On August 1, 2018 Zymeworks Inc. (NYSE/TSX: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, reported financial results for the second quarter ended June 30, 2018 (Press release, Zymeworks, AUG 1, 2018, View Source [SID1234528299]).

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"This was a pivotal quarter for Zymeworks highlighted by the oral presentation of ZW25 clinical data at the ASCO (Free ASCO Whitepaper) annual meeting," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "With the completion of our subsequent financing, we are well capitalized to accelerate the clinical development of ZW25 into registrational studies."

Dr. Tehrani continued, "We also have a number of important near-term catalysts including providing the refined regulatory strategy for ZW25, supported by a clinical update; filing an Investigational New Drug application for our novel bispecific antibody-drug conjugate, ZW49; and the initiation of clinical development by our partners for their Azymetric bispecific candidates as well as the establishment of new revenue-generating partnerships."

Second Quarter 2018 Business Highlights and Recent Developments

Oral Presentation for ZW25 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting
Updated clinical data continued to demonstrate robust single agent anti-tumor activity and tolerability across a range of HER2-expressing cancers including breast and gastric. Currently Zymeworks is evaluating ZW25 as a single agent and in combination with other cancer therapeutics.
Completed $97.8 Million Public Offering
Zymeworks closed a public offering of 6,210,000 common shares, including the full over-allotment of 810,000 additional shares, for gross proceeds of approximately $97.8 million.
Expanded Daiichi Sankyo Immuno-Oncology Collaboration Focused on Bispecific Antibodies
Zymeworks granted additional licenses enabling Daiichi Sankyo to develop two bispecific antibody therapeutics utilizing the Zymeworks’ Azymetric and EFECT technology platforms. Zymeworks received an upfront technology access fee of $18.0 million and may receive up to $466.7 million in milestone payments and up to double-digit tiered royalties on global product sales.
Expanded Corporate Collaboration with Celgene
Zymeworks expanded its relationship with Celgene. The research program term has been extended by two years and additional licenses for two products have been added for a total of 10 potential products under the collaboration. Zymeworks received an expansion fee of $4.0 million and may receive up to $328 million in additional milestone payments resulting in total potential milestones of $1.64 billion, plus royalties on worldwide sales.
Financial Results for the Three Months Ended June 30, 2018

Revenue for the three months ended June 30, 2018 was $22.0 million as compared to $1.3 million in the same period in 2017. The change between the two periods was primarily due to an $18.0 million upfront technology access fee related to a second licensing agreement with Daiichi Sankyo and a $4.0 million research program expansion fee from Celgene.

For the three months ended June 30, 2018, research and development expenditures were $15.4 million as compared to $8.3 million for the same period in the prior year. The change between the two periods was primarily due to increases in clinical costs for ZW25 as well as increased development costs for ZW49, investments in earlier stage R&D activities and platform technologies, and non-cash liability classified equity adjustments.

General and administrative expenses were $8.6 million for the three months ended June 30, 2018, and $2.3 million for the same period in 2017, primarily due increases in non-cash liability classified equity adjustments and stock-based compensation, as well as changes in compensation and professional fees associated with year-over-year corporate growth following the company’s initial public offering in 2017.

Non-cash charges for the three months ended June 30, 2018 included $3.1 million ($2.4 million in G&A and $0.7 million in R&D) related to the quarterly mark-to-market revaluation of liability classified equity adjustments (attributed to the accounting treatment of historical stock-based compensation in both Canadian and US dollars) and stock-based compensation.

The net loss for the three months ended June 30, 2018 was $5.9 million as compared to $11.0 million for the same period in 2017. Zymeworks expects R&D expenditures to increase over time due to the ongoing development of product candidates and other clinical, preclinical, and regulatory activities. Additionally, Zymeworks expects to continue receiving revenue from its existing and future strategic partnerships, including technology access fees and milestone-based payments. However, Zymeworks’ ability to receive these payments is dependent upon either Zymeworks or its collaborators successfully completing specified research and development activities.

