On August 6, 2020 Vaxart, Inc., a clinical-stage biotechnology company developing oral recombinant vaccines that are administered by tablet rather than by injection, reported an update on its financials for the second quarter of 2020, and a corporate update (Press release, Aviragen Therapeutics, AUG 6, 2020, View Source [SID1234563062]).

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"With $140 million in cash at the end of July, Vaxart is now laser focused on preparing to enter a Phase 1 clinical trial with our lead COVID-19 vaccine candidate," said Andrei Floroiu, chief executive officer of Vaxart, "We believe the convenience of our oral tablet, coupled with the potential for better protection than that of injectable vaccines due to the activation of mucosal immunity, positions our COVID-19 vaccine as one of the most promising candidates for successful mass vaccination campaigns, both here in the US and abroad."

Corporate Highlights:

On May 20, 2020, Vaxart announced that it had selected its lead COVID-19 vaccine candidate to move into clinical trials.

Vaxart is continuing with its manufacturing collaboration with Emergent BioSolutions Inc. (Emergent) and KindredBio and is currently producing bulk cGMP vaccine in time for initiation of a Phase 1 clinical study during the second half of 2020.

On June 25, 2020, Vaxart announced the signing of a Memorandum of Understanding with Attwill Medical Solutions Sterilflow, LP ("AMS") affirming the parties’ intent to establish AMS as a resource for lyophilization development and large-scale manufacturing including tableting and enteric coating for the oral COVID-19 vaccine.

On June 26, 2020, Vaxart announced that its oral COVID-19 vaccine was selected to participate in a non-human primate challenge study, organized and funded by Operation Warp Speed.

The universal influenza vaccine collaboration study with Janssen has been completed and a report is being compiled for Janssen.

As of July 13, 2020, Vaxart had raised approximately $97 million in net proceeds through its At-The-Market facility (the ATM Program), which constituted the maximum offering price under the ATM Program.

Financial Results for the Fiscal Period Ended June 30, 2020

Vaxart reported a net loss of $9.0 million for the second quarter of 2020 compared to $5.6 million for the second quarter of 2019. The increase was mainly due to an increase in operating expenses. Net loss per share for the second quarter was $0.12 in 2020 compared to $0.39 in 2019, in part due to an increase in the number of shares outstanding.

Vaxart ended the quarter with cash and cash equivalents of $44.4 million compared to $29.9 million at March 31, 2020. The increase was primarily due to $14.4 million received for the exercise of common stock warrants, partially offset by $3.7 million of cash used in operations.

Revenue for the second quarter was $523,000 compared to $85,000 in the second quarter of 2019. The increase was principally due to the reversal of the reserve for sales returns for Relenza and revenue from our contract with Janssen.

Research and development expenses were $5.1 million for the second quarter compared to $3.7 million for the second quarter of 2019. The increase was mainly due to manufacturing expenses related to the COVID-19 vaccine candidate and higher stock-based compensation costs, partially offset by reductions in the cost of clinical trials for our norovirus vaccine candidate and in personnel costs after we ceased internal manufacturing as part of our December 2019 restructuring.

General and administrative expenses were $3.9 million for the second quarter compared to $1.4 million for the second quarter of 2019. The increase was mainly due to higher stock-based compensation costs and severance expenses related to our former Chief Executive Officer.

On August 6, 2020 Protagonist Therapeutics, Inc. (Nasdaq:PTGX) reported financial results for the second quarter ended June 30, 2020, and provided an update on clinical development programs (Press release, Protagonist, AUG 6, 2020, View Source [SID1234563059]).

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"We have succeeded in bringing three differentiated candidates from de novo discovery into Phase 2 development," commented Dinesh V. Patel, Ph.D., Protagonist President and Chief Executive Officer. "Each of these candidates has unique attributes that address specific unmet needs in diverse diseases, such as blood disorders with PTG-300 and inflammatory bowel disease with PTG-200 and PN-943. The hepcidin mimetic PTG-300 makes use of the iron homeostasis mechanism of a natural hormone and has demonstrated potential in the treatment of polycythemia vera. We expect to initiate a pivotal study for PTG-300 in 2021 after discussions with the regulatory agencies. PN-943 and PTG-200 are both oral, gut-restricted candidates for the potential treatment of inflammatory bowel disease. PTG-200 is an IL-23 receptor antagonist partnered with Janssen and is currently in a Phase 2 Crohn’s study. We recently initiated screening of patients for our Phase 2 study of PN-943 in ulcerative colitis. Finally, we are well financed and recently raised $122 million through a successful secondary offering and use of our ATM program, which enables us to support planned operations through mid-2023."

