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2019-02-28 07:00 CET
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Biocartis Group NV: BIOCARTIS ANNOUNCES 2018 RESULTS AND 2019 OUTLOOK

   
PRESS RELEASE: REGULATED INFORMATION
Thursday, 28 February 2019, 07:00 CET
BIOCARTIS ANNOUNCES 2018 RESULTS AND 2019 OUTLOOK

Mechelen, Belgium, 28 February 2019 - Biocartis Group NV (the 'Company' or 'Biocartis'), an innovative molecular diagnostics company (Euronext Brussels: BCART), today announces its operational highlights and financial results for 2018, prepared in accordance with IFRS as adopted by the European Union as well as selected post period events and its outlook for 2019.

Key messages 2018 results

  • Total operating income: Product revenues increased year-over-year with 46% to EUR 18.8m. Total operating income amounted to EUR 28.7m (year-over-year increase of 24%).
  • Installed base: 326 Idylla(TM) instruments added to the installed base, bringing the total to over 970 as per year-end. Post-period, the total installed base crossed the 1,000 instrument milestone.
  • Commercial cartridge consumption: Amounted to 133k Idylla(TM) cartridges, representing a year-over-year increase of approx. 87%.
  • Commercialization: First year of successful commercialization in the US and completion of a global commercial footprint with establishment of a joint venture for the Chinese market and, post-period, announcement of selection of commercialization partner for the Japanese market.
  • Partners: Expansion of partnership with Genomic Health into the urology space and announcement of agreement with pharmaceutical partner AstraZeneca in the lung cancer domain.
  • MSI testing: Promising initial market adoption of the Idylla(TM) MSI Assay, launched as RUO[1] on 17 July 2018.
  • Cash position: Cash and cash equivalents amounted to EUR 64m as per 31 December 2018. Post-period, on 23 January 2019, Biocartis announced the completion of a EUR 55.5m equity raise.

2019 guidance

  • Installed base: Targeting an installed base growth of around 350 new instrument placements, bringing the total installed based end of 2019 to over 1,300.
  • Cartridge volume: Targeting a commercial volume of 210k-225k Idylla(TM) cartridges, representing a year-over-year increase of around 60% to 70%.
  • Cash position: Targeted cash position in the range of EUR 55m - EUR 65m by 2019 year end.

Biocartis will host a conference call with live webcast presentation today at 14:00 CET / 13:00 BST (UK) / 08:00 EDT (US) to discuss the 2018 results. Click here to access the live webcast. To participate in the questions and answers session, please dial 5-10 minutes prior to the start time the number +44(0)844 571 88 92 (standard international), followed by the confirmation code 1775755. 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.

Commenting on the 2018 results and 2019 guidance, Herman Verrelst, Chief Executive Officer of Biocartis, said: "Driven by our first full year of commercialization in the US as well as a strong continued performance in our European and RoW[2] markets, we managed to significantly expand our customer base and to further ramp-up our commercial cartridge volume in 2018. Through the establishment of our joint venture in China as well as the recent signing of a commercialization agreement for the Japanese market, we now have a commercial network in all major MDx markets worldwide. During 2019, we anticipate to further strengthen our assay menu for colorectal and lung cancer and to gear-up for important assay launches in 2020. Furthermore, we will transition the bulk of our commercial volume to our second cartridge manufacturing line in Mechelen. These investments in menu and manufacturing will allow us to significantly boost our gross margins from 2020 onwards."

Commercial highlights

  • Installed base - The installed base of Idylla(TM) instruments increased to 973 as per year-end as a result of  326 new installations in 2018. The majority of new placements in 2018 were realized in the European and US market. Post-period, driven by continued installed base growth, predominantly in the US market, the total installed base of Idylla(TM) instruments amounts to over 1,000.
  • Cartridge volume - In 2018, Biocartis realized a commercial volume of approx. 133k Idylla(TM) cartridges, a year-over-year increase of approx. 87%. The European and RoW markets contributed most to the absolute volume growth.
  • European commercialization - Over 2018, European direct markets showed an increase in installed base that was above expectation as well as a strong ramp-up of commercial cartridge volumes. This performance was the consequence of an increased usage of Idylla(TM) in first line testing by customers in key European markets, a strong overall contribution from pharmaceutical collaborations and the launch of the Idylla(TM) MSI Assay (RUO).
  • US commercialization - 2018 was the first full year of commercialization in the US during which the US direct sales team, in combination with the Fisher Healthcare sales team, realized a promising initial US installed base and was able to attract high profile customers such as Memorial Sloan Kettering Cancer Center and Dartmouth-Hitchcock Medical Center. Furthermore, and as part of the aim to accelerate market adoption several US based studies[3] of Idylla(TM) assays were published of which eight were presented at the Association for Molecular Pathology Conference in the US in November 2018.
  • RoW distribution markets - RoW realized a strong ramp-up in cartridge volumes in 2018, mainly driven by the 57 new market authorizations for Idylla(TM) products that Biocartis added in 2018 across 18 geographies. The increase in RoW performance was also the result of the strategy focused on those geographies that are of interest to pharmaceutical partners.
  • China commercialization - On 3 September 2018, Biocartis and Guangzhou Wondfo Biotech Co., Ltd. ('Wondfo', SHE: 300482), a fast growing diagnostics leader in China, announced entering into a joint venture aimed at the commercialization of the Idylla(TM) platform in mainland China, within the field of oncology. The joint venture is 50% owned by Biocartis and 50% owned by Wondfo. The initial activities of the joint venture are focused on the local manufacturing, commercialization and registration with the Chinese Regulatory Authorities (CFDA) of the existing Idylla(TM) molecular oncology assays for amongst others colorectal and lung cancer. This is a first important step in unlocking Idylla(TM)'s commercial potential in the Chinese molecular diagnostics market, being one of the fastest growing in the world and expected to reach a total value of USD 1.5bn by the end of 2022[4].
  • Japan commercialization - In 2018, Biocartis selected its commercialization partner for Japan, resulting into signing of a distribution agreement with Nichirei Bioscience as announced post the reporting period (see below), on 7 January 2019.

