On February 28, 2020 NewLink Genetics Corporation (NASDAQ:NLNK) reported financial results for the fourth quarter and full year ended December 31, 2019, and provided an update on corporate activities (Press release, NewLink Genetics, FEB 28, 2020, View Source [SID1234554981]).
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"We continue to focus our work toward the anticipated completion of our proposed merger with Lumos Pharma," stated Carl Langren, Chief Financial Officer, and member of NewLink’s Office of the CEO. "We believe that the newly combined company will be well positioned to increase stockholder value through the continued efforts to offer improved therapeutic options for patients suffering from PGHD and other rare diseases. We look forward to the close of the merger transaction, which we expect later this quarter."
Eugene Kennedy, MD, Chief Medical Officer and member of NewLink’s Office of the CEO added, "We are also delighted by the FDA’s approval on December 19th of ERVEBO, which we licensed to Merck in 2014. We applaud the FDA, as well as Merck and all those involved in achieving approval."
Proposed Merger and Related Milestones
On February 13, 2020, NewLink filed a definitive proxy statement with the Securities and Exchange Committee (SEC) announcing the Special Meeting of Stockholders to be held on Tuesday, March 17th, 2020, for a stockholder vote on the issuance of shares in connection with the proposed merger of NewLink Genetics and Lumos Pharma, as well as other related proposals.
As previously reported, on September 30, 2019, NewLink announced its intent to merge with Lumos Pharma, a private clinical-stage biopharmaceutical company targeting rare and neglected diseases. Under the terms of the merger agreement, Lumos and NewLink stockholders will each own approximately 50% of the combined company, which will be renamed "Lumos Pharma, Inc." at the close of the transaction. Rick Hawkins, current CEO of Lumos Pharma, is expected to become CEO of the combined company. The proposed merger has been approved by the boards of directors of both companies and by the stockholders of Lumos Pharma and NewLink’s largest stockholder have entered into a support agreement with NewLink to vote in favor of various proposals relating to the proposed merger.
The combined company expects to focus initially on the development of Lumos Pharma’s product candidate, LUM-201 (ibutamoren), an oral growth hormone (GH) secretagogue targeting pediatric growth hormone deficiency (PGHD) and other rare endocrine disorders. If approved, LUM-201 has the potential to be the first orally administered growth hormone stimulating therapy for a subset of PGHD patients, an established sizable market where daily recombinant human growth hormone injections represent current standard-of-care therapy.
The initiation of a Phase 2b trial for LUM-201 in a subset of PGHD patients meeting certain predictive enrichment markers (PEMs) is anticipated in mid-2020. The combined company is expected to have resources sufficient to support
clinical development through this planned Phase 2b trial. Other target indications are being evaluated for LUM-201 clinical development, including Turner Syndrome and children born small for gestational age (SGA).
Additional Updates for 2019
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Entered into an exclusive worldwide license agreement with Ellipses Pharma Limited (Ellipses), effective December 17, 2020, for the development of and rights to commercialize NLG207 (formerly CRLX101), a nanoparticle formulation of the topoisomerase 1 inhibitor camptothecin, and the rights to develop and commercialize CRLX-301, a nanoparticle formulation of docetaxel.
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On December 19, 2019, the U.S. Food and Drug Administration (FDA) announced that the agency had granted approval of ERVEBO. A priority review voucher (PRV) was issued in conjunction with that approval and NewLink is entitled to 60% of the value of the PRV obtained through its sale, transfer or other disposition.
Financial Results for the Fourth Quarter and Full Year Ended December 31, 2019
Cash Position: NewLink Genetics ended the year on December 31, 2019, with cash and cash equivalents totaling $90.5 million compared to $120.7 million for the year ending December 31, 2018.
R&D Expenses: Research and development expenses for the fourth quarter of 2019 were $4.7 million, a decrease of $1.0 million from $5.7 million for the same period in 2018. The decrease was primarily due to reductions of $2.2 million in personnel-related and stock compensation expense and $100,000 in contract research and manufacturing spend offset by increases of $700,000 in restructuring costs and $600,000 in clinical trial and licensing expense. For the year ended December 31, 2019, R&D expenses were $22.2 million compared to $45.7 million in the year ended December 31, 2018.
G&A Expenses: General and administrative expenses in the fourth quarter of December 31, 2019 were $4.4 million, a decrease of $1.0 million from $5.4 million for the same period in 2018. The decrease was due primarily to decreases of $1.5 million in personnel-related and stock compensation expense and a decrease of $600,000 in supplies, travel and other expenses, offset by an increase of $600,000 in legal and consulting fees and a $500,000 increase in restructuring and severance expense. For the year ended December 31, 2019, G&A expenses were $23.9 million compared to $29.2 million in the year ended December 31, 2018.
Net Loss: NewLink Genetics reported a net loss of $8.3 million or a net loss of $0.22 per diluted share for the fourth quarter of 2019 and a net loss of $43.0 million or a net loss of $1.15 per diluted share for the year ended December 31, 2019, compared to a net loss of $10.6 million or a net loss of $0.28 per diluted share for the fourth quarter of 2018 and a net loss of $53.6 million or a net loss of $1.44 per diluted share for the year ended December 31, 2018.
NewLink Genetics ended 2019 with 37,325,091 shares outstanding.
ERVEBO is a registered trademark of Merck Sharp & Dohme Corp ("Merck").