On November 1, 2018 Nordic Nanovector ASA (OSE: NANO) reported that an abstract reporting updated results from its LYMRIT 37-01 Phase 1/2 clinical study of Betalutin (177Lu-satetraxetan-lilotomab) in patients with relapsed/refractory indolent non-Hodgkin’s lymphoma (iNHL) has been published ahead of its presentation in a poster at the 60th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting & Exposition (1-4 December 2018 in San Diego, CA, USA) (Press release, Nordic Nanovector, NOV 1, 2018, View Source [SID1234553490]).

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The published dataset (as of 22 June 2018) includes 74 evaluable patients; all patients received Betalutin as a single administration and have six or more months of follow-up. The complete dataset will be presented at ASH (Free ASH Whitepaper).

The conclusions from the updated study results are that Betalutin is well-tolerated and has promising anti-tumour activity in recurrent iNHL, especially in follicular lymphoma (FL) patients. Key results are:

Patients Number of patients (n) Overall Response Rate (ORR) Complete Responses (CR)
All iNHL patients 74 61 % 26 %
FL patients 57 65 % 24 %
3L FL patients (≥2 prior therapies) 37 70 % 27 %
FL patients in Arm 1
(40 mg lilotomab followed by 15 MBq/kg Betalutin) 25 64 % 28 %
FL patients in Arm 4
(100 mg/m2 lilotomab followed by 20 MBq/kg Betalutin) 16 69 % 19 %
The median duration of response (mDoR), when treated with a single administration of Betalutin, was 13.3 months for all patients (20.5 months for those with a CR) based on a median follow-up of 9.1 months (range 4.9-49.5 months). Twenty-six patients (35%) have remained free of disease progression for more than 12 months.

Betalutin therapy was well tolerated with no unexpected safety findings and the safety profile is both predictable and manageable.

The data continue to highlight the encouraging clinical profile of single-agent Betalutin therapy in iNHL patients, particularly in those with FL, the primary NHL population for which Betalutin is being developed.

Two recommended Phase 2 doses were identified from this study and are now being compared in the pivotal, randomised Phase 2b PARADIGME trial in relapsed, anti-CD20 refractory FL patients who have received two or more prior therapies.

Arne Kolstad, lead investigator of LYMRIT 37-01 and senior consultant in medical oncology and radiotherapy, Oslo University Hospital Radiumhospitalet, said: "Patients with relapsed/refractory follicular lymphoma have a need for effective treatment options that improve their quality of life, especially elderly patients. The clinical profile that Betalutin is consistently showing in this patient population is very encouraging."

Lisa Rojkjaer, Chief Medical Officer of Nordic Nanovector, commented: "We are very pleased with the clinical data. The results from Arm 4 further support the decision to compare the 100 mg/m2 lilotomab + 20 MBq/kg Betalutin dosing regimen from Arm 4 with the 40 mg lilotomab + 15 MBq/kg regimen from Arm 1 in the pivotal phase 2b PARADIGME trial. The emerging data on the durability of the responses together with the safety profile of Betalutin and the convenience of a single administration underscore the potential of Betalutin for the treatment of patients with advanced-stage follicular lymphoma."

Poster details

Abstract 2879

Abstract title: LYMRIT 37-01: A phase I/II study of 177Lu-lilotomab satetraxetan (Betalutin) antibody-radionuclide-conjugate (ARC) for the treatment of relapsed non-Hodgkin’s lymphoma (NHL) – Analysis with 6-month follow-up

Authors: A. Kolstad, A et al.

Session Name: 623. Mantle Cell, Follicular, and Other Indolent B-Cell Lymphoma—Clinical Studies: Poster II

Date: Sunday, 2 December 2018

Presentation Time: 6:00 PM – 8:00 PM Pacific time

Location: San Diego Convention Center, Hall GH

The abstract is available at View Source and the poster will be published on the Nordic Nanovector website to coincide with the session.

About ASH (Free ASH Whitepaper)

The ASH (Free ASH Whitepaper) annual meeting is the premier event for scientific exchange in the field of haematology, attracting more than 20,000 attendees from all over the world. Typically, more than 5,000 scientific abstracts are submitted each year, and more than 3,000 abstracts are accepted for oral and poster presentations through an extensive peer review process.

