Medgenics Reports 2012 Financial Results

  Medgenics Reports 2012 Financial Results

Business Wire

MISGAV, Israel & SAN FRANCISCO -- March 14, 2013

Medgenics, Inc. (NYSE MKT: MDGN and AIM: MEDU, MEDG) (the “Company” or
“Medgenics”), the developer of a novel platform technology for the sustained
production and delivery of therapeutic proteins in patients using their own
tissue, today announced financial results for the fiscal year ended December
31, 2012 and the filing with the U.S. Securities and Exchange Commission
(“SEC”) of the Company’s Annual Report on Form 10-K. The Form 10-K includes
audited annual consolidated financial statements containing the information
presented below, as well as additional information regarding the Company. The
Form 10-K is available at and at It will be
mailed to shareholders on or about April 2, 2013.

2012 and Recent Highlights

  *Welcomed financial industry veteran and former Chairman of UBS Financial
    Services Inc. Joseph J. Grano, Jr. to the Board of Directors
  *Appointed Sol J. Barer, Ph.D. as Chairman of the Board. Dr. Barer is the
    former Chairman and CEO of Celgene Corporation
  *Raised gross proceeds of $29.4 million in a public offering of common
    stock and warrants
  *Commenced a first-in-man Phase I clinical trial in Israel of INFRADURE™,
    sustained interferon alpha therapy, for the treatment of hepatitis C
  *Fortified the Company’s intellectual property portfolio with the addition
    of key patents in the U.S. and Japan covering EPODURE™, sustained
    erythropoietin (“EPO”) therapy, and INFRADURE, respectively
  *Convened a roundtable of 15 top liver experts and regulatory advisors from
    the U.S., Europe, Israel and Australia to discuss INFRADURE for the
    treatment of hepatitis, specifically for its potential applications in the
    treatment of hepatitis B and hepatitis D

Management Discussion

“During 2012 we achieved a number of milestones under our strategic plan,”
stated Andrew L. Pearlman, Ph.D., Chief Executive Officer of Medgenics. “We
remain focused on advancing our proprietary Biopump technology for the
sustained production and delivery of therapeutic proteins from a patient’s own
tissue in our lead indications of anemia and hepatitis.

“Our objective with EPODURE is to achieve recommended hemoglobin targets in
patients for months, while avoiding the risks of supraphysiologic EPO
concentrations associated with injections of erythropoietin stimulating agents
(“ESA”). U.S. Food and Drug Administration (“FDA”) black box warnings and the
recent product recall of a commercial ESA drug underscore the need for safer,
more effective therapies in anemia management. EPODURE also has the potential
to improve the safety, efficacy and the logistics of anemia management in a
range of settings, whether in the clinic, home or elsewhere, to the benefit of
both patients and payors.

“We believe, and key opinion leaders in hepatitis recently concurred, that the
foremost opportunity for INFRADURE is in orphan-designated hepatitis D, where
oral drugs are ineffective, and in hepatitis B, where oral drugs do not clear
the disease but only contain it. Also, in hepatitis B these oral drugs must be
taken on a lifelong basis, with mounting costs and health risks over time.
Only sustained interferon therapy of a year or longer has been shown to clear
the hepatitis B virus. As such, INFRADURE Biopumps may be able to provide a
far more compliant alternative to weekly interferon injections. Our strategy
in hepatitis is to develop proof-of-concept and safety data for INFRADURE in
hepatitis C, which represents a large and accessible patient population, and
then use the results to help develop and calibrate INFRADURE dosing and method
of use for these other strains of hepatitis.

“Our goals for the balance of 2013 will be to continue to advance the clinical
development of EPODURE and INFRADURE in Israel and the U.S., to expand our
leadership with experienced industry executives, to optimize our manufacturing
process, to pursue potential partnership and licensing opportunities and to
explore potential new indications for our Biopump autologous tissue
technology,” concluded Dr. Pearlman.

2012 Financial Results

Gross research and development (“R&D”) expense for 2012 increased to $7.19
million from $5.99 million in 2011 due to an increase in the use of materials
and sub-contractors in connection with the Company’s ongoing Phase II EPODURE
clinical trial in Israel, the preparations for the INFRADURE trial in Israel
and the phase II EPODURE clinical trials in the U.S; ongoing method
development, and an increase in R&D personnel.

Net R&D expense for 2012 was $5.43 million compared with $5.05 million in
2011. The increase was due to higher gross R&D expenses as detailed above,
which were partially offset by participation by the Israeli Office of the
Chief Scientist of $1.76 million in 2012 and $0.86 million in 2011.

General and administrative expense for 2012 increased to $7.20 million from
$4.92 million in 2011, primarily due to stock-based compensation expense
related to equity granted to the Chairman of the Board upon his appointment
and increased legal fees and professional services.