          
Menu and partnership highlights

  • Colorectal cancer menu
    • Launch Idylla(TM) MSI Assay (RUO) - On 17 July 2018, Biocartis launched its innovative Idylla(TM) MSI Assay (RUO) that provides information on the MSI status (i.e. MSI-High or Microsatellite stable) of a tumor within approximately 150 minutes from just one slice of FFPE[5] tumor tissue, without requiring a reference sample and based on a novel set of seven exclusively licensed MSI biomarkers. Several multi-center studies comparing the Idylla(TM) MSI Assay to the standard methods showed a >95% concordance between results as well as a significantly lower failure rate[6]. Once validated for diagnostic use the test is expected to significantly strengthen Biocartis' colorectal cancer test menu. Since MSI is an independent factor that may predict a patient's response to certain immunotherapies, it provides Biocartis with further opportunities to enter into the field of immuno-oncology.
    • EGFR ectodomain mutations - On 28 August 2018, Biocartis announced that it has obtained exclusive worldwide license rights for highly innovative EGFR ectodomain mutations that have been shown to determine response to targeted therapy for patients with metastatic colorectal cancer (mCRC).
  • Lung cancer menu
    • Collaboration AstraZeneca - On 29 November 2018, Biocartis announced to have entered into an agreement with AstraZeneca, a global science-led biopharmaceutical company (LON: AZN), aimed at obtaining faster lung cancer molecular diagnostic biomarker results in Europe. Pursuant to the agreement, a prospective lung cancer study with the Idylla(TM) EGFR Mutation Test (CE-IVD) will be conducted in selected European countries.
    • Idylla(TM) ctEGFR Assay - During 2018, Biocartis further progressed the development of the liquid biopsy version of the Idylla(TM) EGFR Mutation Assay (RUO).This test is an important addition to Biocartis' lung cancer menu as liquid biopsy EGFR testing is included in guidelines for situations where no tumor tissue is available for testing.
    • Idylla(TM) GeneFusion Panel - During 2018, Biocartis in concertation with its network of Key Opinion Leaders (KOLs) finalized the panel composition of the Idylla(TM) GeneFusion Panel. This panel is intended for the qualitative detection of different gene fusions (e.g. ALK and ROS1) in human non-small cell lung cancer FFPE[7] tissue samples. Together with the Idylla(TM) EGFR Mutation Test (CE-IVD), these tests will cover the majority of actionable lung cancer mutations, making the GeneFusion Panel as such a key addition to Biocartis' lung cancer menu.
  • Breast cancer menu - On 3 June 2018, Biocartis' partner Genomic Health, Inc. (NASDAQ: GHDX) announced the results of the long-awaited TAILORx study, the largest ever breast cancer treatment trial, which provided definitive evidence that the Oncotype DX Breast Recurrence Score® test identified the vast majority of early stage breast cancer patients who receive no benefit from chemotherapy, and can be effectively treated with endocrine therapy alone. Additionally, the trial established that chemotherapy may provide life-saving benefit to an important minority of patients. These results are expected to be an important driver in the market adoption and reimbursement of the future Oncotype DXi IVD Breast Recurrence ScoreTM test in Europe. During 2018, Genomic Health and Biocartis reached an important milestone in the development of that test by demonstrating feasibility on the Idylla(TM) platform.Early access sites were selected with the aim to initiate validation studies in the second half of 2019 and to launch the Oncotype DXi IVD Breast Recurrence ScoreTM test in 2020, beginning in France and Germany.
  • Prostate cancer menu - On 3 December 2018, Biocartis and Genomic Health announced to have expanded their exclusive collaboration into the field of urology aimed at the development of an in vitro diagnostic (IVD) version of the Oncotype DX Genomic Prostate Score® (GPS(TM)) Test[8] on the Idylla(TM) platform and potentially additional cancer tests that can be performed locally by laboratory partners and in hospitals around the world. Post the reporting period, on 5 February 2019, Genomic Health announced the publication of results from a multi-center, prospective validation study of the Oncotype DX® Genomic Prostate Score® (GPS(TM)) test in newly diagnosed men with clinically low-risk prostate cancer who elected immediate radical prostatectomy after receiving the test. Published in Urology[9], the study results prospectively validated the GPS test as an independent predictor of adverse pathology at the time of surgery as a measure of disease aggressiveness for men with clinically low- or intermediate-risk prostate cancer.
  • Performance studies - During 2018, Biocartis announced the publication of several studies demonstrating the high performance of Idylla(TM) and its oncology molecular diagnostic tests, among which:
    • Eight Idylla(TM) performance study abstracts[10] were selected for presentation at the Association for the Molecular Pathology Conference (AMP), the leading meeting of professionals in the field of molecular diagnostics in the US, which took place between 1-3 November 2018 in San Antonio, Texas (US). The studies were performed by renowned US oncology key opinion leaders from the Memorial Sloan Kettering Cancer Center (New York), Dartmouth-Hitchcock Medical Center (New Hampshire), AstraZeneca and the University of Alabama.
    • Two performance studies on Idylla(TM) MSI Biomarkers[11] selected for publication at the American Society of Clinical Oncology (ASCO) Annual Meeting conference, taking place between 1-5 June 2018, Chicago (IL), US[12].
    • Studies[13] on the Idylla(TM) MSI Assay (RUO) and the Idylla(TM) RAS liquid biopsy tests[14] were presented at the European Society for Medical Oncology (ESMO) congress, 19-23 October 2018 in Munich, Germany.
    • A study[15] published on 14 June 2018 in the Journal of Clinical Pathology reviewing 2,500 performed Idylla(TM) tests across 18 performance studies showed the generation of valid results in 98.1% of the cases and outperformance over currently used reference methods. The 1.9% invalid results generated with Idylla(TM) is approx. 40% lower than the results of the included reference methods, which showed invalid results in 3.1% of the cases.
    • Other studies included a study abstract[16] on the performance of the Idylla(TM) ctRAS liquid biopsy tests which was selected for oral presentation at the 2018 American Association for Cancer Research (AACR) Annual Meeting taking place between 14-18 April 2018 in Chicago (US); a study demonstrating the ability of the Idylla(TM) EGFR Mutation Test (CE-IVD) to produce a result in 80% of failed Next Generation Sequencing Lung Cancer Tests was published in the Journal of Clinical Pathology on 24 May 2018[17]; and a study abstract on the performance of the Idylla(TM) RAS tests[18] was selected for oral presentation at the 70th AACC Annual Scientific Meeting in Chicago, IL (US) on 31 July 2018.

