OvaScience Reports Second Quarter 2018 Financial Results and Provides Strategic Alternatives Update

WALTHAM, Mass.–(BUSINESS WIRE)–OvaScienceSM (Nasdaq:OVAS), a company focused on developing
novel treatments for women and couples struggling with infertility,
today reported financial results for the second quarter ended June 30,
2018 and provided an update on its review of strategic alternatives.

Earlier today we announced a definitive agreement to merge with
Millendo Therapeutics, marking the completion of an extensive
exploration of strategic alternatives,” said Christopher Kroeger, M.D.,
Chief Executive Officer of OvaScience. “As a leading orphan endocrine
disease company with expert management, the proven ability to progress
multiple novel therapies into late-stage development and meaningful
catalysts expected across its pipeline in the year ahead, we believe
that our combined company has the potential to deliver significant
shareholder value, both in the near- and longer-term.”

We are pleased to enter into this merger agreement with OvaScience,
which will enable us to execute on our vision of delivering meaningful
therapies to patients who are suffering from orphan endocrine diseases,”
said Julia Owens, Ph.D., President and Chief Executive Officer of
Millendo. “Post-merger, our combined company will be well-funded, with
sufficient capital to support the further advancement of our lead
assets, livoletide for Prader-Willi syndrome and nevanimibe for classic
congenital adrenal hyperplasia and endogenous Cushing’s syndrome.”

About the Proposed Transaction

In August 2018, OvaScience entered into a definitive agreement to merge
with Millendo Therapeutics, Inc. Upon closing of the transaction, the
combined company will focus on advancing Millendo’s pipeline of distinct
and transformative treatments for orphan endocrine diseases.

The combined company’s pipeline will include two clinically-validated
molecules with differentiated mechanisms: livoletide (AZP-531), an
unacylated ghrelin analogue for the treatment of Prader-Willi syndrome
and nevanimibe (ATR-101), an ACAT1 inhibitor for the treatment of
classic congenital adrenal hyperplasia and endogenous Cushing’s
syndrome. Livoletide demonstrated positive effects in improving
hyperphagia and food-seeking behaviors in a Phase 2 study in
Prader-Willi syndrome and is expected to advance into a pivotal Phase
2b/3 study in the first quarter of 2019. Nevanimibe demonstrated
positive proof-of-concept and a favorable safety profile in an
open-label Phase 2 trial in CAH and is expected to advance into a Phase
2b study in the third quarter of 2018.

An investor syndicate that includes New Enterprise Associates, Frazier
Healthcare Partners, Roche Venture Fund, Innobio managed by Bpifrance,
Osage University Partners, Altitude Life Science Ventures, Adams Street
Partners, and Longwood Fund has committed to invest $30 million in the
combined company. This financing is expected to close before or
concurrently with the completion of the merger. The total cash balance
of the combined company following the closing of the merger and the
financing is expected to be at least $70 million.

On a pro forma basis and based upon the number of shares of OvaScience
common stock to be issued in the merger, current OvaScience shareholders
will own approximately 20% of the combined company and current Millendo
investors will own approximately 80% of the combined company (before
accounting for the additional financing transaction). The actual
allocation will be subject to adjustment based on OvaScience’s net cash
balance at the time of closing and the amount of any additional
financing consummated by Millendo at or before the closing of the
merger. The merger is expected to close in the fourth quarter of 2018,
subject to the approval of OvaScience shareholders at a special
shareholder meeting, as well as other customary conditions.

Upon shareholder approval, the combined company is expected to operate
under the name Millendo Therapeutics and trade on the Nasdaq Capital
Market under the ticker symbol MLND. Julia Owens, Ph.D., Millendo Chief
Executive Officer and President, will serve as Chief Executive Officer
of the combined company, which will be headquartered in Ann Arbor,
Michigan.

