MEDCL Medincell SA

April 2022 - March 2023

Regulatory News:

MedinCell (Paris:MEDCL):

2022-23 Highlights

• Launch of UZEDY™, first commercial product based on BEPO® technology in May 2023 (post-closing)
• Successful financing strategy: European Investment Bank loan (November 2022) and fundraising (May 2023, post-closing)
• Products for schizophrenia and post-operative pain based on BEPO, entered Phase 3 clinical trials, and the rest of the pipeline has progressed with three new programs expected to enter Phase 1 clinical trials in 2024

Consolidated FY 2023 financials

• Income from ordinary activities: € 13.7 million, +64% vs previous year
• Operating expenses: € 37.7 million, +14% vs previous year, 74% of the expenses are devoted to R&D
• Cash consumption from operating activities: € 21.2 million, -1% vs previous year

Note: audit procedures on the Company’s 2022 consolidated financial statements by the Company’s statutory auditors are in progress.

Cash situation increasing significantly post year-end, with a total of € 40.8 million, including cash received post-closing and additional cash inflow anticipated in 2023-24, not including potential new partner service or licensing revenue:

• € 6.5 million in cash and cash equivalents as of March 31, 2023
• € 30.8 million cash received since year-end
  • € 4.0 million of 2021 Research Tax Credit partially pre-financed in April 2023
  • € 3.6 million ($ 4 million) milestone payment from Teva following UZEDY approval by U.S. FDA on April 28, 2023
  • € 23.2 million net from capital raise on May 12, 2023
• € 10 million withdrawable from EIB financing, as the last condition, approval of UZEDY, is now met

Jaime Arango, CFO of MedinCell, commented: “The U.S. FDA approval of our first product is a major step for MedinCell. We can now expect royalties and commercial milestones, they could cover our operational expenses as soon as 2025. In addition, the recent capital raise provides us cash visibility beyond mdc-TJK and mdc-CWM Phase 3 key results.”

Development of the product portfolio based on BEPO technology

mdc-IRM (schizophrenia)

• Complete Response Letter (CRL) from the U.S. FDA received by MedinCell’s partner, Teva, in April 2022
• Resubmission of the marketing application announced on November 3, 2022, by Teva
• U.S. FDA approval achieved on April 28, 2023
• Commercial launch under the brand name UZEDY by Teva in the U.S. in May 2023
• First commercial product based on MedinCell’s long-acting injectable technology, BEPO

mdc-TJK (schizophrenia)

• Decision by MedinCell’s partner, Teva, to move to clinical Phase 3 in the U.S. announced in August 2022
• Phase 3 clinical study initiated in the U.S. in January 2023
• If approved, mdc-TJK would be the first long-long-acting injectable olanzapine with a favorable safety profile offering a valued treatment option as a complement of UZEDY for severe schizophrenia patients

mdc-CWM / F14 (post-operative pain)

• Initiation of a first Phase 3 clinical trial being conducted and funded by MedinCell’s partner, Arthritis Innovation Corporation (AIC), in November 2022 It is a 150-patient, multi-center, randomized, double-blind, safety and efficacy trial designed by AIC post consultation with the U.S. FDA
• Recruitment ongoing as anticipated and is expected to be completed in Q3 2023
• mdc-CWM is designed to provide pain relief for patients over an extended period post-surgery

Early-stage pipeline progression

• Progress of preclinical activities for three programs in preparation to enter Phase 1 clinical trials in 2024: mdc-GRT (immunosuppressor/organ transplant), mdc-WWM (contraception) with the support of the Bill & Melinda Gates Foundation, and mdc-STM (malaria) with the support of Unitaid
• Launch of formulation activities for two new internal products (kept confidential at this stage)
• Several collaborations with pharmaceutical partners are at technical feasibility stage, the first step of formulation activities
• In addition, MedinCell continues to work on expanding its internal programs portfolio

