CENTOGENE Reports First Half 2020 Financial Results
CAMBRIDGE, Mass. and ROSTOCK, Germany and BERLIN, Sept. 23, 2020 (GLOBE NEWSWIRE) -- Centogene N.V. (Nasdaq: CNTG) (“CENTOGENE” or the “Company”), a commercial-stage company focused on rare diseases that transforms real- world clinical and genetic data into actionable information for patients, physicians, and pharmaceutical companies, today provided an update on its corporate progress and reported its financial results for the three and six months ended June 30, 2020.
- Cautiously anticipate 2020 full year revenues to be within the range of €60 and €65 million
- H1 2020 revenues decreased slightly by 0.4% compared to H1 2019 and recovery in core businesses with increases in test requests and new pharmaceutical collaborations
- R&D collaborations with Molecular Health and Evotec further evidenced the value of CENTOGENE’s global proprietary rare disease platform, which, as of August 31, 2020, included real-world data repository with over 3.6 billion weighted data points from approximately 570,000 patients representing 120 different countries
- Comprehensive high-quality COVID-19 testing solutions available at major travel hubs in Germany, nursing homes, and educational institutions as well as via online marketplace, with close to 270,000 test requests received up to the end of August 2020
- CentoFast-SARS-CoV-2 RT-PCR test received U.S. Food and Drug Administration (“FDA”) Emergency Use Authorization (“EUA”)
- Completed follow-on equity offering in July 2020 with proceeds, net of underwriting discounts and commissions, of €24 million
Prof. Arndt Rolfs, CEO of CENTOGENE, said, “During the first half of 2020, we have shown resilience while facing global pandemic headwinds, and we believe we have weathered the worst of this unprecedented situation. Our core business in the rare disease space regained momentum as we continued to expand our COVID-19 efforts and address the urgent need for reliable testing solutions. Ultimately, this underlines the return to a “new normal” for patients, physicians, and orphan drug developers.”
Prof. Arndt Rolfs continued, “Supported by recovering diagnostic volumes, well-established pharma partnerships, and further expansion of our COVID-19 testing efforts, we remain confident in our outlook through the end of the year as we continue to deliver on our life-long commitment to support patients around the world.”
Unwavering Commitment to Patients Drives Recovery
During Q2 2020, the Company has been able to operate at full capacity and keep its commitment to supporting patients around the world. By rapidly responding to the novel coronavirus in Q1 2020 and deploying a series of testing initiatives to contribute to the important needs in diagnosis and disease surveillance, CENTOGENE has been able to minimize the disruption to its core businesses and maintain a solid financial and operational status. As the global community transitioning to a new normal, the number of test requests in the core diagnostics and pharmaceutical segments has gradually recovered. The Company’s pharmaceutical segment has also regained momentum with clinical trials of our pharmaceutical partners slowly resuming and further collaborations have been concluded.
The Company has been continuing to expand its medical and genetic knowledge of rare genetic diseases. With CENTOGENE’s expertise in rare diseases and biomarker discovery, as well as the large volume of datasets in its global proprietary rare disease platform, the Company entered into R&D collaborations its strategic partners, Molecular Health and Evotec, aiming to shorten the diagnostics odyssey of rare disease patients and accelerate the development of new orphan drugs.
Expanding COVID-19 Testing Initiatives
Since the commencement of its COVID-19 testing in March 2020, CENTOGENE has expanded the COVID-19 test offering from employees and essential workers in Rostock, Germany, to nursing homes and high school students throughout Germany in May 2020. In June 2020, CENTOGENE announced a partnership with Lufthansa and Fraport, the operator of Frankfurt airport, to open the first COVID-19 walk-in test center at Frankfurt Airport, providing on-site testing for travelers and the general public. Subsequent to June 2020, additional test centers were set up at Munich and Nuremberg Central Stations offering COVID-19 tests to travelers returning to Germany from “high risk regions” as defined by the Robert Koch Institute (RKI), the public health agency which compiles the COVID-19 statistics in Germany. In August 2020, CENTOGENE announced the opening of a further walk-in testing facility at Hamburg Airport offering its COVID-19 testing to passengers departing from Hamburg, and returning to Hamburg from non-high risk countries as well as the general public.
