Progress in executing commercial plan underscored by recent agreement with Metagenics, Inc.
Last week, Interleukin Genetics, Inc. (Waltham, Massachusetts; OTCQB:ILIU) announced financial and operational results for its fiscal fourth quarter and full fiscal year ended December 31, 2015.
“2015 was an important year for Interleukin Genetics, as we focused on developing and executing a significantly updated strategic and operational plan centered on the medical value of our genetic test, PerioPredict,” says CEO Mark B. Carbeau. “We position PerioPredict as the cornerstone of enhanced benefits designs and employer-sponsored wellness initiatives to identify high-risk individuals for proactive outreach and personalized care. We believe these programs have the potential to ultimately improve quality and substantially reduce medical costs.”
PerioPredict measures variations in the genes for Interleukin-1 (IL-1), a key mediator of inflammation, and identifies individuals who are at an increased risk for more severe periodontal (gum) disease.
Related: Interleukin Genetics introduces PerioPredict
“The reception to this positioning has been very positive from each of the stakeholders needed to drive adoption of PerioPredict,” Carbeau continues. “Medical studies now document the role of systemic inflammation in driving serious chronic diseases such as diabetes, cardiovascular disease and periodontitis. Actions to lower inflammatory burden are proven levers to manage disease—delaying onset, slowing progression, and reducing severity. Greater dental care, when directed to high risk individuals, is a practical intervention shown to lower systemic inflammatory burden and is associated with substantial medical cost savings for patients with certain chronic diseases. PerioPredict helps identify and engage high-risk patients who will benefit from these interventions. Our demand generation efforts are focused initially on large employers and insurance carriers, and we are encouraged by our progress on both fronts.”
“We are also utilizing our expertise in interleukin-1 genetics to continue to develop high-value, next-generation genetic tests that leverage our intellectual property and the growing interest in IL-1 biology,” continued Mr. Carbeau. “We believe our test panels can be of value to physicians in better managing cardiovascular disease patients. Separately, discussions are ongoing with pharmaceutical and biotech companies regarding Interleukin providing clinical testing and potentially developing companion diagnostics for drug candidates that target IL-1.”
Recent Highlights
- Executed Agreement with Metagenics, Inc.: Entered into an agreement to provide Interleukin’s PerioPredict test to Metagenics’ employees as part of an enhanced employee benefits program. PerioPredict will be used to identify individuals with elevated risk who may benefit from reduction of their systemic inflammatory burden as an approach to enhance prevention and management of chronic diseases. Under the terms of the agreement, Interleukin will provide genetic testing and patient education to Metagenics employees, as well as dental professional support to their dental providers, and Metagenics will pay a fixed fee for each test processed by Interleukin.
2015 Highlights for PerioPredict
- Implemented Strategic Plan to Enhance Commercial Positioning and Drive Sales for PerioPredict: New plan positions PerioPredict as the cornerstone of a disease prevention program that targets individuals with chronic conditions such as type 2 diabetes and cardiovascular disease who may benefit from increased dental preventive care that can substantially lower systemic inflammation.
- Signed Collaborative Agreement with Employee Benefit Consulting Group: Interleukin and EBCG are working together to build awareness of PerioPredict as a powerful tool for personalizing patient care among insurance carriers, benefit plans and employer groups, and to potentially incorporate the test in the design of risk-based benefit plans.
Strengthened Intellectual Property
- Received Notice of Allowance On a European Patent Application: The patent application, No. 09740020.4, relates to a method and kits for detecting a predisposition to, determining risk of, and guiding therapy for incident osteoarthritis, osteoarthritis progression, osteoarthritis severity, and associated physical function decline and disability.
- Key European Patent Granted: The European patent, titled “Genetic Markers for Weight Management and Methods of Use Thereof”, with claims covering methods of determining a subject’s metabolic genotype and methods for selecting an appropriate therapeutic/dietary regimen or lifestyle recommendation, was granted. Corresponding patents have been granted in other major markets and patent applications are pending in the U.S and several other markets.
- Received a Grant Notice Regarding a Chinese Patent Application: The Chinese Patent Application, No. 200980127719.9, titled “Genetic Markers for Weight Management and Methods of Use Thereof”, relates to metabolic genotype body metabolism genes critical to establishing a patient’s personal weight loss plan.
Other Events
- Signed Agreements with Ionis Pharmaceuticals (formerly Isis Pharmaceuticals): Interleukin and Ionis Pharmaceuticals entered into two agreements under which Interleukin will provide genetic testing services and kits to support two Ionis clinical programs in cardiovascular disease.