About LYMRIT 37-01

LYMRIT 37-01 is a Phase 1/2 dose-escalation study to determine the safety, pharmacokinetics and preliminary efficacy of a single dose of Betalutin in patients with relapsed iNHL, and to establish a recommended Phase 2 dose for the global, randomised Phase 2b PARADIGME trial.

LYMRIT 37-01 recruited 74 pts [57 follicular (FL), 7 mantle cell (MCL), 9 marginal zone (MZL), 1 small lymphocytic (SLL)] at 13 sites between December 2012 and February 2018. Median age was 68 years (range 38-87; 55% ≥ 65); the median number of prior therapies was 3 (range 1-9); 48 pts (65%) received 2 or more prior therapies.

On November 1, 2018 GlycoMimetics (NASDAQ: GLYC)reported that six abstracts covering data from the company’s research and clinical portfolio have been accepted for presentation at the 60th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition to be held December 1-4, 2018 in San Diego (Press release, GlycoMimetics, NOV 1, 2018, View Source [SID1234530568]).

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Of particular note, the final analysis from the recently completed Phase 1/2 AML trial of uproleselan, an E-selectin antagonist and the company’s lead wholly owned clinical candidate, has been selected for an oral presentation on Sunday, December 2 during a platform session on novel therapies in AML. Clinical data to be presented include analyses of measurable residual disease (MRD), analyses of response in high-risk subgroups, and updated event-free and overall survival data, which continue to compare favorably with matched historical controls. New data will also be presented showing a correlation between E-selectin ligand expression on leukemic blasts and leukemic stem cells (LSCs), supporting the premise that binding to E-selectin is a mechanism of resistance in AML.

In addition, a poster presentation of complementary work by investigators at the Fred Hutchinson Cancer Research Center will highlight new clinical data showing E-selectin ligand expression on leukemic blasts is associated with poor outcomes in patients at their center with AML. The combined clinical dataset from these two studies provides further scientific rationale for the potential value of uproleselan as a selective, bone-marrow microenvironment-disrupting agent in patients with AML.

"Our oral presentation at ASH (Free ASH Whitepaper) is noteworthy in that we show for the first time that the majority of evaluable patients (11 out of 16) in the R/R cohort and more than half of evaluable patients (5 out of 9) in the newly diagnosed cohort achieved measurable residual disease negativity as assessed by either flow and/or RT-PCR, when uproleselan is added to a standard chemotherapy regimen," noted Helen Thackray, M.D., FAAP, GlycoMimetics Senior Vice President, Clinical Development and Chief Medical Officer. "Furthermore, we now have an updated final analysis of survival that reflects longer term follow up and fewer patients’ data censored, and these data also continue to compare very favorably to historical studies of matched patient groups. As we initiate sites for our Phase 3 study, the ASH (Free ASH Whitepaper) data on the addition of uproleselan to chemotherapy, namely improved remission rates, low mucositis rates, high MRD and transplant rates – as well as promising survival – give us greater confidence in the opportunity to provide a potentially transformative regimen for not only patients with R/R AML but also for the newly diagnosed patients."

According to the Phase 1/2 trial’s lead investigator Daniel J. DeAngelo, M.D., Ph.D., Director of Clinical and Translational Research, Adult Leukemia Program, at the Dana-Farber Cancer Institute and Brigham and Women’s Hospital, "Two of the most striking findings from this study are the number of patients negative for measurable residual disease and the low rate of mucositis. These two potential benefits of the candidate drug, combined with the strong survival signals, distinguish uproleselan from other agents in development. These potential benefits clearly underscore the mechanism of action of uproleselan and, importantly, point to the opportunity we have to help change the face of this disease."

Featured GlycoMimetics’ ASH (Free ASH Whitepaper) data include the following:

R/R AML Cohort: At the recommended Phase 2 dose (RP2D), CR (complete response)/CRi (complete remission with incomplete blood count recovery) rate was 41%, median overall survival was 8.8 months (95% CI 5.7-11.4) and 69% of evaluable patients (11/16) achieved measurable residual disease negativity as assessed by either flow and/or RT-PCR. Overall survival (OS) will be the primary outcome measure in the company’s Phase 3 trial in R/R AML patients, and the data reported today compares to 5.2-5.4 months OS in comparable historical controls. 1,2 (Abstract #331)
Newly Diagnosed (ND) AML Cohort: At the RP2D, CR/CRi rate was 72%, median overall survival was 12.6 months (95% CI 9.9-not reached), Event Free Survival (EFS) was 9.2 months (3.0-12.6) and 56% of evaluable patients (5 out of 9) achieved measurable residual disease negativity as assessed by either flow and/or RT-PCR. EFS will be the primary outcome measure for the interim analysis in the National Cancer Institute clinical trial in newly diagnosed patients, and the data presented today compare to 2-6.5 months for EFS in historical controls which represent lower risk patient populations than those treated in our study. 3,4 (Abstract #331)
Based on data from 89 serially acquired AML patient samples at the Fred Hutchinson Cancer Research Center, mean fluorescence intensity of E-selectin-Fc binding is four-fold higher for R/R patients than for newly diagnosed patients (p=0.0026), suggesting that sequestration in the vascular niche of the bone marrow is associated with chemotherapy resistance. (Abstract #1513)
Other GlycoMimetics ASH (Free ASH Whitepaper) presentations will showcase the potential use of uproleselan to mobilize hematopoietic stem cells with increased reconstitution potential, as well as highlight two new novel compounds discovered by GlycoMimetics that are for the first time being presented to the hematology community. Specifically, Abstract 4678 demonstrates that a highly-potent antagonist of E-selectin, GMI-1687, shows equivalent activity to uproleselan, but at 250-fold lower dose and via subcutaneous administration. In addition, GlycoMimetics researchers will also present preclinical data for a novel dual-function galectin-3 / E-selectin inhibitor, GMI-1757, in a well-established model of venous thrombosis.

Presentation details:

Publication Number: 331
TITLE: Uproleselan (GMI-1271), an E-Selectin Antagonist, Improves the Efficacy and Safety of Chemotherapy in Relapsed/Refractory (R/R) and Newly Diagnosed Older Patients with Acute Myeloid Leukemia: Final, Correlative and Subgroup Analyses
Session Name: 616. Acute Myeloid Leukemia: Novel Therapy, excluding Transplantation: Combination Therapy
Session Date: Sunday, December 2, 2018
Session Time: 9:30 AM – 11:00 AM PST
Presentation Time: 9:30 AM
Room: Manchester Grand Hyatt San Diego, Grand Hall B

Publication Number: 1513
TITLE: E-Selectin Ligand Expression by Leukemic Blasts Is Associated with Prognosis in Patients with AML
Session Name: 617. Acute Myeloid Leukemia: Biology, Cytogenetics, and Molecular Markers in Diagnosis and Prognosis: Poster I
Session Date: Saturday, December 1, 2018
Presentation Time: 6:15 PM – 8:15 PM PST
Location: San Diego Convention Center, Hall GH

Publication Number: 2211
TITLE: A Novel Glycomimetic Compound (GMI-1757) with Dual Functional Antagonism to E-Selectin and Galectin-3 Demonstrates Inhibition of Thrombus Formation in an Inferior Vena Cava Model
Session Name: 802. Chemical Biology and Experimental Therapeutics: Poster I
Session Date: Saturday, December 1, 2018
Presentation Time: 6:15 PM – 8:15 PM PST
Location: San Diego Convention Center, Hall GH

Publication Number: 3846
TITLE: The Vascular Bone Marrow Niche Influences Outcome in Chronic Myeloid Leukemia
Session Name: 506. Hematopoiesis and Stem Cells: Microenvironment, Cell Adhesion, and Stromal Stem Cells: Poster III
Session Date: Monday, December 3, 2018
Presentation Time: 6:00 PM – 8:00 PM PST
Location: San Diego Convention Center, Hall GH

Publication Number: 4552
TITLE: Vascular E-Selectin Acts as a Gatekeeper Inducing Commitment and Loss of Self-Renewal in HSC Transmigrating through the Marrow Vasculature
Session Name: 711. Cell Collection and Processing: Poster III
Session Date: Monday, December 3, 2018
Presentation Time: 6:00 PM – 8:00 PM PST
Location: San Diego Convention Center, Hall GH

Publication Number: 4678
TITLE: A Novel and Potent Inhibitor of E-Selectin, GMI-1687, Attenuates Thrombus Formation and Augments Chemotherapeutic Intervention of AML in Preclinical Models Following Subcutaneous Administration
Session Name: 802. Chemical Biology and Experimental Therapeutics: Poster III
Session Date: Monday, December 3, 2018
Presentation Time: 6:00 PM – 8:00 PM PST
Location: San Diego Convention Center, Hall G

Meeting abstracts are available on ASH (Free ASH Whitepaper)’s website.