Product Development and Corporate Update
PTG-300: Injectable Hepcidin Mimetic for Polycythemia Vera and Other Blood Disorders

·Initial Phase 2 results reported in May 2020 in patients with polycythemia vera demonstrated clinically meaningful dose related control of hematocrit levels on individual patient basis.
·In June 2020, PTG-300 received U.S. Food and Drug Administration (FDA) Orphan Drug Designation for the treatment of polycythemia vera.
·Protagonist plans to host a webinar featuring presentations on clinical needs and market research on the potential opportunity for PTG-300 in polycythemia vera. The "PTG-300 Opportunity Update" webinar will be conducted Sept. 11, 2020. Details for participation will be publicly announced prior to the event.

PN-943: Oral Alpha-4-Beta-7 Integrin Antagonist for Inflammatory Bowel Disease

·Protagonist has initiated screening of prospective subjects in a global, randomized, double-blind, placebo-controlled Phase 2 study (the "IDEAL Study") evaluating safety, tolerability and efficacy of PN-943 in approximately 150 patients with moderate to severe active ulcerative colitis. Patients will be randomized in one of three arms (150 mg twice daily, 450 mg twice daily, or placebo) for 12 weeks of oral dosing followed by an extended treatment period of 40 weeks. During the extended treatment period all subjects will receive PN-943. The primary endpoint of the study is proportion of subjects achieving clinical remission at week 12 (as defined by rectal bleeding, stool frequency and endoscopic subscores of the Adapted Mayo Score) in the 450 mg twice daily treatment arm as compared to placebo. Secondary endpoints include additional clinical and safety assessments, as well as pharmacokinetic and pharmacodynamic measurements, and biomarker measurements related to disease activity.

Oral IL-23 Receptor Antagonists (Janssen Biotech and Protagonist Collaboration)

·Janssen Biotech is conducting a global Phase 2 study of PTG-200 (or JNJ-67864238) in moderate-to-severe Crohn’s disease.
·Joint research efforts are underway to identify second-generation oral IL-23 receptor antagonists for multiple indications.

Financial Update

·During May 2020, the Company successfully raised $105.7 million net of underwriting and offering expenses in an oversubscribed secondary offering issuing 8,050,000 shares at $14.00 per share.
·During the second quarter of 2020, the Company issued 1.2 million shares through its at-the-market (ATM) program and raised $16.8 million, at an average price of $14.02 per share.

Financial Results

·Cash, cash equivalents and marketable securities as of June 30, 2020, were $208.7 million. Protagonist estimates sufficient financial resources from its cash, cash equivalents, marketable securities and access to its debt facility to fund its currently planned operating and capital expenditures through mid-2023.
·License and collaboration revenues were $6.2 million and $9.9 million for the second quarter and six months ended 2020, respectively, in comparison to $(8.2) million and $(6.6) million reported for the same periods of 2019. The increase in revenue was due mainly to the previously reported 2019 one-time cumulative adjustment related to the application of revenue recognition principles following the May 2019 amendment of the Janssen Biotech collaboration agreement that had reduced revenue by $9.4 million for the three and six months ended June 30, 2019.
·Research and Development ("R&D") expenses for the three and six months ended June 30, 2020, were $20.3 million and $39.0 million, respectively, as compared to $19.4 million and $31.8 million for the same periods of 2019. These variances were primarily due to increased activities in advancing our ongoing clinical trial for polycythemia vera with PTG-300, preparedness for PN-943 Phase 2 study in ulcerative colitis, and our IL-23 receptor antagonist research collaboration activities with Janssen Biotech.

·General and Administrative ("G&A") expenses for the three and six months ended June 30, 2020, were $4.2 million and $8.8 million, respectively, as compared to $3.9 million and $7.6 million for the same periods of 2019. The increases were primarily due to increases in salaries, insurance expense and professional services to support the growth in our operations.
·Net loss for the three and six months ended June 30, 2020, was $19.4 million and $39.5 million or a net loss of $0.59 per share and $1.31 per share, respectively, as compared to a net loss of $29.2 million and $43.3 million, or a net loss of $1.18 per share and $1.77 per share, for the same periods of 2019.

On August 6, 2020 Syndax Pharmaceuticals, Inc. ("Syndax," the "Company" or "we") (Nasdaq:SNDX), a clinical stage biopharmaceutical company developing an innovative pipeline of cancer therapies, reported its financial results for the second quarter ended June 30, 2020. In addition, the Company provided a clinical and business update (Press release, Syndax, AUG 6, 2020, View Source [SID1234563058]).