Financial expense for 2012 was $2.43 million, up from $0.21 million in 2011,
mainly due to the change in valuation of the warrant liability. Financial
income for 2012 was de minimis, compared with $2.10 million for 2011, which
was primarily due to the change in valuation of the warrant liability.

The Company reported a net loss for 2012 of $15.07 million or $1.37 per share,
compared with a net loss of $8.10 million or $0.96 per share for 2011.

As of December 31, 2012, Medgenics had $6.43 million in cash and cash
equivalents, compared with $5.00 million as of December 31, 2011. Net cash
used in operating activities during the year was $8.61 million compared with
$8.02 million used in 2011. During 2012 the Company received proceeds of $8.41
million from a private placement of common stock and warrants and $1.71
million from the exercise of options and warrants. In February 2013 Medgenics
raised gross proceeds of $29.4 million in a public offering of common stock
and warrants.

About Medgenics

Medgenics is developing and commercializing Biopump™, a proprietary
tissue-based platform technology for the sustained production and delivery of
therapeutic proteins using the patient's own tissue for the treatment of a
range of chronic diseases including anemia, hepatitis and hemophilia, among
others. For more information, visit the Company’s website at

Forward-looking Statements

This release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934 and as that term is defined in the Private Securities Litigation
Reform Act of 1995, which include all statements other than statements of
historical fact, including (without limitation) those regarding the Company's
financial position, its development and business strategy, its product
candidates and the plans and objectives of management for future operations.
The Company intends that such forward-looking statements be subject to the
safe harbors created by such laws. Forward-looking statements are sometimes
identified by their use of the terms and phrases such as "estimate,"
"project," "intend," "forecast," "anticipate," "plan," "planning, "expect,"
"believe," "will," "will likely," "should," "could," "would," "may" or the
negative of such terms and other comparable terminology. All such
forward-looking statements are based on current expectations and are subject
to risks and uncertainties. Should any of these risks or uncertainties
materialize, or should any of the Company's assumptions prove incorrect,
actual results may differ materially from those included within these
forward-looking statements. Accordingly, no undue reliance should be placed on
these forward-looking statements, which speak only as of the date made. The
Company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based. As a result of these factors, the events described in the
forward-looking statements contained in this release may not occur.

                               Tables to Follow

Medgenics, Inc. and its Subsidiary

Consolidated Balance Sheet
in thousands of US Dollars (except share and per share data)
                                                31-Dec-11        31-Dec-12
Cash and cash equivalents                       $ 4,995          $ 6,431
Accounts receivable and prepaid expenses         1,122           539
Total current assets                             6,117           6,970
Restricted lease deposit and prepaid expenses     52               62
Severance pay fund                               259             283
                                                 311             345
PROPERTY AND EQUIPMENT, NET                      434             352
DEFERRED ISSUANCE EXPENSES                       -               40
Total assets                                    $ 6,862          $ 7,707
Trade payables                                    903              877
Other accounts payable and accrued expenses      1,156           1,473
Total current liabilities                        2,059           2,350
Accrued severance pay                             1,328            1,492
Liability in respect of warrants                 478             1,931
Total long-term liabilities                      1,806           3,423
Total liabilities                                3,865           5,773
Common shares                                     1                1
Additional paid-in capital                        52,501           66,509
Accumulated Deficit                              (49,505)        -64,576
Total stockholders' deficit                      2,997           1,934
Total liabilities and stockholders' deficit     $ 6,862          $ 7,707

Medgenics, Inc. and its Subsidiary

Consolidated Statements of Operations

US Dollars in thousands (except share and per share data)
                                              31-Dec-11       31-Dec-12
Research and development expenses             $ 5,987         $ 7,187
Less - Participation by the Office of the       (860      )     (1,756     )
Chief Scientist
U.S. Government Grant                           0
Participation by third party                   (75       )   
Research and development expenses, net          5,052           5,431
General and administrative expenses             4,924           7,197
Other income:                                                                
Excess amount of participation in research
and                                            -             -          
development from third party
Operating loss                                  (9,976    )     (12,628    )
Financial expenses                              (214      )     (2,429     )
Financial income                               2,097         5          
Loss before taxes on income                     (8,093    )     (15,052    )
Taxes on income                                3             19         
Loss                                          $ (8,096    )   $ (15,071    )
Basic and diluted loss per share              $ (0.960    )   $ (1.37      )
Weighted average number of shares of Common
stock used                                     8,447,908     11,023,881 
in computing basic and diluted loss per


Medgenics, Inc.
Dr. Andrew L. Pearlman, +972 4 902 8900
Anne Marie Fields, 212-838-3777
Abchurch Communications
Adam Michael/Joanne Shears/Jamie Hooper
+44 207 398 7719
Nomura Code Securities (NOMAD & Joint Broker)
Jonathan Senior/Giles Balleny,
+44 207 776 1200
SVS Securities plc (Joint Broker)
Alex Mattey/Ian Callaway
+44 207 638 5600
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