Organizational and operational highlights

  • New board composition - Following the annual general shareholders' meeting (AGM) held on 11 May 2018, five new independent board members[19] were appointed and three board members whose mandate expired at the closing of the AGM, were re-appointed[20]. The new board composition allows for a transition towards a board of directors consisting predominantly of independent directors and consists of: CRBA Management BVBA (represented by Christian Reinaudo), chairman of the board, Ann-Christine Sundell, Scientia II LLC (represented by Harry Glorikian), CLSCO BVBA (represented by Leo Steenbergen), Luc Gijsens BVBA (represented by Luc Gijsens), Peter Piot, Hilde Windels BVBA (represented by Hilde Windels), Roald Borré and Herman Verrelst (CEO of Biocartis).
  • US R&D center - On 1 March 2018, Biocartis announced to have established an R&D center in the US as the result of a transfer of R&D staff members and Idylla(TM) related assay development assets and tests of Janssen Diagnostics (a division of Janssen Pharmaceuticals, Inc.). With the establishment of this US R&D center, Biocartis supports the execution of its strategy to accelerate test menu expansion on the Idylla(TM) platform through predominantly companion diagnostics collaborations and assay content partnerships.
  • Cartridge manufacturing - During 2018, Biocartis completed the construction and validation of its second cartridge manufacturing line that should provide for an additional annual cartridge capacity of over 1 million Idylla(TM) cartridges. Currently, Biocartis is in the process of transferring the commercial production of its high volume tests to this new cartridge manufacturing line.
  • Contract terminations - During H2 2018, a review of infectious disease oriented collaborations and license agreements was conducted, which resulted in the termination of certain collaborations that were no longer of strategic importance to Biocartis. As part of this review, the agreement with Koninklijke Philips N.V., under which Biocartis had gained access to certain patent rights and know-how, in relation to an ancillary platform for selective enrichment of pathogen DNA for use with bloodstream infection tests, has been terminated. The underlying patent rights are being returned to Philips and the related book value has been fully impaired, resulting in EUR 3.2m non-cash impairment.

Financial highlights

  • Product sales revenues - Total product sales increased year-over-year with 46% to EUR 18.8m in 2018 (EUR 12.9m in 2017), as the consequence of higher Idylla(TM) cartridge sales (year-over-year growth of 76%) due to increased cartridge volumes partially offset by lower Idylla(TM) platform sales (year-over-year decline of 9%) as more instruments are now being placed under reagent rental contracts.
  • Total operating income - Total operating income amounted to EUR 28.7m in 2018, representing a year-over-year growth of 24% due to higher Idylla(TM) product sales, collaboration revenues and service revenues partially offset by lower grant income.
  • OPEX - Total operating expenses (including cost of sales) amounted to EUR 75.5m, a year-over-year increase of 13% due to higher cost of sales, sales and marketing expenses and general and administrative expenses partially offset by lower research and development expenses.
  • Operational cash flow - Total operational cash flow amounted to minus EUR 42.0m in 2018 versus minus EUR 41.4m in 2017.
  • Cash position - Biocartis' cash position as per 31 December 2018 amounted to EUR 63.5m compared to EUR 112.8m as per 31 December 2017. Please see the paragraph post-period events on the equity raise completed in January 2019.
  • Additional details - see 'key figures for 2018' below for more details on the 2018 financials.

