MagForce AG Announces Financial Results for the Fiscal Year 2021 and Operational Highlights
- MagForce USA received approval by the Centers for Medicare and Medicaid Services (CMS) to cover the majority of treatment-related costs in the ongoing clinical trial in the US after commercial payment code approval from the American Medical Association (AMA) in April 2022
- Since MagForce USA owns and operates the treatment centers, MagForce USA can now bill for the focal prostate clinical trial, which will provide an easier transition to commercialization
- In Europe, treatments of glioblastoma patients increasing significantly after COVID-related decline
Berlin, Germany and Nevada, USA, June 30, 2022 MagForce AG (Frankfurt, Scale, Xetra: MF6, ISIN: DE000A0HGQF5), a leading medical device company in the field of nanomedicine focused on oncology, together with its subsidiary MagForce USA, Inc., today announced financial results and operational highlights for the year ending December 31, 2021.
USA Focal Prostate Cancer Treatment
In late 2021, MagForce USA obtained FDA approval to utilize the commercial protocol for the ongoing clinical trial. This was a necessary pre-condition to also receive the green light from state ethics committees ("Institutional Review Board", IRB) in the beginning of Q1 2022 to proceed with the study at each of the three focal treatment centers. Following these approvals, patient outreach and patient screening programs were intensified during Q2. This was done together with key urology groups in close proximity to MagForce USAs focal treatment centers and the patient outreach group. To further expedite the process and raise awareness, MagForce USA entered into a collaboration with two additional urological practices. These so-called reference centers are located near the Companys study sites. Both centers run Active Surveillance programs and screen their patient base for eligible subjects. Suitable candidates then are referred to MagForce USA, with the Company handling the study recruitment and treatment process.
Another very significant milestone was our recent success in securing reimbursement not only for the future commercial operation but also for the ongoing clinical study.
In April 2022, MagForce USA received commercial code approval from the American Medical Association (AMA). Subsequently, set-up of the reimbursement and billing system is currently in process; the transition from clinical trial to commercial status now will be less cumbersome since the billing procedures will be similar and in place. This also sets the stage for us to apply for approval to cover the costs of the clinical trial. In May, MagForce USA secured coverage approval by Medicare, the U.S. health insurance system, to reimburse MagForce USA for patient treatments with our NanoTherm therapy system as well as related and routine items and services during the ongoing study. Given this new development, MagForce is now able to ramp up patient treatments. This also means that MagForce USA will start generating cash flow from patient treatments already during the study. The FDA will review of the interim results of the clinical trial while the study continues to treat patients. Therefore, MagForce USA will have the opportunity to expeditiously shift from the clinical trial to commercialization.
In light of the achievements described above, as well as the very good treatment results, MagForce has seen in the study so far, including an excellent side effect profile, MagForce very much looks forward to progressing Stage 2b of the pivotal study. MagForce made important steps that will enable it to smoothly transition from the clinical study to the market: 1) CMSs decision to reimburse the company for patient treatments in the clinical trial all the way to approval, and 2) continued treatment of patients after submitting for market approval, allowing MagForce to provide more treatment evidence in H1 2023. Based on these new developments, MagForce USA will be in a stronger financial position to complete the transition to the market.
Europe Glioblastoma Treatment
In Europe, as COVID-19 infections have decreased, inquiries from glioblastoma patients and, thus, the number of treatments has increased significantly, especially in Poland. MagForce is seeing great support for its NanoTherm therapy system by leading Polish neurosurgeons and by the International Alivia Cancer Foundation. In particular, through Alivias Piggy Bank Fundraising Program, Polish patients receive NanoTherm therapy even before general reimbursement has been achieved. Alivia is also active in Spain, where MagForce will open the next NanoTherm Treatment Center still this year.
In Poland, in the Lublin NanoTherm Treatment Center, treatments have been successfully applied for for several years. Recently, a glioblastoma surgery with instillation of NanoTherm particles was performed for the first time in the city of Poznan. One week following surgery, the patient was transferred to the NanoTherm Treatment Center in Zwickau where he received the activation in the NanoActivator. This approach has proven to work well and significantly expands the radius in which glioblastoma patients can be reached.
Going forward, neurosurgeons at up to ten Polish private and public clinics will be trained and certified for NanoTherm application. Patients will be sent to Polish or German NanoTherm Treatment Centers for activation depending on where they live. Therefore, many more patients will be able to receive treatment in Poland without the need to invest in additional NanoActivator sites, improving capacity utilization of the existing centers. MagForce also recently signed tender agreements in Polish public hospitals in Wroclaw and Lublin.
Results of operations, net assets and financial position
In the financial year, revenues amounted to EUR 352 thousand (previous year: EUR 621 thousand). Revenues come from the commercial treatment of patients with NanoTherm therapy in Germany and Poland in the amount of EUR 149 thousand (previous year: EUR 527 thousand) and NanoTherm and catheter deliveries for the US study in the amount of EUR 203 thousand (previous year: EUR 94 thousand).
Other operating income amounted to EUR 1,262 thousand in the financial year (previous year: EUR 26,486 thousand) and mainly included income from the reversal of provisions in the amount of EUR 668 thousand (previous year: EUR 34 thousand) and the charging of management services and other administrative services to affiliated companies in the amount of EUR 475 thousand (previous year: EUR 444 thousand). The previous year was characterized by the disclosure of hidden reserves in the amount of EUR 25,583 thousand in connection with the transfer of shares in MagForce USA Inc.
