PRESS RELEASE: INSIDE INFORMATION / REGULATED INFORMATION
Company will host a conference call with live webcast presentation today at 14:30 CEST /
- Solid performance with 22% growth of oncology cartridge revenue, a 40% gross margin on product sales and a 20% improvement in EBITDA to
EUR -14.5m - Operational reorganization and cost reduction program nearing completion aimed at reaching operating break-even result by the end of 2024
- Comprehensive recapitalization and balance sheet restructuring plan by secured creditors announced and expected wind down of listed holding entity
Commenting on the H1 2023 results and post-reporting period events,
The operational performance of the
I am convinced that, under the new, recapitalized holding company and in combination with the operational reorganization and cost reduction program that are now being completed, we will now accelerate the path to becoming a financially healthy and sustainable business.“
Recapitalization and Balance Sheet Restructuring Plan
The Company today announced an agreement by its secured creditors on a comprehensive corporate restructuring and recapitalization transaction (the “Transaction”). The Transaction will safeguard the interests of customers, suppliers, partners, and employees of
- The Company’s secured creditors will take ownership of the
Biocartis operating subsidiaries through enforcement. Following enforcement,Biocartis Group NV is expected to be wound down in an orderly fashion. - A new entity will be incorporated (“New
Biocartis ”), owned by the secured creditors, to which substantially all the Company’s assets will be transferred upon an anticipated security enforcement by the secured creditors over the Company’s assets that were pledged to such creditors. - Lenders under the Company’s first lien convertible term loan facility and KBC have agreed to roll over their first lien debt into New Biocartis (or its wholly owned subsidiaries) and release claims against
Biocartis Group NV . KBC have agreed to extend their financing toBiocartis NV andBiocartis US, Inc. - The interests and claims of the
EUR 16 million unsecured 4.00% convertible bonds due 2027 (ISIN BE0002651322) will be written down to zero pursuant to their terms as part of the enforcement. - Shareholders of
Biocartis Group NV will receive no distribution from the security enforcement and are expected to receive nothing at the time of its wind down. - With respect to New Biocartis:
- The Company’s
EUR 116 million 4.5% Second Ranking Secured Convertible Bonds due 2026 (ISIN BE6338582206) (the “Bonds”, and the holders of the Bonds, the “Bondholders”) will be fully equitized in New Biocartis and the Bondholders will become the primary owners of Biocartis’s operating business as shareholders of New Biocartis. - The Bondholders will recapitalize New Biocartis (and its operating subsidiaries) with
EUR 40 million of equity capital, backstopped by a group of supporting Bondholders (the “Equity Injection”). - Following the full equitization of
EUR 116 million of Bonds, the write down ofEUR 16 million of Unsecured 2027 Bonds, and the closing of the Equity Injection, New Biocartis will have less thanEUR 45 million of gross debt and net debt of approximately zero.
- The Company’s
H1 Financial highlights
- Product related revenue of
EUR 23.5m (H1 2022:EUR 21.3m ), includingEUR 18.4m from 155k cartridges sold andEUR 5.1m from instrument sales, rentals, and servicing:EUR 17.5m cartridge revenue in oncology, +22% year-on-year, driven by 14% cartridge volume growth and an increase of the average selling price (‘ASP’) by 7%- The contribution of COVID-19 testing to cartridge revenues decreased from
EUR 1.7m in H1 2022 toEUR 0.7m in H1 2023, down to 3% of total product related sales - ASP per commercial cartridge of
EUR 120 in oncology andEUR 115 overall (H1 2022:EUR 113 andEUR 103 , resp.) EUR 5.1m revenue from a global Idylla™ installed base of 2,218 instruments, with 133 net new instruments placed in H1 2023 (H1 2022: 102)- Continued double-digit growth of oncology cartridge revenue across all regions. Renewed growth in US instrument placements and oncology cartridge sales during Q2 2023 after a slowdown in Q1 that was driven by the impact of a cartridge price increase implemented in Q4 2022.