Post-period events

  • Japan commercialization - On 7 January 2019, Biocartis announced to have signed an agreement with Nichirei Bioscience, a leading supplier of biological and diagnostics products in Japan, for the product registrations and distribution of the Idylla(TM) platform in Japan. Upon successful registration, Nichirei Bioscience's sales force will commercialize the Idylla(TM) platform across its network of some 2,000 pathology laboratories.
  • Achievement 2018 key business objectives - On 7 January 2019, Biocartis announced to have achieved its key business objectives for 2018.
  • Equity raise - On 23 January 2019, Biocartis raised an amount of EUR 55.5m in gross proceeds by means of a private placement via an accelerated bookbuild offering of 5,000,000 new shares (being approximately 9.73% of the Company's outstanding shares). Consequently, Biocartis' cash position per end January 2019 amounted to over EUR 110m (unaudited figure). In addition, the Company has EUR 27.5m of multiple purpose credit lines at its disposal on which no drawdowns were made as per end of January 2019.
  • Strengthening management team - Biocartis is pleased to announce that it's strengthening its management team in light of further international growth, expansion of its partner network and associated scaling of its organization with the appointment of Piet Houwen as Chief Operating Officer (effective as of April 2019). With more than 25 years in various operational and general management roles, Piet Houwen has a strong track record in manufacturing, process engineering, project and people management. Piet Houwen has gained broad operational experience in dynamic international environments, including in fast moving consumer goods, food manufacturing, bio-pharmaceuticals and consulting. Prior to joining Biocartis, Piet Houwen was Chief Operations Officer at Ablynx and prior to that, he held global roles for Sanofi/Genzyme and Janssen Pharmaceutica (part of Johnson & Johnson family of companies) where he was active in pharmaceutical manufacturing of large and small molecules, stent coating and medical devices. Piet Houwen holds a Master's Degree in Mechanical Engineering from the Delft University of Technology (The Netherlands).

Summary long term Idylla(TM) test menu strategy[21]
The oncology MDx market that Biocartis operates in, is growing rapidly and is continuously evolving according to the ever-increasing pace of scientific and technological progress. Biocartis therefore continuously monitors the trends affecting its core markets with the aim to strengthen Idylla(TM)'s competitive position and to identify new segments where the platform has unique value. During today's Capital Markets Day, Biocartis will provide an update on its long-term Idylla(TM)  test menu strategy as a response to several important market trends that are believed to have a potential favorable impact the Company's business. With respect to Biocartis' internally developed Idylla(TM) assay menu, the focus going forward is on three key strategic building blocks: targeted therapies (assays focused on cancer specific therapies as well as pan-cancer applications), immunotherapy (assays focused on immune checkpoint inhibitors and cell-based therapies) and liquid-biopsy based monitoring applications (assays focused on on-therapy and post-therapy monitoring). Furthermore, Biocartis is envisioning additional collaborations with partners who own validated, proprietary, high-value oncology gene signatures that can be ported onto the Idylla(TM) platform. This is expected to result in the addition of cancer franchises for Idylla(TM), and the expansion of the platform into new customer segments within the oncology MDx market.
More details on the long term Idylla(TM) test menu strategy can be found in Biocartis' corporate presentation available on www.biocartis.com under 'investors'.

Outlook 2019

  • Installed base -Targeting an installed base growth in 2019 of 350 new instrument placements, bringing the total installed base to over 1,300 Idylla(TM) instruments by year-end.
  • Commercial cartridge consumption - Targeting a commercial volume of 210k-225k Idylla(TM) cartridges in 2019, representing a year-over-year increase of around 60%-70%.
  • Menu expansion:
    • Colorectal cancer menu - CE-IVD marking of the Idylla(TM) MSI Assay expected in Q1 2019 and US FDA 510(k) submission of the Idylla(TM) MSI Assay is expected in 2020. Submission of Idylla(TM) RAS PMA[22] documentation with the US FDA, subject to further feedback from US FDA interactions is expected in 2020;
    • Lung cancer menu - Launch of a liquid biopsy version of the Idylla(TM) EGFR Mutation Assay (RUO) expected mid-2019. Further development of the Idylla(TM) GeneFusion Panel towards expected launch in 2020;
    • Breast cancer menu - Start of the European validation studies of the Idylla(TM) Oncotype DXi IVD Breast Recurrence Score(TM) test in H2 2019 to target expected launch in 2020; and
  • Cash position: Targeted cash position in the range of EUR 55m - EUR 65m by 2019 year end, excluding drawdowns on the Company's multiple purpose credit facility.

Key figures for 2018
The tables below show an overview of the key figures and a breakdown of operating income for 2018. A consolidated income statement, balance sheet, cash flow statement and statement of changes in equity of Biocartis Group NV is presented in the paragraph 'Financial information' at the end of this press release.

Key figures (EUR 1,000) 2018 2017 % Change
Total operating income 28,651 23,110 24%
  Cost of sales -15,349 -8,673 77%
  Research and development expenses -36,842 -39,594 -7%
  Sales andmarketing expenses -15,349 -11,600 32%
  General and administrative expenses -7,971 -6,832 17%
Operating expenses -75,511 -66,699 13%
Operational result -46,860 -43,589 8%
Net financial result -1,402 -1,736 -19%
Income tax 109 3,365 -97%
Net result -48,153 -41,960 15%
Cash flow from operating activities -41,993 -41,405 2%
Cash flow from investing activities -5,820 -4,320 30%
Cash flow from financing activities -1,508 75,256 -102%
Net cash flow -49,320 29,531 -267%
Cash and cash equivalents1 63,539 112,765 -44%
Financial debt 35,335 35,388 0%

