Voluntis reports its 2019 financial results

Cambridge, USA and Paris, France, 27 March 2020
  • 2019 annual results consistent with the level of investments deployed since the first half of the year
  • Effective implementation of the new strategic roadmap, with prioritization of the oncology activity and initiation of the operational cost reduction plan 
  • Convertible notes and share warrants agreement concluded with Alpha Blue Ocean
  • 2020 outlook supported by oncology contribution and organization resizing
  • Confirmed objective of financial breakeven (EBITDA) in 2021, subject to further evaluation of the COVID-19 pandemic’s impact  

Voluntis (Euronext Paris, Ticker: VTX - ISIN: FR0004183960) today announces its results for the 2019 fiscal year. 

Pierre Leurent, Chief Executive Officer of Voluntis, said: "First, we wish to express our support to all those affected, directly or indirectly, by COVID-19, and their healthcare teams. Digital health solutions, and particularly the remote monitoring of patients, are bound to play an important role in enabling care delivery, especially during these unusual circumstances. Today, we provide a status update on our new roadmap announced on March 4 and maintain our objectives despite the current situation, while remaining vigilant of the crisis’ impact on our activities.”

The Group’s Board of Directors, which met on March 26, 2020, reviewed its business activity and approved the financial statements for fiscal year 2019. The audit procedures on these accounts have been performed and the audit reports are in the process of being issued. 

Full year 2019 results consistent with investments made since the first half of the year

Consolidated revenue for fiscal year 2019 amounted to €3.7M, compared to €4.5M for fiscal year 2018. 

Revenue linked to direct sales in the United States and life sciences partnerships

Direct commercialization to healthcare providers in the United States did not contribute significantly to revenues in 2019, despite concluding several contracts, during the second half of the year, with  healthcare providers under the new reimbursement framework introduced in January 2019 by the Center for Medicare and Medicaid Services. The effective implementation of these reimbursement schemes in medical practices has taken longer than initially anticipated by the Group.

With regards to indirect commercialization through partnerships with leading life sciences companies, despite strong commercial momentum in the oncology business, this activity and, in particular, the contract signed with Novartis in December 2019, had no impact on revenue recognized in 2019, due largely to the application of the IFRS 15 standard. 

Loss linked to financing investments in Europe and the US

As announced in H1 2019, the Group deployed its investment strategy in the US and Europe to leverage the commercial structure and technological capabilities surrounding its Theraxium platform. Strict cost control and resource allocation enabled operating expenses to be contained at €19.7M in fiscal year 2019, compared to €20.0M in fiscal year 2018.

As a result, the operating loss (EBITDA) amounted to -€12.5M for fiscal year 2019, compared to -€14.0M for fiscal year 2018.

Cash position

As of December 31, 2019, Voluntis' cash and cash equivalents amounted to €5.1M, compared to €19.8M as of December 31, 2018. This decrease stems from the operating loss of €14.8M recorded in 2019, which corresponds to financing that year’s investment strategy in the United States and Europe.

On March 26, 2020, the cash position is estimated at €6.8M, mainly reflecting payments from new collaborations signed since December 2019. 

Effective implementation of the new strategic roadmap by prioritizing the oncology activity and initiating a cost reduction plan 

Oncology: Strategic prioritization of the activity and strong commercial traction

In addition to Voluntis' major new partnerships with Novartis and Bristol-Myers Squibb[1] since December 2019, which confirm both the relevance of the Group's approach and the unique profile of its assets, Voluntis is in discussion with several other pharmaceutical groups to improve patient experience with many types of cancer treatments. 

New partnership approach in diabetes

In parallel with discontinuing the direct commercial approach in the United States, the Group has engaged active discussions aimed at establishing new privileged partnerships to distributing its Insulia solution on a large scale, primarily in North America and Europe. This approach follows the geographic refocus of the global distribution contract with Sanofi to the French market.

Launch of the operating cost reduction plan 

Considering the operating loss incurred in 2019 and the decision to allocate resources in priority to oncology, the Group launched, in March 2020, a significant plan to adjust operating expenses in order to achieve its objective of financial breakeven in 2021. 