In addition, the Company offers its COVID-19 testing to the community through collaborations with the state government of Mecklenburg-Western Pomerania, educational institutions and other companies, as well as via the online marketplace.
The Company received over 70,050 COVID-19 test requests in the six months ended June 30, 2020, and approximately 270,000 COVID-19 test requests up to August 31, 2020, on a cumulative basis, of which 44,630 test requests were provided free of charge to our employees, the community and for research and development purposes. The graph below shows the number of COVID-19 test requests received from the commencement of the testing in March 2020 to August 31, 2020.
CENTOGENE offers a comprehensive and high quality COVID-19 testing solution to the community. This includes the RT-PCR test, which received EUAs from the FDA; a fully validated sample collection kit, CentoSwab™, which can either be used by healthcare professionals or self-administered by individuals; a secured digital platform, including Corona-App and test portal, which followed stringent data privacy measures in compliance with the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA), allowing seamless registration and result notification.
Six Months Ended June 30, 2020 and Q2 2020 Financial Highlights
Cash and Cash Equivalents
Cash and cash equivalents as of June 30, 2020 were €17.4 million, compared to €41.1 million as of December 31, 2019.
In July 2020, the Company completed a follow-on public offering of 3,500,000 common shares (“Follow-on Offering”), consisting of 2,000,000 common shares offered by the Company and 1,500,000 common shares offered by selling shareholders at a price to the public of $14.00 per common share (i.e. €12.71 per share). Aggregate offering proceeds to the Company, net of underwriting discounts and commissions, amounted to €24 million.
Revenue
Our revenue is principally derived from the provision of pharmaceutical solutions and diagnostic tests enabled by our knowledge and interpretation-based platform.
Revenue for the three months ended June 30, 2020 was €9.7 million, representing a decrease of 13.3% as compared to the three months ended June 30, 2019. Our pharmaceutical and diagnostics segments contributed 40.5% and 59.5%, respectively, of our total revenues for the three months ended June 30, 2020, as compared to 40.8% and 59.2%, respectively, of our total revenues for the three months ended June 30, 2019.
Revenue from our pharmaceutical segment was €3.9 million for the three months ended June 30, 2020, a decrease of 13.7%, from €4.6 million for the same period in 2019. Revenue from our diagnostics segment, including revenue from COVID-19 tests and sales of CentoSwab™ of €2.1 million, was €5.8 million for the three months ended June 30, 2020, a decrease of 12.9%, from €6.6 million for the same period in 2019.
Revenue for the six months ended June 30, 2020 was €21.8 million, a decrease of 0.4% from €21.9 million for the six months ended June 30, 2019. Our pharmaceutical and diagnostics segments contributed 38.9% and 61.1%, respectively, of our total revenues for the six months ended June 30, 2020, as compared to 39.7% and 60.3%, respectively, of our total revenues for the six months ended June 30, 2019.
Revenue from our pharmaceutical segment was €8.5 million for the six months ended June 30, 2020, a decrease of 2.4%, from €8.7 million for the same period in 2019. Revenue from our diagnostics segment was €13.3 million for the six months ended June 30, 2020, an increase of 0.8%, from €13.2 million for the same period in 2019. Revenue from COVID-19 tests and sales of CentoSwab™ for the six months ended June 30, 2020 was €2.1 million and was included in diagnostics segment.
The decrease in revenues from Pharmaceutical and Diagnostics segments in the three and six months ended June 30, 2020 is mainly caused by decrease in our sample volume related to our routine diagnostics business and pharmaceutical collaborations with fee per sample structure.
The graph below shows the number of test requests for our pharmaceutical and the diagnostics segment (excluding COVID-19 tests), as well as number of test requests received for our internal research projects during the three and six months ended June 30, 2019 and 2020.
