RESULTS AND FINANCIAL POSITION
[image]
Year-End Report –
Summary
Dignitana is a medical technology company based in Lund, Sweden
and publicly
-traded on Nasdaq First North. The company produces the patented
DigniCap® Scalp
Cooling System to counteract chemotherapy-related hair loss and
contribute to
improved patient well-being and quality of life. The system
provides continuous
cooling with high efficacy, safety and acceptable patient
comfort. DigniCap was
the first scalp cooling system to receive FDA clearance
and is the only system
with an expanded indication to reduce the likelihood of
chemotherapy-induced
alopecia in cancer patients with solid tumors. In the
pivotal trial it was
concluded that The DigniCap Scalp Cooling System prevented
hair loss in 66.3% of
patients with breast cancer receiving adjuvant
chemotherapy compared to the
control group where all experienced significant
hair loss. Dignitana has offices
in Lund, Sweden, and operations are based in
Dallas, Texas.
Significant events during the year
· Dignitana’s pivotal
study for FDA clearance was published in the 14
February 2017 issue of Journal
of American Medical Association (JAMA).
· The FDA expanded the clinical
indications for DigniCap on 3 July 2017 to
now include men and women with solid
tumors.
· The DigniTherm™ Click Cap was introduced to facilities in
December 2017 and
roll-out to all U.S. facilities is ongoing and will be
completed in Q1 2018.
· Product Development is underway for the next
generation DigniCap System to
be introduced in 2018.
· More than doubled
our footprint with expansion from 52 sites in 16 states
at the beginning of
2017 to 106 sites in 22 states on 12/31/17. These 54 new
sites represent 88
machines, bringing the US total to 130 machines.
· 2017 has seen continued
growth in the U.S. with a consistent increase of
over 19% in revenue quarter
over quarter.
· Transition of operations from Lund, Sweden to the U.S. was
announced and
initiated in Q4 2017. This effort proceeds ahead of schedule and
under budget.
· The new share issue in Dignitana that occurred in Q4 2017
was fully
subscribed and the company received SEK 42.6 million.
Significant
events after the end of the year
· William Cronin was appointed new CEO of
Dignitana AB, effective 27 January
2018.
· Transition of operations from
Lund to Dallas is underway and scheduled to
be completed June 2018.
·
Contracts for 5 locations have been signed since 1 January 2018 bringing
the
total number of locations now to 111 with 135 machines in 23 states.
· The
Rights offering which was begun in Q4 2017 was fully subscribed and
funding was
completed in early January 2018.
· Dignitana, Inc. added a VP Finance and a
VP Quality Affairs in February
2018.
· As of 22 February 2018, in the U.S.
there are 111 sites in 23 states
representing 135 machines.
· Company staff
in Dignitana AB totaled 4 people as of 22 February 2018.
Dignitana Group
totaled 17 people as of 22 February 2018.
· Moving forward all company
communications and reports will be issued
primarily in English, with the
exception of the Årsredovisning och
koncernredovisning för räkenskapsåret that
is published in April or other
documents required to be published in
Swedish.
Our priorities in 2018 are to first complete the transfer of
operations to the
U.S., which is already proceeding ahead of schedule and under
budget. This
transition is critical to our success moving forward as a unified,
effective,
and profitable company.
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Comments from William Cronin, CEO
Dignitana AB
2017 was a pivotal year in reaffirming Dignitana’s leadership
role in the scalp
cooling market. Building on growing momentum and demand,
revenue in the U.S. has
now grown for eight consecutive quarters. Year over
year saw a 378% revenue
increase in the US and our unique pay-per-treatment
model. The FDA expanded
our clinical indications to include solid tumor
cancers which significantly
increases the potential scalp cooling market. We
enhanced cap fit and ease of
use with the DigniTherm Click Cap that was
developed in partnership with Boa
Technology. We continued to secure placement
in prestigious medical facilities
and partner with multi-site health care
providers and we implemented a program
to increase per unit effectiveness and
utilization of machines. In the global
space we continued to place units
through existing relationships and initiated
an evaluation of our distributor
relationships.
