On November 6, 2019 Five Prime Therapeutics, Inc. (NASDAQ: FPRX), a clinical-stage biotechnology company focused on developing immune modulators and precision therapies for solid tumor cancers, reported its results for the third quarter and provided an update on the company’s recent activities (Press release, Five Prime Therapeutics, NOV 6, 2019, View Source [SID1234550462]).

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"We have advanced all of our wholly-owned programs according to our plan for 2019," said Willilam Ringo, Chairman and interim Chief Executive Officer of Five Prime Therapeutics. "As we approach 2020, we have repositioned Five Prime with a focus on prioritizing our pipeline based on upcoming data readouts, while also extending our cash runway, in order to maximize the long-term potential of the company."

Third Quarter 2019 Business Highlights and Milestones

Clinical Pipeline:

Bemarituzumab (anti-FGFR2b) is a first-in-class isoform-selective antibody with enhanced antibody-dependent cell-mediated cytotoxicity (ADCC) in development as a targeted immunotherapy for tumors that overexpress FGFR2b. Bemarituzumab is being evaluated in combination with mFOLFOX6 in the Phase 3 FIGHT (FGFR2b Inhibition in Gastric and Gastroesophageal Junction Cancer Treatment) trial.

The company has enrolled approximately 140 patients with newly diagnosed advanced stage gastric cancer into the FIGHT trial, representing approximately 25% of projected total trial enrollment, and has paused pre-screening of patients for enrollment in the trial.

The prevalence of FGFR2b overexpression in this patient population is approximately 30% based on global pre-screening data.

The company expects to conduct a planned futility analysis for the FIGHT trial in mid-2020. The purpose of the futility analysis is to ensure the trial is adequately powered to detect an overall survival benefit at full enrollment.

FPA150 (anti-B7-H4) is a first-in-class B7-H4 antibody designed to target tumor cells by enhancing killing of B7-H4 overexpressing tumors through ADCC and by blocking B7-H4 from sending an inhibitory signal to CD8 T cells. B7-H4 is frequently overexpressed in breast, ovarian and endometrial cancers.

The company presented a poster at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress with preliminary FPA150 efficacy results from the monotherapy Phase 1b expansion cohorts at the 20mg/kg dose in patients with breast, ovarian or endometrial cancers that overexpress B7-H4.

As of the August 9, 2019 data cut-off date, one patient in the ovarian cohort had a confirmed response; 11 patients had stable disease and remained on therapy. As of the data cut-off date, 31 patients across the ovarian, endometrial and breast cohorts were evaluable for response.

The company also presented safety data for four patients in the combination arm of FPA150 with Keytruda (pembrolizumab) suggesting that FPA150 could be combined at a full dose of 20 mg/kg every three weeks with the standard dose of pembrolizumab.

FPT155 (CD80-Fc) is a first-in-class CD80-Fc fusion protein that uses the binding interactions of soluble CD80 to directly engage CD28 to enhance its co-stimulatory T cell activity without inducing super agonism and to block CTLA-4 from competing for endogenous CD80, allowing CD28 signaling to prevail in T cell activation in the tumor microenvironment.

On November 9, the company will present initial safety data from the Phase 1 clinical trial of FPT155 in patients with advanced solid tumors in a poster presentation at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 34th Annual Meeting in National Harbor, Maryland.

FPT155 data presented at SITC (Free SITC Whitepaper) will include initial safety results from the Phase 1a dose escalation portion of the trial, which is designed to characterize the safety and pharmacokinetic (PK)/pharmacodynamic (PD) profile of FPT155 and identify a recommended dose for the Phase 1b portion of the trial.

Cabiralizumab (anti-CSF1R) is an antibody that inhibits CSF1R and has been shown to block the activation and survival of tumor-associated macrophages. Pursuant to a worldwide collaboration agreement, Bristol-Myers Squibb (BMS) has an exclusive worldwide license for the development and commercialization of cabiralizumab, and Five Prime retains the rights to a U.S. co-promotion option.

Bristol-Myers Squibb has completed enrollment in the randomized Phase 2 trial testing the combination of cabiralizumab with Opdivo (nivolumab) with and without chemotherapy in approximately 160 patients with locally advanced or metastatic pancreatic cancer that has progressed during or after one line of chemotherapy.

The next anticipated event from the Phase 2 trial is the announcement of actionable data from BMS in 2020.