Second Quarter 2018 Financial Results

  • Research and development expenses for the quarter ended June 30, 2018,
    excluding restructuring costs, were $2.4 million, compared to $5.0
    million for the same period in 2017. This decrease was primarily
    driven by a $1.9 million decrease in employee-related costs, including
    stock based compensation expense, and a $0.7 million decrease in
    facilities, travel and other costs as a result of OvaScience’s
    corporate restructuring activities.
  • Selling, general and administrative expenses for the quarter ended
    June 30, 2018, excluding restructuring costs, were $2.6 million,
    compared to $10.8 million for the same period in 2017. This decrease
    was primarily driven by a $5.0 million decrease in employee-related
    costs, including stock based compensation expense, a $2.6 million
    decrease in commercial-related activities and a $0.5 million decrease
    in travel, facilities and other costs as a result of OvaScience’s
    corporate restructuring activities.
  • Restructuring expenses for the quarter ended June 30, 2018 were $2.9
    million, compared to $2.0 million for the same period in 2017. The
    cash outlays related to the restructurings in the second quarter of
    2018 were $0.6 million. OvaScience expects to incur additional cash
    outlays related to the restructurings of between $0.5 million and $1.0
    million during 2018.
  • Net loss for the quarter ended June 30, 2018 was $7.7 million, or
    $0.22 per share, compared to a net loss of $18.2 million, or $0.51 per
    share, for the same period in 2017. The net loss for the quarter ended
    June 30, 2018 includes restructuring charges of $2.9 million, compared
    to $2.0 million for the same period in 2017. $2.2 million of
    restructuring charges in the current quarter related to non-cash
    impairments of fixed assets.

As of June 30, 2018, OvaScience had cash, cash equivalents and
short-term investments of $53.6 million, compared to $67.2 million as of
December 31, 2017. Gross cash burn in the second quarter of 2018 was
$4.7 million.

About OvaScience, Inc.

OvaScience (Nasdaq:OVAS) is focused on developing novel treatment
options for women and couples struggling with infertility. These
treatments are based on a proprietary technology platform that leverages
the breakthrough discovery of egg precursor cells – immature egg cells
found within the outer ovarian cortex. In March 2018, the Company
announced preliminary blinded data for its Phase 1 trial of OvaPrime for
women with primary ovarian insufficiency and poor ovarian response. This
trial was not expected to result in strong signals on secondary
endpoints. The Company has since completed additional preclinical
studies and based on results from these studies, has scaled back
investment in its research and development efforts to focus on
evaluating strategic alternatives. For more information, please visit www.ovascience.com.

About Millendo Therapeutics, Inc.

Millendo Therapeutics is focused on developing novel treatments for
orphan endocrine diseases. The Company’s objective is to build a leading
endocrine company that creates distinct and transformative treatments
for a wide range of diseases where there is a significant unmet medical
need. The Company is currently advancing livoletide for the treatment of
Prader-Willi syndrome and nevanimibe for the treatment of classic
congenital adrenal hyperplasia and endogenous Cushing’s syndrome. For
more information, please visit www.millendo.com.

Forward-Looking Statements

This press release includes forward-looking statements about the
Company’s plans for its business, including statements relating to (i)
the Company’s anticipated merger with Millendo Therapeutics, including
the timing for completion of that transaction, the need for stockholder
approval and the satisfaction of closing conditions, (ii) the
anticipated financing to be completed prior to or concurrently with the
closing of the merger, (iii) the cash balances of the combined company
following the closing of the merger and the financing (iv) the
percentage of the Company expected to be owned by OvaScience
shareholders after the closing; (v) the ability of the combined company
to achieve multiple catalysts across its drug development pipeline
following the merger, and (vi) expected restructuring-related cash
outlays, including the timing and amount of those outlays. Actual
results may differ materially from those indicated by these
forward-looking statements as a result of various important factors,
including risks related to: our ability to obtain regulatory approval or
licenses where necessary for our product candidates; our ability to
develop our product candidates on the timelines we expect, if at all;
our ability to commercialize our product candidates, on the timelines we
expect, if at all; risks associated with preclinical, clinical and other
studies; development risk; risks associated with dependence on third
parties, including our partners; operational risks; the success of our
cash conservation efforts; the size of the financing expected to be
closed in connection with the merger with Millendo Therapeutics; our
ability to remain listed on the Nasdaq Capital Market; risks associated
with the completion of the merger; 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.