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"We are very pleased that the FDA has agreed to several proposed changes to the Phase 1 portion of AUGMENT-101 which build on emerging clinical data and help us maximize SNDX-5613’s potential in as many appropriate patients as possible," said Briggs W. Morrison, M.D., Chief Executive Officer of Syndax. "This includes focusing enrollment exclusively on patients with MLL-r and NPM1 mutant acute leukemias, the ability to expand dose cohorts that demonstrate efficacy, and inclusion of pediatric patients as young as one month, which has long been a key component of our overall strategy for SNDX-5613. We remain on track to identify a recommended Phase 2 dose by the end of this year, with full Phase 1 data now anticipated in early 2021."

Dr. Morrison added, "Progress also continues with the Phase 1/2 trial of axatilimab, our anti-CSF-1R monoclonal antibody, in patients with cGVHD, with Phase 1 results expected in the fourth quarter. We are actively committed to helping people with cancer live longer and better than ever before and look forward to further advancing this mission throughout the balance of the year."

Pipeline Updates

SNDX-5613

Syndax reported that the U.S. Food and Drug Administration (FDA) has agreed to several enhancements to the Phase 1 portion of the AUGMENT-101 protocol. AUGMENT-101 is the Company’s Phase 1/2 open-label trial designed to evaluate the safety, tolerability, pharmacokinetics and efficacy of orally administered SNDX-5613, its potent, highly selective oral menin inhibitor, in patients with acute leukemias. As recently reported, the Phase 1 dose escalation portion of AUGMENT-101 was separated into two cohorts based on concomitant treatment with a strong CYP3A4 inhibitor. Arm A will enroll patients not receiving a strong CYP3A4 inhibitor, while Arm B will enroll patients receiving a strong CYP3A4 inhibitor.

Supported by initial clinical data, as well as new insights from emerging data in the pediatric compassionate use setting, the Company will enact the following enhancements to the Phase 1 portion of the trial: focusing enrollment exclusively on patients with mixed lineage leukemia rearranged (MLL-r) and nucleophosmin (NPM1) mutant acute leukemias; backfilling any dose escalation cohort up to a total of 12 patients in either Arm A or Arm B if efficacy has been observed at that dose level; and expansion of enrollment of pediatric patients over one month old. The Company continues to anticipate identifying a recommended Phase 2 dose by the end of 2020, with full data from the amended Phase 1 portion expected in early 2021. SNDX-5613 was recently granted Orphan Drug Designation for the treatment of adult and pediatric AML by the FDA.

The Company recently participated in the U.S. FDA’s June 2020 meeting of the Pediatric Oncology Subcommittee of the Oncologic Drugs Advisory Committee (pedsODAC) to discuss the clinical development plan for SNDX-5613 in pediatric patients. A replay of the pedsODAC meeting, which was intended to improve and encourage the development of oncology and hematology drugs for pediatric use, as well as a copy of the Company’s briefing package, can be found here.

At the 2020 American Association for Cancer Research (AACR) (Free AACR Whitepaper) Virtual Annual Meeting I in April, Syndax announced initial clinical data from the AUGMENT-101 trial. Data presented serve as the first clinical evidence that inhibition of the menin-MLL1 interaction can induce response in patients with MLL-r acute leukemias. The presentation also highlighted preclinical findings, including data published in Cancer Cell and Science magazine, supporting the potential of single-agent menin-MLL inhibition to serve as an effective intervention for both MLL-r acute leukemias and NPM1 mutant AML. A copy of the presentation is available on Syndax’s website under Publications, Menin-MLLr Inhibitors.

Axatilimab

Enrollment continues across the Company’s Phase 1/2 trial evaluating axatilimab, its anti-CSF-1R monoclonal antibody, for the treatment of chronic graft versus host disease (cGVHD). The Phase 1 portion continues to explore alternate dose and schedules, while the Phase 2 expansion is evaluating the benefit of treatment at 1 mg/kg every two weeks. The Company expects to present additional results from the Phase 1 trial in the fourth quarter of 2020.

Data from the Phase 1 trials exploring axatilimab, both as a monotherapy and in combination with IMFINZI (durvalumab) in patients with locally-advanced or metastatic solid tumors, were summarized in two oral presentations at the AACR (Free AACR Whitepaper) Virtual Annual Meeting I. The data indicate that axatilimab is tolerated well in solid tumor patients and provide evidence of its ability to deplete circulating pro-inflammatory monocytes. A recommended Phase 2 dose of axatilimab for the treatment of patients with solid tumors was determined as monotherapy and in combination with IMFINZI (durvalumab). A copy of each presentation is available on Syndax’s website under Publications, Axatilimab.