To date, the Group has already discontinued its effort to commercialize Insulia directly to healthcare providers in the United States. These expenses represented approximately 15% of the operating cost base. Furthermore, in France, the Group has initiated the process of informing and consulting with its work council so as to review different solutions that could allow a significant reduction in the Group’s expenses.

Convertible Notes and share subscription warrants agreement concluded with Alpha Blue Ocean

On March 23, the Group entered into a Convertible Notes agreement with Luxembourg investment fund European High Growth Opportunities Securitization Fund (“ABO”) to implement a flexible financing program by the issuance of 1,000 notes convertible or exchangeable into new and/or existing shares for a par value of €10,000 each (the “OCEANE”) attached with, where applicable, share subscription warrants (“Warrants”) (the OCEANE and Warrants together are referred to as “OCEANE-Warrants”), representing a nominal maximum amount of €10M.

The main terms of the financing program are described in Appendix 2.   

Outlook

The new commercial collaborations inked by the Group will generate upfront payments and, where applicable, milestone payments, as well as, in the event of a longer-term commercial launch, annual payments linked to the number of patients using the product. These collaborations will contribute significantly to the Group's revenues beginning in the first half of 2020.

As announced on March 4, Voluntis considers that the priority given to the oncology business, the renewed partnership approach in diabetes and the adapted cost structure are the main levers of the Group's trajectory towards profitable growth. Thus, Voluntis maintains its objective of attaining financial breakeven (positive EBITDA) in 2021, subject to the evolution of the current health crisis. Given the great uncertainty regarding how the COVID-19 pandemic will evolve, global confinement measures and a possible resulting economic downturn, the crisis’ impact on the Group’s activities and its future performance is difficult to evaluate.  

To date, Voluntis has put in place appropriate measures to protect its employees while ensuring business continuity with its customers and will adapt them as circumstances arise. Given the digital nature of the Group's activities, which lend themselves well to remote collaborative work, the Group considers that the measures deployed make it possible to maintain operations under almost nominal conditions and does not anticipate a significant impact on its activities. Nevertheless, Voluntis is attentively following the COVID-19 pandemic’s development and, in particular, its possible consequences for the Group and will communicate any significant evolution on the subject to the market. 

To support its activities over 2020 and 2021, especially the research and development of current and future products, the Group will rely on various sources of financing. Furthermore, the Group will remain vigilant of its ability to reimburse its existing debt with Kreos capital. In addition to the signature of new commercial contracts the Group may use the research tax credit and, as needed,  leverage the OCEANE line of financing accorded by Alpha Blue Ocean in March 2020 (for more detail on this line of financing, see following Appendix 2). Taking into account the above-mentioned factors and in particular the possible issuance of 25 OCEANE notes representing an amount of €2.5M, the Group considers that it will be in a position to meet its upcoming maturities over the next 12 months. 

 

Appendix 1: Consolidated financial statements

Consolidated Income Statement

 

As of December 31

M€

 

    2019

    2018

Revenue

 

3.7

4.5

Other operating revenue 

 

1.0

0.6

Total operating revenue

 

4.7

5.2

Personnel expenses 

 

-11.4

-12.2

Other operating costs

 

-5.8

-6.6

Depreciation, amortisation & operating provisions 

 

-2.3

-1.8

Operating income

 

-14.8

-15.5

Financial income

 

-1.0

-0.4

Income tex

 

0.0

0.0

Net income

 

-15.8

-15.9

 

 

 

 

EBITDA

 

-12.5

-13.7

 

Simplified cash flow statement

 

As of December 31

M€

     2019

        2018

 

 

 

Net cash flows from/(used in) operating activities

(12.2)

(14.7)

Net cash flows from/(used in) investing activities

(2.1)

(1.3)

Net cash flows from/(used in) financing activities

(0.3)

34.0 

CASH FLOW VARIANCE 

(14.7)

17.9 

Net foreign exchange difference

0.0 

0.0 

OPENING CASH BALANCE

19.8 

1.8 

CLOSING CASH BALANCE

5.1 

19.8 

  

Statement of financial position

 

As of December 31

M€

  2019

2018

Assets  

 

 