1 Feldman et al, J Clin Oncol. 2005 Jun 20;23(18):4110-6.
2 Greenberg et al, J Clin Oncol. 2004 Mar 15;22(6):1078-86.
3 Lowenberg et al, N Engl J Med. 2009 Sep 24;361(13).
4 Lancet et al, Blood. 2014 May 22;123(21):3239-46.

About Uproleselan (GMI-1271)

Uproleselan (yoo’ pro le’sel an) is designed to block E-selectin (an adhesion molecule on cells in the bone marrow) from binding with blood cancer cells as a targeted approach to disrupting well-established mechanisms of leukemic cell resistance within the bone marrow microenvironment. In a Phase 1/2 clinical trial, uproleselan was evaluated in both newly diagnosed elderly and relapsed/refractory patients with AML. In both populations, patients treated with uproleselan together with standard chemotherapy achieved better than expected remission rates and overall survival compared to historical controls, which have been derived from results from third party clinical trials evaluating standard chemotherapy, as well as lower than expected induction-related mortality rates. Treatment in these patient populations was generally well tolerated, with fewer than expected adverse effects. The U.S. Food and Drug Administration (FDA) has granted uproleselan Breakthrough Therapy Designation for the treatment of adult AML patients with relapsed/refractory (R/R) disease. GlycoMimetics is currently implementing a comprehensive development program across the clinical spectrum of AML. This includes a company sponsored Phase 3 trial in R/R AML and two consortia-sponsored trials in newly diagnosed patients. One consortium trial is being sponsored by the NCI and will enroll newly diagnosed patients fit for intensive chemotherapy. The other trial is sponsored by the HOVON group in Europe and will enroll newly diagnosed patients unfit for intensive chemotherapy.

On November 1, 2018 Bio-Thera Solutions, reported the initiation of a Phase III clinical trial evaluating the efficacy and safety of its investigational HER2 Antibody-Drug Conjugate (ADC), BAT8001, in patients with HER-2 positive metastatic breast cancer who previously received trastuzumab separately or in combination with taxanes (Press release, BioThera Solutions, NOV 1, 2018, View Source [SID1234530650]). The trial is designed to compare BAT8001 versus lapatinib combined with capecitabine which is 2nd-line standard of care for metastatic breast cancer patients in China.

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"Metastatic breast cancer is a difficult to treat cancer that impacts hundreds of thousands of patients around the world. Patients with metastatic breast cancer need more treatment options that provide an improved survival benefit," said Shengfeng Li, CEO of Bio-Thera Solutions. "This Phase III trial is an important step in the development of BAT8001, potentially providing patients with metastatic breast cancer a new treatment option."

This Phase III, multicenter, randomized, open-label, controlled trial will recruit approximately 410 patients in China. The primary efficacy outcome of the trial is progression-free survival (PFS). Other pre-specified outcome measures include overall survival (OS), and objective response rate (ORR). The safety and immunogenicity of BAT8001 will also be evaluated in the trial.

More information on the trial is available at View Source
(CTR20180157).

About BAT8001

BAT8001 is an investigational HER2-ADC being evaluated in multiple tumor types. HER2 is a naturally occurring receptor that is overexpressed in many types of cancer, including breast cancer and gastric cancer. BAT8001 is being developed for use as a single agent and in combination with other agents for the treatment of multiple cancers. The BAT8001 clinical study program will be expanded beyond metastatic cancer to other HER2-positive cancers, including gastric cancer, over the next 12 months.

About Antibody-Drug Conjugates

Antibody-drug Conjugates or ADCs are designed to harness the targeting ability of monoclonal antibodies (mAbs) to deliver cytotoxic agents selectively to tumor cells by linking the monoclonal antibody and cytotoxic agent through a chemical linker. An ideal ADC consists of: 1) a highly selective mAb for a tumor-associated antigen that has little or no expression on normal cells, 2) a potent cytotoxic agent designed to induce target cell death after being internalized in the tumor cell and released and 3) a chemical linker that is stable in circulation but releases the cytotoxic agent in target cells. By selectively delivering a cytotoxic agent directly inside a tumor cell, ADCs increase the safety and tolerability of the cytotoxic agent relative to giving the cytotoxic agent systemically to the patient.

