1 2022
RESULTS
PRESS RELEASE: REGULATED INFORMATION1 September 2022, 07:02
CEST
BIOCARTIS
ANNOUNCES H1
2022 RESULTSAffirms 2022
Outlook 35% growth
in oncology cartridge
revenues Gross Margin on Products
of 32%Refinancing
underway
Company will host a conference call with live
webcast presentation today at 14:30 CEST / 13:30 BST (UK) / 08:30
EDT (US) to discuss H1 2022 results
Mechelen, Belgium,
1 September 2022
– Biocartis Group NV (the ‘Company’ or ‘Biocartis’), an innovative
molecular diagnostics company (Euronext Brussels: BCART), today
announces its business highlights and financial results for the
first half of 2022, prepared in accordance with IAS 34 ‘Interim
Financial Reporting’ as adopted by the European Union.
Commenting on the H1
2022 results and post-reporting period events,
Herman Verrelst, Chief Executive Officer of Biocartis,
said: “Our operational
performance in H1 2022 marked a pivotal moment on our journey
towards profitability: continued strong growth of our core oncology
business translated into significantly higher gross margins.
Cartridge revenue in our core oncology business grew by 35%
year-on-year, and the gross margin on products increased to 32%.
Despite the expected decrease of Idylla™ SARS-CoV-2 product sales,
we almost quadrupled gross profit to EUR 6.6m during the first half
of the year, fueled by increased average selling prices of
cartridges in oncology and economies of scale in our cartridge
manufacturing. We are on track to deliver on our objectives for the
entire year, and also made important progress in securing future
growth. We are particularly proud of the extended partnership with
AstraZeneca for the development of a companion diagnostic for its
blockbuster Tagrisso®. Furthermore, we were very pleased to
announce that we entered into several financing arrangements with
the support of certain holders of our convertible bonds. These
will, upon successful completion, strengthen our cash position with
approximately EUR 66m and fundamentally improve our financing
structure."
KEY MESSAGES
H1 2022
- Product revenue of
EUR 20.3m (H1 2021: EUR 18.5m), of which EUR 16.5m from 153k
cartridges sold and EUR 3.8m from instrument rentals and sales:
- EUR 14.4m cartridge revenue in
oncology (+35% year-on-year), double-digit growth across all
regions, led by the US, both in cartridge volumes as in Average
Selling price (ASP)
- The contribution of COVID-19
testing to cartridge revenues decreased to EUR 1.7m as both volumes
and pricing continued to reduce. Revenues are evenly split between
Europe and the US
- ASP per commercial cartridge of EUR
113 in oncology and EUR 103 overall
- EUR 3.8m revenue from a global
Idylla™ installed base of 2,014 instruments, with 102 net new
instruments placed
- Gross
profit on product sales increased
by 370% from EUR 1.4m to EUR 6.6m, reflecting a gross margin of
32%, compared to 8% for H1 2021 and 16% for the full year 2021
- Operating cash
burn1 of EUR -19.2m, EUR 9.4m lower than in H1 2021;
Company cash position of EUR 19.7m (unaudited figure) end of H1
2022. The available credit facilities of EUR 15.0m remained fully
undrawn as of 30 June 2022
- New partnership
with AstraZeneca to develop a companion
diagnostic2 (CDx) for use with Tagrisso® (osimertinib),
AstraZeneca’s third-generation EGFR-TKI (tyrosine kinase inhibitor)
treatment
- Post the reporting period, start of
Biocartis’ commercialization in Europe of
SkylineDx’s Merlin Assay as a CE-IVD marked kit,
ahead of the launch of an Idylla™ version of the Assay
REFINANCINGToday the Company
announced a comprehensive recapitalization transaction (the
‘Transactions’) that will provide adequate capital to support the
Company’s growth for the foreseeable future. The Transactions,
which are supported by key existing investors, is a significant
milestone for the Company and will provide for the following:
- Deleveraging via a partial
equitization of the 4.00% convertible bonds due 2024 (“Existing
Convertible Bonds”) equal to 10% of notional amounts outstanding,
and maturity extension by 3.5 years to November 2027.