- Collaboration revenue of
EUR 6m , an increase of 18% compared to H1 2022 driven by expansion of our network of strategic partners - Gross profit on product sales increased by 36% from
EUR 6.6m m toEUR 9m , reflecting a gross margin of 40%, compared to 32% in H1 2022 and a further improvement from 37% in Q1 2023. Commercial cartridges are now exclusively produced on the more automated high-throughput manufacturing line ML2 after having decommissioned the older manufacturing line ML1 during Q1 2023- EBITDA of
EUR -14.5m (H1 2022:EUR -18.2m ) and a cash position end H1 2023 ofEUR 25.2m
- EBITDA of
Organizational update
- Operational reorganization and cost reduction program
- The operational reorganization and cost reduction program announced on
15 June 2023 is in its finalization phase. In total, approximately 125 positions will be reduced. In addition, the role of approximately 20 positions has significantly changed. A proportion of these positions will be phased out during the remainder of 2023, to ensure a smooth handover of activities. The reorganization is realized through a transition to a leaner and more agile management structure and an increased focus on partner funded test menu expansion and a more targeted US commercial strategy to increase oncology test utilization. The reorganization is expected to achieve an annualized cost reduction of approximatelyEUR 18m . The process has been completed in accordance with the Belgian rules on collective dismissals. Total cost associated with the operational reorganization amount up toEUR 4.3m - Going forward, enabling access to molecular diagnostic testing in oncology remains at the core of Biocartis’ strategy with a streamlined organization that will focus investments on profitable product revenue generation and strategic partnerships that have the potential to generate significant long-term value
- The operational reorganization and cost reduction program announced on
- Management changes:
- Appointment of
Roger Moody as new CEO per24 April 2023 , with Herman Verrelst transitioning into the role of Chair of the Board of Directors - Appointment of
George Cardoza as new CFO and Head of Service Delivery per7 August 2023 following the resignation ofJean-Marc Roelandt as the Company’s CFO per4 Aug 2023 - Resignation of
Piet Houwen as COO per1 September 2023 as part of the operational reorganization
- Appointment of
- Cartridge manufacturing – The transfer of all Idylla™ assays to the second generation cartridge manufacturing line (‘ML2’) was completed and all commercial cartridge manufacturing production on ML1 was stopped after Q1 2023. Continued scaling of the more automated high-throughput manufacturing line ML2 is expected to further reduce cartridge production cost and contribute to a gross margin on products of 40-45% for the full year 2023
New Medical Advisory Board – creation of newMedical Advisory Board announced on28 August 2023 comprised of renowned practice leaders to assist with expedited growth of diagnostics partnerships and provide valuable expert technology insights, expert knowledge in the field of oncology in general and of pharma needs in particular
Idylla™ test menu, partnerships & publications
- Test menu and product registrations
- Launch among selected customers on
9 February 2023 of the Idylla™ IDH1-2 Mutation Assay Kit (RUO). The test was subsequently launched globally inJuly 2023 - Announcement on
2 March 2023 : 510(k) clearance by theU.S. Food and Drug Administration (FDA) for the Idylla™ MSI Test Japan – End ofApril 2023 , Nichirei Biosciences, Biocartis’ distribution partner inJapan , received the approval by the Japanese competent authorities (Ministry of Health, Labor and Welfare ) to commercialize the Idylla™ KRAS Mutation Test and the Idylla™ NRAS-BRAF Mutation Test inJapan .
- Launch among selected customers on
- Partnerships:
- Announcement on
4 April 2023 of a new partnership agreement with APIS Assay Technologies Ltd. For development of APIS’ Breast Cancer Subtyping assay on the Idylla™ platform. This assay, already available for in vitro diagnostic use1 in centralized expert laboratories in theUK , will be commercialized2 byBiocartis ahead of the Idylla™ version of the assay. - Announcement on
10 August 2023 of a new post-commercial collaboration program with Lilly to explore via an ongoing Lilly-sponsored study the advantages of adding Idylla™ to molecular diagnostic workflows in global clinical labs and help guide the improvement of US community-based diagnostic workflows.