After significant assessment across all divisions of the
company, in Q4
Dignitana’s Board of Directors took the bold step of moving the
majority of
Dignitana’s administrative operations to the U.S. This move will
help the
company to operate more effectively and efficiently as our decision
making and
development efforts are combined with our sales and marketing
functions. In
short, we have now accurately repositioned the company for future
growth and
optimization of resources.
We have accelerated our product
development efforts and are on target to produce
a new system in 2018. The
DigniTherm Click Cap roll out is near completion and
has received a positive
response from both health care providers and patients.
The Click Cap improves
ease of use and enhances cap fit to optimize patient
outcomes. For 2018,
Dignitana will continue to focus not only new site
installations but also on
maximizing machine utilization rates with existing
site partners
Our marketing
efforts continue to target both the clinical and consumer
audiences to increase
awareness of scalp cooling and our product through
frequent messaging via
multiple messaging channels. Launching a new product in
the healthcare space
takes time, as does adoption of a new product in a
facility. Our consultative
and service-oriented approach is working well as we
build a solid foundation
with our health care providers.
Based on current revenue trends, the company
is forecasting to become cash flow
positive by the end of calendar 2018.
This
forecast does not take into account other possible changes in the market
such
as progress toward insurance reimbursement. Insurance reimbursement may
also
occur in 2018, but it will likely take some time for insurance providers
to
implement and thus the impact to our revenue will come later.
Additional
updates
Sales
The pay-per-treatment business model in the U.S. is growing
steadily. The model
is attractive for Dignitana AB, both partner sites and
patients as it enables
very low startup costs for the sites and patients pay
for only the treatments
that they use.
As of December 31, 2017, in the U.S.
there were 106 sites in 22 states.
In August 2017 Dignitana signed a contract
with Dignity Health which allows any
of the 19 cancer centers in the Dignity
Health network to offer the DigniCap
system to their patients. The first
Dignity location implemented the system in
Q3 2017 and a second location will
be installed in Q1 2018.
In October 2017 Dignitana announced that Memorial
Sloan Kettering had
renegotiated its long-term agreement and replace it with a
short-term agreement.
Dignitana continues to provide service to Memorial Sloan
Kettering.
In conjunction with adding new locations, in 2018 the sales and
clinical teams
will continue to collaborate to increase utilization of existing
locations, as
the per-treatment model provides significant revenue opportunity
through
optimizing the usage of machines that are already installed.
Global
market
International sales efforts are now being handled from the U.S. and
are
currently under detailed analysis to evaluate financial models and
market
potential. We have existing relationships with distribution partners in
Europe,
United Kingdom, Mexico, Australia, South America, and the Middle East,
and in
conjunction with Konica Minolta we are evaluating the PMDA approval
process to
provide DigniCap to the Japanese market.
Product development
As a
result of Dignitana’s collaboration with Boa Technology to improve ease of
use
and enhance cap fit for optimal patient outcomes, The DigniTherm Click Cap
was
launched in December 2017 and the new cap has been very well-received.
Staff
training is brief, patient usage is intuitive, and clinical results have
been
excellent. The Click Cap roll-out to all U.S. facilities will be completed
in Q1
2018 and the Click Cap is now the standard that is sent out to all
new
installations. Options for adoption of the Click Cap outside the U.S.
are
currently being evaluated.
Redesign of the existing C3 device continues.
We are on target to bring the next
generation cooling device to market in
2018.
Insurance reimbursement
In the U.S., universal insurance coverage for
scalp cooling is not yet
available. With insurance reimbursement for scalp
cooling, this treatment option
would be available to a much wider patient
population. Because there is not a
unique CPT treatment code for scalp cooling,
many providers will not approve
claims for the treatment. Some patients are
successfully using generic codes for
reimbursement, but this is sporadic based
on provider, plan, location and other
factors. Universal insurance coverage
will not occur until there is a recognized
CPT code with an attached cost
valuation.