BMS-986258 (anti-TIM-3) is a fully-human monoclonal antibody targeting TIM-3 (T cell immunoglobulin and mucin domain-3), an immune checkpoint receptor that may limit the duration and magnitude of T cell responses. This is the first clinical candidate from the discovery collaboration between Five Prime and BMS that includes targets in three immune checkpoint pathways.

The Phase 1/2 clinical trial continues to progress, with the expected size of the trial increased to 383 patients in July 2019.

Corporate Highlights

In October, the company announced a corporate restructuring to extend its cash runway without impacting or delaying the data timelines of its clinical programs. The company will retain a small research group focused on advancing three wholly-owned, late-stage research programs.

In September, the company’s board of directors appointed William Ringo as interim Chief Executive Officer in addition to his position as Chairman of the Board of Directors.

Summary of Financial Results and Guidance:

Cash Position: Cash, cash equivalents and marketable securities totaled $186.0 million as of September 30, 2019, compared to $214.1 million as of June 30, 2019. The decrease in cash, cash equivalents and marketable securities was primarily attributable to quarterly operating expenses that exceeded quarterly revenues.

Revenue: Collaboration and license revenue for the third quarter of 2019 decreased by $2.8 million, or 48.3%, to $3.0 million from $5.8 million for the third quarter of 2018. This decrease was primarily related to the completion of the research term under the immuno-oncology research collaboration with BMS in March 2019 and from progress made towards the company’s performance obligation under the original collaboration agreement.

R&D Expenses: Research and development expenses for the third quarter of 2019 decreased by $17.8 million, or 39.8%, to $26.9 million from $44.7 million for the third quarter of 2018. This decrease was primarily due a one-time milestone payment triggered by the dosing of the first patient in the Phase 3 FIGHT trial in the third quarter of 2018. Lower compensation costs, pre-clinical and research activities, manufacturing and diagnostic expenses and the reduction in the use of temporary resources contributed to the decrease and were partially offset by increased clinical trial expense to advance the company’s bemarituzumab, FPA150, and FPT155 clinical programs.

G&A Expenses: General and administrative expenses for the third quarter of 2019 increased by $3.4 million, or 34.7%, to $13.2 million from $9.8 million for the third quarter of 2018. The increase was primarily due to increased compensation costs offset by a reduction in the use of temporary resources.

Net Loss: Net loss for the third quarter of 2019 was $36.1 million, or $1.03 per basic and diluted share, compared to a net loss of $47.2 million, or $1.37 per basic and diluted share, for the third quarter of 2018.

Shares Outstanding: Weighted average shares outstanding for the third quarter of 2019 was 34,996,298 as of September 30, 2019.

Cash Guidance: Five Prime expects full-year 2019 net cash used in operating activities to be between $117 and $122 million and estimates ending 2019 with cash, cash equivalents and marketable securities between $148 and $153 million.

Conference Call Information

Five Prime will host a conference call and live audio webcast today at 4:30 p.m. (ET) / 1:30 p.m. (PT) to discuss its financial results and provide a corporate update. To participate in the conference call, please dial (877) 878-2269 (domestic) or (253) 237-1188 (international) and refer to conference ID 5769473. To access the live webcast please visit the "Events & Presentations" page under the "Investors" tab on Five Prime’s website at www.fiveprime.com. An archived copy of the webcast will be available on Five Prime’s website beginning approximately two hours after the conference call. Five Prime will maintain an archived replay of the webcast on its website for at least 30 days after the conference call.

On November 6, 2019 Fate Therapeutics, Inc. (NASDAQ: FATE), a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders, reported that two oral and four poster presentations covering the Company’s off-the-shelf, induced pluripotent stem cell (iPSC)-derived natural killer (NK) cell and chimeric antigen receptor (CAR) T-cell product candidates will be featured at the 61stAmerican Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition (Press release, Fate Therapeutics, NOV 6, 2019, View Source [SID1234550461]). The meeting will be held December 7-10, 2019 in Orlando, Florida.

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In addition, this year’s ASH (Free ASH Whitepaper) press program will feature the Company’s FT596 product candidate. The "CAR-T and Beyond" press briefing will take place at 7:30 a.m. EST, Saturday, December 7, in the ASH (Free ASH Whitepaper) Press Briefing Room (W221DE) of the Orange County Convention Center. It is open to all media registered to attend the meeting.