“Prime” ISS ESG rating received as a recognition of the embedment of Corporate Social Responsibility across the Company

• Institutional Shareholder Services (ISS) awarded MedinCell a “Prime” Environmental, Social, and Governance (ESG) rating in January 2023
• Rating places MedinCell among the top 10% in the Pharmaceuticals & Biotechnology sector
• ISS, one of the world’s leading ratings agencies for sustainable investments, provides a highly relevant, material assessment of ESG performance to investors

Selected financial information for the year 2022-2023

Key consolidated data - IFRS (In thousands of €)

 

31/03/2023 12 months

 

31/03/2022 12 months

PROFIT AND LOSS ACCOUNT

 

 

 

 

Revenue

 

9 889

 

4 090

Other income from ordinary activities

 

3 766

 

4 247

Current operating profit

 

(24 025)

 

(23 812)

Operating profit

 

(24 046)

 

(23 814)

Financial result

 

(5 452)

 

(992)

Net result

 

(29 498)

 

(24 806)

CASHFLOW

 

 

 

 

Net cashflow from operating activities

 

(21 029)

 

(21 362)

Net cashflow from investing activities

 

1 298

 

(316)

Net cashflow from financing activities

 

1 577

 

(800)

BALANCE SHEET

 

 

 

 

Equity of the consolidated group

 

(39 781)

 

(13 371)

Total non-current liabilities

 

17 662

 

19 433

Total current liabilities

 

51 458

 

38 241

Total non-current assets

 

9 772

 

10 229

Of which financial assets and other non-current assets

 

1 460

 

1 519

Total current assets

 

19 568

 

34 074

Of which cash and cash equivalents

 

6 467

 

24 617

FINANCIAL DEBT

 

 

 

 

Financial debt, non-current portion

 

14 762

 

16 249

Financial debt, current portion

 

37 245

 

27 764

GROSS FINANCIAL DEBT

 

52 008

 

44 014

Cash and cash equivalents

 

6 467

 

24 617

Capitalization contract *

 

-

 

2 560

NET FINANCIAL DEBT

 

45 541

 

16 837

* The Group had funds immobilized in a capitalization contract and euro funds given as collateral for a bank loan of €7.0m, the balance of which was repaid in 2022/2023.

Cash position significantly strengthened

On March 31, 2023, MedinCell had € 6.5 million of cash and cash equivalents (compared to € 24.6 million of cash and cash equivalents and € 2.6 million of current and non-current non-risky financial assets a year ago).

Financial strategy of the Company was adjusted following FDA’s Complete Response Letter received by Teva on April 19, 2022, which resulted in commercialization of MedinCell’s first product approximately one year later than expected.

In November 2022, the Company signed a loan agreement for € 40 million with the European Investment Bank (EIB). The two first tranches of the credit facility for a total amount of € 30 million have been drawn in Q4 2022 and Q1 2023, of which around € 23.3 million have been used to repay the existing EIB loan from 2018 as specified in the agreement. Disbursement of the last € 10 million was conditioned to approval by U.S. FDA of UZEDY that occurred on April 28, 2023. This last tranche is available immediately. In addition to the new EIB loan, the Company successfully completed a € 23.2 million net capital raise in May 2023 through an offering to French and international investors via a Private Placement and to retail investors in France.

Considering these financing operations and anticipated revenues from existing collaboration, MedinCell has the resources to continue its portfolio development.

As of March 31, 2023, one of the EIB loan covenants had not been met, giving EIB the right to ask for partial or total early repayment of the existing loan. On June 12, 2023, the Company obtained a waiver from EIB. The Company points out that, with its current base cash forecast, that does not include potential new partner service or licensing revenue, the covenant may not be met again as of March 31, 2024. This is a significant uncertainty on the going concern. To avoid this, the Company continues having discussions with the EIB. With a positive outcome, the cash visibility of the company’s current base cash forecast is estimated until at least Q4 2025.

