On September 14, 2016 Aviragen Therapeutics, Inc. (NASDAQ:AVIR) reported its financial results for the fourth quarter and 2016 fiscal year ended June 30, 2016, and also provided an update on recent corporate and clinical developments (Press release, Nabi Biopharmaceuticals, SEP 14, 2016, View Source [SID:SID1234515155]).
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"Over the last twelve months we have made significant advances with our three next generation direct-acting antivirals that address serious infections with limited therapeutic options. Enrollment is 90% complete in the SPIRITUS Phase 2b trial of vapendavir for the treatment of human rhinovirus infections in moderate and severe asthmatic patients, and we look forward to announcing top-line data from the trial around the end of the year. We also announced today comparable bioavailability results for two new formulations of vapendavir that are appropriate for pediatrics, Phase 3 and commercial scale-up," remarked Joseph M. Patti, PhD, President and Chief Executive Officer of Aviragen Therapeutics.
"For our RSV program, we were pleased to resume enrollment in the Phase 2a RSV challenge study of BTA585, a RSV fusion inhibitor, following a short delay. We anticipate that top-line viral load data will be available around the end of the year. Finally, we strengthened our balance sheet with $20 million of non-dilutive cash from the partial monetization of our Inavir royalty stream. This positions us well to aggressively advance our pipeline of clinical-stage antivirals."
Recent Corporate Highlights
Vapendavir Phase 1 Bioavailability Trial. The Company reported today that it has successfully completed a single-center, open-label, bioavailability study in healthy volunteers assessing the comparability of the vapendavir phosphate salt capsule, and two new formulations of vapendavir free base in the forms of an oral suspension and tablet. Forty-six (46) subjects completed three periods of oral dosing and the plasma pharmacokinetic results indicated that the bioavailability of the oral suspension and tablet formulation were comparable to the capsule form of vapendavir which is currently being used in the Phase 2b SPIRITUS trial. The oral suspension formulation is intended to enable the conduct of future pediatric trials, and the tablet formulation will allow an increase in manufacturing scale appropriate for Phase 3 trials and commercial development.
Resumed Enrollment in the Phase 2a Efficacy Study of BTA585 for the Treatment of Respiratory Syncytial Virus (RSV) Infections. In July 2016, the Company reported that, subsequent to receiving approval from the U.K. Medicines and Healthcare Products Regulatory Agency (MHRA), enrollment has resumed in the double-blind, placebo-controlled, Phase 2a trial that is designed to evaluate the safety, pharmacokinetics, and antiviral activity of orally-dosed BTA585 in healthy volunteers challenged intranasally with RSV. In May, the Company announced that it was voluntarily delaying enrollment in the trial to investigate an aberrant lab result from a subject that was coupled with transient ECG changes. The Company also reported in July that it expects to submit a complete response to the U.S. Food and Drug Administration (FDA) in the first quarter of calendar 2017 regarding the clinical hold of BTA585’s investigational new drug (IND) application. The clinical hold was related to the aberrant lab report.
Entered into a License and Sponsored Research Agreement with Georgia State University Research Foundation (GSURF). In July 2016, the Company announced that it entered into an exclusive, worldwide license and sponsored research agreement with GSURF to jointly develop and commercialize RSV replication inhibitors discovered by Professor Richard Plemper and his team in the Institute for Biomedical Sciences (IBMS) at Georgia State University.
Financial Results for the Three Month Period Ended June 30, 2016
The Company reported net loss of $7.0 million for the three month period ended June 30, 2016, as compared to a net loss of $19.9 million in the same quarter of the prior fiscal year. Basic and diluted net loss per share was $0.18 for the three month period ended June 30, 2016, as compared to a basic and diluted net loss per share of $0.55 in the same period of 2015. The major components of net loss in both periods are as follows:
Revenue decreased to $0.6 million for the three month period ended June 30, 2016 from $4.1 million in the same period in 2015 due to a $3.7 million reduction in royalty revenues resulting from lower government stockpiling sales of the flu product Relenza.
Research and development expense increased to $6.0 million for the three month period ended June 30, 2016 from $5.2 million in the same period in 2015. The increase reflected higher clinical costs related to the initiation of a Phase 2a challenge trial investigating the use of BTA585 as a treatment for RSV, and higher expenses for producing clinical supplies of BTA074 for its Phase 2 clinical trial for the treatment of condyloma caused by human papillomavirus (HPV) types 6 and 11.
In June 2015, the Company recorded a $17.6 million non-recurring, in-process research and development (IPR&D) expense in connection with the acquisition of Anaconda Pharma. There was no IPR&D expense recorded in 2016.
General and administrative expense was $1.3 million for both the three month period ended June 30, 2016 and the same period in 2015, as higher consulting and professional fees were fully offset by lower employee compensation costs.
Accounting Treatment for the Sale of Royalty Interest to HealthCare Royalty Partners (HCRP):
In April 2016, Aviragen sold a portion of its interest in future royalty payments related to Inavir, a flu product marketed in Japan by Daiichi Sankyo, to HCRP for gross proceeds of $20 million. As a result of a limit on the amount of royalties that HCRP can earn under the arrangement, U.S. accounting rules require Aviragen to account for this transaction under the debt accounting method. Aviragen has no obligation to pay any amounts to HCRP other than to pass through to HCRP its share of royalties as they are received from Daiichi Sankyo. In addition, although the royalty payments were sold to HCRP, the debt accounting rules require the Company to continue to recognize HCRP’s share of the royalties as non-cash revenue in its Statement of Operations and to record the proceeds of $20 million, net of expenses, as a liability on its Balance Sheet. As royalties are passed through Aviragen to HCRP under this arrangement, the liability is reduced. Non-cash implied interest expense will be recognized on the liability. In the fourth quarter of 2016, Aviragen recognized $0.2 million of non-cash royalty revenue and $0.3 million in non-cash interest expense related to this arrangement.
The Company held $69.0 million in cash, cash equivalents, and short-term investments as of June 30, 2016.
Financial Results for the Fiscal Year Ended June 30, 2016
The Company reported a net loss of $25.4 million for its fiscal year ended June 30, 2016, as compared to a net loss of $19.1 million in the prior year. The $6.3 million increase in net loss from the prior year was primarily due to a $15.5 million decrease in revenues reflecting a reduction of $7.0 million in royalty revenue, principally related to Relenza, and $8.5 million in lower service revenue, due to the cancellation of the BARDA contract in 2014. The net loss comparison was also impacted by a $6.5 million increase in research and development expense, largely related to higher costs for the Company’s vapendavir and BTA585 clinical development programs. These items were partially offset by the impact of a non-recurring $17.6 million IPR&D expense recorded in fiscal 2015 related to the acquisition of Anaconda Pharma. Basic and diluted net loss per share was $0.66 for the fiscal year ended June 30, 2016, as compared to a basic and diluted net loss per share of $0.54 in the prior year.