- Signed License Agreement with NYU School of Medicine: The agreement covers the development and commercialization of the first genetic test of its kind to identify individuals at increased risk for progression of osteoarthritis (OA) and related complications. The OA genetic test is being designed to provide physicians and pharmaceutical medical device companies with novel genetic information to identify high-risk patients and develop personalized treatment options.
- Two Late-Breaking Posters Presented at 2015 Experimental Biology Annual Meeting: At the Experimental Biology Annual Meeting in March, data from two important studies were presented by Interleukin’s collaborators highlighting the influence of genetics on both body composition and weight loss in response to particular diet and exercise programs.
- Poster Presentations at International Society of Sports Nutrition Annual Conference: Interleukin’s collaborators at Texas A&M University presented two posters discussing the effects of matching diet type to obesity-related genotype on body composition changes in women and the influence of matching diet type to obesity-related genotype on changes in visceral adipose tissue in women during a six-month resistance-exercise training and walking program.
- Mark B. Carbeau appointed Chief Executive Officer: Mr. Carbeau has a proven track record of building high growth diagnostic and pharmaceutical businesses, bringing more than three decades of business expertise in the life sciences industry. Dr. Kenneth Kornman, who was President and CEO from 2012 to 2015, continues to serve as President, Chief Scientific Officer and Director.
Fourth Quarter 2015 Financial Results
Revenues for the quarter ended December 31, 2015, were $366,000, compared to $322,000 for the same period in 2014. This increase is primarily attributable to higher research and royalty revenue recognized in 2015 from our license agreement with Access Business Group International LLC’s (“ABGI”), partially offset by a decrease in the number of kits returned for processing related to the Access Business Group LLC’s (“ABG”) promotional product bundle program and lower breakage revenue compared to the same period in 2014 and lower breakage revenue.
Research and development expenses for the quarter ended December 31, 2015, were $321,000, compared to $176,000 for the same period in 2014. The increase is primarily attributable to greater compensation expense related to our President and CSO, Dr. Ken Kornman, moving to the R&D department from G&A in 2015.
Selling, general and administrative expenses for the quarter ended December 31, 2015, were $1.2 million, compared to $1.4 million for the same period in 2014. The decrease is primarily attributable to lower compensation expense, accounting and consulting fees and facility costs, partially offset by higher recruiting and legal fees.
Net loss for the quarter ended December 31, 2015, was $1.9 million, or $(0.01) per basic and diluted common share, compared to $1.6 million, or $(0.01) per basic and diluted common share, for the same period in 2014.
Full Year 2015 Financial Results
Total revenue was $1.44 million for the year ended December 31, 2015 compared to $1.81 million for the year ended December 31, 2014. The decrease in total revenue is largely attributable to a decrease in the number of kits returned for processing related to our sales through ABG’s promotional product bundle program. Breakage revenue recognized in the year ended December 31, 2015 was $218,000, compared to $309,000 of breakage revenue recognized in the year ended December 31, 2014, also contributing to the decrease in revenue. Royalty revenue from our license agreement with ABGI was $191,000 for the year ended December 31, 2015, compared to $151,000 of royalties earned in the year ended December 31, 2014, partially offsetting the decrease in total revenue.
Research and development expenses were $1.3 million for the year ended December 31, 2015, compared to $843,000 for the year ended December 31, 2014, an increase that is primarily attributable to Dr. Kornman moving back into R&D from G&A in April 2015, and to increased compensation for existing staff.
Selling, general and administrative expenses were $5.9 million for the year ended December 31, 2015, compared to $5.8 million for the year ended December 31, 2014. The 1.7% increase is primarily attributable to severance for the former chief marketing officer and recruiting fees for the new chief executive officer and search for a new chief commercial officer.
The net loss for the year ended December 31, 2015, was $7.9 million, or $(0.05) per basic and diluted common share, compared to a net loss of $6.3 million, or $(0.05) per basic and diluted common share for 2014.
Cash and cash equivalents were $4.7 million as of December 31, 2015, which management believes is sufficient to fund the Company’s operations into the second half of 2016.
About Interleukin Genetics
Interleukin Genetics, Inc. develops and markets proprietary genetic tests for chronic diseases and health-related conditions, and for informing lifestyle choices to facilitate wellness. These tests provide information that is not otherwise available to empower individuals and their healthcare providers to manage their health and wellness through genetics-based insights and actionable guidance. Interleukin Genetics leverages research, intellectual property, and genetic test development expertise in inflammation and metabolism to identify individuals whose risk for certain chronic diseases may be increased due to variants in one or more genes, which can enable a more personalized approach to the individual’s healthcare. The Company markets its tests through healthcare professionals, partnerships with health and wellness companies, and through other distribution channels. Interleukin Genetics’ lead products include its proprietary PerioPredict® genetic test that identifies individuals with an elevated risk for severe periodontal disease and a life-long predisposition to over-produce inflammation and our Inherent Health® line of genetic tests. Interleukin Genetics is headquartered in Waltham, MA and operates an on-site, state-of-the-art DNA testing laboratory certified under the Clinical Laboratory Improvements Amendments (CLIA). For more information, please visit www.ilgenetics.com.