As of June 30, 2018, Zymeworks had $166.2 million in cash and cash equivalents and short-term investments.

On August 1, 2018 Medtronic plc (NYSE:MDT), the global leader in medical technology, reported Paurvi Bhatt as the new President of the Medtronic Foundation and Vice President of Medtronic Philanthropy (Press release, Medtronic, AUG 1, 2018, View Source;p=RssLanding&cat=news&id=2361335 [SID1234528345]). Effective immediately, Bhatt will oversee all Medtronic Foundation and Medtronic Philanthropy operations, which aim to expand access to healthcare in underserved communities around the world and support healthy communities where Medtronic’s 86,000 employees live and give.

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Bhatt succeeds Dr. Jacob Gayle in this leadership role, following Dr. Gayle’s transition to his new position as Vice President of Social Impact for Medtronic. Dr. Gayle will continue to serve as a member of the Medtronic Foundation Board of Directors.

As the new head of the Medtronic Foundation, Bhatt will focus on ensuring the organization is a high impact, high performance philanthropy team that delivers measurable impact for the underserved.

Bhatt has been with the Medtronic Foundation for five years, and most recently served as leader of the Global Health and Community Well-Being portfolios. Bhatt has deep experience in global health, philanthropy, and corporate social responsibility (CSR). Prior to joining Medtronic, Bhatt served in global health and CSR roles at Levi Strauss & Company and Abbott. Earlier in her career, Bhatt led portfolios in Economics and HIV/AIDS at USAID and served as Deputy Director of Health for CARE where she led primary care globally and shaped disaster relief efforts in reproductive health.

She holds a Master’s of Public Health from Yale University and bachelor’s degree in neuroscience from Northwestern University.

Medtronic is committed to making the world a healthier place and strengthening communities around the world, having donated more than $1 billion throughout the years to support philanthropic efforts. In fiscal year 2018, the Medtronic Foundation awarded $42 million in grants globally.

On august 1, 2018 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the quarter ended June 30, 2018 (Press release, United Therapeutics, AUG 1, 2018, View Source [SID1234528401]).

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"Our second quarter net revenues totaled $444 million and we are treating a larger number of patients, compared to the prior year, suffering from pulmonary arterial hypertension with our prostacyclin product franchise, which consists of Orenitram, Remodulin, and Tyvaso," said Martine Rothblatt, Ph.D., Chairman and Chief Executive Officer of United Therapeutics. "We also continued to invest in our innovative product pipeline, which includes seven Phase III clinical trials in cardiopulmonary diseases and oncology as well as programs in regenerative medicine and organ manufacturing to ultimately provide a cure for PAH and other end-stage organ diseases. We believe this product pipeline uniquely positions United Therapeutics to deliver long-term revenue growth to our stakeholders."

Update on SteadyMed Acquisition

Our previously-announced acquisition of SteadyMed Ltd. (SteadyMed) has satisfied two key closing conditions. On July 20, 2018, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired, and on July 30, 2018, SteadyMed’s shareholders approved the transaction. Under Israeli law, closing may not occur until at least thirty days have passed since the SteadyMed shareholders approved the transaction. Assuming all remaining conditions to closing of this transaction are satisfied or waived, we expect the transaction to be completed in the third quarter of this year. SteadyMed’s lead drug product candidate is Trevyent, a development-stage drug-device combination product that combines SteadyMed’s PatchPump technology with treprostinil to treat pulmonary arterial hypertension.

Financial Results for the Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017

Key financial highlights include (dollars in millions, except per share data):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Revenues

$

444.5

$

444.6

$

(0.1)

—

%

Net income (loss)

$

172.9

$

(56.0)

$

228.9

409

%

Non-GAAP earnings(1)

$

189.1

$

199.2

$

(10.1)

(5)

%

Net income (loss), per basic share

$

4.01

$

(1.25)

$

5.26

421

%

Net income (loss), per diluted share

$

3.98

$

(1.25)

$

5.23

418

%

Non-GAAP earnings, per diluted share(1)

$

4.36

$

4.37

$

(0.01)

—

%

(1)

See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.