About Metastatic Breast Cancer

Metastatic breast cancer is not a specific type of breast cancer, it is breast cancer that has spread beyond the breast to other organs in the body. Metastatic breast cancer is most often found in the bones, lungs, liver or brain but can be found in other locations in the body. Although metastatic breast cancer has spread to another part of the body, it is still considered and treated as breast cancer. Typically, metastatic breast cancer arises months or years after a person has completed treatment for early or locally advanced breast cancer. This is sometimes called a distant recurrence. Some patients are first diagnosed with metastatic breast cancer. This is called de novo metastatic breast cancer. The risk of metastasis after breast cancer treatment varies from person to person and depends greatly on the biology of the tumor, the stage at the time of the original diagnosis and the treatments for the original cancer.

On November 1, 2018 MannKind Corporation (NASDAQ:MNKD) reported financial results for the third quarter ended September 30, 2018 (Press release, Mannkind, NOV 1, 2018, View Source [SID1234530468]).

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"In 3Q 2018, we executed on both of our corporate value drivers, Afrezza and Technosphere Platform, by signing a global licensing and collaboration agreement for Treprostinil Technosphere and a research agreement for an undisclosed Technosphere formulation with upfront payments from these deals received in the last two months. Our sales and marketing efforts continue to show progress in growing Afrezza sales as the 3Q revenues have more than doubled from 3Q 2017," said Michael Castagna, Chief Executive Officer of MannKind Corporation.

Third Quarter Results

For the third quarter of 2018, Afrezza net revenue was $4.4 million, an increase of 121% compared to $2.0 million for the third quarter of 2017, reflecting increased product demand and pricing as well as a more favorable mix of cartridges.

Cost of goods sold was $5.3 million for the third quarter of 2018, an increase of 16% compared to $4.6 million for the same period in 2017, which was driven by an increased write-off of expiring inventory in the amount of $0.7 million.

Research and development (R&D) expenses for the third quarter of 2018 were $2.0 million compared to $4.4 million for the third quarter of 2017, a decrease of $2.4 million or 53%, reflecting $1.0 million in lower salary related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), lower clinical trial expense of $0.9 million, a decrease in headcount of $0.4 million and lower research and development supply costs of $0.2 million. These decreases were offset by increases in stock compensation expense and in travel expenses of $0.2 million.

Selling, general and administrative (SG&A) expenses were $19.4 million for the third quarter of 2018 compared to $17.7 million for the third quarter of 2017. The $1.7 million or 9% increase was primarily due to a marketing and advertising cost increase of $1.2 million, an increase in commercial operations headcount of $0.9 million, an increase in sample spending of $0.3 million which were offset by lower facility costs of $0.5 million and a decrease in general and administrative personnel severance costs of $0.4 million.

Interest expense on notes was $1.0 million for the third quarter of 2018 compared to $2.3 million for the third quarter of 2017. The $1.3 million or 57% decrease was primarily due to a reduction in the principal debt balances.

The net loss for the third quarter of 2018 was $24.2 million, or $0.16 per share, compared to the $32.9 million net loss in the third quarter of 2017 or $0.31 per share. The lower loss per share is attributable to an increase in revenues, lower expenses and an increase in shares used to compute the basic and diluted net loss per share.

Nine Months Ended Results

For the nine months ended September 30, 2018, Afrezza net revenue was $11.5 million, an increase of 144% compared to $4.7 million for the same period in 2017, reflecting increased product demand and pricing as well as a more favorable mix of cartridges.

Cost of goods sold for the nine months ended September 30, 2018 was $14.4 million compared to $12.2 million for the nine months ended September 30, 2017. This increase of $2.2 million or 18% was primarily attributable to a $1.2 million increase resulting from higher Afrezza sales, an increase of $0.9 million of excess capacity costs and a $0.4 million realized currency loss from insulin purchases which were offset by a $0.3 million settlement of a credit related to a purchase of insulin. Inventory write-offs of $1.8 million for the nine months ended September 30, 2018 remained flat compared to 2017.