FDA clearance
The July 2017 FDA expansion of DigniCap clinical
indications to include not only
women with breast cancer, but also men and
women with solid tumor cancers is a
significant milestone for the company. The
potential scalp cooling market in the
U.S. thereby increased from 255,000 new
breast cancer cases to more than 800,000
men and women diagnosed with solid
tumors each year. We can now offer scalp
cooling to three times the number of
patients we could treat under our initial
clearance. DigniCap is the only scalp
cooling system to have clearance for
patients with solid tumors in the U.S.,
and men are starting to discover that
this technology is now an option as they
undergo chemotherapy.
It is noteworthy that of the 255,000 breast cancer cases
each year in the U.S.,
approximately 60% are on regimens that would be
compatible with DigniCap. The
U.S. market for scalp cooling is worth
approximately $710 million per year –
including $275 million per year for
breast cancer and an additional $435 million
for other solid tumors.
Clinical
support
As we continue to expand the availability of DigniCap, we recognize
the
importance of establishing an ongoing partnership with clinicians. In Q3
2017 we
launched the Scalp Cooling Integration Program to provide comprehensive
and
ongoing training and support to clinical partners, so they can easily
and
efficiently integrate scalp cooling into their daily work flow. The program
has
been very well-received in our facilities and has already proven to be
very
effective in optimizing the clinical utilization of DigniCap. Dignitana’s
focus
on personal service and support is a critical differentiator in the
scalp
cooling field, and a driving force in our expansion.
Clinical trials and
publications
In addition to Dignitana’s pivotal study for FDA clearance that
was published in
the 14 February 2017 issue of Journal of American Medical
Association (JAMA),
research featuring DigniCap was published in three other
clinical journals:
Clinical Breast Cancer, Breast Cancer Research and
Treatment, and Clinical
Journal of Oncology Nursing. Additionally, abstracts on
studies using DigniCap
were presented at the 2017 SABCS conference.
In terms
of clinical trials, the five-year follow up of the DigniCap pivotal
trial is
ongoing at the five medical centers in the initial trial. This
collection of
long-term data is critical to wider clinical acceptance of scalp
cooling. In Q1
2017 data from19 clinical trials was submitted to the FDA, and
the expanded FDA
clearance was granted in July 2017 based on their evaluation of
this large
collection of clinical evidence.
Quality affairs
The majority of Quality
Affairs has been transferred from Sweden to the U.S. and
we have hired a VP
Quality Affairs in Dallas to provide leadership to this
critical function
moving forward.
Operations
In Q3 2017 Dignitana announced production delays
due to changes at a
subcontractor’s operations which caused a decline in sales
in the second half of
2017 and these issues were resolved in Q4 2017. With the
transition of
operations to the U.S., all production facilities and vendor
relationships have
been evaluated, and changes will be made as needed to
optimize production costs,
efficiency, and deliverability.
Medical
conferences
Dignitana had visibility with over 70,000 health care providers by
exhibiting at
three large medical conferences in 2017 – American Society of
Clinical Oncology,
San Antonio Breast Cancer Symposium, and Oncology Nursing
Society Congress, as
well as several other significant special focus meetings
including the Miami
Breast Cancer Conference, Community Oncology Alliance,
Multinational Association
of Supportive Care in Cancer, Chemotherapy Foundation
Symposium, and numerous
local events.
Marketing and media
Dignitana’s
targeted marketing efforts continued to build public awareness, with
a dual
strategy of informing both prospective patients and health care providers
about
scalp cooling and DigniCap availability through print, advertising,
media
outreach, digital content and events. We plan to build on this solid
foundation
in 2018 and focus on creating targeted digital content to our varied
audiences.
Media interest in DigniCap remains high and in 2017 we achieved 968
media
placements resulting in 1,402,639,331 media impressions across print,
online and
broadcast channels. These numbers were fueled by achievements such
as the FDA
expansion of clinical indications announcement in July, coverage of
DigniCap’s
clinical trial in Journal of the American
Medical
Association (https://jamanetwork.com/journals/jama/article
-abstract/26
01503)(JAMA),
and connecting reporters with compelling patient
stories in local
markets.