"We are honored that FT596 has been selected by the ASH (Free ASH Whitepaper) Program Committee for feature in this year’s prestigious Annual Meeting Press Program," said Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics. "The multi-antigen targeting functionality and off-the-shelf availability of FT596, combined with the intrinsic anti-tumor activity of NK cells, is a promising approach to overcome antigen escape and time-to-patient treatment, and has the potential to convey deeper and more durable responses to more patients. We look forward to highlighting the breadth of our novel off-the-shelf, iPSC-derived cell-based cancer immunotherapy pipeline this year at ASH (Free ASH Whitepaper)."

FT596 is among the first cell-based cancer immunotherapies to be manufactured from a master iPSC line, and is the first-ever cellular immunotherapy allowed for clinical investigation that is genetically engineered to contain three active anti-tumor modalities: a proprietary chimeric antigen receptor (CAR) targeting B-cell antigen CD19; a novel high-affinity, non-cleavable CD16 Fc receptor for enhanced binding to tumor-targeting antibodies; and an interleukin-15 receptor fusion (IL-15RF) for improved potency.

2019 ASH (Free ASH Whitepaper) Oral Presentations

FT538: Preclinical Development of an Off-the-Shelf Adoptive NK Cell Immunotherapy with Targeted Disruption of CD38 to Prevent Anti-CD38 Antibody-Mediated Fratricide and Enhance ADCC in Multiple Myeloma When Combined with Daratumumab
Publication Number: 133
Session Name: 652. Myeloma: Pathophysiology and Pre-Clinical Studies, excluding Therapy: Modeling Cellular Immunity and Tumor Microenvironment in Multiple Myeloma
Date and Time: Saturday, December 7, 2019, 9:30 AM
Location: Orange County Convention Center, Valencia A (W415A)
FT596: Translation of First-of-Kind Multi-Antigen Targeted Off-the-Shelf CAR-NK Cell with Engineered Persistence for the Treatment of B Cell Malignancies
Publication Number: 301
Session: 625. Lymphoma: Pre-Clinical – Chemotherapy and Biologic Agents: Targeting Apoptosis Pathways in Lymphoma Infections: Pre-clinical T and NK Cell Immunotherapies
Date and Time: Saturday, December 7, 2019, 4:00 PM
Location: Orange County Convention Center, Valencia A (W415A)
2019 ASH (Free ASH Whitepaper) Poster Presentations

FT500 iPSC-Derived NK Cells Synergize with T Cells and Anti-PD-1 Antibody to Mediate Durable Anti-Tumor Responses In Vivo
Publication Number: 1933
Session: 703. Adoptive Immunotherapy: Mechanisms and New Approaches: Poster I
Date and Time: Saturday, December 7, 2019, 5:30 PM – 7:30 PM
Location: Orange County Convention Center, Hall B
FT576: A Novel Multiplexed Engineered Off-the-Shelf Natural Killer Cell Immunotherapy for the Dual-Targeting of CD38 and BCMA for the Treatment of Multiple Myeloma
Publication Number: 3214
Session: 703. Adoptive Immunotherapy: Mechanisms and New Approaches: Poster II
Date and Time: Sunday, December 8, 2019, 6:00 PM – 8:00 PM
Location: Orange County Convention Center, Hall B
NK Cells Lacking CD38 Are Resistant to Oxidative Stress-Induced Death
Publication Number: 3215
Session: 703. Adoptive Immunotherapy: Mechanisms and New Approaches: Poster II
Date and Time: Sunday, December 8, 2019, 6:00 PM – 8:00 PM
Location: Orange County Convention Center, Hall B
FT819: Translation of Off-the-Shelf TCR-Less Trac-1XX CAR-T Cells in Support of First-of-Kind Phase I Clinical Trial
Session: 703. Adoptive Immunotherapy: Mechanisms and New Approaches: Poster III
Publication Number: 4434
Date and Time: Monday, December 9, 2019, 6:00 PM – 8:00 PM
Location: Orange County Convention Center, Hall B
About Fate Therapeutics’ iPSC Product Platform

The Company’s proprietary induced pluripotent stem cell (iPSC) product platform enables mass production of off-the-shelf, engineered, homogeneous cell products that can be administered with multiple doses to deliver more effective pharmacologic activity, including in combination with cycles of other cancer treatments. Human iPSCs possess the unique dual properties of unlimited self-renewal and differentiation potential into all cell types of the body. The Company’s first-of-kind approach involves engineering human iPSCs in a one-time genetic modification event and selecting a single engineered iPSC for maintenance as a clonal master iPSC line. Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, clonal master iPSC lines are a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, can be mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf for patient treatment. As a result, the Company’s platform is uniquely capable of overcoming numerous limitations associated with the production of cell therapies using patient- or donor-sourced cells, which is logistically complex and expensive and is subject to batch-to-batch and cell-to-cell variability that can affect clinical safety and efficacy. Fate Therapeutics’ iPSC product platform is supported by an intellectual property portfolio of over 250 issued patents and 150 pending patent applications.