Entinostat

In May 2020, the Company reported final results of E2112, the Phase 3 clinical trial conducted by ECOG-ACRIN Cancer Research Group and sponsored by the National Cancer Institute, that evaluated the investigational compound entinostat, Syndax’s class I HDAC inhibitor, plus exemestane in patients with advanced hormone receptor positive, human epidermal growth factor receptor 2 negative (HR+, HER2-) breast cancer. The trial did not achieve the primary endpoint of demonstrating a statistically significant overall survival benefit over hormone therapy alone. The Company has decided to deprioritize the entinostat program to focus resources on advancing the remainder of its pipeline.

Financial Update and Guidance

As of June 30, 2020, Syndax had cash, cash equivalents and short-term investments of $186.8 million and 44.1 million shares and share equivalents issued and outstanding which included 38.5 million shares of common stock and pre-funded warrants to purchase 5.6 million shares of common stock.

In May 2020, Syndax closed an underwritten public offering whereby the Company sold 6.4 million shares of common stock at a price of $18.00 per share. The aggregate net proceeds received by the Company were $107.9 million, net of underwriting discounts and commissions and estimated offering expenses payable by the Company.

Second quarter 2020 research and development expenses decreased to $10.9 million from $12.3 million for the prior year period. The second quarter decrease was primarily due to the impact of a $4.0 million expense for achievement of a clinical milestone associated with SNDX-5613 which was recognized and recorded in the second quarter of 2019. Excluding this milestone, research and development expenses in the second quarter of 2020 increased compared to the prior year period primarily due to an increase in clinical activities related to SNDX-5613 and axatilimab, and professional fees, partially offset by a decrease in clinical activities related to entinostat.

General and administrative expenses for the second quarter 2020 increased to $6.0 million from $3.5 million for the prior year period. The increase was primarily due to increased pre-commercialization activities in advance of the phase 3 breast cancer results for entinostat and employee related expenses.

For the three months ended June 30, 2020, Syndax reported a net loss attributable to common stockholders of $17.1 million or $0.42 per share compared to $14.9 million or $0.47 per share for the prior year period.

Financial Guidance

Today the Company provided operating expense guidance for the third quarter and second half of 2020. For the third quarter and second half of 2020, research and development expenses are expected to be $14 to $16 million and $30 to $35 million, respectively, and total operating expenses are expected to be $19 to $21 million and $40 to $45 million, respectively.

Conference Call and Webcast

In connection with the earnings release, Syndax’s management team will host a conference call and live audio webcast at 4:30 p.m. ET today, Thursday, August 6, 2020.

The live audio webcast and accompanying slides may be accessed through the Events & Presentations page in the Investors section of the Company’s website at www.syndax.com. Alternatively, the conference call may be accessed through the following:

Conference ID: 8998873
Domestic Dial-in Number: (855) 251-6663
International Dial-in Number: (281) 542-4259
Live webcast: View Source

For those unable to participate in the conference call or webcast, a replay will be available on the Investors section of the Company’s website, www.syndax.com.

On August 6, 2020 Iovance Biotherapeutics, Inc. (NASDAQ: IOVA), a late-stage biotechnology company developing novel T cell-based cancer immunotherapies (tumor-infiltrating lymphocyte, TIL and peripheral-blood lymphocyte, PBL), reported second quarter 2020 financial results and provided a corporate update.

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"During a strong first half of 2020 we completed dosing and reported early data for our pivotal melanoma program for lifileucel, announced data at AACR (Free AACR Whitepaper) for our collaborator Moffitt’s TIL in non-small cell lung cancer, presented updated Cohort 2 data for lifileucel at ASCO (Free ASCO Whitepaper), and successfully completed a public financing," said Maria Fardis, Ph.D., MBA, Iovance President and Chief Executive Officer. "Iovance is now in an excellent position to execute our planned commercial launch while broadening our pipeline programs. The cumulative set of positive clinical data for lifileucel continue to support our planned BLA submission for this one-time treatment for metastatic melanoma. We are also pleased to report that our cervical cancer pivotal program has recently completed enrollment in Cohort 1, and we look forward to dosing the last few patients in the coming weeks. With the first potential cell therapy in solid tumors and a broadening TIL platform, we believe Iovance is the leader in development, manufacturing, and commercialization of TIL cell therapy for cancer."