Revenues

The following table presents the components of total revenues (dollars in millions):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Net product sales:

Remodulin

$

159.5

$

157.7

$

1.8

1

%

Tyvaso

105.9

104.2

1.7

2

%

Adcirca

109.8

120.6

(10.8)

(9)

%

Orenitram

49.5

46.0

3.5

8

%

Unituxin

19.8

16.1

3.7

23

%

Total revenues

$

444.5

$

444.6

$

(0.1)

—

%

Revenues for the three months ended June 30, 2018 decreased by $0.1 million as compared to the same period in 2017. Remodulin net product sales increased by $1.8 million due to a $16.7 million increase in U.S. net product sales partially offset by a $14.9 million decrease in international net product sales. U.S. net product sales increased due to an increase in quantities ordered from our U.S. distributors, which do not precisely reflect underlying patient demand, and a price increase implemented in April 2018, which was the first price increase for Remodulin since 2010. International net product sales decreased primarily due to a reduction in the price at which we sell Remodulin to an international distributor in connection with a transfer of additional regulatory and commercial responsibilities to that distributor in 2017. Tyvaso net product sales increased by $1.7 million primarily due to a price increase. Adcirca net product sales decreased by $10.8 million primarily due to a decrease in the number of bottles sold, partially offset by price increases that were determined by Lilly. Orenitram net product sales increased by $3.5 million primarily due to an increase in the number of patients being treated with Orenitram. Unituxin net product sales increased by $3.7 million primarily due to an increase in the number of vials sold and a price increase implemented in 2017.

Expenses

Cost of product sales. The following table summarizes cost of product sales by major category (dollars in millions):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Category:

Cost of product sales

$

61.1

$

19.3

$

41.8

217

%

Share-based compensation expense (benefit)(1)

0.6

(0.4)

1.0

250

%

Total cost of product sales

$

61.7

$

18.9

$

42.8

226

%

(1)

Refer to Share-based compensation expense (benefit) below for discussion.

Cost of product sales, excluding share-based compensation. The increase in cost of product sales of $41.8 million for the three months ended June 30, 2018, as compared to the same period in 2017, was primarily due to a $40.7 million increase in the royalty expense for Adcirca. As a result of an amendment to our license agreement with Lilly, effective December 1, 2017 our royalty rate on net product sales of Adcirca increased from five percent to an effective rate of approximately 42.5 percent.

Research and development expense. The following table summarizes research and development expense by major category (dollars in millions):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Category:

Research and development projects

$

79.1

$

61.6

$

17.5

28

%

Share-based compensation expense (benefit)(1)

3.2

(1.8)

5.0

278

%

Total research and development expense

$

82.3

$

59.8

$

22.5

38

%

(1)

Refer to Share-based compensation expense (benefit) below for discussion.

Research and development expense, excluding share-based compensation. The increase in research and development expense of $17.5 million for the three months ended June 30, 2018, as compared to the same period in 2017, was driven by the continued investment in our innovative product pipeline to treat cardiopulmonary diseases and cancer.

Selling, general and administrative expense. The following table summarizes selling, general and administrative expense by major category (dollars in millions):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Category:

General and administrative

$

50.8

$

51.6

$

(0.8)

(2)

%

Sales and marketing

15.6

15.5

0.1

1

%

Share-based compensation expense(1)

16.7

0.3

16.4

NM

(2)

Total selling, general and administrative expense

$

83.1

$

67.4

$

15.7

23

%

(1)

Refer to Share-based compensation expense (benefit) below for discussion.

(2)

Calculation is not meaningful.

Share-based compensation expense (benefit). The following table summarizes share-based compensation (benefit) expense by major category (dollars in millions):

Three Months Ended
June 30,

Dollar

Percentage

2018

2017

Change

Change

Category:

Stock options

$

15.5

$

12.2

$

3.3

27

%

Restricted stock units

2.0

0.5

1.5

300

%

Share tracking awards plan (STAP)

2.7

(14.9)

17.6

118

%

Employee stock purchase plan

0.3

0.3

—

—

%

Total share-based compensation expense (benefit)

$

20.5

$

(1.9)

$

22.4

NM

(1)

(1)

Calculation is not meaningful.