About FT596

FT596 is an investigational, universal, off-the-shelf natural killer (NK) cell cancer immunotherapy derived from a clonal master induced pluripotent stem cell (iPSC) line engineered with three anti-tumor functional modalities: a proprietary chimeric antigen receptor (CAR) optimized for NK cell biology, which contains a NKG2D transmembrane domain, a 2B4 co-stimulatory domain and a CD3-zeta signaling domain, that targets B-cell antigen CD19; a novel high-affinity 158V, non-cleavable CD16 Fc receptor that has been modified to augment antibody-dependent cellular cytotoxicity by preventing CD16 down-regulation and enhancing CD16 binding to tumor-targeting antibodies; and an IL-15 receptor fusion (IL-15RF) that promotes enhanced NK cell activity. The FDA has allowed investigation of FT596 in an open-label Phase 1 clinical trial as a monotherapy and in combination with rituximab for the treatment of advanced B-cell malignancies and in combination with obinutuzumab for the treatment of chronic lymphocytic leukemia. In preclinical studies of FT596, the Company has demonstrated that dual activation of the CAR19 and CD16 receptors, in combination with IL-15RF signaling, convey synergistic anti-tumor activity. Increased degranulation and cytokine release were observed upon dual receptor activation in lymphoma cancer cells as compared to activation of each receptor alone, indicating that multi-antigen engagement may elicit a deeper and more durable response. Additionally, in a mixed cellular composition cytotoxicity assay comprised of CD19+ and CD19- tumor cells, FT596 combined with CD20-directed monoclonal antibody therapy effectively eliminated the heterogeneous population of tumor cells, a result that was not observed with single-antigen targeted CAR19 T cells.

On November 6, 2019 Roche (SIX: RO, ROG; OTCQX: RHHBY) reported that new data for its approved and investigational medicines across a range of blood diseases will be presented at the 61st American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting from 7 – 10 December 2019, in Orlando, Florida, US (Press release, Hoffmann-La Roche, NOV 6, 2019, View Source [SID1234550459]). Ten Roche medicines will be featured in more than 70 abstracts and 21 oral presentations. These data feature results in 15 blood diseases across numerous molecular targets and combinations, as well as different clinical endpoints that Roche is exploring.

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"We are proud to present a broad range of data at ASH (Free ASH Whitepaper) this year, and of the progress and commitment these data represent," said Levi Garraway, Roche’s Chief Medical Officer and Head of Global Product Development. "We believe that our science-driven approach to therapeutic development will continue to provide new options for people with aggressive blood cancers and rare blood diseases."

Key data presentations in non-Hodgkin lymphoma (NHL)
Roche will present data for two CD20-CD3 T-cell engaging bispecific antibodies in NHL (mosunetuzumab and CD20-TCB), including a Plenary Session discussing the phase I/Ib GO29781 study results of mosunetuzumab in people with poor prognosis NHL, which includes those who have had prior chimeric antigen receptor T-cell therapy. The Plenary Session highlights the top six abstracts submitted to the meeting, as determined by the ASH (Free ASH Whitepaper) Program Committee. Additionally, Roche will present new preliminary data evaluating CD20-TCB in combination with other Roche medicines.

Follow-up data on the pivotal phase Ib/II GO29365 study, investigating Polivy (polatuzumab vedotin), a first-in-class antibody drug conjugate, in combination with MabThera/Rituxan (rituximab) and bendamustine in people with relapsed or refractory (R/R) diffuse large B-cell lymphoma (DLBCL) will also be presented. This study was the basis of Polivy’s accelerated approval by the US Food and Drug Administration in June 2019 for people with R/R DLBCL who have received at least two prior therapies, and has been submitted to other health authorities around the world for approval consideration.