Second Quarter 2020 Updates

Clinical:

·TIL therapy, lifileucel, in Melanoma: updated data from the C-144-01 trial continue to support the potential for lifileucel as a one-time treatment for advanced melanoma.
oUpdated Cohort 2 data presented at ASCO (Free ASCO Whitepaper) 2020 showed an ORR of 36.4% with median duration of response not reached at 18.7 months of median study follow up (n=66).
Early Cohort 4 data showed 32.4% ORR at 5.3 months of median study follow up (n=68).
·TIL therapy, lifileucel, in Cervical cancer: enrollment in the pivotal Cohort 1 is complete in the C-145-04 study of lifileucel, previously known as LN-145, for advanced cervical cancer.
·TIL therapy in non-small cell lung cancer (NSCLC): active planning is underway for a registration-directed study, IOV-LUN-202, for LN-145 in NSCLC patients with defined unmet medical need.
·T-cell based therapies in additional indications: patient recruitment continues in the IOV-COM-202 basket study in solid tumors as well as the C-145-03 study in squamous cell carcinoma of the head and neck (SCCHN). Additional sites are being activated for the IOV-CLL-01 study in relapsed or refractory chronic lymphocytic leukemia and small lymphocytic lymphoma (CLL/SLL).

Regulatory:

·Iovance continues preparing for submission of a Biologics License Application (BLA) in late 2020 through data compilation and internal readiness activities.
·Iovance scheduled a meeting with U.S. FDA Division of Manufacturing and Product Quality (DMPQ) to align on the commercial manufacturing facility design and capacity. Full alignment was reached with the DMPQ prior to the upcoming scheduled meeting with the division.
·United States Adopted Names (USAN) council accepted and published the use of the name "lifileucel" to describe Iovance TIL therapy for cervical cancer in addition to melanoma. Lifileucel will replace the former product code LN-145 for the cervical cancer indication.

Commercial Launch Planning:

·Iovance is committed to providing individualized support for a personalized therapy through IovanceCaresTM, a program that will allow communication and coordination with health care providers (HCPs) for patient care throughout the lifileucel journey. All elements of the system will be managed by dedicated Iovance case managers to handle the needs of HCPs and patients. This platform will allow the hospitals to place orders for lifileucel, with Iovance to monitor and track patients’ cells during the manufacturing process through the delivery of lifileucel to the hospitals. The system will also include reimbursement support for sites.

Manufacturing:

·Construction of the Iovance Cell Therapy Center (iCTC) at the Navy Yard in Philadelphia remains on schedule. Clean rooms are expected to be completed in late 2020 with clinical activities to initiate in early 2021. Commercial manufacturing is on track for 2022.

Research:

·Entered into an agreement with Avid Bioservices for the GLP and GMP manufacturing of novel IL-2 analog IOV-3001.

Corporate:

·Cash position of $777.4 million at June 30 includes net proceeds of $567.4 million from a common stock public offering in June 2020. The current cash position is sufficient for Iovance to execute commercial launch and pipeline activities including a clinical program in NSCLC.
·A strong and growing organization of over 200 employees is in place across multiple locations, including an experienced commercial team with extensive cell therapy experience preparing for launch of lifileucel.
·Iovance has been granted a total of 12 U.S. patents for compositions and methods of treatment in using Iovance TIL in a broad range of cancers related to its 22-day second generation (Gen 2) manufacturing process.

Upcoming Data Presentations:

·Three Abstracts Accepted for ESMO (Free ESMO Whitepaper) Virtual Congress 2020: the following three posters will be highlighted at the upcoming ESMO (Free ESMO Whitepaper) Virtual Congress 2020, Scientific Weekend, to be held September 19-21, 2020
oIn vivo persistence of Iovance tumor-infiltrating lymphocytes LN-145 in cervical cancer patients (Abstract #3688)
oGenetic Modification of Iovance’s TIL through TALEN-mediated knockout of PD-1 as a strategy to empower TIL therapy for cancer (Abstract #3721)
oIovance Generation-2 Tumor-infiltrating Lymphocyte (TIL) Product Is Reinvigorated During the Manufacturing Process (Abstract #4229)

Second Quarter and First Half 2020 Financial Results

At June 30, 2020, Iovance held $777.4 million in cash, cash equivalents, short-term investments and restricted cash compared to $312.5 million at December 31, 2019. The current cash position includes net proceeds of $567.4 million from a common stock public offering in June 2020. The company anticipates that the year-end balance of cash, cash equivalents, short-term investments and restricted cash may be over $630 million. The operating expenses in the second half of 2020 are forecasted to be in the same range as the first half of 2020.

Net loss for the second quarter ended June 30, 2020, was $63.0 million, or $0.47 per share, compared to a net loss of $47.6 million, or $0.38 per share, for the second quarter ended June 30, 2019. Net loss for the six months ended June 30, 2020, was $132.6 million, or $1.02 per share, compared to a net loss of $84.5 million, or $0.68 per share, for the same period ended June 30, 2019.