R&D expenses for the nine months ended September 30, 2018 were $7.7 million compared to $10.6 million for the same period in 2017. This $3.0 million or 28% decrease was primarily attributable to a $2.2 million decrease in salary-related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), a decrease in headcount of $0.7 million, a decrease in research and development supply costs of $0.5 million, and a decrease in salary related expenses for personnel supporting manufacturing and production activities of $0.4 million. These decreases were offset by an increase in relocation and recruiting fees of $0.6 million plus an increase in consulting services costs of $0.4 million in connection with international regulatory activities.

SG&A expenses were $61.7 million for the nine months ended September 30, 2018 compared to $51.7 million for the same period in 2017. The $10.0 million or 19% increase was primarily due to an increase in headcount-related expenses associated with commercial operations of $3.5 million and general and administration personnel of $2.5 million, a $2.2 million increase in salary-related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), an increase in stock-based compensation expense of $1.9 million, a $1.1 million increase in the cost of transitioning corporate support functions from Connecticut to our headquarters in California and an increase in consulting fees in connection with corporate strategies of $0.9 million, which were offset by lower marketing expenses of $1.6 million and a decrease in facility expenses of $0.7 million.

Interest expense on notes was $4.5 million for the nine months ended September 30, 2018 compared to $7.4 million for the same period in 2017. The $2.9 million or 40% decrease was primarily due to a reduction in the principal debt balances.

The net loss for the nine months ended September 30, 2018 was $77.2 million, or $0.56 per share, compared to $84.5 million for the nine months ended September 30, 2017, or $0.84 per share. The lower net loss per share is attributable to an increase in revenues, a decrease in expenses and an increase in shares used to compute basic and diluted net loss per share.

Cash and Cash Equivalents

Cash, cash equivalents and restricted cash at September 30, 2018 was $11.0 million compared to $48.4 million at December 31, 2017, primarily due to net cash used in operating activities of $62.7 million, inclusive of $10.0 million received from United Therapeutics in September 2018, primarily offset by $26.4 million of net proceeds from a registered direct offering of 14 million shares of common stock and warrants at a purchase price of $2.00 per share and accompanying warrant.

Conference Call

MannKind will host a conference call and presentation webcast to discuss these results today at 9:00 a.m. Eastern Time. To view and listen to the earnings call webcast live via the Internet, visit the Company’s website at www.mannkindcorp.com and click on the "Q3 2018 MannKind Earnings Conference Call" link in the Webcasts section of News & Events. To participate in the live call by telephone, please dial (888) 394-8218 toll-free or (323) 701-0225 toll/international and use the conference passcode: 5666425.

A telephone replay of the call will be accessible for approximately 14 days following completion of the call by dialing (844) 512-2921 toll-free or (412) 317-6671 toll/international and use the replay passcode: 5666425. A replay will also be available on MannKind’s website for 14 days.

On November 1, 2018 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and nine months ended September 30, 2018 (Press release, Emergent BioSolutions, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374998 [SID1234530510]).

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"Our financial and operational performance is solidly in line with expectations and we are confident in a strong finish to the year, driven by our organic business as well as the impact of the PaxVax and Adapt Pharma acquisitions," said Daniel J. Abdun-Nabi, CEO of Emergent BioSolutions. He continued, "Strategically, we have broadened our reach into the public health threats market, strengthened our portfolio of unique products, and expanded the patients and customers that we serve. Operationally, we have added substantial manufacturing and sales capabilities, diversified our product development pipeline, and strengthened our pool of engaged and talented employees. Financially, we now expect to achieve our 2020 revenue goal of at least $1 billion in 2019, a full year ahead of schedule, bolstering our ability to create long-term shareholder value."

Richard S. Lindahl, CFO of Emergent BioSolutions, said, "The acquisitions of Adapt Pharma and PaxVax create a step-change forward for Emergent. On a combined basis, we expect the two entities to contribute between $270 and $300 million of incremental revenue and to be accretive to adjusted net income and adjusted EBITDA in 2019. We are actively engaged in integration and our entire team is excited to move forward together as we continue to diversify our revenue sources, realize scale efficiencies and drive strong cash flow from the now larger Emergent business operations."

Q3 2018 AND RECENT BUSINESS ACCOMPLISHMENTS

Acquisitions

Acquired specialty vaccines company PaxVax and its U.S. Food and Drug Administration (FDA) approved vaccines for typhoid, Vivotif (Typhoid Vaccine Live Oral Ty21a), and cholera, Vaxchora (Cholera Vaccine, Live, Oral), along with a development pipeline focused on infectious disease vaccines and related U.S.- and Europe-based manufacturing infrastructure.