No Offer or Solicitation:

This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No public offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.

Important Additional Information Will be Filed with the SEC

In connection with the proposed transaction between OvaScience and
Millendo, OvaScience intends to file relevant materials with the SEC,
including a registration statement that will contain a proxy statement
and prospectus. OVASCIENCE URGES INVESTORS AND STOCKHOLDERS TO READ
THESE MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
OVASCIENCE, THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
shareholders will be able to obtain free copies of the proxy statement,
prospectus and other documents filed by OvaScience with the SEC (when
they become available) through the website maintained by the SEC at www.sec.gov.
In addition, investors and shareholders will be able to obtain free
copies of the proxy statement, prospectus and other documents filed by
OvaScience with the SEC by contacting Investor Relations by mail at
OvaScience, Inc., Attn: Investor Relations, 9 Fourth Avenue, Waltham,
Massachusetts 02451. Investors and stockholders are urged to read the
proxy statement, prospectus and the other relevant materials when they
become available before making any voting or investment decision with
respect to the proposed transaction.

Participants in the Solicitation

OvaScience and Millendo, and each of their respective directors and
executive officers and certain of their other members of management and
employees, may be deemed to be participants in the solicitation of
proxies in connection with the proposed transaction. Information about
OvaScience’s directors and executive officers is included in
OvaScience’s Annual Report on Form 10-K for the year ended December 31,
2017, filed with the SEC on March 15, 2018, and the proxy statement for
OvaScience’s 2018 annual meeting of stockholders, filed with the SEC on
April 30, 2018. Additional information regarding these persons and their
interests in the transaction will be included in the proxy statement
relating to the transaction when it is filed with the SEC. These
documents can be obtained free of charge from the sources indicated
above.

 
OvaScience, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
  As of

June 30,
2018

 

December 31,
2017

Assets
Current assets:
Cash and cash equivalents $ 24,601 $ 15,703
Short-term investments 29,027 51,500
Prepaid expenses and other current assets   547   1,578
Total current assets 54,175 68,781
Property and equipment, net 403 3,113
Investment in joint venture 142 146
Restricted cash 789 789
Other long-term assets   24   24
Total assets $ 55,533 $ 72,853
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 757 $ 2,242
Accrued expenses and other current liabilities   3,990   5,562
Total current liabilities 4,747 7,804
Other non-current liabilities   576   751
Total liabilities   5,323   8,555
Total stockholders’ equity   50,210   64,298
Total liabilities and stockholders’ equity $ 55,533 $ 72,853
 
 
OvaScience, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
       
Three Months Ended
June 30,
Six Months Ended
June 30,
2018 2017 2018 2017
 
Revenues $ 81 $ 84 $ 148 $ 147
Costs and expenses:
Cost of revenues 54 274 166 543
Research and development 2,394 4,997 5,015 10,761
Selling, general and administrative 2,645 10,751 6,869 17,880
Restructuring charge   2,892     1,992     3,584     3,480  
Total costs and expenses   7,985     18,014     15,634     32,664  
Loss from operations (7,904 ) (17,930 ) (15,486 ) (32,517 )
Interest income, net 224 186 415 368
Other income/(expense), net (19 ) 25 2 (35 )

Loss from equity method
investment

  (4 )   (454 )   (3 )   (875 )
Loss before income taxes $ (7,703 ) $ (18,173 ) $ (15,072 ) (33,059 )
Income tax expense   0     13     0     22  
Net loss   (7,703 )   (18,186 )   (15,072 )   (33,081 )

Net loss per share—basic and
diluted

$ (0.22 ) $ (0.51 ) $ (0.42 ) $ (0.93 )

Weighted average number of
shares used in net loss per share—
basic
and diluted

  35,760     35,664     35,743     35,653  
 

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Contacts

Media and Investors
OvaScience, Inc.
Jonathan
Gillis, 617-420-8639
jgillis@ovascience.com