Research and development expenses were $49.3 million for the second quarter ended June 30, 2020, an increase of $10.0 million compared to $39.3 million for the second quarter ended June 30, 2019. Research and development expenses were $106.2 million for the six months ended June 30, 2020, an increase of $36.0 million compared to $70.2 million for the same period ended June 30, 2019.

The increase in research and development expenses in the second quarter 2020 over the prior year period was primarily attributable to an increase in costs associated with multiple clinical trials, and growth of the internal research and development team. The increase in research and development expenses in the first half 2020 over the prior year period was primarily attributable to higher patient enrollment in clinical trials, licensing fees and growth of the internal research and development team.

General and administrative expenses were $14.4 million for the second quarter ended June 30, 2020, an increase of $3.5 million compared to $10.9 million for the second quarter ended June 30, 2019. General and administrative expenses were $28.2 million for the six months ended June 30, 2020, an increase of $8.3 million compared to $19.9 million for the same period ended June 30, 2019.

The increases in general and administrative expenses in the second quarter and first half 2020 compared to the prior year periods were primarily attributable to growth of the internal general and administrative team and higher stock-based compensation expenses.

Webcast and Conference Call

Iovance will host a conference call today at 4:30 p.m. ET to discuss the second quarter 2020 financial results and to provide a corporate update. The conference call dial-in numbers are 1-844-646-4465 (domestic) or 1-615-247-0257 (international). The conference ID access number for the call is 7875997. The live webcast can be accessed in the Investors section of the company’s website at View Source The archived webcast will be available for a year in the Investors section at www.iovance.com.

On August 6, 2020 Applied DNA Sciences, Inc. (NASDAQ: APDN) ("Applied DNA" or the "Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing that enables in vitro diagnostics, pre-clinical nucleic acid-based therapeutic drug candidates, supply chain security, anti-counterfeiting and anti-theft technology, reported consolidated financial results for the fiscal third quarter and the nine months ended June 30, 2020 (Press release, Applied DNA Sciences, AUG 6, 2020, View Source [SID1234563052]).

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"We continued during the quarter to position the Company to serve the unmet and evolving needs for COVID-19 testing solutions and vaccine development," said Dr. James A. Hayward, president and CEO of Applied DNA Sciences. "Upon the receipt of FDA Emergency Use Authorization ("EUA") for our Linea COVID-19 diagnostic assay kit (for use with nasopharyngeal (NP) swab and anterior nasal swab (ANS) sample collections), we put into place the foundation of our COVID-19 diagnostics business: we established the requisite supply chains and inventory to support anticipated growth in assay kit demand; we formed a clinical lab subsidiary (Applied DNA Clinical Labs LLC) that, once certified by the State of New York, will offer testing as a service ("TaaS") whose potential economics to us is more favorable than that of standalone kit sales; and we applied for amendments to our EUA to expand the addressable market for our kits and improve customer testing turnaround time and throughput. We are in the marketplace today with what we believe to be a highly sensitive and purpose-designed platform for the high-throughput workflows found at clinical diagnostic laboratories nationally. We are currently pursuing diagnostic kit contracts and, upon State certification, commercial testing contracts."

Continued Dr. Hayward, "The U.S. is facing bottlenecks in testing capacity with supply shortages and testing backlogs at laboratories that, together with the spike in infection numbers in the southern and western parts of the country, suggests greater and long-term demand for testing. We believe we are well-positioned to deliver greater patient access to testing and increased market penetration in the coming quarters. The recent amendments to our EUA advance our go-to-market strategy significantly: they greatly enhance our opportunity for commercial kit sales by increasing the size of the installed base of RT-PCR systems upon which our kit can run and they enable the use of automated RNA extraction robotics at third-party labs and at Applied DNA Clinical Labs LLC, when licensed, to increase testing throughput.

"We have also recruited our first research sponsors who have funded the development of pooling models for the testing of asymptomatic patients (screening testing), which we will be presenting to FDA. We believe that our ability to sample for the virus using the less-invasive ANS will enhance compliance among students and asymptomatic individuals who may require multiple rounds of testing. Several academic institutions are contemplating COVID-19 safety programs based upon the use of our diagnostic kit to enhance the safety of students, faculty, and staff. We have recruited both internal and external sales infrastructures to drive demand for our diagnostic kit."

Commenting on the development of the Company’s vaccine candidates co-developed with Takis S.R.L. and Evvivax S.R.L. (collectively, "Takis Biotech"), Dr. Hayward stated, "Tests on the linear DNA forms of our COVID-19 vaccine candidates provoked seroconversion in mouse models that are consistent with prior data from the plasmid forms of the vaccine candidates by Takis Biotech. Our results suggest that a low-dose vaccine could be potentially effective in providing protection while the T cell response suggests potential long-term persistence. We believe our results in animal models echo the effectiveness announced by some of the COVID-19 vaccines already in human trials. We have attracted the attention of ‘Big Pharma’ and are presently negotiating rights to novel delivery systems and funding for sophisticated toxicology screens done in collaboration with our partner Takis Biotech and their network of service partners."