- Allow holders of the Existing
Convertible Bonds to exchange into new second lien secured
convertible bonds (“New Convertible Notes”), subject to their
commitment to participate pro-rata in a fully backstopped EUR 25
million investment into additional New Convertible Notes.
- Allow existing shareholders to
participate in the growth of the Company by taking part in a fully
covered rights issue of EUR 25 million, which is backstopped in
full by certain new investors and KBC Securities (subject to a
number of customary and transaction specific conditions).
- Certain existing holders of New
Convertible Notes will provide a new senior secured term loan (“New
Convertible Term Loans”) that will provide the Company with
approximately EUR 16 million of additional cash liquidity.
More information can be found in the press
release here.
2022 OUTLOOK
As a result of a fading demand for COVID-19 testing, the product
revenues for 2022 are projected to be around the lower end of the
initial EUR 50-55m range, without any impact however on the
previously stated expectations for gross margin on product sales
and operating cash burn, which are maintained at:
- Increase gross margins on product sales to 25% - 30%
- Reduce the operating cash burn (EBITDA plus capital
expenditure) by EUR 9.5m-13.5m, to be between EUR 43m - 47m for
FY22
Biocartis will host a
conference call with live webcast presentation today at 14:30 CEST
/ 13:30 BST (UK) / 08:30 EDT (US) to discuss the H1 2022 results.
Participants that want to follow the webcast presentation live, are
invited to click on this link on the day of the event. Participants
that also want to ask a question and/or attend the event over the
phone, are required to register here in advance of the conference.
After registration, each participant will be provided with dial-in
numbers and a personal PIN. The conference call and webcast will be
conducted in English. A replay of the webcast will be available on
the Biocartis investors’ website shortly after.
Commercial highlights
- 153k commercial cartridges sold in H1 2022, compared to 156k in
H1 2021: oncology cartridge volumes grew by 21% while infectious
disease cartridge volumes almost halved as COVID-19 testing
continued to reduce
- Double-digit growth of oncology cartridge volumes in all
regions combined with pricing discipline, delivered 35% growth in
oncology cartridge revenue:
- Sustained growth across Europe with growing contribution of the
Idylla™ GeneFusion that is now increasingly used in clinical
routine
- The US remains the fastest growing market in oncology, fueled
by an increasing ASP as the proportion of free-of-charge cartridge
volumes for market seeding and the initial validation of assays by
customers declines
- Strong performance of the distributor markets3 and good
traction from the commercial partnership with AstraZeneca
- Total revenue from Idylla™ instruments increased by 4% to EUR
3.8m in H1 2022, including instruments sold to content partners4:
- Revenue generated from instrument placements at end customers
increased by 24% year-on-year, against a 12% increase of the
installed base of Idylla™ instruments, and evenly split between
revenue from capital sales and reagent rentals
- The US recorded the strongest growth of instrument revenue,
driven by a high proportion of capital sales, representing more
than 90% of total US instrument revenue and nearly half of total
revenue from sold instruments
- Continued double-digit growth of instrument revenue in Europe,
mostly from rental income that accounts for nearly 90% of total
instrument rental income
Idylla™ test menu,
partnerships & publications
- Test menu:
- Launch of the fully automated,
CE-marked IVD Idylla™ GeneFusion Panel on 20 June 2022
- Launch of new SeptiCyte RAPID®
EDTA5 (CE-IVD) blood compatible cartridges6 by Biocartis’ partner
Immunexpress on 23 August 2022, post the reporting period
- Product registrations:
- Russia – Additional registrations
have been completed in June 2022 for the Idylla™ NRAS-BRAF Mutation
Test, the Idylla™ KRAS Mutation Test and the Idylla™ MSI Test in
Russia. More information on the impact of the war in Ukraine and
Russia can be found in the disclaimer at the bottom of this press
release.
- Japan – On 29 August 2022, Nichirei
Biosciences, Biocartis’ distribution partner in Japan, received
approval by the Japanese regulatory authorities (Ministry of
Health, Labor and Welfare) for the commercialization of the Idylla™
MSI Test in Japan. Nichirei Biosciences plans the commercial launch
of the Idylla™ MSI Test in Japan in November 2022.
