Dignitana publish interim financial report for Q1, 2017

Interim Financial Report - Summary:

Significant events during the period

•  March record month. The most important contract during the period is with The University of Miami Health System (UHealth) for four sites. UHealth is the largest provider of cancer care in south Florida. As we demonstrate the efficacy and demand for the product, UHealth will add DigniCap® units to additional sites.
•  Dignitana has continued to develop its U.S. subsidiary, Dignitana Inc. New resources were added during Q1 to properly support the growing roster of sites and patients. Two new clinical support personnel were hired for the New York City metropolitan area, a Florida-based salesperson was added to accelerate growth in the southeast, and an Operations Manager was added in the Dallas office.
•  Dignitana AB hired a Supply Chain Manager starting March 1.
•  Dignitana installed the 17 systems to Memorial Sloan Kettering Cancer Center in New York that were ordered in the end of 2016.
•  Dignitana’s pivotal study for FDA clearance was published in the February 14th issue of Journal of American Medical Association (JAMA) along with two positive editorials.
•  The 510(K) for solid tumors has been submitted to the FDA and is currently under review.

Significant events after the end of the period

 

•  As per April 15, Dignitana Inc. will be responsible for global sales.
•  Additional sites have been contracted and announced through the typical process, including highly-ranked Mayo Clinic, Moffitt and NYU facilities.
•  Dignitana AB hired a Production and Service Manager April 1.
•  Dignitana Inc. hired an Accounting Manager April 24.
•  Dignitana AB obtained credit from a Swedish bank to provide capital for increased DigniCap unit production.

Comments from Johan Ericsson, VD Dignitana AB (publ)  

 Dignitana installed the 17 systems to Memorial Sloan Kettering Cancer Center (MSKCC) in the New York area that were ordered in the end of 2016. This is the most important contract so far for Dignitana. MSKCC is ranked number two among U.S. cancer centers. During the quarter, installations have started at multiple sites with good results.

Dignitana continue to grow on the U.S. market and during Q1, 2017 we signed 14 new contracts giving us a total of 69 sites across the United States. The most important contracts are with Memorial Sloan Kettering Cancer Center and University of Miami Health System.

New business model in the US

The new business model that we introduced in the U.S. market is now taking off. The model consists of a fixed monthly leasing fee for the system and a pay-per-treatment fee. This model is attractive for both our partner sites and patients as it enables very low to no startup costs for the sites and patients pay for only the treatments they use the DigniCap® system.

In the U.S., the DigniCap® treatment is currently payed for by the patient themselves. With healthcare reimbursement for the DigniCap® scalp cooling system, this therapy can be available to a wider patient population. Dignitana is working on getting the scientific data published and thereby increasing the scientific value and awareness of the DigniCap® Scalp Cooling System, which is a precondition for reimbursement.

New publications in highly ranked medical journals

Following the publication of the effectiveness, safety and tolerability of the DigniCap® scalp cooling system in the highly ranked medical journal JAMA on February 14, 2017, another scalp cooling paper was published in Breast Cancer Research and Treatment on March 8, 2017; “Scalp cooling with adjuvant/neoadjuvant chemotherapy for breast cancer and the risk of scalp metastases: systematic review and meta-analysis.”. The authors conclude that the incidence of scalp metastases was low regardless of scalp cooling which suggests that scalp cooling does not increase the incidence of scalp metastases. The theoretical increased risk for scalp metastases following scalp cooling should no longer be a reason for restricting the use of scalp cooling for patients undergoing chemotherapy. Also, the Quality of Life data presented at San Antonio Breast Cancer Symposium in December 2016; “Body image in women with breast cancer using a scalp cooling system to reduce chemotherapy induced alopecia”, is currently being revised into a full-length paper for publication.

Dignitana Inc. is working closely with the clinical sites where DigniCap® has recently been installed to ensure proper training. Clinical support resources have been added to meet the increasing demand from new sites and expanding usage.