With regard to the Company’s non-biological business segment, Dr. Hayward said, "Our supply chain security segment felt the full brunt of COVID-19 in the fiscal third quarter that resulted in a further weakening of demand for tagging and related services across the global supply chain chains we serve. We remain focused on business-building in key industrial and regulated markets, including textiles, cannabis, personal care, nutraceuticals, and pharmaceuticals, ahead of the return of increased demand patterns."

Concluded Dr. Hayward, "Looking ahead, we are focused on advancing our COVID-19 diagnostic kit and TaaS market strategy and progressing the development of the linear DNA forms of our vaccine candidates. To drive broader adoption of our kit by laboratories and to increase TaaS opportunities, we plan additional EUA amendments to further expand the base of RT-PCR systems relevant to our kit and to secure the ability to conduct asymptomatic screening testing, which we believe would confer onto us a potentially significant commercial advantage in the marketplace. We also await New York State certification of Applied DNA Clinical Labs LLC that would initiate commercial testing revenues.

"In the development of our vaccine candidates, we expect to launch of toxicology screens once funding is secured followed by higher animal studies before initiating human trials. We are recruiting industry partners to lead on the regulatory process and distribution with Applied DNA serving as the sole-source manufacturer globally. With our linear DNATM manufacturing platform, we are differentiated not only for our ability to manufacture any linear DNA form of a COVID-19 vaccine at extremely large scale, but also for our ability to react to any new variants of the virus with unrivaled speed."

Recent Business Highlights:

LineaTM COVID-19 SARS-CoV-2 Assay Kit

On July 31, 2020, the Company announced that the U.S. Food and Drug Administration (FDA) had granted its second EUA amendment that increases the size of the installed base of RT-PCR systems upon which the Company’s diagnostic assay kit can run as well as the speed and throughput of the laboratory process, including RNA extraction, via a robotic platform. The EUA was granted to Applied DNA on May 13, 2020, and the first amendment to the EUA was granted on July 8, 2020.

The second amendment to the EUA: 1) extends the RT-PCR platform from the Applied Biosystems (ThermoFisher Scientific) QuantStudio Dx to include Applied Biosystems’ QuantStudio 5 Real-Time PCR system to analyze patient samples on the company’s Linea COVID-19 assay kit; and 2) authorized the use of the Hamilton STARlet robotic automation in conjunction with the Omega Bio-tek MagBind viral RNA Express kit to speed the process of extracting viral RNA from specimens and drive greater testing throughput.

The scope of the EUA, as amended, is expressly limited to use consistent with the Instructions for Use by authorized laboratories, certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) to perform high complexity tests. The EUA will be effective until the declaration that circumstances exist justifying the authorization of the emergency use of in vitro diagnostics for detection and/or diagnosis of COVID-19 is terminated or until the EUA’s prior termination or revocation. The diagnostic kit has not been FDA cleared or approved, and the EUA’s limited authorization is only for the detection of nucleic acid from SARS-CoV-2, not for any other viruses or pathogens.

Vaccine Candidates

On July 17, 2020, Applied DNA and its vaccine development partner, Takis Biotech, announced that linear DNA forms of COVID-19 vaccine candidates under development by Takis Biotech and manufactured by the Company yielded strong antibody and T-cell responses even at very low doses of linear DNA.

The Company believes that linear DNA vaccines offer a broad array of potential advantages: stability during storage and shipment, the capacity to manufacture both centrally and locally across the globe, vaccine expression without apparent integration into the patient’s genome, the avoidance of antibiotics, no risk of transference of antibiotic-resistance genes, the avoidance of bacterial vectors, high purity and simplicity of production, and apparent high efficacy. Given the mutational proclivity of SARS-CoV-2, and the synthetic genomic design skills of Takis Biotech, the Company believes it could manufacture an improved linear DNA vaccine within weeks of obtaining the sequence of a mutant variant that dodged any future vaccines targeting then dominant variants.

Applied DNA Clinical Labs LLC ("ADCL")

On July 9, 2020, the Company announced the formation of ADCL as a wholly-owned subsidiary dedicated to the commercial development of its tests in virology (for the detection of COVID-19) and in oncology (for the detection and enumeration of invasive Circulating Tumor Cells (iCTCs) in patients with cancer).