Forward-Looking Statements
Certain statements contained herein are “forward-looking” statements, including statements that employer-sponsored wellness initiatives that incorporate PerioPredict have the potential to ultimately improve quality and substantially reduce medical costs, regarding our progress in commercializing PerioPredict with large employers and insurance carriers, and that management believes the cash and cash equivalents at December 31, 2015 will be sufficient to fund operations until into the second half of 2016. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those risks and uncertainties described in the Company’s annual report on Form 10-K for the year ended December 31, 2015, and other filings with the Securities and Exchange Commission. The Company disclaims any obligation or intention to update these forward-looking statements.
INTERLEUKIN GENETICS, INC. | |||||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||||
Balance Sheet Data | December 30, | December 31, | |||||||||||||||
2015 | 2014 | ||||||||||||||||
Cash and cash equivalents | $ | 4,706,018 | $ | 11,466,807 | |||||||||||||
Total current assets | $ | 5,695,533 | $ | 12,180,658 | |||||||||||||
Total assets | $ | 6,491,520 | $ | 13,267,121 | |||||||||||||
Total current liabilities | $ | 5,477,936 | $ | 4,011,650 | |||||||||||||
Total liabilities | $ | 8,952,920 | $ | 8,750,264 | |||||||||||||
Total shareholders' equity/(deficit) | $ | (2,461,400 | ) | $ | 4,516,857 | ||||||||||||
Total liabilities and shareholders' deficit | $ | 6,491,520 | $ | 13,267,121 | |||||||||||||
Statement of Operations Data | Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenue: | |||||||||||||||||
Genetic testing service revenue | $ | 234,369 | $ | 298,543 | $ | 1,155,980 | $ | 1,641,490 | |||||||||
Other | 131,279 | 23,462 | 284,930 | 168,828 | |||||||||||||
Total revenue | 365,648 | 322,005 | 1,440,910 | 1,810,318 | |||||||||||||
Less Sales Allowance & Discount | - | - | - | - | |||||||||||||
Net revenue | 365,648 | 322,005 | 1,440,910 | 1,810,318 | |||||||||||||
Cost of Revenue | 428,380 | 320,282 | 1,414,113 | 1,435,377 | |||||||||||||
Gross profit (loss) | (62,732 | ) | 1,723 | 26,797 | 374,941 | ||||||||||||
Operating costs and expenses: | |||||||||||||||||
Research and development | 320,571 | 176,264 | 1,299,542 | 843,102 | |||||||||||||
Selling, general and administrative | 1,247,223 | 1,428,893 | 5,878,940 | 5,767,138 | |||||||||||||
Amortization of intangibles | 78,644 | 23,525 | 136,886 | 94,100 | |||||||||||||
Total operating expenses | 1,646,438 | 1,628,682 | 7,315,368 | 6,704,340 | |||||||||||||
Loss from operations | (1,709,170 | ) | (1,626,959 | ) | (7,288,571 | ) | (6,329,399 | ) | |||||||||
Total other income and (expense), net | (153,354 | ) | (10,824 | ) | (609,442 | ) | (6,315 | ) | |||||||||
Loss from continuing operations | |||||||||||||||||
before income taxes | (1,862,524 | ) | (1,637,783 | ) | (7,898,013 | ) | (6,335,714 | ) | |||||||||
Income taxes | - | - | - | - | |||||||||||||
Loss from continuing operations | $ | (1,862,524 | ) | $ | (1,637,783 | ) | $ | (7,898,013 | ) | $ | (6,335,714 | ) | |||||
Income from discontinued Operations, | |||||||||||||||||
net of income taxes | - | - | - | - | |||||||||||||
Net loss | $ | (1,862,524 | ) | $ | (1,637,783 | ) | $ | (7,898,013 | ) | $ | (6,335,714 | ) | |||||
Basic and diluted net (loss) income per | |||||||||||||||||
common share from: | |||||||||||||||||
Continuing operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.05 | ) | |||||
Discontinued operations | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||
Net loss | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.05 | ) | |||||
Weighted average common shares outstanding, | |||||||||||||||||
basic and diluted | 172,887,221 | 172,683,342 | 172,813,224 | 123,768,139 | |||||||||||||
