GNMX Aevi Genomic Medicine Inc

Medgenics, Inc. (NYSE Amex: MDGN and AIM: MEDU, MEDG) (the “Company”), the developer of a novel technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue, today reported financial results for the three and six months ended June 30, 2011 and the filing with the U.S. Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q. The Form 10-Q includes unaudited interim consolidated financial statements containing the information highlighted below, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov or www.medgenics.com.

Second Quarter Financial Results

The Company’s net research and development expense for the second quarter of 2011 was $1.04 million, compared with $0.40 million for the second quarter of 2010. This increase is due to costs associated with the ongoing Phase I/II clinical trial with EPODURE, preparation of INFRADURE for a Phase I/II clinical trial, further development of HEMODURE to produce Factor VIII and decreases in participations in R&D costs by third parties, partially offset by increases to participations in R&D costs from the Israeli Office of the Chief Scientist.

General and administrative expense for the second quarter of 2011 increased to $1.05 million from $0.44 million for second quarter of 2010, due primarily to higher professional fees.

The net loss for the second quarter of 2011 was $2.32 million or $0.26 per share, compared with a net loss of $1.95 million or $0.47 per share for the second quarter of 2010.

Six Month Financial Results

For the six months ended June 30, 2011 net research and development expense increased to $2.22 million from $0.70 million for the comparable prior-year period due to ongoing clinical development of the Biopump™ platform, partially offset by increases to participations in R&D costs from the Israeli Office of the Chief Scientist. General and administrative expense for the first six months of 2011 was $1.83 million compared with $1.11 million for the first six months of 2010, with the increase due primarily to higher professional fees. The Company’s net loss for the first six months of 2011 was $2.66 million or $0.37 per share, compared with a net income of $0.35 million or $0.09 per share for the same period of 2010.

Medgenics ended the second quarter of 2011 with $10.12 million in cash and cash equivalents, compared with $2.86 million as of December 31, 2010. In April 2011, the Company raised $13.2 million of gross proceeds (approximately $10.4 million net) in its U.S. initial public offering (“IPO”).

Commenting on the second quarter, Andrew L. Pearlman, Ph.D., President and Chief Executive Officer of Medgenics, said, “We were heartened by the positive investment community response as we successfully completed our IPO in the U.S., raising approximately $10.4 million (net) in equity capital. These funds will support the ongoing development of our proprietary Biopump technology platform for the sustained manufacture and delivery of therapeutic proteins in patients using their own dermis tissue.”

About Medgenics

Medgenics is developing and commercializing Biopump, a proprietary tissue-based platform technology for the sustained production and delivery of therapeutic proteins using the patient's own skin biopsy for the treatment of a range of chronic diseases including anemia, hepatitis C and hemophilia. Medgenics believes this approach has multiple benefits compared with current treatments, which include regular and costly injections of therapeutic proteins.

Medgenics has three long-acting protein therapy products in development based on this technology:

• EPODURE (now completing a Phase I/II dose-ranging trial) to produce and deliver erythropoietin for many months from a single administration, has demonstrated elevation and stabilization of hemoglobin levels in anemic patients for 6 to more than 24 months;
• INFRADURE (to commence a Phase I/II trial in Israel in 2011) to produce a sustained therapeutic dose of interferon-alpha for use in the treatment of hepatitis C;
• HEMODURE is a sustained Factor VIII therapy for the prophylactic treatment of hemophilia, now in development.

Medgenics intends to develop its innovative products and bring them to market via strategic partnerships with major pharmaceutical and/or medical device companies. Since October 2009, HEMODURE has been the focus of cooperation between Medgenics and a major healthcare company, a market leader in hemophilia.

In addition to treatments for anemia, hepatitis C and hemophilia, Medgenics plans to develop and/or out-license a pipeline of future Biopump products targeting the large and rapidly growing global protein therapy market, which is forecast to reach $132 billion in 2013. Other potential applications for Biopumps include multiple sclerosis, arthritis, pediatric growth hormone deficiency, obesity and diabetes.

Forward-looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995, which include all statements other than statements of historical fact, including (without limitation) those regarding the Company's financial position, its development and business strategy, its product candidates and the plans and objectives of management for future operations. The Company intends that such forward-looking statements be subject to the safe harbors created by such laws. Forward-looking statements are sometimes identified by their use of the terms and phrases such as "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning, "expect," "believe," "will," "will likely," "should," "could," "would," "may" or the negative of such terms and other comparable terminology. All such forward-looking statements are based on current expectations and are subject to risks and uncertainties. Should any of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may differ materially from those included within these forward-looking statements. Accordingly, no undue reliance should be placed on these forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements contained in this release may not occur.

CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Six months ended

June 30,

  Three months ended

June 30,

2011   2010 (*) 2011   2010 (Unaudited)

Research and development expenses

$ 2,718 $ 1,366 $ 1,544 $ 811   Less - Participation by the Office of the Chief Scientist (503) (238) (503) (147) U.S. Government grant - - - - Participation by third party   -   (432)   -   (265)   Research and development expenses, net 2,215 696 1,041 399   General and administrative expenses 1,832 1,111 1,052 441   Other income: Excess amount of participation in research and development from third party   -   (1,292)   -   (688)   Operating loss (4,047) (515) (2,093) (152)   Financial expenses (133) (106) (232) (1,830) Financial income   1,521   975   4   31   Income (loss) before taxes on income (2,659) 354 (2,321) (1,951)   Taxes on income   2   -   2   -   Net income (loss) $ (2,661) $ 354 $ (2,323) $ (1,951)   Basic earnings (loss) per share $ (0.369) $ 0.091 $ (0.257) $ (0.472) Diluted earnings per share $ (0.369) $ 0.041 $ (0.257) $ (0.472)   Weighted average number of shares of Common stock used in computing basic earnings/loss per share   7,212,074   3,884,541   9,033,672   4,133,859 Weighted average number of shares of Common stock used in computing diluted earnings per share   7,212,074   8,641,369   9,033,672   4,133,859 CONSOLIDATED BALANCE SHEET U.S. dollars in thousands

 

 

June 30,

  December 31, 2011   2010 2010 (Unaudited)   ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,116 $ 1,363 $ 2,859 Accounts receivable and prepaid expenses   1,026   321   983 Total current assets   11,142   1,684   3,842 LONG-TERM ASSETS: Restricted lease deposits 49 32 46 Severance pay fund   353   247   318   Total long-term assets   402   279   364 PROPERTY AND EQUIPMENT, NET   378   253   243 DEFERRED ISSUANCE EXPENSES   -   -   672 Total assets $ 11,922 $ 2,216 $ 5,121   LIABILITIES AND STOCKHOLDERS’ DEFICIT   CURRENT LIABILITIES:   Trade payables $ 869 $ 824 $ 743 Advance payment - 678 - Other accounts payable and accrued expenses 1,272 1,198 1,235 Convertible debentures   -   -   5,460   Total current liabilities   2,141   2,700   7,438   LONG-TERM LIABILITIES:   Accrued severance pay 1,146 995 1,087 Convertible debentures - 992 - Liability in respect of warrants   1,321   2,430   3,670   Total long-term liabilities   2,467   4,417   4,757   Total liabilities   4,608   7,117   12,195

(*) Restated see Note 4 in 10-Q