National media saturation included coverage in prestigious outlets
such as The
New York
Times (https://www.nytimes.com/2017/02/14/well/live/scalp-cooling-helps
-prevent
-hair-loss-in-chemo.html),
CBS
Evening
News (http://www.cbsnews.com/news/cooling-caps-fighting-chemo-induced-ha
ir-loss
-new-studies-effectiveness/),
CNN (http://www.cnn.com/videos/living/2017
/07/24/innovators-dignicap.cnn),
and
the Washington
Post (https://www.washingtonpost.com/national/health
-science/cooling-caps-can-h
elp-hair-survive-chemotherapy/2017/02/17/6fb83bb0
-f39c-11e6-b9c9-e83fce42fb61_s
tory.html?utm_term=.f965759c169a),
Mashable (http://mashable.com/2017/01/27/wome
n-who-kept-their-hair-thanks-to
-cold-caps/#KY60ffSASmqM),
Marie
Claire (http://www.marieclaire.com/health
-fitness/a27472/we-will-beat-cancer/)
and U.S. News and
World
Report. (http://health.usnews.com/health-care/articles/2017-07-05/fda-wide
ns
-access-to-cooling-cap-to-stop-hair-loss-in-cancer-patients)
With the addition
of new DigniCap sites across the country, we strengthened
community relations
and local outreach, working directly with physicians and
patients in to identify
positive, educational stories for traditional and
social media. Targeted local
media outreach resulted in highly effective local
outlets such as The
Baltimore
Sun (http://www.baltimoresun.com/ac-cm-breast-bwmc-dignicap-20171006
-
story.html),
Jacksonville.com (http://jacksonville.com/shorelines/mandarin-st
-johns/town/201
7-12-19/hair-loss-during-chemotherapy-not-inevitable-anymore),
and
Spanish-language media in Miami (https://youtu.be/Yu73SZ-Zs6A).
Social media
has been a strong patient marketing channel, with consistent growth
and
interaction on Facebook, Instagram, and Twitter. Several patient stories
were
featured in DigniCap’s first social media campaign for Breast Cancer
Awareness
Month, #BetterWithYou, and targeted campaigns in local markets have
been very
successful.
Personnel
Dignitana has made several key hires to provide the
experience and resources
needed for effective and efficient operations. A VP
Finance and a VP Quality
Affairs were hired in February. After restructuring
the sales division to
include global responsibilities based in the U.S., we are
adding at least one
additional salesperson to ensure we are reaching all
possible partner sites.
Investor relations
With the transition of operations
to the U.S., we are particularly aware of the
need to maintain close ties to
the First North community and our investor base
in Sweden. With this in mind,
Dignitana has introduced a program to increase
transparency to the market with
more frequent communication through a monthly
newsletter, direct response to
shareholder emails, additional information posted
on the company website, and
online presentations with company leadership to be
scheduled throughout the
year.
The update to number of locations will be provided in the monthly
newsletter and
will be added to the Location section of the DigniCap website as
well. With the
exception of large contracts, updates on new locations will not
be announced in
a separate press release but will be included in the monthly
newsletter that is
posted online the first week of each month.
As noted
previously, please note that moving forward all company communications
and
reports will be issued primarily in English, with the exception of
the
Årsredovisning och koncernredovisning för räkenskapsåret that is published
in
April or other documents required to be published in Swedish.
Financial
comments
· A transfer pricing agreement was 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. Due to the transition
of
administrative functions from Sweden to the US this transfer pricing
agreement
is under review by the company and its’ auditors.
· On 29 August
2017 Dignitana received a line of credit from Union Business
Leasing, Inc to
finance existing systems installed in the U.S. market in the
form of a credit
facility valued at up to $2.5 million. At this time Dignitana
has approximately
$1.25 million available credit under this lending facility.