    1 Including EUR 1.2m of restricted cash (as a guarantee for KBC Lease financing)

Operating income (EUR 1,000) 2018 2017 % Change
Collaboration revenue 8,329 7,739 8%
  Idylla(TM) System sales 4,185 4,620 -9%
  Idylla(TM) Cartridge sales 14,658 8,316 76%
Product sales revenue 18,843 12,936 46%
Service revenue 639 282 127%
Total revenue 27,811 20,957 33%
Grants and other income 840 2,153 -61%
Total operating income 28,651 23,110 24%

Product sales revenue by type
(EUR 1,000)
2018 2017 % Change
  Commercial revenue 17,843 12,748 40%
  Research & Development revenue 1,000 187 434%
Total product sales revenue 18,843 12,936 46%

Income statement
Collaboration revenue increased year-over-year with 8% to EUR 8.3m in 2018 driven by proceeds from R&D services that increased with over 6 times to EUR 4.3m which was partially offset by lower upfront license revenues (EUR 3.2m) and milestone revenues (EUR 0.8m).
Total product sales amounted to EUR 18.8m in 2018 (EUR 12.9m in 2017), representing a year-over-year growth of 46%, and included Idylla(TM) cartridge sales of EUR 14.7m (EUR 8.3m in 2017) and Idylla(TM) system revenues of EUR 4.2m (EUR 4.6m in 2017). The decrease in Idylla(TM) system revenues was driven by lower Idylla(TM) system sales (EUR 2.4m in 2018 versus EUR 3.4m in 2017), partially offset by higher Idylla(TM) system rental revenue (EUR 1.8m in 2018 versus EUR 1.2m in 2017).
Service revenue increased year-over-year with over 2 times to EUR 0.6m in 2018 as the consequence of the increased customer base. Recognized grants and other income amounted to EUR 0.8m in 2018 (EUR 2.2m in 2017) and consisted of R&D project support grants and training subsidies related to the establishment of a second cartridge manufacturing line.

Driven by the above Biocartis' total operating income in 2018 amounted to EUR 28.7m versus EUR 23.1m in 2017, representing an increase of 24%.

Total operating expenses in 2018 amounted to EUR 75.7m versus EUR 66.7m in 2017, an increase of 13%. This included cost of sales of EUR 15.3m in 2018 compared to EUR 8.7m in 2017 as the consequence of an overall increase in commercial product volumes as well as higher operational costs for cartridge manufacturing due to the expansion of night and weekend shifts. Operating expenses excluding cost of sales amounted to 60.2m in 2018 versus EUR 58.0m in 2017 as the result of a decrease in research and development ('R&D') expenses that was offset by higher expenses for sales and marketing ('S&M') and general and administrative expenses ('G&A').
R&D expenses amounted to EUR 36.8m in 2018 versus EUR 39.6m in 2017 which represents a year-over-year decrease of approx. 7%. This was predominantly driven by lower platform and cartridge prototype costs, subcontracting expenses (i.e. outsourced R&D activities) and allocated depreciation and amortization expenses which was partially offset by an one-off (non-cash) impairment expense related to patent rights that are being returned to Philips (see the paragraph 'Organizational and operational highlights' above) as well as higher employee benefit expenses and consultancy costs. Sales and marketing expenses amounted to EUR 15.3m in 2018 compared to EUR 11.6m in 2017, a year-over year increase of 32%. This increase is predominantly a consequence of increased additional operational expenses incurred in relation to the expansion of the Company's sales and marketing team, mainly in the US, and higher allocated depreciation and amortization expenses. G&A expenses amounted to EUR 8.0m in 2018 compared to EUR 6.8m in 2017 being a year-over-year increase of approx. 17% as a result of higher costs for staffing (including non-cash share based payment expenses), human resources and external advice.
The above resulted in an operational result for the period of EUR -46.9m, compared to EUR -43.6m in 2017, a year-over-year change of approx. 8%. Excluding one-off impairment losses, the 2018 operating result would have amounted to EUR -43.7m (i.e. a similar level as compared to 2017).
Net financial expenses amounted to EUR 1.4m in 2018 compared to 1.7m in 2017 and predominantly include financial expenses in relation to the Company's subordinate loan and commitment fees for the multiple purpose credit lines. As the Company had no taxable income in 2018, income tax expenses consists of recognized research and development tax credits in Belgium. Please note that the recognized tax credits for 2017 included a one-off adjusted fiscal treatment of certain historical intellectual property (IP) investments.
As a result of the foregoing, the net result for the year 2018 amounted to EUR -48.2m (EUR -45.0m excluding one-off impairment losses) compared to EUR -42.0m in 2017.