   Intangible assets

2.7 

1.9 

   Tangible assets

3.3 

0.6 

   Financial non-current assets

0.3 

0.3 

   Other non-current assets

0.4 

1.0 

Non  current assets

6.6 

3.7 

   Receivables

0.5 

1.5 

   Other current financial assets

0.1 

   Other current assets

5.0 

5.4 

   Cash on hand

5.1 

19.8 

Current assets

10.6 

26.8 

Total

17.3  

30.6 

 

 

 

M€

2019

2018

Liabilities  

 

 

Shareholder equity

1.7 

17.3 

Financial debt (non current)

4.5 

2.2 

LT provisions and other non current liabilities

0.9 

3.4 

Non  current liabilities

5.3 

5.6 

Financial debt (current)

3.2 

1.4 

Payables and other current liabilities

7.0 

6.2 

Current liabilities

10.2 

7.6 

Total

17.3 

30.6  

Appendix 2: Characteristics of the financing program entered into with Alpha Blue Ocean

The financing program will consist of an initial funding commitment for a maximum total principal amount of €2.5M made up of 3 tranches (one tranche of €1.5M followed by two sequential tranches of €0.5M each) (the "Initial Commitment"), followed by a second funding commitment for a maximum total principal amount of €7.5 million made up of 7 additional tranches (one tranche of €1.5 million followed by 6 tranches of €1 million each) (the "Additional Commitment" and, together with the Initial Commitment, the "Commitment"). The total principal amount of the OCEANE note warrants thus issued would be equal to €10M[2].

 Subject to customary conditions[3], the Group may request, until December 31, 2020 and at its sole discretion, the subscription of the first tranche of an amount of €1.5M[4] representing a maximum dilution of 16% of the Group’s share capital, on a non-diluted basis and before issuance[5]. If the Group has not requested the subscription of the first tranche by December 31, 2020 at the latest, ABO may terminate the agreement and is eligible to a termination fee of €50,000.

 Subject to the aforementioned conditions, the Group may decide whether or not to request the subscription of the additional tranches within 18 months of the disbursement of the first tranche of the Initial Commitment, it being specified that as from the first tranche’s disbursement, ABO shall also have the right to request the issuance of one tranche under the Initial Commitment and, subject to the approval of a prospectus by the AMF, two tranches under the Additional Commitment.

The main characteristics of the OCEANE are as follows:

  • the OCEANE shall have a duration of 12 months from the date of issuance,
  • each OCEANE will have a subscription price equal to 97% of its par value,
  • each OCEANE may be converted at any time by its holder, it being specified that the number of new or existing shares to be delivered by the Company upon conversion of an OCEANE shall be equal to the nominal value of the OCEANE in question (i.e. €10,000) divided by the conversion price of the said OCEANE, i.e. 98% of the lowest volume-weighted average daily share price during a period of five (5) consecutive trading days immediately preceding the date of the notification of conversion of the OCEANE in question by ABO[6],
  • at maturity or in the event of the occurrence of a default event, unconverted OCEANE must be redeemed by the Company at their par value,
  • the OCEANE do not bear interest. However, the outstanding OCEANE notes will be reimbursed to ABO at 120% of their nominal value, in the event of the occurrence of an event of default consisting of (i) the failure by the Company to deliver the shares due to ABO within 5 trading days following the date of conversion of the OCEANE notes or the date of exercise of the warrants, or (ii) the failure by the Group to make any payment due by the Group to ABO under the terms of the contract of issuance. It is specified that in the event of the occurrence of any other event of default under the contract, the outstanding OCEANE notes will be redeemed by ABO at 100% of their nominal value.

Finally, in the event that the conversion price of an OCEANE should be lower than the nominal value of a share of the Company, the Company has contractually agreed to indemnify ABO for the loss resulting from the conversion of said OCEANE at the nominal value of the Voluntis share when their theoretical conversion price calculated on the basis of the stock market price would prove to be lower than the share’s nominal value (the "Conversion Fee"). Payment of the Conversion Fee shall be made, at the Group’s discretion, in cash or in new shares, within ten (10) trading days after the conversion date of the relevant OCEANE.