· The
subscription period for Dignitana AB's new share issue with
preferential rights
for the Company's shareholders expired on 22 December 2017,
and the final
outcome shows that the rights issue was subscribed to
approximately 141 percent
and the Company receives approximately SEK 42,6
million before issue costs.
Allotment of shares subscribed for without
subscription rights has been carried
out in accordance with the principles set
out in the prospectus prepared for
the rights issue and published on 6 December
2017. Through the rights issue the
number of shares increases by 20 274 112 to
40 548 224 shares.
Dividends
The
Board of Directors propose that no dividend will be paid for 2017.
Future
prospects
Dignitana is in an intensive product launch phase in several
markets, which may
cause sales to differ from one quarter to the next. Future
capitalization may
become necessary to build the organization for successful
penetration of
selected markets.
Staff
Company staff in Dignitana AB totaled
9 people as of 31 December 2017.
Dignitana Group totaled 15 people as of 31
December 2017.
The share
Shares in Dignitana AB (publ) were listed on the
Nasdaq First North listing of
the Stockholm Stock Exchange on 30 November 2011
after having been listed at
Aktietorget since June 2009. Total shares in the
company are 40,548,224 after
the share issues during December 2017 and there is
one class of share. Every
share carries an equal right to shares of company
assets and profit, and the
right to a single vote at the annual general meeting
of shareholders. There are
487,000 warrants issued in the company. The warrants
carry the right to purchase
222,000 shares in the period June 1 to 30, 2018 and
165,000 shares in the period
June 1 to 30, 2019 and 100,000 shares in the
period June 1 to 30, 2020 and will,
on full exercise, increase the company
share capital by SEK 487,000. Erik Penser
Bank act as Certified Adviser for the
company.
Related party shareholdings
Shareholding
Warrants
Johan Stormby via Eurosund AB
4 180 726
William Cronin
3 712 976 30
000
Semmy Rülf
974 863
Erik von Schenck
21 538
Johan Ericsson 32
768
Scheduled financial reports
22 February 2018 2017 Year
End Report
5 April 2018 2017 Annual Report
26 April
2018 Annual General Meeting
22 May 2018
Q1 Interim Report through 31 March 2018
28 August 2018
Q2 Interim Report through 30 June 2018
27 November 2018 Q3
Interim Report through 30 September 2018
26 February 2019
2018 Year End Report
Review by auditors
This year-end report has not been
subject to review by the company auditors
Policies for preparation of the
financial report
Swedish Annual Accounts Act (1995:1554) and Swedish
Accounting Standards Board
General Recommendations BFNAR 2012:1 Annual
reporting and consolidated financial
statements
Submission of the year end
report
Lund, 22 February 2018
Dignitana AB (publ) - Board of Directors
Semmy
Rülf Chairman
Johan Stormby Director
Erik von
Schenck Director
William Cronin Director
Dignitana
AB
Traktorgränden 3
226 60 Lund
Phone: +46 (0) 46-16 30
90
www.dignitana.se
investorrelations@dignitana.com
Certified Adviser
Erik
Penser Bank
+46 (0) 8 463
8000
www.penser.se (http://file///C:/Users/Melissa/Documents/Quarterly%20Report
s/www.p
enser.se)
Dignitana
Year End Financial Report 2017 22
Feb
2018 (http://mb.cision.com/Public/2116/2457460/92736054d3aea796.pdf)
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 8:05 (CEST), 22
February
2018.
Investor Relations
Media
Contact
Melissa Bourestom
Caren Browning
Dignitana
King +
Company
00 1 773 387 8504
00 1 212
561
7464
investorrelations@dignitana.com (http://file/C:/Users/Melissa/Document
s/PR%20
-%20King/Press%20Releases/investorrelations@dignitana.com)
caren.browning@kingcompr.com
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. Headquartered
in Dallas
Texas, Dignitana, Inc. is the U.S. subsidiary of Dignitana AB. For
more
information visit www.dignitana.se and www.dignicap.com
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