Balance sheet

Intangible assets predominantly consist of patents and licenses on third-party intellectual property and decreased from EUR 10.3m in 2017 to EUR 6.6m in 2018 driven by additions of EUR 0.3m and amortization and impairment expenses of EUR 3.9m, of which the latter predominantly related to the impairment mentioned under the paragraph 'Organizational and operational highlights' above.
During 2018, property plant & equipment increased with EUR 4.2m to EUR 30.4m driven by additions of EUR 9.2m and depreciation charges for the period of EUR 5.0m. Additions predominantly consisted of new manufacturing equipment for cartridge manufacturing as well as capitalization of instrumentation placed at clients under leasing or rental contracts as well as instrumentation held for internal needs.
Inventory amounted to EUR 11.9m as per end 2018 compared to EUR 9.1m as per end 2017. This year-over-year increase was driven by higher inventory levels of finished products and raw materials. Trade receivables increased to EUR 9.7m as per year-end 2018 (EUR 9.9m end of 2017) as a consequence of higher overall commercial volumes as well as amongst others invoicing to strategic partners in Q4 in light of collaboration activities.
The Company's cash and cash equivalents end of 2018 amounted to EUR 63.5m compared to EUR 112.8m end of 2017.
Biocartis' total equity end of 2018 amounted to EUR 87.4m compared to EUR 132.2m end of 2017. This decrease was driven by the negative operating result for 2018 that was partially offset by proceeds from warrants exercises as well as a correction for non-cash share-based payment expenses.
Total financial debt amounted to EUR 35.3m as per end of 2018 versus EUR 35.4m as per end of 2017 as a consequence of a decrease in lease financing that was offset by the addition of capitalized interest to the Company's subordinated loan.
Trade payables end of 2018 amounted to EUR 8.0m, representing an increase of EUR 2.4m compared to the EUR 5.6m that was outstanding end of 2017. Deferred income increased in 2018 to EUR 3.0m (EUR 2.8m end of 2017) as a consequence of payments received from collaboration partners, partially offset by the revenue recognition of received grant payments.

Cash flow statement
The cash flow from operating activities amounted to EUR -42.0m in 2018 which was slightly lower compared to 2017 (EUR -41.4m) driven by a lower net result for 2018 and increased investments in working capital that were to a large extent offset by increased (non-cash) adjustments due to the 2018 impairment losses as well as the one-off income statement impact in 2017 due to the adjusted fiscal treatment of certain historical IP investments.
The cash flow from investing activities in 2018 amounted to EUR -5.8m compared to EUR -4.3m in 2017 and included predominantly capitalization of Idylla(TM) instrumentation as well as investments in laboratory and manufacturing equipment. The cash flow from financing activities in 2018 amounted to EUR -1.5m (EUR 75.3m in 2017, driven by the capital raise of EUR 80m in November 2017) and predominantly consisted of repayments on borrowings that were partially offset by proceeds from the exercise of warrants. Driven by the aforementioned, the total net cash flow in 2018 amounted to EUR -49.3m compared to EUR 29.5m in 2017.

Financial calendar 2019

  • 28 February 2019       Full year results 2018
  • 4 April 2019               Publication Annual Report 2018
  • 25 April 2019             Q1 2019 Business Update
  • 10 May 2019              Annual General Meeting Biocartis Group NV
  • 5 September 2019      H1 2019 results
  • 14 November 2019     Q3 2019 Business Update

Webcast and presentation
Biocartis will host a conference call with live webcast, during which the 2018 results will be presented, followed by a Q&A session. This event will be held today, 28 February 2019 at 14:00 CET / 13:00 BST (UK) / 08:00 EDT (US). Access the webcast by clicking here. If you would like to participate in the Q&A, please dial +44(0)844 571 88 92 (standard international), followed by the confirmation code 1775755. A replay of the webcast will be available on the Biocartis investors website shortly after.

Financial information
The consolidated financial statements have been prepared in accordance with IFRS, as adopted by the EU. The financial information included in this press release is an extract from the full IFRS consolidated financial statements, which will be published on 4 April 2019. The statutory auditor, Deloitte Bedrijfsrevisoren /Réviseurs d'Entreprises, represented by Gert Vanhees, has confirmed that its audit procedures, which have been substantially completed, have not revealed any material adjustment that should be made in the accounting information included in this press release.


 Consolidated Income Statement

  Years ended 31 December,
In EUR 000 2018   2017
       
Revenue      
Collaboration revenue 8,329   7,739
Product sales revenue 18,843   12,936
Service revenue 639   282
  27,811   20,957
Other operating income      
Grants and other income 840   2,153
       
Total operating income 28,651   23,110
       
Operating expenses      
Cost of sales -15,349   -8,673
Research and development expenses -36,842   -39,594
Sales and marketing expenses -15,349   -11,600
General and administrative expenses -7,971   -6,832
  -75,511   -66,699
       
Operating loss for the year -46,860   -43,589
       
Financial expense -1,565   -1,714
Other financial results 163   -22
Financial result, net -1,402   -1,736
       
Loss for the year before taxes -48,262   -45,325
Income taxes 109   3,365
Loss for the year after taxes -48,153   -41,960
       
Attributable to owners of the Company -48,153   -41,960
Attributable to non-controlling interest      
       
Earnings per share      
Basic and diluted loss per share -0.94   -0.93


Consolidated Balance Sheet

    As of 31 December,
In EUR 000 2018   2017
         
Assets      
         
  Non-current assets      
  Intangible assets 6,579   10,267
  Property plant and equipment 30,391   26,199
  Financial assets 5,052   5,052
  Other non-current receivables 11   11
  Deferred tax assets 6,569   6,572
    48,602   48,102
         
  Current assets      
  Inventories 11,919   9,060
  Trade receivables 9,744   6,892
  Other receivables 3,751   2,856
  Other current assets 1,830   1,517
  Cash and cash equivalents* 63,539   112,765
    90,783   133,090
         
  Total assets 139,385   181,191
         
Equity and liabilities      
         
  Capital and reserves      
  Share capital -220,718   -220,721
  Share premium 632,769   630,670
  Share based payment reserve 3,445   2,381
  Accumulated deficit -328,145   -280,091
  Total equity attributable to owners of the Company 87,351   132,239
         
  Non-current liabilities      
  Provisions 28   16
  Financial liabilities 30,221   31,359
  Deferred income 6   10
  Accrued charges 1,501   1,767
    31,756   33,152
         