Key data presentations in chronic lymphocytic leukaemia (CLL), acute myeloid leukaemia (AML) and myelodysplastic syndromes (MDS)
Additionally, Roche will be sharing results from three studies of Venclexta/Venclyxto (venetoclax) representing chemotherapy-free treatment options for certain people with leukaemia. Further long-term follow-up data from the pivotal phase III MURANO study in CLL will be presented, as well as an updated analysis from the pivotal phase III CLL14 study with progression-free survival as the primary endpoint and minimal residual disease as a secondary endpoint, confirming the potential of Venclexta/Venclyxto as a fixed-duration treatment option. Results of the investigational medicine idasanutlin, an oral MDM2 inhibitor, in combination with Venclexta/Venclyxto in elderly patients with R/R AML will be shared. Additionally, new data will be presented for Venclexta/Venclyxto as a first-line treatment in MDS, a rare form of blood cancer that affects the bone marrow. Venclexta/Venclyxto is being developed by AbbVie and Roche.

Key data presentations in rare non-malignant blood conditions
Finally, data for rare blood conditions, including haemophilia A and paroxysmal nocturnal haemoglobinuria (PNH) will be presented. New analyses from the phase III HAVEN 3 study of Hemlibra (emicizumab) in people with haemophilia A without factor VIII inhibitors will be presented. The analyses include data on the positive effect of Hemlibra on joint health, as well as additional data on the use of on-demand factor VIII replacement therapy to treat breakthrough bleeding in people receiving Hemlibra prophylaxis in the HAVEN 3 study compared to factor VIII prophylaxis in a non-interventional study. Roche is also sharing phase I/II data from the COMPOSER study, which assessed the investigational medicine crovalimab in people with PNH, a life-threatening disease where red blood cells are destroyed by the body’s immune system. Crovalimab, a novel humanised anti-C5 monoclonal antibody designed to block the complement system, which plays a key role in PNH, was created by Chugai Pharmaceutical Co., Ltd. and is being co-developed by Roche.

Key abstracts featuring Roche medicines that will be presented at ASH (Free ASH Whitepaper) can be found in the table below.

About Roche in haematology
Roche has been developing medicines for people with malignant and non-malignant blood diseases for over 20 years; our experience and knowledge in this therapeutic area runs deep. Today, we are investing more than ever in our effort to bring innovative treatment options to patients across a wide range of haematologic diseases. Our approved medicines include MabThera/Rituxan (rituximab), Gazyva/Gazyvaro (obinutuzumab), Polivy (polatuzumab vedotin), Venclexta/Venclyxto (venetoclax) in collaboration with AbbVie, and Hemlibra (emicizumab). Our pipeline of investigational haematology medicines includes idasanutlin, a small molecule which inhibits the interaction of MDM2 with p53; T-cell engaging bispecific antibodies targeting both CD20 and CD3; Tecentriq (atezolizumab), a monoclonal antibody designed to bind with PD-L1; and crovalimab, an anti-C5 antibody engineered to optimise complement inhibition. Our scientific expertise, combined with the breadth of our portfolio and pipeline, also provides a unique opportunity to develop combination regimens that aim to improve the lives of patients even further.

On November 6, 2019 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the third quarter and nine months ended September 30, 2019 (Press release, Emergent BioSolutions, NOV 6, 2019, View Source [SID1234550458]).

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Q3 2019 AND RECENT BUSINESS ACCOMPLISHMENTS

Procurement

Announced the contract award by the Office of the Assistant Secretary for Preparedness and Response (ASPR) in the U.S. Department of Health and Human Services (HHS) valued at approximately $2 billion over 10 years for the continued supply of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) into the U.S. Strategic National Stockpile (SNS) in support of smallpox preparedness.

Announced the exercise by the Biomedical Advanced Research and Development Authority (BARDA) of the first contract option, valued at $261 million, to procure doses of the next generation anthrax vaccine candidate AV7909 (anthrax vaccine adsorbed with adjuvant) for delivery into the SNS over 12 months.

Awarded a contract by the ASPR in HHS valued at up to $490 million over 10 years ($90 million agreed to now and the remaining $400 million to be negotiated and finalized over the next 6 months) for the continued

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supply of BAT [Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G) – (Equine)] into the SNS in support of botulism preparedness and response capability.

Product Development

Granted PRIority MEdicines, or PRIME, designation by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for the company’s chikungunya virus (CHIKV) virus-like particle (VLP) vaccine candidate, CHIKV VLP.

Awarded a research grant by the National Institute on Drug Abuse (NIDA), a component of the National Institutes of Health (NIH), in HHS, valued at approximately $6.3 million over two years, for the continued development of AP007, the company’s sustained-release nalmefene formulation for the treatment of opioid use disorder (OUD).