Consolidated cashflow statement

 

 

(In thousands of €)

 

31/03/2023 12 months

 

31/03/2022 12 months

A

 

Net cashflow from operating activities

 

(21 029)

 

(21 362)

B

 

Net cashflow from investing activities

 

1 298

 

(316)

C

 

Net cashflow from financing activities

 

1 577

 

(800)

 

 

Impact of non-monetary items and foreign exchange rate changes

 

-

 

-

 

 

Change in net cash position

 

(18 149)

 

(22 478)

 

 

Cash and cash equivalents - opening balance

 

24 617

 

47 095

 

 

Cash and cash equivalents - closing balance

 

6 467

 

24 617

A- Net cashflow used in operating activities

During the year, the Company's cash consumption was similar to the previous year at € 21 million. Over the same period, operating expenses increased from € 32.2 million to € 37.7 million, mainly due to the increase in Research & Development activities.

The Company points out that the first revenues directly linked to product sales should be royalties from the commercialization of products developed with Teva, mainly UZEDY. In the meantime, due to the product development cycle and depending on the financial parameters set up in the context of partnerships (which may or may not include certain elements such as invoicing for formulation services, milestone payments, royalties, cost sharing, profit sharing, etc.), revenues may vary significantly from one year to the next.

B- Net cashflow from investing activities

The increase of € 1.6 million compared to previous year corresponds to the end of the capitalization contract in Q1 2023 (€2.6 million) partially offset by the acquisition of machinery and fixed instruments, improvements at the Jacou site for € 0.6 million, and the acquisition of intangible assets for € 0.5 million related to intellectual property.

C- Net cashflow from financing activities

The net cashflow from financing activities is driven by the new contract with the EIB signed in November 2022, of which € 30 million have been withdrawn as of March 31, 2023. This cash has been partly used to early repay the 2018 EIB loan in January 2023 of € 23.3 million.

Profit and loss account

Income from ordinary activities: € 13.7 million

For the year ended March 31, 2023, revenues correspond to:

Development services of € 5.8 million, mainly related to activities for mdc-WWM and mdc-STM products financed by international health foundations and agencies, compared to €4.0 million in the previous year.

• The development of a long-acting injectable malaria product supported by the Unitaid health agency generated revenue of € 2.2 million compared to € 1.3 million in the prior year.
• The development of a long-acting contraceptive product supported by the Bill & Melinda Gates Foundation generated revenue of € 2.0 million compared to € 2.4 million in the prior year
• Reflecting the intensification of Business Development, R&D activities related to new partnered programs(proof of feasibility) generated € 1.6 million revenue compared to €0.3 million in the prior year.

In addition, the Company received a milestone payment from Teva of € 2.9 million after their decision in August 2022 to start Phase 3 clinical activities for mdc-TJK, the second schizophrenia product candidate.

The Company also received a € 1.2 million royalty payment from the joint venture, CM Biomaterials, dedicated to the sale of polymers to the Company's partners, significantly higher than the € 0.1 million the year before.

The Research Tax Credit recognized during the period amounted to € 3.7 million (€ 4.2 million in the prior year).

Current operating expenses aligned with the Company's plan: € 37.7 million

Current operating expenses increased by 17% compared to the previous year. This increase was mainly driven by R&D activities, which accounted for 74% of operating expenses, reaching € 27.9 million, compared to € 23.6 million in the previous year. This increase is driven by the advancement of the current portfolio and increased cash requirements in the preclinical stages and the clinical study conducted during the year.

Resuming to normal activities after the pandemic crisis led to a 14% increase in marketing and business development costs, as travel is no longer as restrictive as it was in the recent past. Also, G&A expenses increased by 14%, driven by additional consulting fees and salaries and benefits increase.

Financial result: € (5.5) million

The financial result is mainly impacted by the new EIB financing signed in May and November 2022, partially offset by forex gains of € 1.2 million.