Acquired Adapt Pharma and its flagship product NARCAN (naloxone HCl) Nasal Spray, the first and only needle-free presentation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose, and the leading community-use option for naloxone delivery.
Product Development

Initiated a Phase 1 clinical study of ZIKV-IG, the Company’s anti-Zika virus immune globulin being developed as a therapeutic intervention against Zika virus disease; the candidate was granted Fast Track designation by the FDA in December 2017.
Financing

To fund the recent acquisitions of PaxVax and Adapt Pharma and pay related fees, costs, and expenses for both transactions, the Company incurred a total of $768 million of debt; this debt was incurred pursuant to an amended and restated credit facility that provides up to $1.05 billion of financing through a $600 million revolver and a $450 million term loan.
2018 FINANCIAL PERFORMANCE

(I) Quarter Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For Q3 2018, total revenues were $173.7 million, an increase of 16% over 2017. Total revenues reflect a significant increase in product sales.

Product Sales

For Q3 2018, product sales were $133.3 million, an increase of $19.0 million or 17% as compared to 2017. The increase primarily reflects sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) and Raxibacumab injection, a fully human monoclonal antibody, both acquired in Q4 2017, (included in Other product sales).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Product Sales
BioThrax $45.9 $83.5 (45%)
Other 87.4 30.8 184%
Total Product Sales $133.3 $114.3 17%

Contract Manufacturing

For Q3 2018, revenue from the Company’s contract manufacturing operations was $22.2 million, an increase of $3.3 million or 17% as compared to 2017. The increase primarily reflects increased manufacturing services for existing commercial customers at the Company’s Camden site.

Contracts and Grants

For Q3 2018, revenue from the Company’s development-based contracts and grants was $18.2 million, an increase of $2.0 million or 12% as compared to 2017. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q3 2018, cost of product sales and contract manufacturing was $73.2 million, an increase of $28.7 million or 64% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, offset by lower BioThrax (Anthrax Vaccine Adsorbed) sales during the quarter.

Research and Development (Gross and Net)

For Q3 2018, gross R&D expenses were $37.0 million, an increase of $14.3 million or 63% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For Q3 2018, 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 $18.8 million, an increase of $12.3 million or 189% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The Q3 2018 net R&D expense was 12% of net revenue (total revenue less contracts & grants).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Research and Development Expenses $37.0 $22.7 63%
Adjustments:
– Contracts and grants revenue $18.2 $16.2 12%
Net Research and Development Expenses $18.8 $6.5 189%

Selling, General and Administrative

For Q3 2018, selling, general and administrative expenses were $42.1 million, an increase of $7.6 million or 22% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions.

Income Taxes

For Q3 2018, the provision for income tax expense in the amount of $0.6 million includes a discrete benefit of $5.6 million primarily related to finalizing positions taken on the Company’s 2017 U.S. federal and state income tax filings and stock compensation activity, resulting in an effective tax rate of 3%.

Net Income & Adjusted Net Income

For Q3 2018, the Company recorded net income of $20.9 million, or $0.41 per diluted share, versus net income of $33.6 million, or $0.68 per diluted share, in 2017. (1)

For Q3 2018, the Company recorded adjusted net income of $28.2 million, or $0.55 per diluted share, versus adjusted net income of $37.1 million, or $0.73 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For Q3 2018, the Company recorded EBITDA of $34.4 million, or $0.67 per diluted share, versus $57.5 million, or $1.14 per diluted share, in 2017. (2)

For Q3 2018, the Company recorded adjusted EBITDA of $39.6 million, or $0.77 per diluted share, versus $60.5 million, or $1.20 per diluted share, in 2017. (2)

(II) Nine Months Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For the nine months of 2018, total revenues were $511.7 million, an increase of $144.6 million or 39% over 2017. Total revenues reflect a significant increase in product sales and contract development and manufacturing services revenue.

Product Sales

For the nine months of 2018, product sales were $389.1 million, an increase of $129.2 million or 50% as compared to 2017. The increase primarily reflects sales of ACAM2000 and Raxibacumab, both acquired in Q4 2017.