In addition, at the time of the drawdown of the first tranche of the Initial Commitment and at the time of the drawdown of each tranche of the Additional Commitment, the Company will issue warrants to the benefit of ABO, each giving the right to one share of the Company. The number of warrants issued will depend on the volume-weighted average price of the Voluntis share in the 15 trading days preceding their issue. The exercise price of these warrants will correspond to 110% of the lowest volume-weighted average price of the Voluntis share in the 15 trading days preceding their issuance.

For illustration purposes, the impact of the issue of the OCEANE and attached warrants would be as follows:

  • Impact of the issue on shareholders' equity per share (based on consolidated shareholders' equity on December 31, 2019, i.e. €1 742 000, and the number of shares comprising the Company's share capital as at December 31, 2019, i.e. 7 601 076 shares):

 

Equity share as of 

31 December 2019(1)(2)

Non-diluted basis

Fully Diluted basis

Before issuance

0.23

1.21

After issuance of only 976 218 new shares resulting from the conversion of the OCEANE notes issued under the first tranche of the Initial Commitment

0.36

1.22

After issuance of only 434 861 new shares resulting from the exercise of the warrants issued under the first tranche of the Initial Commitment

0.31

1.23

After issuance of only 1 627 030 new shares resulting from the conversion of the OCEANE notes issued under the 2 additional tranches of the Initial Commitment

0.44

1.24

After issuance of only 6 508 120 new shares resulting from the conversion of the OCEANE notes issued under the 7 tranches of the Additional Commitment

0.78

1.30

After issuance of only 652 291 new shares resulting from the exercise of the warrants issued under the 7 tranches of the Additional Commitment

0.35

1.24

TOTAL

 

 

After issuance of 7 595 272 new shares resulting from the conversion of all the OCEANE notes and the exercise of all the warrants

0.84

1.33

(1)       Theoretical calculations based on the closing price of the Group’s share on March 26, 2020, i.e. €1.57, and a conversion price of the OCEANE notes corresponding to 98% of this value, i.e. €1.5365 euros and an exercise price of the warrants of €1.7247. This dilution does not prejudge either the final number of shares to be issued or their issue price, which will be determined on the basis of the stock market price, in accordance with the procedures described above. The diluted basis takes into account the exercise of all existing dilutive instruments that could result in the creation of an indicative maximum of 804 010 shares.

(2)       The issuance of these securities remains, however, subject to the fulfilment of the aforementioned conditions. 


  • Impact of the issuance on a shareholder’s investment holding 1% of the Company's share capital to date (based on the number of shares comprising the Company's share capital at March 26, 2020, i.e. 7 601 076 shares): 

 

Shareholder interest(1)(2)

Non-diluted basis

Diluted basis

Before issuance

1.00

0.90

After issuance of only 976 218 new shares resulting from the conversion of the OCEANE notes issued in connection with the initial tranche of the Initial Commitment

0.89

0.81

After issuance of only 434861 new shares resulting from the exercise of the warrants issued under the first tranche of the Initial Commitment

0.95

0.86

After issuance of only 1 627 030 new shares resulting from the conversion of the OCEANE notes issued under the 2 additional tranches of the Initial Commitment

0.82

0.76

After issuance of only 6 508 120 new shares resulting from the conversion of the OCEANE notes issued under the 7 tranches of the Additional Commitment

0.54

0.51

After issuance of only 652 291 new shares resulting from the exercise of the warrants issued under the 7 tranches of the Additional Commitment

0.92

0.84

TOTAL

 

 

After issuance of 7 595 272 new shares resulting from the conversion of all the OCEANE notes and the exercise of all the warrants

0.50

0.48

(1)   Theoretical calculations based on the closing price of the Group’s share on March 26, 2020, i.e. €1.57, and a conversion price of the OCEANE notes corresponding to 98% of this value, i.e. €1.5365 euros and an exercise price of the warrants of €1.7247. This dilution does not prejudge either the final number of shares to be issued or their issue price, which will be determined on the basis of the stock market price, in accordance with the procedures described above. The diluted basis takes into account the exercise of all existing dilutive instruments that could result in the creation of an indicative maximum of 804 010 shares.

