4basebio AG: 4basebio AG reports first six months of 2020 financial results

DGAP-News: 4basebio AG / Key word(s): Half Year Results
13.08.2020 / 07:30
The issuer is solely responsible for the content of this announcement.

- 4basebio reports strong H1 profit

- Cash balances and liquid resources of EUR 100 million

- Ongoing progress and investment in DNA manufacturing capabilities

- Treasury shares held in Q1 following share buyback now cancelled

Conference call for investors and analysts to be held today, 13 August 2020, 3:00pm CEST/2:00pm BST

Heidelberg, Germany and Cambridge, UK, 13 August 2020 - 4basebio AG (Frankfurt: 4BSB; ISIN: DE000A2YN801; Prime Standard) today reported results for the second quarter of 2020 and six-month period ended 30 June 2020.

"Following on the very strong Q1 performance with the sale of our proteomics and immunology assets to Abcam, in Q2 we continued to focus on the development of our proprietary DNA technology," commented Dr Heikki Lanckriet, CEO. "We are very satisfied with the progress we are making in establishing academic and commercial partnerships to support the validation and scaling of our DNA. This also is highlighting exciting opportunities to work across a range of promising gene therapy delivery systems."

2020 year-to-date operational highlights:

Progressing the DNA Manufacturing capabilities forward
4basebio is establishing cost-effective in vitro processes to produce hairpin-DNA. Enzyme production capacity is being expanded and work on process optimization is continuing. A second laboratory in UK is expected to open in Q3 with an initial team of five new staff that will help to scale the manufacturing process and build an infrastructure for GMP grade manufacturing of DNA products, suitable for clinical and pharmaceutical applications.

4basebio has identified potential partners for GMP process development support and discussions are ongoing. The goal is to achieve GMP-readiness during 2021.

Partnerships for research and development
Through an outreach program to technology transfer organisations (TTOs) and Life Science Networks in the UK, Spain and Germany, 4basebio has identified several collaboration opportunities in which to evaluate hp-DNA by substituting plasmid-DNA. These projects are also introducing 4basebio to new licensable delivery technologies. The objective is to partner with academic research groups, research service organisations, TTOs, gene therapy and DNA vaccine developers covering the spectrum of viral and non-viral gene therapy delivery systems for different indication areas and different therapeutic formats such as CAR-T and TCR therapies.

"Buy and Build" strategy
Appraising target company fair values in present market conditions is challenging, with many companies in this space being affected in one way or another by COVID-19. As a result, 4basebio remains cautious about current market valuation metrics.

Public purchase offer from Sparta AG
On 27 July 2020, 4basebio's investor Sparta AG announced that it intends to submit a voluntary public purchase offer for the company's shares. The management board and the supervisory board of 4basebio will submit a statement on the offer following publication of the final approved offer document.

David Roth, CFO of 4basebio, noted: "During H1 we continued to invest in our DNA platform as well as completing a 5.2 million share buyback; nevertheless, we closed H1 with over 100 million of cash and other liquid resources, comprising cash balances of EUR 85.1 million, Abcam escrow of EUR 14.4 million and cash deposits held as security against Spanish softloans of EUR 0.7 million. We remain very well placed to exploit commercial opportunities which may arise."

Second quarter of 2020 Financial Results:
Revenues for second quarter were EUR 212 thousand (Q2 2019: EUR 297 thousand from continuing operations). While European operations were largely unaffected by COVID-19, US sales were curtailed through periodic shut down. The group expects to meet its full year revenue guidance.

Total net operating expenses (including cost of goods sold) were EUR 1.8 million in 2020 (2019: EUR 807 thousand from continuing operations). This increase is due in particular to one-time costs, the timing of certain expenditure relative to Q1 and well as the increasing scale of operations.

The group largely ceased operations in 4basebio Inc. as previously announced. The results therefore include a one-time inventory write down of EUR 290 thousand, aggravated by COVID-19 closure, as well as staff termination charges of EUR 325 thousand; in addition, the company incurred one time advisory spend of EUR 117 thousand.

Finance costs were EUR 210 thousand and relate primarily to negative interest on cash balances. Taxation for the period represents primarily an adjustment to deferred tax balances recognised at the end of 2019.

Reported net loss for the second quarter of 2020 was € 1.9 million compared to a loss of € 1.3 million in the same period of the previous year.

First half of 2020 Financial Results:
Revenues in the first half of 2020 amounted to EUR 507 thousand (2019: EUR 592 thousand from continuing operations) in line with our guidance for the year. Total net operating expenses (including cost of goods sold) were EUR 2.7 million in 2020 (2019: EUR 2.0 million from continuing operations). This difference relates primarily to charges recorded in 4basebio Inc. as noted above.

The result for the period includes a profit of EUR 66.9 million from discontinued operations (2019: EUR 238 thousand). The current year result represents the profit from the sale of the proteomics and immunology businesses to Abcam on 1 January 2020.

As reported in the first quarter results, the terms of the transaction provided for proceeds of EUR 120 million adjusted for debt and cash balances. The following table presents an analysis of the profit on the transaction:

In addition, EUR 360 thousand of transaction expenses were recognised in 2019.

As a result, the net profit for the first half of 2020 was EUR 64.0 million (2019: loss of EUR 1.7 million).

