WALTHAM, Mass. – August 16, 2016 – Interleukin Genetics, Inc. (OTCQB: ILIU) today announced financial results for its fiscal second quarter of 2016, ended June 30, 2016, and provided a corporate update.

“The second quarter was significant for Interleukin Genetics, as we continue to advance our commercial plan to drive market adoption of PerioPredict®, our genetic test that identifies individuals with an increased risk for severe and progressive periodontitis due to a life-long genetic predisposition to over-produce Interleukin-1 (IL-1), a key mediator of inflammation,” said Mark B. Carbeau, Chief Executive Officer of Interleukin Genetics.  “Since the beginning of the year, we’ve made progress on both tracks of our commercial strategy, signing new licensing agreements for PerioPredict with both a large self-insured employer, Amway, and an insurance carrier, Reimbursement Specialists, Inc.”

“Recently, we added significant expertise and depth to our commercial team, appointing Stephan Toutain as Chief Commercial Officer and Mary Hiter as Director of Marketing, to leverage our field sales effort. To support our expanding commercial activities, we also strengthened our balance sheet, raising gross proceeds of approximately $5.6 million in a private placement. We greatly appreciate the continued support and confidence shown by our investors.”

Second Quarter 2016 and Recent Highlights

  • Appointed New Chief Commercial Officer and Director of Marketing: Stephan Toutain, with more than 25 years of commercial development, market access, and sales and marketing leadership in ultra-orphan drug and orphan oncology markets worldwide, was appointed Chief Commercial Officer.  Mary Hiter, who has launched multiple diagnostic, medical device and specialty pharmaceutical products over a 20-year career, was appointed Director of Marketing.
  • Signed an Agreement with Amway to Provide Interleukin’s PerioPredict Genetic Risk Test and Patient Engagement Platform: Interleukin Genetics is making PerioPredict available to Amway’s approximately 5,000 employees in the U.S. The combined program provides genetic insights to enable targeted treatment plans and deliver engaging personalized content tailored to maximize participant engagement.
  • PerioPredict Genetic Risk Test Incorporated into Freedom Dental Plan: Reimbursement Specialists, Inc., a Comprehensive Benefit Administrators (CBA) company will include coverage for PerioPredict as part of CBA’s Freedom Dental Plan.
  • Entered into Collaboration with Eleven Biotherapeutics to Provide Genetic Stratification of Drug Response in IL-1 Implicated Eye Diseases: Evaluated subjects in Eleven Bio’s two Phase 3 studies for allergic conjunctivitis and dry eye, utilizing IL-1 genetic patterns to help assess clinical response to isunakinra (EBI-005), Eleven Bio’s novel interleukin-1 receptor inhibitor. Interleukin’s data provided post hoc evaluation of patient IL-1 genotypes and showed a differential clinical response within the studies providing the opportunity for further evaluation of the drug and genetic link.
  • Announced Clarification of Commercial Test Compliance: Interleukin and the U.S. Food & Drug Administration (FDA) reached alignment on compliance status of the Company’s genetic tests.  The Office of In Vitro Diagnostics and Radiological Health (OIR) confirmed that PerioPredict is a laboratory developed test currently subject to FDA enforcement discretion and may continue to be marketed without prior marketing authorization.
  • Received Notice of Allowance for United States Patent for PerioPredict:  Received a notice of allowance for a patent by the United States Patent and Trademark Office (USPTO) for an application, entitled “Method for Determining Severity and Progression of Periodontal Disease”.
  • Raised $5.6 Million in a Private Placement: The investment syndicate was composed of existing investors, including two leading life sciences investment firms, Bay City Capital and New Enterprise Associates (NEA), and Pyxis Innovations Inc., an affiliate of Alticor Inc. (parent company to Amway Corporation), as well as broad participation from the management team.

 

Second Quarter Ended June 30, 2016 Financial Results
Total revenue was $590,000 for the three months ended June 30, 2016 compared to $376,000 for the three months ended June 30, 2015. The change in total revenue is largely attributable to a contracted research project recognized in Other revenue, and an increase in genetic testing revenue in advance of the transition of the Bone Health and Heart Health products out of the DTC channel that was partially offset by a decrease in volume related to Access Business Group’s (ABG) promotional product bundle.

Research and development expenses were $452,000 for the three months ended June 30, 2016, compared to $385,000 for the three months ended June 30, 2015. The 17% increase of $67,000 is primarily attributable to expenses related to Dr. Kornman moving back to the R&D department in April 2015 as President and Chief Scientific Officer from his previous position as CEO. While he served as CEO, expenses generated by Dr. Kornman were recorded as selling, general and administrative expenses. The increase in R&D expenses was also partially due to increased compensation expense related to annual salary increases for existing staff.