Awarded approximately $20 million to develop and manufacture an auto-injector containing diazepam (5 mg/mL) to treat nerve agent-induced seizures. Emergent’s device is being designed for intramuscular buddy-administration for use in military environments and for civilian emergencies.

2019 FINANCIAL PERFORMANCE (unaudited)

(I) Quarter Ended September 30, 2019 (Q3)

Revenues

Total Revenues
For Q3 2019, total revenues were $311.8 million, an increase of 80% over 2018. Total revenues reflect the contribution of recently acquired products as well as increased contracts and grants revenue.
Product Sales
For Q3 2019, product sales were $256.2 million, an increase of $122.9 million or 92% as compared to 2018. The increase primarily reflects sales of both NARCAN (naloxone HCl) Nasal Spray, which was acquired in October 2018, and increased sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live), offset by decreased sales of Anthrax vaccines (BioThrax (Anthrax Vaccine Adsorbed) and AV7909) and other product sales.
(in millions)
Three Months Ended September 30,

Contract Manufacturing
For Q3 2019, revenue from the Company’s contract manufacturing operations was $20.0 million, a decrease of $2.1 million or 10% as compared to 2018. The decrease primarily reflects contracted service work in Q3 2018 that did not recur in Q3 2019.

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Contracts and Grants
For Q3 2019, revenue from the Company’s development-based contracts and grants was $35.6 million, an increase of $17.4 million as compared to 2018. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs, most notably AV7909.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q3 2019, cost of product sales and contract manufacturing was $108.0 million, an increase of $38.7 million or 56% as compared to 2018. The increase is attributable to the increase in product sales.

Research and Development (Gross and Net)

For Q3 2019, gross R&D expenses were $53.4 million, an increase of $16.4 million or 44% as compared to 2018. The increase primarily reflects costs associated with incremental development programs from the recent acquisitions of PaxVax and Adapt Pharma in October 2018, as well as timing of manufacturing development activities related to the AV7909 program.

For Q3 2019, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $17.8 million, a decrease of $1.0 million or 5% as compared to 2018. The decrease primarily reflects a reduction in raxibacumab technology transfer costs, partially offset by increases related to the development of the CHIKVVLP vaccine and various programs related to opioid overdose response. The Q3 2019 net R&D expense was 6% of adjusted revenue (total revenue less contracts & grants) compared to 12% of adjusted revenue in Q3 2018.

Selling, General and Administrative

For Q3 2019, selling, general and administrative expenses were $65.0 million, an increase of $22.9 million or 54% as compared to 2018. The increase primarily reflects the addition of the operations and integration costs associated with the PaxVax and Adapt Pharma acquisitions.

Amortization of Intangible Assets

For Q3 2019, amortization of intangible assets was $14.7 million versus $3.9 million as compared to 2018. The increase entirely reflects higher non-cash intangible asset amortization costs associated with the PaxVax and Adapt Pharma acquisitions.

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Income Taxes

For Q3 2019, the income taxes expense in the amount of $15.7 million includes the impact of permanent items.

Net Income & Adjusted Net Income

For Q3 2019, the Company recorded net income of $43.2 million, or $0.83 per diluted share, versus net income of $20.9 million, or $0.41 per diluted share, in 2018.

For Q3 2019, the Company recorded adjusted net income of $63.3 million, or $1.21 per diluted share, versus adjusted net income of $28.4 million, or $0.55 per diluted share, in 2018. (1)

EBITDA & Adjusted EBITDA

For Q3 2019, the Company recorded EBITDA of $96.3 million versus $33.7 million in 2018. (1)

For Q3 2019, the Company recorded adjusted EBITDA of $106.4 million versus $39.1 million in 2018. (1)

(II) Nine months ended September 30, 2019 (unaudited)

Revenues

Total Revenues
For the nine months ended September 30, 2019, total revenues were $745.7 million, an increase of 46% over 2018. Total revenues reflect the contribution of recently acquired products as well as increased contracts and grants revenue.

Product Sales
For the nine months ended September 30, 2019, product sales were $592.7 million, an increase of $203.6 million or 52% as compared to 2018. The increase primarily reflects sales of NARCAN Nasal Spray, which was acquired in October 2018, and ACAM2000, offset by decreased sales of Anthrax vaccines (BioThrax and AV7909).
(in millions)
Nine Months Ended September 30,

Contract Manufacturing
For the nine months ended September 30, 2019, revenue from the Company’s contract manufacturing operations was $54.6 million, a decrease of $17.4 million or 24% as compared to 2018. The decrease primarily reflects contracted service work in the nine months of 2018 that did not recur in the nine months of 2019.