- Partnerships:
- Announcement of a new partnership
on 8 February 2022 between Biocartis and Ophiomics, a Lisbon
(Portugal) based biotech company with an initial focus on the
commercialization of HepatoPredict7.
- Announcement of a new agreement
with AstraZeneca on 22 June 2022 highlighting the development and
planned premarket submission to the US FDA of a novel CDx test on
the Idylla™ platform for AstraZeneca’s third-generation EGFR-TKI
(tyrosine kinase inhibitor) treatment.
- Announcement of Biocartis’ start of
the commercialization in Europe of SkylineDx’s innovative Merlin
Assay as a CE-IVD marked manual kit, ahead of the launch of an
Idylla™ version of the Assay, on 1 September 2022 and post the
reporting period.
- Publications - During H1 2022,
excellent data was published from several new Idylla™ studies,
including a study (announced 4 May 2022) by Memorial Sloan
Kettering Cancer Center (NY, US), in the Journal of Molecular
Diagnostics on the Idylla™ GeneFusion Assay (RUO8).
Organizational and operational
highlights
- Commercial milestones – Double
milestone announced on 15 June 2022 with the selling of the
one-millionth commercial Idylla™ cartridge and the placement of the
2,000th Idylla™ instrument since commercial launch.
- Shareholders’ Meetings – All agenda
items were approved during the ordinary shareholders’ meeting held
13 May 2022.
- Cartridge manufacturing – Transfer
of the Idylla™ SARS-CoV-2 Test (CE-IVD) and the Idylla™
SARS-CoV-2/Flu/RSV Panel (CE-IVD) to the second cartridge
manufacturing line (‘ML2’) was completed during H1 2022. Plans are
under development to complete all current assay transfers in the
course of 2023. The gradual product transfers to the fully
automated ML2 line will further unlock economies of scale and
reduce manufacturing costs.
- ISO 27001 certification – Post the
reporting period, ISO 27001 certification achievement announced on
24 August 2022 for Biocartis for the design, development,
maintenance, service provision and support of the Idylla™ platform
and associated customer-facing software.
- Management team – Biocartis aligned
its organizational structure to deliver on its strategic priorities
and has appointed, effective as from 1 September 2022:
- Global Head of Partnering:
Madhushree (Madhu) Ghosh, PhD, MS, will join Biocartis as Global
Head of Partnering. Dr. Ghosh brings a wealth of experience to
successful commercial and strategic team leadership in global
strategic alliance management, P/L business unit leadership and IVD
and CDx product development for in excess of 20 years spent in
molecular diagnostics and clinical assay development with a focus
on Next Generation Sequencing, real-time PCR, multiplex PCR,
oncology and infectious disease diagnostics. Previously, Dr. Ghosh
held senior roles at Thermo Fisher Scientific, NeoGenomics
Laboratories Inc., QIAGEN, and AltheaDx.
- Global Head of Sales: David Dejans,
previously Head of Sales Europe and Distributor markets, will move
into the role of Global Head of Sales.
Financial highlights
- Total operating income – Total
operating income amounted to EUR 26.8m compared to EUR 23.1m last
year. Product revenues increased by 10% from EUR 18.5m in H1 2021
to EUR 20.3m in H1 2022. Within product sales, cartridge sales
revenues increased by 11.6%. Excluding the revenue from the sale of
Idylla™ SARS-CoV-2 tests9 that continue to trend downward,
cartridge revenues increased 38%. Revenues from Idylla™ instrument
sales amounted to EUR 3.8m (H1 2021: EUR 3.7m). The majority of the
102 net new instruments were placed under reagent rental agreements
as opposed to H1 2021 during which immediately recognized capital
sales accounted for most of the 189 net placements. Collaboration
revenues, almost entirely from R&D services provided to
partners, increased by EUR 2.6m to EUR 5.1m.
