Dignitana publishes Year End Financial Report 2016

Financial Year End Report - Summary:

Significant events during the year   

• The first leasing agreements and deliveries to US customers took place early in the year. The most important contract so far is with Memorial Sloan Kettering Cancer Center for multiple sites in the New York area. 
• Dignitana successfully introduced a new business model in US. The model consists of a fixed monthly leasing fee for the system and a pay-per-treatment fee.
• Dignitana has continued to develop its US subsidiary, Dignitana Inc. Bill Cronin has been appointed CEO of Dignitana Inc. and new resources for sales, marketing and clinical support were added. The company has set up its office in Dallas, Texas.
• Dignitana AB appointed a new CEO during the fall and during the year new employees were added to QA and product development.
• During the year Dignitana successfully completed new share issues of 52,5 MSEK consisting of two private placements totaling 33,1 MSEK and a rights issue from existing shareholders of 19,4 MSEK.
• The Quality of Life data from the pivotal study was presented as a poster during the yearly held San Antonio Breast Cancer Symposium, SABCS, in December.

Significant events after the end of the year   

• Dignitana AB is launching the 17 systems to Memorial Sloan Kettering Cancer Center 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).

Comments from Johan Ericsson, CEO Dignitana AB (publ)  

Dignitana AB successfully completed the first year on the US market and we are proud of what we have accomplished so far. During Q4, 2016 we signed contracts for 22 new sites giving us a total of 52 sites across the United States at the end of the year. An additional 5 sites have been signed thus far in Q1, bringing the current number of U.S. DigniCap sites to 57. The most important contract so far is with Memorial Sloan Kettering Cancer Center (MSKCC) for multiple sites in the New York area. MSKCC is ranked number two among US cancer centers.

The new business model that we introduced in the US market has proven to work well. The model consists of a fixed monthly leasing fee for the system and a pay-per-treatment fee. Reimbursement of the treatment will be essential for a full acceptance of DigniCap®. We are working on obtaining healthcare reimbursement for DigniCap. We must show that DigniCap has a positive effect on the quality of life of patients and much of this information was collected during the clinical trial. The more DigniCap is used, the better the chances for a positive outcome of our efforts within this area. In the February 14th issue of Journal of American Medical Association (JAMA), the results of Dignitana’s pivotal study for FDA clearance was published; Scalp Cooling Device May Help Reduce Hair Loss for Women with Breast Cancer Receiving Chemotherapy. JAMA is one of the highest ranked medicine and science journals and the most widely circulated medical journal in the world. Having the pivotal study published in such a renowned journal is an important piece when seeking reimbursement.

The company has spent significant time and effort with its’ early partner sites in the US during the previous year to ensure outcomes are as good as possible for our mutual patients. By ensuring sites and their staff are properly trained and supported, we will ultimately ensure that our treatment numbers are as high as possible. The DigniCap system has never been about saving all hair on every scalp, but to make chemotherapy more tolerable by reducing hair loss. The result may vary depending on which chemotherapy is used or how well the staff have been able to receive the training. We are working on modifying the fitting process further and have entered into an exclusive partnership with Boa Technologies in order to optimize the cap fitting.

Dignitana participated at the annual Breast Cancer Symposium in San Antonio (SABCS) in December where the Quality of Life data from the US pivotal study was presented. The poster was entitled “Body image in women with breast cancer using a scalp cooling system to reduce chemotherapy induced alopecia”. In summary, women with breast cancer receiving scalp cooling using DigniCap versus control during chemotherapy were significantly less likely to lose >50% of their hair, felt significantly more physically attractive, were significantly less dissatisfied with their appearance when dressed, and regarded the importance of hair significantly more.

The Dignitana presence at SABCS was bolstered by the announcement of our partnership with Boa Technologies, which drew the Fox TV reporters to the conference for interviews at the Dignitana booth resulting in more than 221 media pick-ups and over 89 million impressions through Yahoo Health, CNBC, and several online and broadcast channels.

Media interest in DigniCap remained strong throughout 2016 in the US with more than 837 media placements garnering more than 2,6 billion impressions through online, broadcast, and print media channels. Top national placements in 2016 include a lengthy feature on CBS This Morning, as well as positive coverage in Bustle, NY1, Crain's New York, Yahoo Health, Women's Health, Men's Health, Oncology Nursing News, and patient features on local television stations in more than 12 markets.

During the year, we have continued to develop the Swedish and the US organization. In Sweden, QA and product development resources have been added and in US we have added resources for sales, marketing and clinical support.

We are in the process of defining requirements of the next generation DigniCap. Input is being gathered from the US installations and the information gathered will result in a system better suited for the market.

At the moment, DigniCap® has US FDA clearance for female breast cancer patients, and we claim to know that the system will work with other forms of solid tumor cancers as well. We have subsequently started to work with FDA on an expanded indication for use. If our indicated usage is expanded to other solid tumor cancers, the total approachable market will increase significantly.

Deliveries to our European distributor, Sysmex Europe GmbH, was not following plan during the year, but recovered at the end of the year when Sysmex put new orders for 15 systems to be delivered in 2017.

Sales in China with our distributor Konica Minolta Medical & Graphic did not follow plan so we are looking for new solutions to approach this market more efficiently in the future.

Konica Minolta has selling rights in Japan as well and has, during the year since we got the FDA clearance, started the process to obtain regulatory approval in Japan. 

With all the focus to be successful in the American market, less resources have been put into other markets such as the UK and the rest of the world where we do not have distributor agreements.

During the year, the company successfully completed new share issues of 52,5 MSEK consisting of two private placements totaling 33,1 MSEK and a rights issue of 19,4 MSEK from existing shareholders in order to finance further expansion in the US. The main investor in the private placement was Hodges Capital Management, a Dallas, TX based institutional investment firm.

Net revenues for the Group in Q4 increased from 277 TSEK in 2015 to 4,069 TSEK 2016, and by 45% compared to Q3, 2016. The whole year is up by 87 % compared to 2015. On the US market net revenue continues to increase quarter by quarter due to increasing number of installations and treatments. For the rest of the world we have delivered 10 systems to our European distributor Sysmex Europe GmbH in Q4.

Financial comments

• As of September 2015 Dignitana AB, the parent company of the Dignitana group, reports consolidated group financials, including the American subsidiary Dignitana, Inc. 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 continues 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 US will be capitalized as assets and depreciated over five years. 

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

The information in this press release is such that Dignitana AB must disclose it in accordance with the EU market abuse regulation. The information was submitted, by the above contact, for publication at 08,30 (CET), February 23, 2017. 

Johan Ericsson

CEO, Dignitana AB (publ)

Phone: +46 (0)46 – 16 30 92

E-mail: johan.ericsson@dignitana.se

About Dignitana AB (publ)
Dignitana is a Swedish public company, based in Lund, and manufacturer of the medical cooling device DigniCap®. Dignitana is continuously researching and developing new uses for DigniCap®. Dignitana AB is listed on the OMX Nasdaq First North stock exchange 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® is developed to provide continuous cooling with high efficacy, safety and acceptable patient comfort.

Tags: