OvaScience Reports Fourth Quarter and Year-End 2016 Financial Results

OvaTure Program On Track to Successfully Fertilize a Bovine EggPC
Cell-Derived Egg

50 Patients Enrolled in OvaPrime Clinical Trial

Cash Position Expected to Support Operations into Q12019

Conference Call Today at 4:30 p.m. ET

WALTHAM, Mass.–(BUSINESS WIRE)–OvaScienceSM (NASDAQ: OVAS), a global fertility company
focused on the discovery, development and commercialization of new
treatment options, today reported financial results and provided a
business update for the fourth quarter and year ended December 31, 2016.

“We are entering 2017 with continued confidence in our portfolio of
potentially transformative fertility treatments and a strong belief in
the potential of our EggPC platform to help women and couples build the
families they deserve,” said Michelle Dipp, M.D., Ph.D., Executive Chair
and Co-Founder of OvaScience.

“In 2016, we achieved criteria indicative of developmental competence in
EggPC cell-derived bovine and human eggs, an important step in the
preclinical development of OvaTure, and we are on track to successfully
fertilize a bovine EggPC cell-derived egg by year-end,” added Christophe
Couturier, Chief Financial Officer. “We are also pleased to have
enrolled the first 50 patients in our company-sponsored trial of
OvaPrime, and to have started performing the first biopsies and
reintroductions. With these milestones in hand, we remain on track to
report initial data on our first 20 patients from this study by
year-end. We are sufficiently funded to support the preclinical
development of OvaTure and clinical development of OvaPrime into the
first quarter of 2019.”

2016 and Recent Business Highlights:

OvaTureSM Treatment: The Company today
reviewed progress for OvaTure, its potential next-generation in vitro
fertilization (IVF) treatment that could help a woman produce healthy,
young, fertilizable eggs without hormone injections by maturing egg
precursor (EggPC SM) cells into eggs in vitro.

  • Progressing toward fertilization of EggPC cell-derived bovine egg
    and development of repeatable and robust process for maturation of
    EggPC cell-derived human eggs

There are a choreographed series of events that occur during egg
maturation to prepare an egg for fertilization. Collectively, these can
be described as developmental competence. Together with its partner,
Intrexon Corporation (NYSE: XON), OvaScience has developed an in vitro
cell culture process that has produced bovine and human eggs derived
from EggPC cells that exhibit genetic, morphological and functional
criteria of developmental competence during various phases of
maturation. These criteria include: chromosomal segregation; an increase
in cytoplasmic volume; the appearance of germinal vesicles, polar bodies
and zona pellucida structures; and a positive brilliant cresyl blue
(BCB) test.

Fertilization studies for bovine EggPC-cell derived eggs are underway
and OvaScience and Intrexon expect to successfully fertilize a bovine
EggPC-derived egg by year-end. OvaScience will continue to work with its
clinical partners to develop a repeatable and robust process for the
maturation of eggs derived from human EggPC cells and to secure
authorization to fertilize human EggPC cell-derived eggs and embryos by
the end of the first half of 2018.

OvaPrimeSM Treatment: The Company
announced milestone achievements for OvaPrime, a potential fertility
treatment that could enable a woman who makes too few or no eggs to
increase her egg reserve.

  • Advancing clinical development

In December 2016, OvaScience announced its decision to continue the
development of OvaPrime. OvaScience is currently evaluating OvaPrime in
a prospective, blinded, randomized and controlled Company-sponsored
trial, which is designed to assess the safety of OvaPrime and changes in
a patient’s hormone levels and follicular development as measured by
ultrasound. The trial will enroll 70 women with either diminished
ovarian reserve (DOR) or primary ovarian insufficiency (POI). To date,
the Company has enrolled 50 patients and expects to enroll an additional
20 women by the end of the first half of 2017.

OvaScience recently completed the first biopsies and reintroductions in
this ongoing clinical trial in Canada. The Company remains on track to
announce initial data from the first 20 patients, including six months
of post-EggPC reintroduction safety data, by year-end.

AUGMENT SM Treatment: The Company
maintained its commercial footprint for AUGMENT, a treatment designed to
improve egg health and with that, IVF success rates, by using
mitochondria from a woman’s own EggPC cells during IVF.

  • Revised commercial strategy

In December 2016, the Company announced that it will continue to make
AUGMENT available to patients at clinics in Canada and Japan and will
expand regionally on a limited basis as appropriate.

  • Reassessing clinical strategy

Also announced in December 2016, the Company is reassessing its clinical
development strategy for AUGMENT, including its planned multi-center
clinical trial and the ongoing IVI-sponsored study in Valencia, Spain.

Separately, OvaScience will meet with the U.S. Food and Drug
Administration (FDA) in the first half of 2017, as part of its ongoing
exploration of potential entry into the U.S. market.

Corporate Highlights:

  • In December 2016, OvaScience undertook a corporate restructuring to
    extend its cash position into the first quarter of 2019 and to
    increase its focus on the development of OvaTure and OvaPrime. In
    conjunction with this restructuring, the Company reduced its workforce
    by approximately 30 percent. Total restructuring costs of $6.8 million
    to $8.2 million are expected to result from this corporate
    restructuring, $5.4 million of which was recorded in 2016.
  • In 2016, seven new patents related to the Company’s treatments were
    issued, including one in the U.S. regarding antibody compositions and
    methods for isolating EggPC cells, a step common to all OvaScience
    treatments. In addition, in 2017, nearly 50 new applications covering
    more than 130 countries were filed, significantly extending the
    geographic reach of the Company’s patent portfolio. The Company now
    owns or otherwise controls 58 issued patents in 44 countries and more
    than 150 applications pending in more than 130 countries.

Upcoming 2017 Milestones:

The Company expects to achieve the following milestones in 2017:

  • OvaTure:

    • Fertilize a bovine EggPC cell-derived egg by year-end
  • OvaPrime:

    • Complete enrollment of all 70 patients in the ongoing Canadian
      study by the end of the first half of the year
    • Complete biopsies in all patients in the ongoing Canadian study by
      year-end
    • Provide initial read-out, including six months of post-EggPC
      reintroduction safety data from 20 patients, by year-end
  • AUGMENT:

    • Meet with the U.S. FDA to discuss potential market entry in the
      first half of the year

Fourth Quarter and Full Year 2016 Financial
Results

  • Revenue for the quarter ended December 31, 2016 was $121,000, compared
    to $157,000 in the same period of 2015. Revenues for the full year
    2016 were $653,000, compared to $277,000 in 2015. The Company
    recognized revenue related to 16 AUGMENT treatments in the fourth
    quarter of 2016, and related to 107 AUGMENT treatments in the full
    year 2016, including treatments offered under various pricing
    programs. In 2015, OvaScience recognized revenue from 22 AUGMENT
    treatments for the full fiscal year.
  • Net loss for the quarter ended December 31, 2016 was $22.6 million, or
    ($0.64) per share, as compared to net loss of $20.6 million, or
    ($0.76) per share, for the same period in 2015. Net loss for the full
    year ended December 31, 2016 was $82.3 million or ($2.56) per share,
    compared to net loss of $73.2 million or ($2.70) per share for the
    same period in 2015. The net loss for the quarter and year ended
    December 31, 2016 includes restructuring costs of $5.4 million.
  • Research and development expense for the quarter ended December 31,
    2016, excluding restructuring costs, was $4.7 million, consistent with
    the same period in 2015. Research and development expense for the full
    year ended December 31, 2016, excluding restructuring costs, was $21.6
    million, compared to $18.4 million in the same period in 2015. The
    year-over-year increase was primarily driven by a $3.9 million
    increase in employee compensation and related benefits driven by the
    hiring of additional research and development personnel, a $2.4
    million increase in costs associated with certain ongoing research
    agreements, clinical studies and other costs, partially offset by a
    $3.3 million decrease in stock-based compensation expense related to
    certain mark-to-market adjustments of Founders’ stock, which was fully
    vested and expensed in the first quarter of 2015 that did not recur in
    2016, and stock-based compensation expense for certain senior
    executives that did not recur in 2016 as a result of executive
    leadership changes.
  • Selling, general and administrative expense for the quarter ended
    December 31, 2016, excluding restructuring costs, was $10.9 million,
    compared to $14.6 million for the same period in 2015. This decrease
    was primarily driven by a $3.2 million decrease in stock-based
    compensation expense related to certain senior executives that did not
    recur in 2016 as a result of executive leadership changes in 2016, a
    $1.7 million decrease in costs related to international expansion
    preparation, including the establishment of certain international
    legal entities and international infrastructure, partially offset by a
    $1.2 million increase in costs related to commercialization efforts
    and overall business expansion, including increased marketing-related
    costs. Selling, general and administrative expense for the full year
    ended December 31, 2016 was $49.2 million, compared to $51.6 million
    in the same period in 2015. This decrease was primarily driven by a
    $7.2 million decrease in stock-based compensation expense related to
    certain senior executives that did not recur in 2016 as a result of
    executive leadership changes in 2016, as well as certain
    mark-to-market adjustments of Founders’ stock, which was fully vested
    and expensed in the first quarter of 2015 and did not recur in 2016, a
    $4.2 million decrease in costs related to international expansion
    preparation, including the establishment of certain international
    legal entities and international infrastructure, partially offset by a
    $4.7 million increase in costs related to commercialization efforts
    and overall business expansion, including increased marketing-related
    costs, and a $4.3 million increase in employee compensation and
    related benefits driven by the hiring of additional selling, general
    and administrative personnel.

At December 31, 2016, OvaScience had cash, cash equivalents and
short-term investments of $114.4 million. OvaScience expects one-time
cash expenditures of approximately $5.7 million to $6.5 million over
2017 and 2018 related to actions resulting from the corporate
restructuring announced in December 2016. The Company may also incur
further restructuring charges related to the restructuring plan.
OvaScience’s operating cash burn for 2017 is expected to be between $45
million and $50 million, which excludes these one-time cash
expenditures. OvaScience anticipates that it will have sufficient funds,
without additional financing, to support its operating plan into the
first quarter of 2019.

Conference Call
OvaScience will host a conference call at
4:30 p.m. ET today, Thursday, March 2, 2017, to discuss these financial
results and provide an update on the Company. The conference call may be
accessed by dialing +1-888-424-8151 for U.S. callers and +1-847-585-4422
for international callers five minutes prior to the start of the call
and providing the passcode 7862456. Additionally, the live, listen-only
webcast of the conference call can be accessed by visiting the Investors
section of the Company’s website at www.ovascience.com.
A replay of the conference call will be available from 7:00 p.m. ET on
Thursday, March 2, 2017 through 11:59 p.m. ET on Thursday, March 9,
2017, and may be accessed by visiting OvaScience’s website or by dialing
+1-888-843-7419 for U.S. callers and +1-630-652-3042 for international
callers. The replay access code is 7862456#.

About OvaScience
OvaScienceSM, Inc. (NASDAQ:
OVAS) is a global fertility company dedicated to improving treatment
options for women around the world. OvaScience is discovering,
developing and commercializing new fertility treatments because it
believes women deserve more options. Each OvaScience treatment is based
on the Company’s proprietary technology platform that leverages the
breakthrough discovery of egg precursor (EggPCSM) cells –
immature egg cells found inside the protective ovarian lining.
OvaScience is developing OvaTureSM, a potential
next-generation IVF treatment that could help a woman produce healthy,
young, fertilizable eggs without hormone injections and OvaPrimeSM,
which could increase a woman’s egg reserve. OvaScience’s AUGMENTSM
treatment, a fertility option designed to improve IVF success rates, is
available in certain IVF clinics in select international regions.
OvaScience treatments are not available in the U.S. For more
information, visit www.ovascience.com.

Forward-Looking Statements
This press release includes
forward-looking statements about the Company’s plans for the OvaPrime
treatment, OvaTure treatment and AUGMENT treatment, including statements
relating to the Company’s plans to fertilize a bovine EggPC cell-derived
egg by year-end; to complete enrollment of all 70 patients in the
ongoing Canadian study of OvaPrime by the end of the first half of 2017;
to complete biopsies in all patients in the ongoing Canadian study of
OvaPrime by year-end; to present initial data from 20 OvaPrime patients,
including six months of post-EggPC reintroduction safety data, by
year-end; availability of sufficient funding to support the preclinical
development of OvaTure and clinical development of OvaPrime into the
first quarter of 2019; the Company’s further efforts on human egg
maturation, the Company’s plans to work with its clinical partners in
pursuit of its goals to develop a repeatable and robust process for the
maturation of eggs derived from human EggPC cells and to secure
authorization to fertilize human EggPC cell-derived eggs and embryos by
the end of the first half of 2018; and the Company’s plans to meet with
the U.S. Food and Drug Administration in the first half of 2017. Actual
results may differ materially from those indicated by these
forward-looking statements as a result of various important factors,
including risks related to: the science underlying our treatments
(including the OvaPrime, OvaTure and AUGMENT treatments), which is
unproven; our ability to obtain regulatory approval or licenses where
necessary for our treatments; our ability to develop our treatments on
the timelines we expect, if at all; our ability to commercialize our
treatments, on the timelines we expect, if at all; as well as those
risks more fully discussed in the “Risk Factors” section of our most
recently filed Quarterly Report on Form 10-Q and/or Annual Report on
Form 10-K. The forward-looking statements contained in this press
release reflect our current views with respect to future events. We
anticipate that subsequent events and developments will cause our views
to change. However, while we may elect to update these forward-looking
statements in the future, we specifically disclaim any obligation to do
so. These forward-looking statements should not be relied upon as
representing our view as of any date subsequent to the date hereof.

– Financial Tables to Follow –

 

OvaScience, Inc.

Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
       
As of
December 31,
2016

December 31,
2015

Assets
Current assets:
Cash and cash equivalents $ 43,930 $ 43,224
Short-term investments 70,458 83,438
Prepaid expenses and other current assets 2,056 3,199
Total current assets 116,444 129,861
Property and equipment, net 5,572 8,313
Investment in joint venture 65
Restricted cash 439 439
Other long-term assets 23
Total assets $ 122,543 $ 138,613
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 2,183 $ 3,352
Accrued expenses 11,026 7,891
Total current liabilities 13,209 11,243
Other non-current liabilities 1,116 520
Total liabilities 14,325 11,763
Total stockholders’ equity 108,218 126,850
Total liabilities and stockholders’ equity $ 122,543 $ 138,613
 
OvaScience, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
 
    Three Months Ended
December 31,
    Year Ended
December 31,
2016     2015     2016     2015
Revenues $ 121 $ 157     $ 653 $ 277
Costs and expenses:
Costs of revenues 1,433 1,158 5,401 2,249
Research and development 4,709 4,667 21,641 18,433
Selling, general and administrative 10,947 14,572 49,223 51,594
Restructuring 5,400         5,400    
Total operating expenses 22,489     20,397     81,665     72,276
Loss from operations (21,368)     (20,240)     (81,012)     (71,999)
Interest income (expense), net 162 150 659 436
Other (expense) income, net (82) (51) (164) (20)
Loss from equity method investment (371)     (385)     (1,542)     (1,561)
Loss before income taxes (22,659) (20,526) (82,059) (73,144)
Income tax expense   (15)       75       201       75
Net loss $ (22,644)     $ (20,601)     $ (82,260)     $ (73,219)
Net loss per share—basic and diluted $ (0.64)     $ (0.76)     $ (2.56)     $ (2.70)
Weighted average number of shares used in net loss per share—basic
and diluted
35,612     27,280     32,148     27,085

###

Contacts

Media and Investor Contact:
OvaScience, Inc.
Jennifer
Viera, 617-420-8748
jviera@ovascience.com