- Idylla™ cartridge average sales
price (ASP) – During H1 2022, Idylla™ oncology cartridge ASP
increased by 8% to EUR 113, resulting from a growing contribution
of the Idylla™ GeneFusion Assay10 (RUO) and from higher sales from
the US where pricing is generally higher than in Europe and other
parts of the world. The overall ASP in H1 2022 stood at EUR 103, up
from EUR 95 in H1 2021 because of the increased ASP in oncology and
a lower contribution of lower priced SARS-CoV-2 tests.
- Gross margin – Gross margin on
products significantly increased, from 8% in H1 2021 to 32% in H1
2022. Last year, the gross margin was impacted by a higher
cartridge COGS (Costs of Goods Sold) because production volumes
were lower than expected as the pandemic caused a global shortage
of reagent supplies. Moreover, the lower revenues from SARS-CoV-2
tests that have a significantly lower ASP than the other assays,
also contributes to an improved gross margin. The total gross
profit amounted to EUR 6.6m, or EUR 5.2m more than in H1 2021.
- OPEX – Total operating expenses
(excluding cost of sales) of EUR 37.7m in H1 2022 decreased by EUR
1.4m from EUR 39.1m in H1 2021. EUR 4.1m lower spending in R&D
was partly offset by the post-pandemic normalization of commercial
activities, the impact of the 2021 restructuring of the US
commercial operations and by global inflation.
- Net cash flow and cash position –
The operating cash burn of EUR 19.2m (H1 2021: EUR 28.8m) was
complemented by working capital investments of EUR 0.6m and a
scheduled investment of EUR 1.0m to fund the operations of the
Chinese joint venture WondfoCartis. Financial cash flows included
EUR 3.1m interest payments and the repayment of EUR 8.6m
borrowings, including EUR 6.0m drawn on working capital facilities
at the end of 2021. The net cash outflow amounted to EUR 35.5m and
resulted in a net cash position of EUR 19.7m. EUR 15m of credit
facilities were undrawn and remain fully available awaiting the
closing of the refinancing.
KEY FIGURES H1
2022 The tables below show an overview of the key
figures and a breakdown of operating income for H1 2022 and H1
2021. Consolidated financial statements and accompanying notes are
included in Biocartis’ half-year 2022 report available here on the
Company’s website.
Key figures (EUR 1,000) |
H1 2022 |
H1 2021 |
% Change |
Total operating income |
26,771 |
23,057 |
16% |
Cost of goods sold |
-13,720 |
-17,059 |
-20% |
Research and development expenses |
-19,251 |
-23,389 |
-18% |
Sales and marketing expenses |
-10,050 |
-7,740 |
30% |
General and administrative expenses |
-8,376 |
-7,935 |
6% |
Operating expenses |
-51,397 |
-56,132 |
-8% |
Operating result |
-24,626 |
-33,075 |
-26% |
Net financial result |
-3,805 |
-4,249 |
-10% |
Share in the result of associated companies |
-432 |
-101 |
328% |
Income tax |
96 |
149 |
-36% |
Net result |
-28,767 |
-37,276 |
-23% |
Cash flow from operating activities |
-24,154 |
-33,752 |
-28% |
Cash flow from investing activities |
-1,594 |
-2,087 |
-24% |
Cash flow from financing activities |
-9,542 |
-3,518 |
171% |
Net cash flow 1 |
-35,290 |
-39,357 |
-10% |
Cash and cash equivalents2 |
19,724 |
84,905 |
-77% |
Financial debt |
147,166 |
149,412 |
-2% |
1 Excludes the effect of exchange rate
differences on the cash balances held in foreign currencies2
Including EUR 1,2m of restricted cash in H1 2022 and H1 2021
Operating income (EUR 1,000) |
H1 2022 |
H1 2021 |
% Change |
Collaboration revenue |
5,082 |
2,640 |
93% |
Idylla™ system sales |
3,824 |
3,715 |
3% |
Idylla™ cartridge sales |
16,477 |
14,749 |
12% |
Product sales revenue |
20,301 |
18,463 |
10% |
Service revenue |
977 |
748 |
31% |
Total revenue |
26,360 |
21,851 |
21% |
Grants and other income |
411 |
1,206 |
-66% |
Total operating income |
26,771 |
23,057 |
16% |
Product sales revenue (EUR 1,000) |
H1 2022 |
H1 2021 |
% Change |
Commercial revenue |
19,899 |
18,441 |
8% |
Research & development revenue |
401 |
22 |
1724% |
Total product sales revenue |
20,301 |
18,463 |
10% |
IDYLLA™ TEST MENU
OUTLOOK
- Idylla™ MSI Test US FDA submission – Biocartis continues to
interact with the US FDA on the 510(k) that was previously
submitted for its Idylla™ MSI Test.