For the nine months of 2018, revenue from the Company’s contract manufacturing operations was $72.0 million, an increase of $19.3 million or 37% as compared to 2017. The increase primarily reflects the completion of a milestone related to the expansion of certain contract manufacturing capabilities at the Company’s Lansing site and manufacturing services at the Company’s Canton site.

Contracts and Grants

For the nine months of 2018, revenue from the Company’s development-based contracts and grants was $50.6 million, a decrease of $3.9 million or 7% as compared to 2017. The decrease primarily reflects a reduction in revenue associated with the successful completion of multiple U.S. government development contracts, as well as reduced R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For the nine months of 2018, cost of product sales and contract manufacturing was $220.4 million, an increase of $95.0 million or 76% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, and increased CMO revenue, offset by lower BioThrax sales during the period.

Research and Development (Gross and Net)

For the nine months of 2018, gross R&D expenses were $90.8 million, an increase of $21.9 million or 32% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For the nine months of 2018, net R&D expense was $40.2 million, an increase of $25.8 million or 179% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The nine months of 2018 net R&D expense was 9% of net revenue (total revenue less contracts & grants).

Selling, General and Administrative

For the nine months of 2018, selling, general and administrative expenses were $121.8 million, an increase of $20.3 million or 20% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions, as well as non-capitalized costs associated with critical IT systems improvements and higher non-cash compensation expenses associated with the Company’s equity awards program.

Income Taxes

For the nine months of 2018, the provision for income tax expense in the amount of $11.8 million includes a discrete benefit of $8.7 million primarily related to stock compensation activity and finalizing positions taken on the Company’s 2017 US federal and state income tax filings, resulting in an effective tax rate of 15%.

Net Income & Adjusted Net Income

For the nine months of 2018, the Company recorded net income of $66.2 million, or $1.29 per diluted share, versus net income of $48.7 million, or $1.03 per diluted share, in 2017. (1)

For the nine months of 2018, the Company recorded adjusted net income of $81.4 million, or $1.59 per diluted share, versus adjusted net income of $57.8 million, or $1.15 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For the nine months of 2018, the Company recorded EBITDA of $116.7 million, or $2.28 per diluted share, versus $100.8 million, or $2.01 per diluted share, in 2017. (2)

For the nine months of 2018, the Company recorded adjusted EBITDA of $123.9 million, or $2.42 per diluted share, versus $108.7 million, or $2.17 per diluted share, in 2017. (2)

2018 FINANCIAL FORECAST & OPERATIONAL GOALS

The company is revising its financial forecast for 2018. The revised forecast reflects:

the strength of the organic business performance (excluding acquisitions, financing and other related costs), which is expected to be at the higher end of the previous forecast;
the incremental impact in the fourth quarter of the operations of PaxVax and Adapt Pharma;
a total of approximately $50 million in pre-tax transaction and integration costs, preliminary purchase accounting impacts and additional interest expense related to these recent acquisitions; and
an estimated effective tax rate of approximately 22% to 23%.

The Company is also reaffirming its full year 2018 operational goals.

OPERATIONAL GOAL Status
• Advance NuThrax development to enable Emergency Use Authorization filing with the FDA in 2018 • PPQ lots work in process; EUA submission on track to be filed by year end
• Complete ACAM2000 deliveries and establish a multi-year follow-on contract with the U.S. government • Deliveries on track; Follow-on contract negotiations underway
• Deliver Raxibacumab doses under current contract; advance technology transfer to the Company’s Bayview facility in Baltimore, Maryland • Deliveries on track; Technology transfer on track
• Progress pipeline to have at least four product candidates in advanced development • Completed
• Complete an acquisition that generates revenue within 12 months of closing • Completed

FOOTNOTES

(1) See "Calculation of Diluted Earnings Per Share."
(2) See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
(3) The Company reintroduced the use of Adjusted EBITDA following the closing of the acquisitions of PaxVax and Adapt Pharma, which excludes additional specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments, in order to provide a more complete understanding of factors and trends affecting the Company’s business.

CONFERENCE CALL AND WEBCAST INFORMATION

Company management will host a conference call at 5:00 pm (Eastern Time) today, November 1, 2018, to discuss these financial results. This conference call can be accessed live by telephone or through Emergent’s website:

Live Teleconference Information:
Dial in: [US] (855) 766-6521; [International] (262) 912-6157
Conference ID: 93346559
Live Webcast Information:
Visit View Source for the live webcast feed