  Current liabilities      
  Financial liabilities 5,114   4,029
  Trade payables 7,973   5,555
  Deferred income 3,010   2,777
  Other current liabilities 4,181   3,439
    20,278   15,800
         
Total equity and liabilities 139,385   141,305
         
   

Cash and cash equivalents for 31 December 2018 include EUR 1.2 million restricted cash related to KBC Lease financing

Consolidated cash flow statement

  Years ended 31 December,
In EUR 000 2018   2017
Operating activities      
       
Loss for the year -48,153   -41,960
       
Adjustments for      
Depreciation and amortization 4,273   5,096
Impairment losses 3,456   0
Income taxes in profit and loss 109   -3,365
Financial result, net 1,402   1,736
Net movement in defined benefit obligation -15   -31
Share based payment expense 1,065   665
Other -19   -38
       
Changes in working capital      
Net movement in inventories -2,859   769
Net movement in trade and other receivables and other current assets -4,060   -4,197
Net movement in trade payables & other current liabilities 2,893   -95
Net movement in deferred income 229   682
  -41,679   -40,738
       
Interests paid -215   -562
Taxes paid -99   -105
Cash flow used in operating activities -41,993   -41,405
       
Investing activities      
Interests received 8   -2
Acquisition of property, plant & equipment -5,571   -3,157
Acquisition of intangible assets -257   -1,161
Cash flow used in investing activities -5,820   -4,320
       
Financing activities      
Net proceeds from the issue of ordinary shares, net of transaction costs 2,102   76,669
Repayment of borrowings -3,580   -1,375
Bank charges -29   -38
Cash flow from financing activities -1,507   75,256
       
Net increase / (decrease) in cash and cash equivalents -49,320   29,531
       
Cash and cash equivalents at the beginning of the year 112,765   83,246
Effects of exchange rate changes on the balance of cash held in foreign currencies 94   -12
Cash and cash equivalents at the end of the year* 63,539   112,765
     

* Including EUR 1.2 million restricted cash related to KBC Lease financing


Consolidated Statement of Changes in Shareholder Equity

      Attributable to owners of the Company    
In EUR 000      Share capital    Share premium    Share based payment reserve    Gains and losses on defined benefit plans    Accumulated deficit    Total equity attributable to the owners of the Company    Total equity
Balance as at 1 January 2017     -220,786   554,065   1,716   -19   -238,088   96,889   96,889
Loss for the period                     -41,960   -41,960   -41,960
Other comprehensive loss                 -26   0   -25   -25
Total comprehensive loss                 -26   -41,960   -41,985   -41,985
Share-based payment expense             665           665   665
Share issue - exercise of stock options on 5 October 2017     0   176               176   176
Share issue - private placement
28 November 2017
    64   79,936               80,000   80,000
Costs related to private placement         -3,771               -3,771   -3,771
Share issue - exercise of stock options on 21 December 2017     0   264               264   264
Consolidation translation difference                     2   2   2
Balance as at 31 December 2017     -220,722   630,670    2,381   -45   -280,046   132,240   132,240
                               
Balance as at 1 January 2018     -220,722   630,670   2,381   -45   -280,046   132,240   132,240
Loss for the period                     -48,153   -48,153   -48,153
Re-measurement gains and losses on defined benefit plan                 -23       -23   -23
Consolidation translation difference                     123   123   123
Total comprehensive loss                 -23   -48,030   -48,053   -48,053
Share-based payment expense             1,064           1,064   1,064
Share issue - exercise of stock options on 5 April 2018     2   1,807               1,809   1,809
Share issue - exercise of stock options on 4 October 2018     1   239               240   240
Share issue - exercise of stock options on 20 December 2018     1   53               53   53
Other                     -2   -2   -2
Balance as at 31 December 2018     -220,718   632,769   3,445   -67   -328,078   87,351   87,351

--- END ---
More information:
Renate Degrave
Manager Corporate Communications & Investor Relations
e-mail   rdegrave@biocartis.com
tel         +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(TM) 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 rapidly expanding test menu addressing key unmet clinical needs in oncology. This area represents the fastest growing segment of the MDx market worldwide. Today, Biocartis offers tests supporting melanoma, colorectal and lung cancer. More information: www.biocartis.com. Press Photo Library available here. Follow us on Twitter: @Biocartis_.

Forward-looking statements

Certain 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. 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.

Biocartis and Idylla(TM) are registered trademarks in Europe, the United States and other countries. The Biocartis trademark and logo and the Idylla(TM) trademark and logo are used trademarks owned by Biocartis. 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. Please refer to the product labeling for applicable intended uses for each individual Biocartis product. 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.



[1] Research Use Only, not for use in diagnostic procedures.

[2] RoW = Rest of the World. RoW is defined as the world excluding European direct markets, US, China and Japan.

[3] All study abstracts can be found in the AMP Abstract Book available on https://amp18.amp.org/abstracts-posters/. 

[4] Source: DataMintelligence, "Global Molecular Diagnostics Market 2018-2025".

[5] Formalin-fixed, paraffin embedded.

[6] Maertens G. et al. Annals of Oncology (2017) 28 (suppl_5): v22-v42; De Craene B. et al. Annals of Oncology (2017) 28 (suppl_5): v209-v268; De Craene et al. J Clin Oncol 36, 2018 (suppl; abstr e15639)>.

[7] Formalin fixed, paraffin embedded.