(2)   The issuance of these securities remains, however, subject to the fulfilment of the above-mentioned conditions.

About Voluntis

Voluntis creates digital therapeutics that empower people suffering from chronic conditions to self- manage their treatment every day, thus improving real-world outcomes. Combining mobile and web apps, Voluntis’ solutions deliver personalized recommendations to the patient and the care team so that they can, for example, adjust treatment dosage, manage side effects or monitor symptoms. These real-time recommendations are based on digitized clinical algorithms. Leveraging its Theraxium technology platform, Voluntis has designed and operates multiple digital therapeutics, especially in diabetes and oncology. Voluntis has long-standing partnerships with leading life science companies. Based out of Boston and Paris, France, Voluntis is a founding member of the Digital Therapeutics Alliance. For more information, please visit: www.voluntis.com

Mnemo : VTX - ISIN : FR0004183960

Contacts

NewCap

Media relations

Nicolas Merigeau

voluntis@newcap.eu

+33 (0)1 44 71 94 98

 

NewCap

Investor relations

Louis-Victor Delouvrier

voluntis@newcap.eu

+33 (0)1 44 71 94 94

Voluntis

Chief Financial Officer

Matthieu Plessis

investisseurs@voluntis.com

+33 (0)1 41 38 39 20

 

Disclaimer

This press release contains certain forward-looking statements concerning Voluntis group and its business, including its prospects and product candidate development. Such forward-looking statements are based on assumptions that Voluntis considers to be reasonable. However, there can be no assurance that the estimates contained in such forward-looking statements will be verified, which estimates are subject to numerous risks including the risks set forth in the reference document of Voluntis registered with the French Financial Markets Authority (Autorité des Marchés Financiers) under number R.19-013 on April 26, 2019 (a copy of which is available on www.voluntis.com) and to the development of economic conditions, financial markets and the markets in which Voluntis operates. The forward-looking statements contained in this press release are also subject to risks not yet known to Voluntis or not currently considered material by Voluntis. The occurrence of all or part of such risks could cause actual results, financial conditions, performance or achievements of Voluntis to be materially different from such forward-looking statements. Voluntis expressly declines any obligation to update such forward-looking statements.


[1] See press releases of March 3 and 4 2020

[2] In the event that Voluntis share liquidity in the 20 trading days preceding the drawdown of a tranche proves to be very low, ABO will have the possibility to divide the amount of this disbursement by two.

[3] The main conditions for the subscription of the OCEANE-BSAs by ABO, under a given tranche, are as follows: (i) no authority (including the AMF) has opposed or is opposed to the issue of the OCEANE notes (or their conversion) or the warrants (or their exercise), (ii) the AMF has approved the prospectus prepared for the admission to the regulated market of Euronext Paris of the shares to be issued, if any, on conversion of the OCEANE notes and exercise of the warrants issued under the Additional Commitment, (iii) no event of default exists on the date of drawdown (including the absence of material adverse change), (iv) the principal amount of the outstanding OCEANE notes represents less than 30% of the Company's market capitalization, (v) the Company's shares are still listed and the listing of the Company's shares has not been suspended (and there is no identified risk of such suspension), and (vi) the Company has a sufficient number of authorized shares to serve the conversions of the OCEANE notes to be issued in connection with the drawdown of the relevant tranche (and, if applicable, of the OCEANE notes still outstanding), i.e. a number of shares corresponding to at least 150% of the nominal amount of this bond debt divided by the volume-weighted average price of the Voluntis share at the close of trading on the day of the drawdown. 

[4] It is specified that, in consideration for the Commitment, the Company shall be required to pay ABO, upon drawdown of the first installment of the Initial Commitment, a commitment fee of 125,000 euros (or 120,000 euros if this installment is drawn down before May 23, 2020) and, upon drawdown of the first installment of the Additional Commitment, a commitment fee of 375,000 euros.

[5] Based on a conversion price calculated on the volume weighted averaged stock price recorded on March 26, 2020.

[6] It being specified that this price may not be less than (i) the nominal value of the Company, and (ii) 85% of the average of the volume-weighted average prices of the last three trading days preceding the conversion date.