The increase in share-based compensation expense of $22.4 million for the three months ended June 30, 2018, as compared to the same period in 2017, was primarily due to: (1) a $17.6 million increase in STAP expense related to an increase in our stock price during the three months ended June 30, 2018, as compared to a decrease in our stock price during the same period in 2017; and (2) a $3.3 million increase in stock option expense due to additional awards granted and outstanding in 2018.

Loss Contingency

In December 2017, we entered into a civil Settlement Agreement with the U.S. Government to resolve a DOJ investigation related to our support of 501(c)(3) organizations that provide financial assistance to patients. During the second quarter of 2017, we recorded a $210.0 million accrual relating to this matter, and ultimately paid this amount, plus interest, to the U.S. Government upon settlement.

Impairment of Investment in a Privately-Held Company

During the quarter ended June 30, 2017, one of our investments in a privately-held company experienced an event triggering an impairment analysis to evaluate the recoverability of our investment. We determined that the fair value of our investment as of June 30, 2017 was lower than its carrying value, resulting in an impairment charge of $46.5 million. As of June 30, 2017, the adjusted carrying value of our investment in this company was $53.5 million. The carrying value of this asset has not been further adjusted since June 30, 2017.

Income Tax Expense

The provision for income taxes was $45.0 million for the three months ended June 30, 2018, as compared to $100.2 million for the same period in 2017. The provision for income taxes is based on an estimated effective tax rate for the entire year. The estimated annual effective tax rate is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. Our effective tax rate (ETR) as of June 30, 2018 and June 30, 2017 was approximately 21 percent and approximately 60 percent, respectively. Our ETR for the six months ended June 30, 2018 decreased as compared to the same period in 2017 due to the impacts of The Tax Cuts and Jobs Act as well as the $210.0 million accrual in connection with the civil settlement described above and the $46.5 million impairment charge described above that did not meet the criteria for tax deductibility at that time.

On August 1, 2018 PepVax, Inc., an early-stage biotechnology company, reported the launch of its novel SMARTmid platform for drug delivery of nucleic acid and amino acid-based drugs and cell therapies in pre-clinical development (Press release, PepVax, AUG 1, 2018, View Source [SID1234630790]). With manufacturing and delivery of immunotherapies, cell therapies, and gene therapies getting increasingly complicated and expensive at scale-up, the SMARTmid platform offers a unique solution with our "Trojan Horse" approach to use the patient’s own cells to manufacture the required proteins, T-cells and nucleic acids in vivo for cancers, infectious and genetic diseases.

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Learn more about PepVax here – View Source

The Perfect Solution for Researchers and Early-Stage Biotechnology Companies

Our SMARTmid vector design is our fully synthetic method for producing plasmid vector particles for mammalian cell transduction and is a powerful template in which to build a drug delivery and immuno-adjuvant platform. DNA-based delivery can directly enhance expression levels and enable easy manufacturing of protein-, DNA- and RNA-based treatments in vivo. Moreover, SMARTmid can be used as an immuno-adjuvant to enhance already developed drugs to work more effectively in patients requiring a strong immune response, like checkpoint inhibitors and CAR-T treatments. SMARTmid can also be used as a diagnostic tool for certain cancers and infectious diseases.

Efficiency and Simplicity That Just Works
"Delivering drugs has always been a challenge for drug developers," said Mahesh Narayanan, CEO of PepVax. "Researchers and research companies looking to deliver their biologics intramuscularly or intravenously can use our SMARTmid platform to produce their drugs inside the patient or deliver it without worrying about degeneration or decreased potency."

Focused on Continued Innovation
PepVax is looking to license SMARTmid to established biopharmaceutical companies that are looking for efficient drug delivery in patients as well as developing novel cancer and infectious disease therapeutics. The Company is also looking to enter into research agreements with academia.