Personnel expenses in the amount of EUR 3,984 thousand (previous year: EUR 4,121 thousand) also included expenses for bonuses.
Other operating expenses amounted to EUR 3,020 thousand and were therefore EUR 495 thousand lower than in the previous year (EUR 3,515 thousand). The decrease in other operating expenses was mainly attributable to lower costs for capital procurement measures.
The operating result in the financial year 2021 amounted to EUR -6,737 thousand, in contrast to the positive result of the previous year of EUR 18,620 thousand, which was due to the disclosure of hidden reserves in the amount of EUR 25,583 thousand. Normalized for the extraordinary effect, the previous year's operating result would have been EUR -6,963 thousand.
At EUR 215 thousand, interest income corresponded to that of the previous year (EUR 215 thousand), while interest expenses fell by EUR 97 thousand from EUR 3,038 thousand to EUR 2,941 thousand. The main reason for the reduction in interest expenses was lower interest on liabilities that are partially linked to the share price. The write-down of contributions to finance the operating activities of the subsidiary MT MedTech Engineering GmbH amounted to EUR 1,110 thousand (previous year: EUR 1,048 thousand). The reduction in interest expenses correspondingly led to a slight improvement in the negative financial result by EUR 34 thousand from EUR 3,870 thousand to EUR 3,836 thousand.
While the previous year closed with a net income of EUR 14,747 thousand due to the above-described extraordinary effect of the disclosure of hidden reserves as part of the intragroup transfer of shares in MagForce USA Inc., the 2021 financial year ended with a net loss of EUR 10,574 thousand. Compared to the previous year's result adjusted for the extraordinary effect (EUR -10,836 thousand), the annual result improved by EUR 262 thousand.
Cash flow from operating activities amounted to EUR -4,927 thousand (previous year: EUR -5,698 thousand). Cash outflow from operating activities was derived indirectly from net loss. Cash outflows largely relate to the financing of operating activities.
Cash flow from investing activities amounted to EUR -1,816 thousand (previous year: EUR -2,981 thousand) and mainly related to payments for the construction of mobile NanoActivators and expenses for the preparation of technical documentation for MagForce products. Furthermore, contributions were made to the subsidiary MT MedTech Engineering GmbH to provide financial support.
Cash flow from financing activities amounted to EUR 5,151 thousand (previous year: EUR 10,218 thousand) and was mainly attributable to cash inflows resulting from the issue of convertible notes and intercompany loans. The cash inflows were offset by interest payments.
At the end of the financial year, freely available liquidity amounted to EUR 115 thousand (previous year: EUR 1,706 thousand).
Outlook and financial forecast for 2022
The following core activities are planned for 2022:
- Increase in the number of commercially treated patients in Germany and Poland
- Creation of an efficient way of reimbursement for NanoTherm therapy
- Completion of the registration study for the NanoTherm therapy in the indication of prostate cancer in the USA
MagForce AG expects an increase in revenues due to a rise in the number of commercially treated patients in Europe. A further increase in revenues is expected for the following years due to the increase in NanoTherm production volumes.
A positive operating result is also not expected for the 2022 financial year. The increased sales will relieve the operating result but will not be able to compensate for the current expenses. The need to carry out further debt financing measures and make interest payments will continue to have a negative impact on the financial result.
It cannot be completely ruled out that there will be new waves of infection due to the COVID-19 pandemic, which could have a negative impact on the expected results. However, the effects of the infection waves seem to be diminishing. The war in Ukraine could also have a negative impact, particularly on the treatment of patients at the Lublin site in Poland.
In the interest of securing the financing of current business activities, and in particular of the study in the USA, in a market environment that is quite uncertain overall due to a wide variety of factors, the Management Board has decided to take various financing measures in the current fiscal year 2022:
In January, MagForce AG issued convertible notes in the amount of EUR 3.0 million as part of its convertible notes agreement with the US investment firm Yorkville Advisors Global LP. In February, MagForce AG extended the convertible notes agreement with Lansdowne Investment Company Cyprus Limited and issued an additional EUR 2.0 million under this convertible note. Furthermore, in June, a bearer notes agreement with a total volume of up to EUR 3.5 million, was concluded with Lansdowne Investment Company Cyprus Limited.
About MagForce AG and MagForce USA, Inc.
MagForce AG, listed in the Scale segment of the Frankfurt Stock Exchange (MF6, ISIN: DE000A0HGQF5), together with its subsidiary MagForce USA, Inc. is a leading medical device company in the field of nanomedicine focused on oncology. The Group's proprietary NanoTherm therapy system enables the targeted treatment of solid tumors through the intratumoral generation of heat via activation of superparamagnetic nanoparticles.
NanoTherm®, NanoPlan®, and NanoActivator® are components of the therapy and have received EU-wide regulatory approval as medical devices for the treatment of brain tumors. MagForce, NanoTherm, NanoPlan, and NanoActivator are trademarks of MagForce AG in selected countries.
For more information, please visit: www.magforce.com
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This release may contain forward-looking statements and information which may be identified by formulations using terms such as "expects", "aims", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or "will". Such forward-looking statements are based on our current expectations and certain assumptions, which may be subject to a variety of risks and uncertainties. The results actually achieved by MagForce AG may substantially differ from these forward-looking statements. MagForce AG assumes no obligation to update these forward-looking statements or to correct them in case of developments, which differ from those, anticipated.
Barbara von Frankenberg
VP Communications & Investor Relations
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