Selling, general and administrative expenses were $1.71 million for the three months ended June 30, 2016, compared to $1.66 million for the three months ended June 30, 2015.  The 3% increase is primarily attributable to expenses related to the creation of the Clinical Advisory Board in March 2016 and subsequent meetings in June 2016.

The Company reported a net loss of $2,087,201, or ($0.01) per diluted share for the three months ended June 30, 2016, compared to a net loss of $2,166,786, or ($0.01) per share in the comparable period in 2015.

Six Months Ended June 30, 2016 Financial Results
Total revenue was $1.6 million for the six months ended June 30, 2016 compared to $779,000 for the six months ended June 30, 2015. The change in total revenue is largely attributable to a contracted research project, partially offset by a decrease in kits returned for processing related to Access Business Group’s promotional product bundle.

Research and development expenses were $933,000 for the six months ended June 30, 2016, compared to $567,000 for the six months ended June 30, 2015. The 65% increase of $366,000 is primarily attributable to expenses related to Dr. Kornman moving from his previous position as CEO back to the R&D department in April 2015, as described above. The increase in R&D expenses was also partially due to annual salary increases for existing staff and higher consulting expenses.

Selling, general and administrative expenses were $3.0 million for the six months ended June 30, 2016, compared to $3.2 million for the six months ended June 30, 2015.  The 6% decrease is primarily attributable to lower compensation and recruiting expenses partially offset by higher legal and consulting expenses and costs associated with the Clinical Advisory Board.

The Company reported a net loss of $3,604,936, or ($0.02) per diluted share for the six-month period ended June 30, 2016, compared to a net loss of $4,009,981, or ($0.02) per share in the six-month period ended June 30, 2015.

As of June 30, 2016, the Company had cash and cash equivalents of $1.3 million. On July 29, 2016, the Company completed a private placement transaction with various accredited investors, raising gross proceeds of approximately $5.6 million. The Company expect the proceeds from this transaction, together with the cash on hand, to be sufficient to support the further commercialization of the PerioPredict test and the Company’s operations at least into the second quarter of 2017.

Conference Call details

Tuesday, August 16th, 8:30 am Eastern Time,
Dial in (domestic):                  877-324-1976
Dial in (international):             631-291-4550
Conference ID:                       62562552

About PerioPredict
PerioPredict is an innovative, easy-to-use genetic test that identifies individuals with an increased risk for severe and progressive periodontitis, due to a life-long genetic predisposition to over-produce Interleukin-1 (IL-1), a key mediator of inflammation. Such individuals may benefit from enhanced dental care to prevent or treat periodontitis and thereby lower their systemic inflammatory burden. Targeted management of systemic inflammation has been shown to help manage several chronic diseases, including type 2 diabetes and coronary artery disease. The PerioPredict test is made available to employees in covered health plans under the supervision of a licensed dentist or physician, and the results provide important information to dental professionals for assessing prevention and treatment options for their patients. The PerioPredict test is run solely in Interleukin’s CLIA-certified lab in Waltham, MA.  For more information, please visit www.PerioPredict.com.

About Interleukin Genetics
Interleukin Genetics, Inc. (OTCQB: ILIU) develops and markets proprietary genetic tests for chronic diseases and health-related conditions. The products empower individuals to prevent certain chronic conditions and manage their existing health and wellness through genetic-based insights with actionable guidance. Interleukin Genetics leverages its research, intellectual property and genetic panel development expertise in metabolism and inflammation to facilitate the emerging personalized healthcare market. The Company markets its tests through healthcare professionals, partnerships with health and wellness companies, and other distribution channels. Interleukin Genetics’ lead products include its proprietary PerioPredict Genetic Risk Test for periodontal disease and tooth loss susceptibility available through dentists, and the Inherent Health Weight Management Genetic Test that identifies the most effective diet program for an individual based on genetics. Interleukin Genetics is headquartered in Waltham, MA, and operates an on-site, state-of-the-art DNA testing laboratory certified under the Clinical Laboratory Improvement Amendments (CLIA). For more information, please visit www.ilgenetics.com.

Forward-Looking Statements
Certain statements contained herein are “forward-looking” statements, including statements that cash and cash equivalents as of June 30, 2016, and the proceeds from the July 29, 2016 private placement are sufficient to support the further commercialization of the PerioPredict test and operations at least into the second quarter of 2017, and that individuals with genetic predisposition to over-produce IL-1 may benefit from enhanced dental care to prevent or treat periodontitis and thereby lower their systemic inflammatory burden. 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.

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Investor Relations Contact:
Hans Vitzthum
LifeSci Advisors, LLC.
(212) 915-2568
hans@lifesciadvisors.com

Media Contact:
Jennifer Moritz
Zer0 to 5ive for Interleukin Genetics
(917) 748-4006
jmoritz@0to5.com