About MedinCell

MedinCell is an innovative pharmaceutical company developing a portfolio of long-acting injectable products in various therapeutic areas - from development to commercialization - by combining its proprietary BEPO technology (licensed to Teva under the name SteadyTeq™) with active ingredients already known and marketed. Through the controlled and extended release of the active pharmaceutical ingredient, MedinCell makes medical treatments more efficient, particularly thanks to improved compliance and to a significant reduction in the quantity of medication required. MedinCell's proprietary BEPO technology makes it possible to control the delivery of a drug at a therapeutic dose for several days, weeks or months, from the subcutaneous or local injection of a simple, fully bioresorbable deposit just a few millimeters in size. The first treatment based on BEPO technology for the treatment of schizophrenia was approved by the FDA in April 2023 and is now commercialized in the United States by Teva under the name UZEDY™. MedinCell collaborates with leading pharmaceutical companies and foundations to improve global health through new therapeutic options. Based in Montpellier, MedinCell currently employs over 140 people representing more than 25 different nationalities. www.medincell.com

UZEDY™ and SteadyTeq™ are trademarks of Teva Pharmaceuticals

This press release contains forward-looking statements, including statements regarding Company’s expectations for (i) the timing, progress and outcome of its clinical trials; (ii) the clinical benefits and competitive positioning of its product candidates; (iii) its ability to obtain regulatory approvals, commence commercial production and achieve market penetration and sales; (iv) its future product portfolio; (v) its future partnering arrangements; (vi) its future capital needs, capital expenditure plans and ability to obtain funding; and (vii) prospective financial matters regarding our business. Although the Company believes that its expectations are based on reasonable assumptions, any statements other than statements of historical facts that may be contained in this press release relating to future events are forward-looking statements and subject to change without notice, factors beyond the Company's control and the Company's financial capabilities. These statements may include, but are not limited to, any statement beginning with, followed by or including words or phrases such as "objective", "believe", "anticipate", “expect”, "foresee", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "may", "probably", “potential”, "should", "could" and other words and phrases of the same meaning or used in negative form. Forward-looking statements are subject to inherent risks and uncertainties beyond the Company's control that may, if any, cause actual results, performance, or achievements to differ materially from those anticipated or expressed explicitly or implicitly by such forward-looking statements. A list and description of these risks, contingencies and uncertainties can be found in the documents filed by the Company with the Autorité des Marchés Financiers (the "AMF") pursuant to its regulatory obligations, including the Company's registration document, registered with the AMF on September 4, 2018, under number I. 18-062 (the "Registration Document"), as well as in the documents and reports to be published subsequently by the Company. In particular, readers' attention is drawn to the section entitled "Facteurs de Risques" on page 26 of the Registration Document. Any forward-looking statements made by or on behalf of the Company speak only as of the date they are made. Except as required by law, the Company does not undertake any obligation to publicly update these forward-looking statements or to update the reasons why actual results could differ materially from those anticipated by the forward-looking statements, including in the event that new information becomes available. The Company's update of one or more forward-looking statements does not imply that the Company will make any further updates to such forward-looking statements or other forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. This press release is for information purposes only. The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy or subscribe for the Company's shares in any jurisdiction, in particular in France. Similarly, this press release does not constitute investment advice and should not be treated as such. It is not related to the investment objectives, financial situation, or specific needs of any recipient. It should not deprive the recipients of the opportunity to exercise their own judgment. All opinions expressed in this document are subject to change without notice. The distribution of this press release may be subject to legal restrictions in certain jurisdictions. Persons who come to know about this press release are encouraged to inquire about, and required to comply with, these restrictions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230626735708/en/

MedinCell David Heuzé Head of Communications david.heuze@medincell.com +33 (0)6 83 25 21 86

NewCap Louis-Victor Delouvrier/Alban Dufumier Investor Relations medincell@newcap.eu +33 (0)1 44 71 94 94

NewCap Nicolas Merigeau Media Relations medincell@newcap.eu +33 (0)1 44 71 94 94