In forming ADCL, Applied DNA is executing on a strategy to expand its market reach through value-added services complementary to a growing portfolio of diagnostic assays attractive to a broader number of qualified labs.

Corporate

On June 26, 2020, the Company announced that it had joined the Russell Microcap Index (the "Index") following the conclusion of the 2020 Russell indexes annual reconstitution.

Fiscal Third Quarter 2020 Financial Results:

·Revenues decreased 79% for the third quarter of fiscal 2020 to $432 thousand, compared with $2.1 million reported in the third quarter of fiscal 2019, and decreased 22% from the $552 thousand reported in the second fiscal quarter ended March 31, 2020. The decrease in year-over-year revenues was due primarily to a decrease in revenue from a licensing agreement in the cannabis industry of $1.0 million, as well as cannabis feasibility pilots of $137 thousand during the three months ended June 30, 2019. The decrease also relates to a decline in revenues of approximately $213 thousand from the government development contract award that expired during the second half of fiscal 2019. The remaining decrease related to a decline in product revenue as a result of lower textile and biopharmaceutical revenue.
·Total operating expenses increased to $3.5 million for the third fiscal quarter of 2020, compared with $3.2 million in the prior fiscal year’s third quarter. This increase is primarily attributable to an increase in selling, general and administrative expenses of $182 thousand. This increase was the result of stock-based compensation expense. There was also an increase of approximately $95 thousand in research and development expenses, specifically as it relates to the development of our Linea COVID-19 diagnostic assay kit.
·Net loss for the quarter ended June 30, 2020 was $3.3 million, or $0.72 per share, compared with a net loss of $1.5 million, or $1.55 per share, for the quarter ended June 30, 2019, and a net loss of $3.0 million, or $0.79 per share, for the quarter ended March 31, 2020.
·Excluding non-cash expenses, Adjusted EBITDA was negative $2.8 million and a negative $1.2 million for the quarters ended June 30, 2020 and 2019, respectively. See below for information regarding non-GAAP measures.

Nine-Month Financial Highlights:

·
Revenues for the first nine months of fiscal 2020 totaled $1.6 million, a decrease of 56% from $3.7 million from the same period in the prior fiscal year. The decrease in revenues was due to a decline in revenue of approximately $613 thousand associated with the completion of a government contract award, which was completed during the second half of fiscal 2019, as well as decreases of approximately $1.2 million in cannabis due to a decline in licensing and feasibility projects year over year.

·Operating expenses for the nine months ended June 30, 2020 decreased by $886 thousand or 9% for the same period last fiscal year. The decrease is primarily attributable to a decrease in stock-based compensation, consulting, travel and legal and professional fees, as well as a decrease in payroll of $273 thousand.
·Net loss for the nine months ended June 30, 2020 was $8.9 million or $2.54 per share, compared with a net loss of $7.4 million or $8.46 per share for the nine months ended June 30, 2019.
·Excluding non-cash expenses and interest, Adjusted EBITDA for the nine months ended June 30, 2020 was a negative $7.8 million as compared to a negative $6.1 million for the same period in the prior fiscal year. See below for information regarding non-GAAP measures.

Fiscal Third Quarter 2020 Conference Call Information

The Company will hold a conference call and webcast to discuss its fiscal third quarter-end 2020 results on Thursday, August 6, 2020 at 4:30 PM ET. To participate on the conference call, please follow the instructions below. While every attempt will be made to answer investors’ questions on the Q&A portion of the call, due to the large number of expected participants, not all questions may be answered.

To Participate:
·Participant Toll Free:1-844-887-9402
·Participant Toll: 1-412-317-6798
·Please ask to be joined to the Applied DNA Sciences call

Live webcast: View Source

Replay (available 1 hour following the conclusion of the live call through August 3, 2020):

·Participant Toll Free: 1-877-344-7529
·Participant Toll: 1-412-317-0088
·Participant Passcode: 10146786

Webcast replay: View Source

For those investors unable to attend the live call, a copy of management’s PowerPoint presentation will be available for review under ‘IR Calendar’ portion of the Company’s Investors web site: View Source

Information about Non-GAAP Financial Measures

As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. To supplement our condensed consolidated financial statements prepared and presented in accordance with GAAP, this earnings release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information presented in accordance with GAAP. We use this non-GAAP financial measure for internal financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our business by excluding non-cash expenses that may not be indicative of our recurring operating results. We believe this non-GAAP financial measure is useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

"EBITDA"- is defined as earnings (loss) before interest expense, income tax expense and depreciation and amortization expense.

"Adjusted EBITDA"- is defined as EBITDA adjusted to exclude (i) stock-based compensation and (ii) other non-cash expenses.