- Idylla™ ABC (Advanced Breast Cancer) Assay (collaboration
LifeArc) – The launch of the Idylla™ ABC Assay (RUO) is planned for
Q4 2022.
- Idylla™ Platform registration in China –Biocartis continues to
interact with the Chinese regulatory authority NMPA on the Idylla™
Platform registration that was completed 10 August 2022 after
addressing NMPA feedback.
POST-PERIOD EVENTS
- Announcement of Biocartis’ obtaining of ISO 27001 certification
on 24 August 2022 – see above.
- Announcement of Biocartis’ commercialization in Europe of
SkylineDx’s Merlin Assay as a CE-IVD marked manual kit on 1
September 2022 – see above.
- Announcement of refinancing on 1 September 2022 – see
above.
FINANCIAL CALENDAR
- 10 November 2022
Q3 2022 Business Update
- 23 February 2023
2022 full year results
- 30 March 2023
Publication 2022 annual report
AUDITOR STATEMENT
The condensed consolidated interim financial
statements for the six-months’ period ended 30 June 2022 have been
prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as
adopted by the European Union. They do not include all the
information required for the full annual financial statements and
should therefore be read in conjunction with the financial
statements for the year ended 31 December 2021. The condensed
consolidated interim financial statements are presented in
thousands of Euros (unless stated otherwise). The condensed
consolidated interim financial statements have been approved for
issue by the Board of Directors. The statutory auditor, Deloitte
Bedrijfsrevisoren/Reviseurs d’Entreprises, represented by Nico
Houthaeve, has performed a review, which did not reveal any
significant adjustments to the condensed consolidated interim
financial statements. The interim financial report 2022 and the
review opinion of the auditor are available on
www.biocartis.com.
--- END ---
More information: Renate
DegraveHead of Corporate Communications & Investor Relations
Biocartise-mail rdegrave@biocartis.comtel
+32 15 631 729
mobile +32 471 53 60 64
About Biocartis
Biocartis (Euronext Brussels: BCART) is an
innovative molecular diagnostics (MDx) company providing next
generation diagnostic solutions aimed at improving clinical
practice for the benefit of patients, clinicians, payers and
industry. Biocartis' proprietary MDx Idylla™ platform is a fully
automated sample-to-result, real-time PCR (Polymerase Chain
Reaction) system that offers accurate, highly reliable molecular
information from virtually any biological sample in virtually any
setting. Biocartis is developing and marketing a continuously
expanding test menu addressing key unmet clinical needs, with a
focus in oncology, which represents the fastest growing segment of
the MDx market worldwide. Today, Biocartis offers tests supporting
melanoma, colorectal and lung cancer, as well as for COVID-19, Flu,
RSV and sepsis. More information: www.biocartis.com. Follow us
on Twitter: @Biocartis_.
Biocartis and Idylla™ are registered trademarks
in Europe, the United States and other countries. The Biocartis and
Idylla™ trademark and logo are used trademarks owned by Biocartis.
Please refer to the product labeling for applicable intended uses
for each individual Biocartis product.
This press release is not for distribution,
directly or indirectly, in any jurisdiction where to do so would be
unlawful. Any persons reading this press release should inform
themselves of and observe any such restrictions. Biocartis takes no
responsibility for any violation of any such restrictions by any
person. This press release does not constitute an offer or
invitation for the sale or purchase of securities in any
jurisdiction. No securities of Biocartis may be offered or sold in
the United States of America absent registration with the United
States Securities and Exchange Commission or an exemption from
registration under the U.S. Securities Act of 1933, as amended.