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Contracts and Grants
For the nine months ended September 30, 2019, revenue from the Company’s development-based contracts and grants was $98.4 million, an increase of $47.8 million or 94% as compared to 2018. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs, most notably AV7909.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For the nine months ended September 30, 2019, cost of product sales and contract manufacturing was $300.7 million, an increase of $91.9 million or 44% as compared to 2018. The increase is attributable to the increase in product sales.

Research and Development (Gross and Net)
For the nine months ended September 30, 2019, gross R&D expenses were $163.4 million, an increase of $72.6 million compared to 2018. The increase primarily reflects costs associated with incremental development programs from the recent acquisitions of PaxVax and Adapt Pharma in October 2018, as well as timing of manufacturing development activities related to the AV7909 program.

For the nine months ended September 30, 2019, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $65.0 million, an increase of $24.8 million or 62% as compared to 2018. The increase primarily reflects investments in the development of the CHIKV-VLP vaccine and various programs related to opioid overdose response. The nine months of 2019 net R&D expense was 10% of adjusted revenue (total revenue less contracts & grants) compared to 9% of adjusted revenue in the nine months of 2018.

Selling, General and Administrative
For the nine months ended September 30, 2019, selling, general and administrative expenses were $201.3 million, an increase of $79.5 million or 65% as compared to 2018. The increase primarily reflects the addition of the operations and integration costs associated with the PaxVax and Adapt Pharma acquisitions.

Amortization of Intangible Assets
For the nine months ended September 30, 2019, amortization of intangible assets was $43.9 million versus $11.7 million as compared to 2018. The increase entirely reflects higher non-cash intangible asset amortization costs associated with the PaxVax and Adapt Pharma acquisitions.

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Income Taxes
For the nine months ended September 30, 2019, income tax benefit was $1.7 million, which includes the impact of permanent items.

Net Income & Adjusted Net Income
For the nine months ended September 30, 2019, the Company recorded net income of $7.6 million, or $0.15 per diluted share, versus net income of $66.2 million, or $1.29 per diluted share, in 2018.

For the nine months ended September 30, 2019, the Company recorded adjusted net income of $67.0 million, or $1.28 per diluted share, versus adjusted net income of $83.3 million, or $1.63 per diluted share, in 2018. (1)

EBITDA & Adjusted EBITDA
For the nine months ended September 30, 2019, the Company recorded EBITDA of $116.3 million versus $115.5 million in 2018. (1)

For the nine months ended September 30, 2019, the Company recorded adjusted EBITDA of $145.4 million versus $124.6 million in 2018. (1)

2019 FINANCIAL FORECAST (Reaffirmed)

* Reflects revision from previous guidance ($255-$285) due to the inclusion of changes in fair value of contingent consideration as an additional item for reconciliation in the calculation of Adjusted EBITDA; management has determined Adjusted EBITDA is more reflective of the Company’s true operations than EBITDA alone and the guidance range for EBITDA has been revised based on current expectations.

The Company’s financial forecast for 2019 includes the anticipated impact of full year product sales, continued contract manufacturing and contracts & grants revenue as well as continued investment in internally funded development projects. The outlook for 2019 does not include estimates for potential new corporate development or other M&A transactions.

FOOTNOTES

(1) See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.

CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at 5:00 pm (Eastern Time) today, November 6, 2019, to discuss these financial results. This conference call can be accessed live by telephone or through the Company’s website.

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Live Teleconference Information:
Dial in: [US] (855) 766-6521; [International] (262) 912-6157
Conference ID: 1169597

Live Webcast Information:
Visit View Source for the live webcast.

On November 6, 2019 Eli Lilly and Company (NYSE: LLY) reported that multiple abstracts from its LOXO-305 program have been accepted for presentation at the 61st American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition to be held December 7-10, 2019 in Orlando, Florida (Press release, Eli Lilly, NOV 6, 2019, View Source [SID1234550457]). LOXO-305 is a next-generation, highly selective, non-covalent BTK inhibitor.

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There will be two LOXO-305 oral presentations. The first will provide an analysis of interim Phase 1 clinical trial data from the ongoing first-in-human, Phase 1/2 Trial of LOXO-305 in patients with pretreated B-cell malignancies. The second oral presentation will provide a preclinical analysis of LOXO-305’s activity in ibrutinib-resistant CLL, based on patient-derived samples. Finally, a poster presentation will provide a preclinical analysis of LOXO-305’s activity against diverse BTK C481 substitution mutations.