Total assets at 30 June 2020 were EUR 104.5 million (31 December 2019: EUR 62.3 million), including cash balances of EUR 85.1 million (31 December 2019: EUR 990 thousand in continuing operations and EUR 2.7 million in discontinued operations), amounts held in escrow of EUR 14.4 million (31 December 2019: EUR nil) and cash pledged a security against Spanish softloans of EUR 675 thousand (31 December 2019: EUR 281 thousand).

Non-current assets were significantly higher at EUR 17.6 million (31 December 2019: EUR 3.6 million from continuing operations) due to the classification of the escrow balance as long term (the escrow balance is released 2 January 2022).

Overall cash flows for the half year were a positive EUR 81.4 million (2019: outflow of EUR 2.4 million). This included net cash flows from the Abcam transaction of EUR 116.1 million, as follows:

Excluding the impact of the transaction, underlying cash outflows from operating activities before interest and taxes were EUR 1.7 million (2019: inflow of EUR 206 thousand), consistent with market guidance. Cash outflows on interest and taxes relate primarily to obligations under discontinued operations.

Net cash inflows from investing activities amounted to EUR 105.2 million, compared to a EUR 509 thousand outflow in the previous year. Cash outflows from financing activities included EUR 6.5 million debt repayments relating primarily to discontinued operations, settlement of an option, EUR 9.7 million in relation to the share buyback which occurred in February 2020 and the repurposing of cash as security for softloans (such security provided on behalf of the group in the form of shares owned by Dr. Heikki Lanckriet). Outflows for the prior year were EUR 1.8 million. The company closed the period with cash balances of EUR 85.1 million.

Buyback and cancellation of own shares:

In the second quarter, 4basebio cancelled 5,230,667 shares held in treasury after the share buyback in the first quarter. This brings the total number of shares as of 30 June 2020 to 48,525,915.

Outlook 2020:
For the fiscal year 2020, 4basebio reaffirms its guidance of 24 April 2020: The operational cash burn for 2020, excluding expenses relating to the Abcam transaction, is expected to be between EUR 2.5 million to EUR 3.5 million with revenues between EUR 0.5 million and EUR 1.0 million.

Conference call details:

4basebio will host a conference call for investors and analysts conducted in English) today, 13 August 2020, at 3:00pm CEST/2:00pm BST, to discuss the consolidated financial statements for the half year ended 30 June 2020 and important developments during the reporting period and to provide a strategic update and financial outlook.

Interested parties may pre-register and will receive dedicated dial-in details to easily and quickly access the conference call by following this link:https://services.choruscall.de/DiamondPassRegistration/register?confirmationNumber=3301059&linkSecurityString=41f04d056

After registration, please check your email inbox for your confirmation details.

The conference call will be accompanied by a slide presentation which can be accessed during the call by following this link: https://78449.choruscall.com/dataconf/productusers/4basebio/mediaframe/39333/indexl.html (Presentation only, no sound - advised for participants on the phone)

Please dial in 5 minutes before the beginning of the event.

A conference call recording will be available on the Company's investors website www.investors.4basebio.com.

4basebio AG, Heidelberg, Germany

Interim results for the six months ending 30 June 2020

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

For further information, please contact:

4basebio AG
Dr. Heikki Lanckriet, CEO/CSO
Phone: +44 1223 873 364
Email: heikki.lanckriet@4basebio.com

Dr. Robert Mayer, Manager IR
Phone: +49 171 3876540
Email: robert.mayer@4basebio.com

MC Services AG
Julia Hofmann
Phone: +49 89 210228 0
Email: 4basebio@mc-services.eu

About 4basebio AG:

4basebio AG, formerly operating under the name of Expedeon AG, is an enabler of exciting advances in medical science and patient care. After divestment of its immunology and proteomics products portfolio on 1 January 2020, the Company changed its name to 4basebio AG reflecting the enhanced focus on technologies and products centered around DNA. The Company is focusing on DNA manufacturing to supply DNA products for therapeutic and other uses requiring large amounts of high-purity DNA, such as the fast-growing market of novel gene therapies and gene vaccines. Besides DNA manufacturing, 4basebio aims at providing research and diagnostic products based on its RNA reverse transcriptase, DNA polymerase and DNA primase enzymes, addressing the research tools and diagnostic products markets.

4basebio AG has offices in Germany, Spain, UK, and the US. The Company is listed on the Prime Standard segment of the Frankfurt Stock Exchange (Ticker: 4BSB; ISIN: DE000A2YN801).

More information: www.investors.4basebio.com

# # # This publication is intended for information only and constitutes neither an offer to sell nor an invitation to buy securities. Some statements included in this press release, relating neither to proven financial results nor other historical data, should be viewed as forward-looking, i.e. not definite. Such statements are mainly predictions of future results, trends, plans or goals. These statements should not be considered to be total guarantees since given their very nature they are subject to known and unknown risks and imponderability and can be affected by other factors as a consequence of which the actual results, plans and goals of 4basebio AG may deviate greatly from the established conclusions or implied predictions contained in such statements. 4basebio does not undertake to publicly update or revise these statements in the light of new information or future results or for any other reason. # # #

13.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de