Impact of the war in UkraineBiocartis has no
sales in Ukraine. In Russia, Biocartis works through a local sales
distributor who realized first commercial sales in H1 2021
following completion of first product registrations in Russia in Q1
2021. The impact to expected revenue for 2022 from Russian
distributor sales that were projected prior to the start of the
war, is not material. Supplier exposure is limited to one indirect
supplier for Idylla™ instrument sub-parts who is based in Russia.
Based on the current level of inventory on-hand and on various
alternative sources of supply that were identified and are
currently being assessed, Biocartis does not expect any material
adverse impact on the continued supply of instruments.
Forward-looking statementsCertain statements,
beliefs and opinions in this press release are forward-looking,
which reflect the Company's or, as appropriate, the Company
directors' or managements' current expectations and projections
concerning future events such as the Company's results of
operations, financial condition, liquidity, performance, prospects,
growth, strategies and the industry in which the Company operates.
By their nature, forward-looking statements involve a number of
risks, uncertainties, assumptions and other factors that could
cause actual results or events to differ materially from those
expressed or implied by the forward-looking statements. These
risks, uncertainties, assumptions and factors could adversely
affect the outcome and financial effects of the plans and events
described herein. A multitude of factors including, but not limited
to, changes in demand, competition and technology, can cause actual
events, performance or results to differ significantly from any
anticipated development. Forward-looking statements contained in
this press release regarding past trends or activities are not
guarantees of future performance and should not be taken as a
representation that such trends or activities will continue in the
future. In addition, even if actual results or developments are
consistent with the forward-looking statements contained in this
press release, those results or developments may not be indicative
of results or developments in future periods. No representations
and warranties are made as to the accuracy or fairness of such
forward-looking statements. As a result, the Company expressly
disclaims any obligation or undertaking to release any updates or
revisions to any forward-looking statements in this press release
as a result of any change in expectations or any change in events,
conditions, assumptions or circumstances on which these
forward-looking statements are based, except if specifically
required to do so by law or regulation. Neither the Company nor its
advisers or representatives nor any of its subsidiary undertakings
or any such person's officers or employees guarantees that the
assumptions underlying such forward-looking statements are free
from errors nor does either accept any responsibility for the
future accuracy of the forward-looking statements contained in this
press release or the actual occurrence of the forecasted
developments. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
press release.
1 EBITDA plus capital expenditure2 A companion diagnostic (CDx)
test is a test used as a companion to a therapeutic drug that helps
predict if a patient is likely to respond to a treatment or not
3 Defined as the world excluding European direct
markets, US, China and Japan4 Partners providing test content so as
to develop an Idylla™ version of their assay or test on the Idylla™
platform5 EDTA represents Ethylenediaminetetraacetic acid, which is
the anticoagulant used for most hematology procedures (like
identifying and counting blood cells, blood typing, etc.). Source:
ksmedical.com, last consulted on 24 August 20226 In addition to
blood samples collected in PAXgene blood RNA tubes (per the
manufacturer’s instructions), this test is now also able to process
undiluted EDTA blood samples which are commonly used for most
hematology procedures, with results available in about one hour
7 HepatoPredict will be distributed by Biocartis
in Europe as a manual kit mainly addressing centralized expert
laboratories, and the test may later be translated into a version
on Biocartis’ rapid and easy-to-use molecular diagnostics platform
Idylla™. HepatoPredict is a prognostic gene expression signature
test to help identify which patients will benefit from
curative-intent surgery, in particular liver transplantation8
Research Use Only, not for use in diagnostic procedures
9 The Idylla™ SARS-CoV-2 Test (CE-IVD) and the
Idylla™ SARS-CoV-2/Flu/RSV Panel (CE-IVD)10 The contribution in H1
2022 mainly resulted from Idylla™ GeneFusion Assay (RUO) sales, as
the Idylla™ GeneFusion Panel (CE-IVD) was only launched late in H1
2022, on 20 June 2022
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