Pharmaceutical segment
Our pharmaceutical segment provides a variety of services to our pharmaceutical partners, including target discovery, early patient recruitment and identification, epidemiological and patient population sizing insights, biomarker discovery and patient monitoring and follow-up. Our information platforms, our access to rare diseases patients and their biomaterials, and our ability to develop proprietary technologies including biomarkers enable us to provide services to our pharmaceutical partners in all phases of the drug development process as well as post commercialization.
In particular, with the capability to collaborate with our pharmaceutical partners in the early stages of drug development, puts us in a position to provide more support to the development process and increases our potential to secure further collaborations for the same drugs.
Revenues in our pharmaceutical segment are generated primarily from collaboration agreements with our pharmaceutical partners, which are structured on a fee per sample basis, milestone basis, fixed fee basis, royalty basis or a combination of these.
As of June 30, 2020, we collaborated with 41 pharmaceutical partners, as compared to 35 pharmaceutical partners as of June 30, 2019. We had 63 active/completed collaborations in the six months ended June 30, 2020, as compared to 60 collaboration in the six months ended June 30, 2019.
The graphs below show our revenues for the three and six months ended June 30, 2020 and 2019 resulting from our collaborations with our pharmaceutical partners, split between drug development stages, as well as between different fee structures.
Revenues from our collaborations which are structured on a fixed fee basis, represented 63.0% and 60.2% of our total revenues for the three and six months ended June 30, 2020, as compared to 59.1% and 57.6% for the three and six months ended June 30, 2019. These revenues, given the fee structure, provide us with stable revenues and cashflow from the pharmaceutical segment.
As new and existing clinical trials were slowed down or put on hold, the COVID-19 pandemic had a more significant impact on our collaborations structured on a fee per sample basis. Revenues from fee per sample collaborations were €0.4 million and €1.1 million respectively, for the three and six months ended June 30, 2020, decreased by 39.8% and 15.7%, respectively, as compared to the same periods in 2019. Revenues from the fee per sample collaborations represented 9.7% and 12.5% of our total revenues from the pharmaceutical segment for the three and six months ended June 30, 2020, decreased by 4.2 percentage points and 2.0 percentage points, respectively, as compared to the same periods in 2019.
Biomarkers are key in orphan drug development, as they can be used to support a diagnosis, demonstrate the efficacy of a treatment and to monitor the progress of rare disease patients. Biomarkers can also be used to enhance treatment solutions and guide dose titration. As of June 30, 2020, we have over 60 biomarker programs, with over 25 biomarker programs (covering more than 22 diseases) having completed the first validation with mass spectrometry. Out of these biomarker programs, 33 biomarkers were used in connection with our active pharmaceutical collaborations as of June 30, 2020, as compared to 30 as of June 30, 2019. Since early 2020, we also started to pursue a metabolomics approach for establishing a biomarker discovery pipeline for rare hereditary disease. Our new approach includes a tandem mass spectrometry (ion mobility quadrupole time-of-flight mass spectrometry) methodology and artificial intelligence and combined with the large volume of datasets in our global rare disease platform, has proven successful in the identification of new biomarkers.
Diagnostics segment
Our diagnostics segment provides targeted genetic sequencing and diagnostics services to patients through our distribution partners or our clients, who are typically physicians, labs or hospitals. The revenues for the diagnostics segment are recognized over time by reference to the percentage of completion of the service on the reporting date, assessed on the basis of the work rendered.
During the three and six months ended June 30, 2020, we have experienced significant decreases in tests requests received for our primary rare diseases testing products (i.e., standard genetic testing including single gene, CNV and mutation quantification products, panel sequencing, whole exome sequencing (‘‘WES’’) and whole genome sequencing (‘‘WGS’’), as well as non-invasive pre-natal testing (‘‘NIPT’’) and biochemistry) due to the COVID-19 pandemic.
The graphs below show test requests and revenues split between our primary rare disease testing products for the three and six months ended June 30, 2020 and 2019:
Number of test requests received for our primary rare disease testing products in the three and six months ended June 30, 2020 decreased by 45.7% and 22.8% respectively, as compared to the same periods in 2019.