On August 1, 2018 Compugen Ltd. (Nasdaq: CGEN), a clinical-stage cancer immunotherapy company and a leader in predictive target discovery, reported financial results for the second quarter ended June 30, 2018 (Press release, Compugen, AUG 1, 2018, View Source [SID1234528284]).

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"The first half of 2018 has been transformational for Compugen, and we are excited to soon dose the first patient in the Phase 1 clinical trials for COM701, our lead cancer immunotherapy program," said Anat Cohen-Dayag, Ph.D., President and CEO of Compugen. "COM701 is a first-in-class therapeutic antibody targeting PVRIG, a novel immune checkpoint originating from Compugen’s computational discovery efforts. Based on the mechanistic rationale for this newly-discovered checkpoint pathway, which ties into both the TIGIT and PD‑1 pathways, COM701 has the potential to improve the response rate in patients with refractory or relapsed disease following treatment with existing cancer immunotherapies in multiple solid tumor indications. As we believe we have the only clinical-stage product candidate targeting PVRIG, which is part of the larger TIGIT/PVRIG and PD-1 axis, Compugen has a first-mover advantage in the competitive cancer immunotherapy landscape."

"COM701 and BAY 1905254, which are both initiating Phase 1 clinical trials in 2018, represent a key milestone for our Company. These two clinical-stage programs, along with our anti-TIGIT antibody, COM902, address new immune checkpoints that were identified purely through computational analysis. Compugen is a pioneer and leader in computational discovery, a field now receiving increasing attention in our industry. Our proven know-how in computational discovery, coupled with our integrated in-house drug development capabilities, uniquely position us in this field. We will continue to employ this core competency to generate novel drug targets and therapeutic programs for internal development and for collaboration purposes," added Dr. Cohen-Dayag.

Paul Sekhri, Chairman of the Board, stated, "We are very pleased with Compugen’s accomplishments to date in 2018 and excited about the future prospects of the Company. In parallel with this progress, we recently added three new members to the Board of Directors, whom together with the existing members, have the breadth of experience and expertise to support and guide the Company’s future growth. Along with our strong management team, I am confident in our ability to execute our long-term strategy, continue advancing our therapeutic pipeline and achieve our corporate business goals."

Recent highlights:

Investigational new drug (IND) application for COM701, a first-in-class therapeutic antibody targeting PVRIG, cleared by the U.S. Food and Drug Administration (FDA). First patient dosing in Phase 1 study for COM701 expected in early fall 2018.
IND application for BAY 1905254, a first-in-class therapeutic antibody targeting ILDR2 being developed under license by Bayer AG, cleared by the FDA. First patient dosing in Phase 1 study for BAY 1905254 expected in 2018 and will trigger a milestone payment to Compugen.
A registered direct offering with net proceeds of approximately $19.8 million concluded.
Three new board members appointed to the Company’s Board of Directors.
Financial Results

R&D expenses for the second quarter ended June 30, 2018, were $8.0 million, compared with $7.1 million for the comparable period in 2017. The increase in R&D expenses reflects preclinical development activities as well as expenses associated with clinical-related activities in preparation for the COM701 Phase 1 trial expected to begin later this year.

Net loss for the second quarter of 2018 was $10.2 million, or $0.19 per diluted share, compared with a net loss of $9.2 million, or $0.18 per diluted share, in the comparable period of 2017.

As of June 30, 2018, cash, cash related accounts, short-term and long-term bank deposits totaled $43.1 million, compared with $30.4 million at December 31, 2017. During the second quarter, the Company completed a registered direct offering with net proceeds of approximately $19.8 million. The Company has no debt.

Conference Call and Webcast Information

Compugen will hold a conference call to discuss its second quarter 2018 results today, August 1, 2018, at 8:30 a.m. ET. To access the live conference call by telephone, please dial 1-888-668-9141 from the U.S., or +972-3-918-0609 internationally. The conference call will also be available via live webcast through Compugen’s website, located at the following link. In its prepared comments, management will refer to the slide found in this link. Following the live audio webcast, a replay will be available on the Company’s website (www.cgen.com).