- Announcement on
- Publications
- During H1 2023, 17 new papers were published, providing further evidence of Idylla’s™ robust and accurate performance combined with much shorter turn-around times compared to other testing methods. In particular, one retrospective and prospective study on determining EGFR mutations from FFPE tissue samples3 emphasized that integrating the ultra-rapid Idylla™ as a critical screening step before deploying NGS could provide timely and comprehensive benefits to patients, ultimately leading to better treatment outcomes in non-small cell lung cancer.
- During H1 2023, 17 new papers were published, providing further evidence of Idylla’s™ robust and accurate performance combined with much shorter turn-around times compared to other testing methods. In particular, one retrospective and prospective study on determining EGFR mutations from FFPE tissue samples3 emphasized that integrating the ultra-rapid Idylla™ as a critical screening step before deploying NGS could provide timely and comprehensive benefits to patients, ultimately leading to better treatment outcomes in non-small cell lung cancer.
The tables below show an overview of the key figures and a breakdown of operating income for H1 2023 and H1 2022. Consolidated financial statements and accompanying notes are included in Biocartis’ half-year 2023 report available here on the Company’s website.
Key figures ( | H1 2023 | H1 2022 | % Change |
Total operating income | 29,617 | 26,771 | 11% |
Cost of goods sold | -13,378 | -13,720 | -2% |
Research and development expenses | -18,091 | -19,251 | -6% |
Sales and marketing expenses | -10,892 | -10,050 | 8% |
General and administrative expenses | -8,018 | -8,376 | -4% |
Operating expenses | -50,379 | -51,397 | -2% |
Operating result | -20,762 | -24,626 | -16% |
Net financial result | -10,140 | -3,805 | 166% |
Share in the result of associated companies | -375 | -432 | -13% |
Income tax | 23 | 96 | -76% |
Net result | -31,254 | -28,767 | 9% |
Cash flow from operating activities | -29,262 | -24,154 | 21% |
Cash flow from investing activities | -1,132 | -1,594 | -29% |
Cash flow from financing activities | 29,680 | -9,542 | -411% |
Net cash flow 1 | -714 | -35,290 | -98% |
Cash and cash equivalents2 | 25,178 | 19,724 | 28% |
Financial debt | 152,247 | 147,166 | 3% |
1 Excludes the effect of exchange rate differences on the cash balances held in foreign currencies
2 Including
Operating income ( | H1 2023 | H1 2022 | % Change |
Collaboration revenue | 5,987 | 5,082 | 18% |
Idylla™ system sales | 4,000 | 3,824 | 5% |
Idylla™ system service sales | 1,145 | 977 | 17% |
Idylla™ cartridge sales | 18,359 | 16,477 | 11% |
Product related revenue | 23,504 | 21,278 | 10% |
Total revenue | 29,491 | 26,360 | 12% |
Grants and other income | 126 | 411 | -69% |
Total operating income | 29,617 | 26,771 | 11% |
- Total operating income – Total operating income amounted to
EUR 29.6m compared toEUR 26.8m in H1 2022. Product related revenues increased by 10% fromEUR 21.3m in H1 2022 toEUR 23.5m in H1 2023. Within product sales, cartridge sales revenues amounted to 18.4m. Revenue from oncology cartridge sales representedEUR 17.5m and grew by 22% year-on-year. Revenue from the sale of Idylla™ SARS-CoV-2 tests4 continues to decrease and amounted toEUR 0.7m compared toEUR 1.7m in H1 2022. Revenues from the sale, rental and servicing of Idylla™ instruments increased by 7% and amounted toEUR 5.1m (H1 2022:EUR 4.8m ). 133 net new instrument placements in H1 2023 increased the global installed base to 2,218, evenly split between reagent rental agreements and straight capital sales. Collaboration revenue amounted toEUR 6m in H1 2023 compared toEUR 5.1m in H1 2022 and largely consisted of development services delivered to our growing network of strategic partners - Gross profit – Gross profit on product sales amounted to