In particular, the decreases in test requests for our NIPT (non-core product) were 55.0% and 55.5%, respectively, for the three and six months ended June 30, 2020 as compared to the same periods ended June 30, 2019, reflecting our strategy of moving towards testing products that provide larger quantity of data such as WES and WGS.
Total number of WES and WGS test requests received in the diagnostics segment for the three and six months ended June 30, 2020 represented 29.1% and 32.8%, respectively, of total primary test requests for the periods, which amounts to an increase of 5.9 percentage points and 10.8 percentage points, respectively, as compared to three and six months ended June 30, 2019. In addition, total number of WES and WGS test requests received for the six months ended June 30, 2020 increased by 15.5% as compared to the same periods ended June 30, 2019.
We anticipate the proportion of WES and WGS as a percentage of total test requests in the future will continue to increase. The data and biomaterials collected through our diagnostics services, allow us to continue to grow our global biorepository and our rare disease platform repository.
Research and development expenses (“R&D”)
Our R&D expenses increased by 29.6% to €3.1 million for the three months ended June 30, 2020, and increased by 41.1% to €5.8 million for the six months ended June 30, 2020, as compared to the prior year periods. The increase is primarily attributable to expenses associated with the expansion of our proprietary information platform, as well as to the development of new products and solutions.
General administrative expenses (“G&A”)
Our G&A expenses increased by 36.4%, to €7.7 million for the three months ended June 30, 2020, and by 35.0%, to €15.7 million for the six months ended June 30, 2020, as compared to the prior year periods.
The increases were principally due to an increase in personnel costs and operating expenses as a result of the expansion of our business. The increase was also due to costs of operating as a public company, such as additional legal, accounting, corporate governance and investor relations expenses, and higher directors’ and officers’ insurance premiums.
General administrative expenses for the three and six months ended June 30, 2020 also included €0.3 million expenses related to our free of charge COVID-19 tests, as well as legal and consulting expenses of €0.2 million incurred in relation to our Follow-on Offering completed in July 2020.
Other operating expenses
We have taken into consideration the impact of the COVID-19 pandemic on the global economy and the unforeseeable potential magnitude of the ultimate disruptions to different businesses when assessing our credit risk, in particular regarding the MENA region for the diagnostic segment as it represents the majority of that segment’s revenue. Such assessment resulted in additional credit losses of €0.5 million and €1.7 million for the three and six months ended June 30, 2020, respectively. Credit losses for the three and six months ended June 30, 2019 amounted to €0.2 million and €0.5 million, respectively.
Comprehensive loss attributable to equity holders
The comprehensive loss attributable to equity holders for the three months ended June 30, 2020 was €10.4 million or €0.52 per share, as compared to €6.2 million or €0.39 per share for the prior year period.
The comprehensive loss attributable to equity holders for the six months ended June 30, 2020 was €19.0 million or €0.95 per share, as compared to €11.4 million or €0.72 per share for the prior year period.
Basic and diluted loss per share is calculated by dividing loss for the period attributable to equity holders of the Group by the weighted average number of shares outstanding of 19,861,340 during the three and six months ended June 30, 2020, and 15,861,340 during the three and six months ended June 30, 2019.
Financial Outlook
The COVID-19 pandemic outbreak poses unprecedented challenges for all businesses, in particular, for healthcare systems across the globe. CENTOGENE has shown resilience in the first half of 2020 by taking a series of measures to minimize the disruptions to the business and operations. The negative impact on the core businesses in Q2 2020 was partially offset by revenues resulting from our COVID-19 tests. Since July 2020, the Company has seen the core business in the rare disease space regain momentum, evidenced by the increase in sample volume and new collaborations with pharmaceutical partners. In addition, the follow-on equity offering completed in July 2020 further strengthened our balance sheet.