Request for wider Indications for use

In the U.S., the DigniCap® was cleared by the FDA only for women with breast cancer since this was the study population in the pivotal study. Dignitana believes that there is no scientific or clinical basis to limit this technology to breast cancer patients when, in fact, it is currently approved and being used throughout the world safely and effectively for treating patients with all types of solid tumors undergoing chemotherapy. The 510(K) requesting a wider indications for use of the DigniCap® scalp cooling system has been submitted to the U.S. FDA and is currently under review.

Dignitana strongly believes that the combination of scientific publications, healthcare reimbursement, and expanded indications for use will greatly increase the usage of scalp cooling in the U.S. over time.

U.S. media interest in DigniCap® remained strong during Q1, 2017 in the U.S. With the results of the clinical trial featured in The Journal of the American Medical Association and the official announcement of the DigniCap® machine being offered at Memorial Sloan Kettering, media coverage reached a high this quarter with 485 media placements garnering more than 899 million impressions through online and broadcast media channels. Highlights include The New York Times, Mashable, CBS Evening News and The Washington Post. 

Efficient supply chain

During the year, we have continued to develop the Swedish and the U.S. organization. In Sweden, Supply Chain and Operations resources have been added and in U.S. additional sales and support staff have been added to support and grow our rapidly expanding customer and patient sites.

We are working hard to supply to the increased number of systems required to fulfil orders. Significant effort has been directed to the supply chain as well as logistics and product improvements. Dignitana is continuously evaluating options to enhance and facilitate cap fitting to improve patient outcome. Two development projects have started to provide a better user experience.

Market update

In March Dignitana delivered 15 systems to our European distributor, Sysmex Europe GmbH.

With the focus on success in the U.S., fewer resources have been put into other markets such as the UK and the rest of the world where we do not have distributor agreements. To ensure that company resources are appropriately allocated in regard to sales and unit placement opportunities, Dignitana, Inc. will now handle all outside distributor relationships.

Financial comments

•  Group revenues in Q1, 2017 increased to 6,177 TSEK, compared to 1,134 TSEK for the same period last year, and by more than 50 % compared to the previous quarter. The monthly leasing fees increases as more and more systems are installed, and pay per treatment revenues increases both due to more installations, but also higher usage rates on already installed systems.
•  As of September 2015, Dignitana AB, the parent company of the Dignitana group, reports consolidated group financials, including the subsidiary Dignitana, Inc. in USA. Costs related to the subsidiary are now being paid by Dignitana, Inc. Other costs such as regulatory, quality, FDA and product development will continue to be paid by the parent company.
•  Every month Dignitana, Inc. will invoice the customers a fixed rental fee for DigniCap® and a pay per treatment fee based on the number of completed treatments. Since Dignitana AB continue to own the systems, part of the revenue will be transferred to the parent company.
•  A transfer pricing agreement has been established between Dignitana AB and Dignitana, Inc. to determine how the result will be shared between the companies. Other external expenses in Dignitana AB include costs related to the transfer price agreement between the companies.
•  Fixed tangible assets in Dignitana AB continue to increase since systems leased to customers in the U.S. will be capitalized as assets and depreciated over five years.

The complete report will be found on our webpage http://www.dignitana.se/eng 

For more information:

Johan Ericsson

CEO, Dignitana AB (publ)

+ 46 (0)46 16 30 92

johan.ericsson@dignitana.se 

This information is information that Dignitana AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, by the above contact, for publication at 13.00 pm (CET), May 24, 2017.

About Dignitana AB (publ)
Dignitana is a Swedish public company, based in Lund, and manufacturer of the medical cooling device DigniCap®. Dignitana AB is listed on Nasdaq First North Stockholm and has appointed Erik Penser Bank as Certified Adviser. For more information visit www.dignitana.com

About the scalp cooling system DigniCap® 
Dignitana’s core product, DigniCap®, is a patented scalp-cooling system that offers cancer patients the ability to keep their hair during chemotherapy. DigniCap® provides continuous cooling with high efficacy, safety and acceptable patient comfort.

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