EUR 9m , an increase of 32% fromEUR 6.6m in H1 2022. The gross margin on products continue to increase, from 32% in H1 2022 to 40% in H1 2023, driven by continued scaling of the high-throughput manufacturing line ML2 and the increasing ASP. Q1 2023 was the last quarter that included cartridge production on the old manufacturing line ML1, which is now no longer in use for commercial cartridge production. The overall cartridge ASP increased fromEUR 103 in H1 2022 toEUR 115 in H1 2023, as a result of declining sales of the cheaper Idylla™ SARS-CoV-2 tests and the continued increased contribution of higher-priced novel tests in oncology - OPEX – Total operating expenses (excluding cost of sales) of
EUR 37m in H1 2023 slightly decreased byEUR 0.7m fromEUR 37.7m in H1 2022. The cost reduction implemented during Q4 2022 was partly offset by the impact of the high inflation which led to a mandatory indexation of wages and salaries inJanuary 2023 of over 11% inBelgium - Operating result – The sustained revenue growth and the increased gross profit contributed to a 20% y-o-y improvement of EBITDA, from
EUR -18.2m in H1 2022 toEUR -14.5m in H1 2023 - Net cash flow and cash position – Cash burn from operating activities increased from
EUR 24.2m toEUR 29.3m , despite the improved operating result, which was offset byEUR 10.3m investments in working capital (H1 2022:EUR 2.6m ) andEUR 1m higher interest expenses. Last year, working capital was favorably impacted by the collection of the fire insurance claim. Moreover, a significant amount of transaction fees associated with the recapitalization were paid during the first half of 2023 and trade receivable increased a.o. because of the deferred payment of services to certain collaboration partners that are expected to be collected during the second half of 2023. Investing cash flows amounted toEUR 1.1m and included the drawdown of the convertible note by SkylineDx after having reached an agreed milestone in the development of the Idylla™ version of SkylineDx’s Merlin assay. On16 January 2023 , the comprehensive recapitalization was completed, and the financing cash flows includedEUR 34.4m of net proceeds from the issuance ofEUR 25m of new second lien convertible bonds and the final drawdown ofEUR 12m under the convertible term loan
IDYLLA™ TEST MENU OUTLOOK
After having obtained
- Idylla™ PIK3CA-AKT1 Mutation Assay – RUO product developed in collaboration with
LifeArc - Idylla™ Merlin CP-GEP Assay – RUO launch in collaboration with SkylineDx
- Idylla™ ThyroidPrint Assay – RUO launch in collaboration with GeneproDx
POST-PERIOD EVENTS
- Announcement of appointment of
George Cardoza as new CFO and Head of Service Delivery – see above - Announcement of new collaboration with Lilly – see above
- Creation of the new
Medical Advisory Board – see above - Comprehensive recapitalization and balance sheet restructuring plan by secured creditors – see above
FINANCIAL CALENDAR
9 November 2023 Q3 2023 Business Update
AUDITOR STATEMENT
The condensed consolidated interim financial statements for the six-months’ period ended
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More information:
e-mail ir@biocartis.com
@Biocartis_ www.linkedin.com/Biocartis
About
With its revolutionary and proprietary Idylla™ platform,
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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. 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 Registered as IVD in the
2 In the
3 Qui et al. Ultra-rapid Idylla™ EGFR mutation screening followed by next-generation sequencing: An integrated solution to molecular diagnosis of non-small cell lung cancer. Front Oncol. 2023
4 The Idylla™ SARS-CoV-2 Test (CE-IVD) and the Idylla™
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