The Company cautiously anticipates that the revenue for the full year 2020 will be within the range of €60 and €65 million. CENTOGENE anticipates that the existing cash and cash equivalents, and the proceeds from the Follow-on Offering, will enable the Company to fund its operating expenses and capital expenditure requirements for more than 12 months.
Centogene N.V.
Consolidated statements of comprehensive loss for the three and six months ended June 30, 2019 and 2020
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
| 2019 | 2020 | 2019 | 2020 | ||||||||
| (unaudited, € in thousands) | |||||||||||
| Condensed consolidated statement of comprehensive loss: | |||||||||||
| Revenue | 11,206 | 9,719 | 21,921 | 21,824 | |||||||
| Cost of sales | 6,114 | 6,815 | 12,858 | 13,833 | |||||||
| Gross profit | 5,092 | 2,904 | 9,063 | 7,991 | |||||||
| Research and development expenses | 2,407 | 3,119 | 4,108 | 5,810 | |||||||
| General administrative expenses | 5,693 | 7,767 | 11,603 | 15,665 | |||||||
| Selling expenses | 2,345 | 2,386 | 4,356 | 4,712 | |||||||
| Other operating income | 590 | 801 | 1,688 | 1,746 | |||||||
| Other operating expenses | 122 | 537 | 464 | 1,812 | |||||||
| Real estate transfer tax expenses | 1,200 | - | 1,200 | - | |||||||
| Operating loss | (6,085 | ) | (10,104 | ) | (10,980 | ) | (18,262 | ) | |||
| Interest and similar income | 4 | 13 | 12 | 13 | |||||||
| Interest and similar expenses | 221 | 269 | 431 | 718 | |||||||
| Finance costs, net | (207 | ) | (256 | ) | (419 | ) | (705 | ) | |||
| Loss before taxes | (6,292 | ) | (10,360 | ) | (11,399 | ) | (18,967 | ) | |||
| Income tax (benefits)/expenses | (11 | ) | - | 163 | 129 | ||||||
| Loss for the period | (6,281 | ) | (10,360 | ) | (11,562 | ) | (19,096 | ) | |||
| Other comprehensive income/(loss) | 8 | (6 | ) | 10 | 70 | ||||||
| Total comprehensive loss for the period | (6,273 | ) | (10,366 | ) | (11,552 | ) | (19,026 | ) | |||
| Total comprehensive loss for the period attributable to the equity holders of the parent | (6,216 | ) | (10,364 | ) | (11,426 | ) | (18,963 | ) | |||
| Loss per share – Basic and diluted (in €) | (0.39 | ) | (0.52 | ) | (0.72 | ) | (0.95 | ) | |||
Centogene N.V.
Supplemental selected segment information for the three and six months ended June 30, 2019 and 2020
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||
| 2019 | 2020 | 2019 | 2020 | ||||
| (unaudited, € in thousands) | |||||||
| Revenue by segment: | |||||||
| Pharmaceutical | 4,568 | 3,940 | 8,698 | 8,490 | |||
| Diagnostics | 6,638 | 5,779 | 13,223 | 13,334 | |||
| Total Revenue | 11,206 | 9,719 | 21,921 | 21,824 | |||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||
| 2019 | 2020 | 2019 | 2020 | ||||||
| (unaudited, € in thousands) | |||||||||
| Segment Adjusted EBITDA: | |||||||||
| Pharmaceutical | 3,217 | 1,799 | 6,161 | 4,407 | |||||
| Diagnostics | 530 | (824 | ) | 541 | (737 | ) | |||
| Total segment Adjusted EBITDA | 3,747 | 975 | 6,702 | 3,670 | |||||
| Reconciliation of segment Adjusted EBITDA to Group loss for the period | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||
| 2019 | 2020 | 2019 | 2020 | ||||||||
| (unaudited, € in thousands) | |||||||||||
| Reported Segment Adjusted EBITDA | 3,747 | 975 | 6,702 | 3,670 | |||||||
| Corporate expenses | (6,185 | ) |
By: GlobeNewswire
- 23 Sep 2020
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