[8] The Oncotype DX GPS test is the only commercially available tissue biopsy-based, multi-gene test that has been clinically validated to assess the aggressiveness of prostate cancer in men with clinically low-risk or favorable intermediate-risk cancer at the time of diagnosis, helping to make better informed and more personalized treatment decisions. The vast majority of men currently diagnosed with low-risk prostate cancer undergo surgery or radiation treatment, although there is only a three percent chance that their disease will become life-threatening. In response to this issue, Genomic Health's tissue biopsy-based, multi-gene test has been clinically validated to predict aggressive cancer at the time of diagnosis, helping to identify those men who need immediate surgery or radiation therapy versus those who can confidently choose active surveillance. The result is a more precise and accurate assessment of risk, which helps more men avoid the lifelong complications associated with treatments they do not need, while directing aggressive therapy to those men who require immediate treatment. Source: website Genomic Health, last consulted on 28 November 2018.

[10] All study abstracts can be found in the AMP Abstract Book available on https://amp18.amp.org/abstracts-posters/.  

[11] The MSI Biomarkers were identified by Prof. Diether Lambrechts' laboratory and exclusively licensed to Biocartis from the Flemish Institute for Biotechnology (VIB) in 2013. 

[12] On 17 May 2018, Biocartis announced that two studies conducted in cooperation with VIB regarding the performance of its exclusively licensed novel set of biomarkers for microsatellite instability (MSI) that are included in the Idylla(TM) MSI Assay (the 'MSI Biomarkers'), have been selected for publication at the ASCO. B. De Craene et al., "Detection of microsatellite instability (MSI) in colorectal cancer samples with a novel set of highly sensitive markers by means of the Idylla(TM) MSI Assay prototype", ASCO Annual Meeting of the American Society of Clinical Oncology, 1-5 June 2018, Chicago, US; H. Zhao et al., "A novel set of 7 homopolymer indels for detection of MSI is associated with tumor mutation burden and total indel load in endometrial and colorectal cancers", ASCO Annual Meeting of the American Society of Clinical Oncology, 1-5 June 2018, Chicago, US. The methodology used for detection of the seven biomarkers, TMB (tumor mutation burden,) and indel load, was whole-exome sequencing. 

[13] It concerns two studies, one treatment outcome study on the Idylla(TM) ctKRAS and ctNRAS-BRAF Mutation Tests (CE-IVD) and one on the performance of the prototype Idylla(TM) MSI test. Montagut et al., "Clinical impact of circulating tumor RAS and BRAF mutation dynamics in metastatic colorectal cancer patients treated with first-line chemotherapy plus anti-EGFR therapy: Combined analysis of two prospective clinical trials", presented at ESMO, 19-23 October 2018, Münich, Germany, and published in the ESMO 2018 Congress Abstract Book, a supplement to the official ESMO journal Annals of Oncology; Decraene et al., "Detection of microsatellite instability (MSI) with a novel set of 7 Idylla(TM) biomarkers on colorectal cancer samples in a multi-center study", presented at ESMO, 19-23 October 2018, Münich, Germany, and published in the ESMO 2018 Congress Abstract Book, a supplement to the official ESMO journal Annals of Oncology.  

[14] The Idylla(TM) ctKRAS and ctNRAS-BRAF Mutation Tests (CE-IVD).

[15] The performance review study was performed by Dr. Arnaud Uguen (MD, PhD, Department of Pathology of the Brest University Hospital, Brest, France) and Dr. Giancarlo Troncone (MD, PhD, Professor of Anatomic Pathology, University of Naples Federico II, Naples, Italy) and was published in the Journal of Clinical Pathology on 14 June 2018.

[16] B Jacobs, B Claes, P Laurent-Puig, JP Bachet, S Tejpar, G Maertens, E Sablon, "Analytical and clinical validation of the Idylla(TM) ctKRAS and ctNRAS-BRAF Liquid biopsy tests", first presented at the 2018 AACR Annual Meeting in Chicago, US, 14-18 April 2018.

[17] De Luca et al, University of Naples Federico II, "The Idylla(TM) Assay and Next Generation Sequencing: an integrated EGFR mutational testing algorithm", Journal of Clinical Pathology, to consult online on http://jcp.bmj.com/content/jclinpath/early/2018/05/24/jclinpath-2018-205197.full.pdf?ijkey=V8eBoaMDpKZ7t9N&keytype=ref, 24 May 2018. 

[18] The Idylla(TM) KRAS and NRAS-BRAF-EGFR492 Mutation Assays (RUO, not for use in diagnostic procedures). M. Rabie Al-Turkmani et al., "Rapid Somatic Mutation Testing in Colorectal Cancer Using a Fully Automated System and Single-Use Cartridge: A Comparison with Next-Generation Sequencing", first presented at 70th AACC Annual Scientific Meeting in Chicago, IL (US).

[19] CRBA Management BVBA, represented by Christian Reinaudo (chairman of the board), Ann-Christine Sundell, Harry Glorikian, CLSCO BVBA, represented by Leo Steenbergen, and Luc Gijsens BVBA, represented by Luc Gijsens.

[20] Peter Piot (independent director), Hilde Windels BVBA, represented by Hilde Windels (non-executive director) and Roald Borré (non-executive director).

[21] The Biocartis Idylla(TM) menu strategy is indicative and subject to change driven by amongst others commercial, partnering, financial and operational considerations.

[22] PMA = Pre-Market Approval.

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