The presentation details, including dates and times, are highlighted below:

LOXO-305 Oral Presentation Session Date & Time: Sunday, December 8, 2019, 4:30-6:00 pm ET
Title: Results from a First-in-Human, Proof-of-Concept Phase 1 Trial in Pretreated B-Cell Malignancies for Loxo-305, a Next-Generation, Highly Selective, Non-Covalent BTK Inhibitor
Abstract Number: 501
Session Title: CLL: Therapy, excluding Transplantation: BTK Inhibitors and CAR T Cells in CLL
Presenter: Anthony Mato

LOXO-305 Oral Presentation Session Date & Time: Sunday, December 8, 2019, 12:00-1:30 pm ET
Title: LOXO-305: Targeting C481S Bruton Tyrosine Kinase in Patients with Ibrutinib-Resistant CLL
Abstract Number: 478
Session Title: CLL: Biology and Pathophysiology, excluding Therapy: Mechanisms of Response and Resistance to Targeted Agents
Presenter: Aishath Naeem

LOXO-305 Poster Presentation Session Date & Time: Monday, December 9, 2019, 6:00-8:00 pm ET
Title: Loxo-305, a Highly Selective and Non-Covalent Next Generation BTK Inhibitor, Inhibits Diverse BTK C481 Substitution Mutations
Abstract Number: 4644
Session Title: Chemical Biology and Experimental Therapeutics: Poster III
Presenter: Eliana Gomez

About LOXO-305
LOXO-305 is an investigational, novel, highly selective, non-covalent Bruton’s tyrosine kinase (BTK) inhibitor. BTK plays a key role in the B-cell antigen receptor signaling pathway, which is required for the development, activation and survival of normal white blood cells, known as B-cells, and malignant B-cells. BTK is a validated molecular target found across numerous B-cell leukemias and lymphomas including chronic lymphocytic leukemia, Waldenstrom’s macroglobulinemia, mantle cell lymphoma and marginal zone lymphoma. Currently available BTK inhibitors irreversibly inhibit BTK and the long-term efficacy of these therapies has been limited by acquired resistance, most commonly through BTK C481 mutations, and intolerance, due to off target inhibition of other cellular targets. LOXO-305 was designed to reversibly bind BTK, preserve activity in the presence of the C481 acquired resistance mutations, and avoid off-target kinases that have complicated the development of both covalent and investigational non-covalent BTK inhibitors. Interested patients and physicians can contact the Loxo Oncology Physician and Patient BTK Clinical Trial Hotline at 1-855-LOXO-305 or email [email protected].

About the LOXO-305 Phase 1/2 trial
This first-in-human, global, multi-center Phase 1/2 trial evaluates LOXO-305 as a single agent in patients with previously treated chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), or non-Hodgkin’s lymphomas (NHL). The primary objective of the Phase 1 portion of the trial is to determine the maximum tolerated dose or recommended Phase 2 dose. Key secondary objectives include measures of safety, pharmacokinetics, and anti-tumor activity (i.e. Overall Response Rate and Duration of Response, as determined by appropriate histology-specific response criteria). The trial includes a Phase 1 dose escalation phase and a Phase 2 dose expansion phase. The Phase 1 dose escalation enrolls patients with CLL/SLL or NHL who have received at least two prior lines of therapy and have progressed or are intolerant to standard of care. In the Phase 2 dose expansion phase, six cohorts are planned to allow for the characterization of the preliminary anti-tumor activity of LOXO-305: 1) CLL/SLL failed prior BTK inhibitor with BTK C481 mutation; 2) CLL/SLL failed prior BTK inhibitor without BTK C481 mutation; 3) Waldenstrom’s macroglobulinemia (WM), mantle cell lymphoma (MCL) or marginal zone lymphoma (MZL) failed prior BTK inhibitor with BTK C481 mutation; 4) WM, MCL or MZL failed prior BTK inhibitor without BTK C481 mutation; 5) CLL/SLL, WM, MCL or MZL intolerant to prior BTK inhibitor; 6) CLL/SLL, WM, MCL or MZL failed prior BTK inhibitor with unknown BTK C481 mutation status and other CLL/SLL, WM, CML, MZL or other NHL patients not meeting the definitions of Cohorts 1 through 5.