On August 9, 2018 Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), a clinical-stage biotechnology company that designs and develops innovative human enzyme therapeutics for patients with rare genetic diseases and cancer, reported financial results for the second quarter ended June 30, 2018 (Press release, Aeglea BioTherapeutics, AUG 9, 2018, View Source [SID1234528707]).

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"We made good progress in the second quarter with our clinical programs, and we completed a follow-on financing that sets the stage for an exciting second half of the year," said Anthony G. Quinn, M.B Ch.B, Ph.D., president and chief executive officer of Aeglea. "We are looking forward to providing clinical updates at a number of medical conferences in the fall, including reporting the latest interim data from both our Arginase 1 Deficiency and cancer development programs. We also will provide updates on our clinical trial enrollment and our progress with one of our research enzyme programs, which we believe shows promise for treating the metabolic disorder homocystinuria."

"With the management team we now have in place, Aeglea is ready to take the next step in advancing therapies with the potential to improve the lives of patients with devastating diseases. I believe the Company is well positioned for future growth with our current pipeline programs and our expanded in-house drug-hunting capabilities," added Dr. Quinn.

Recent Highlights

In July, the Company’s Board of Directors named Anthony G. Quinn, M.B. Ch.B, Ph.D. as president and chief executive officer. Dr. Quinn has been a member of the Board of Directors since 2016 and had served as interim CEO since July 2017. Prior to joining Aeglea, Dr. Quinn served as executive vice president, head of research and development, and chief medical officer at Synageva Biopharma Corp., prior to its acquisition by Alexion Pharmaceuticals.
In July, the Company announced the appointment of Bryan Lawlis, Ph.D., as an independent director. Dr. Lawlis served as CEO of Itero Biopharmaceuticals, LLC from 2011 to 2017 and from 2007 to 2011 was co-founder and CEO of Itero Biopharmaceuticals, Inc. He is currently on the boards of Biomarin Pharmaceutical, Inc., Geron, Inc., and Coherus Biosciences, Inc.
Upcoming Events

Dr. Quinn will present a corporate update at the Wells Fargo Healthcare Conference being held September 5 – 6 in Boston, MA. Details regarding the date and time of the presentation and webcast will be announced before the conference.
Aeglea will present new interim Phase 1/2 clinical trial data demonstrating clinically relevant treatment effects in patients with Arginase 1 Deficiency at the 2018 Society for the Study of Inborn Errors of Metabolism (SSIEM) Annual Symposium being held September 4 – 7 in Athens, Greece.
Title: Improvements in Arginase 1 Deficiency-related disease manifestations following plasma arginine reduction with pegzilarginase
Poster #P-164
Presentation Date/Time: Wednesday, September 5 at 5:45 p.m. – 8:30 p.m. EET and Thursday, September 6 at 12:15 p.m. – 1:15 p.m. EET
Aeglea will deliver three poster presentations detailing clinical and preclinical data at the American Society of Human Genetics (ASHG) 2018 Annual Meeting being held October 16 – 20 in San Diego, California (schedule details to be announced):
Interim Phase 1/2 clinical trial data for the treatment of Arginase 1 Deficiency that will include additional clinical insights from recently enrolled adult and pediatric patients, as well as from longer-term dosing in previously enrolled patients
Title: Improvements in Arginase 1 Deficiency-related disease manifestations following plasma arginine reduction with pegzilarginase: early Phase 2 results
The effects of a novel homocysteine degrading enzyme in a preclinical model of homocystinuria.
Title: Improved survival and amelioration of disease-related liver pathology in a mouse model of homocystinuria with a novel homocysteine degrading enzyme
Summary of disease manifestation in Arginase 1 Deficiency case reports from scientific literature
Title: Clinical features of Arginase 1 Deficiency: Review of Literature Case Series
Aeglea will present interim Phase 1 advanced solid tumor clinical trial data on melanoma expansion cohorts at the 2018 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Annual Congress being held October 19 – 23 in Munich, Germany.
Title: Initial cohort expansion results of sustained arginine depletion with pegzilarginase in melanoma patients in a Phase 1 advanced solid tumor trial
Abstract #1269P
Presentation Date/Time: Sunday, October 21 at 1:35 p.m. – 2:35 p.m. CEST
Second Quarter 2018 Financial Results

As of June 30, 2018, Aeglea had available cash, cash equivalents and marketable securities of $72.2 million, which includes $37.7 million in net proceeds from a follow-on public offering that closed in April 2018. Based on Aeglea’s current operating plan, management believes it has sufficient capital resources to fund anticipated operations to the middle of 2020.

Aeglea recognized grant revenues of $2.4 million in the second quarter of 2018, compared with $1.5 million in the second quarter of 2017. The grant revenues were the result of a $19.8 million research grant received from the Cancer Prevention and Research Institute of Texas (CPRIT). The revenue increase was primarily due to higher qualifying expenditures associated with the clinical trials for pegzilarginase in cancer patients in the second quarter of 2018 compared with the second quarter of 2017. Additionally, the grant contract ended in May 2018 with the full $19.8 million grant recognized as revenue over the life of the award. As of June 30, 2018, Aeglea had a remaining grant receivable totaling $4.3 million.

Research and development expenses totaled $9.1 million for the second quarter of 2018, compared with $5.8 million for the second quarter of 2017. The increase was primarily due to expanded clinical activity for Aeglea’s lead product candidate, pegzilarginase, as Aeglea advanced a Phase 1/2 clinical trial in patients with Arginase 1 Deficiency and initiated single-agent cohort expansions in a Phase 1 clinical trial for advanced solid tumor patients and a Phase 1/2 combination trial in patients with small cell lung cancer.

General and administrative expenses totaled $2.9 million for the second quarter of 2018, compared with $2.4 million in the second quarter of 2017. This increase was primarily due to additional employee compensation costs related to the building out of Aeglea’s management team as well as to support expanding research and development activities. Non-cash stock compensation expense accounted for $0.2 million of the increase.

Net loss totaled $9.4 million and $6.6 million for the second quarter of 2018 and 2017, respectively, with non-cash stock compensation expense of $1.0 million and $0.7 million for the second quarter of 2018 and 2017, respectively.

Inducement Grants Under Nasdaq Listing Rule 5635(c)(4)

Aeglea also announced today that the Compensation Committee of its Board of Directors has granted non-qualified stock options to purchase an aggregate of 2,400 shares of Aeglea’s common stock to two new employees under Aeglea’s 2018 Equity Inducement Plan.

The 2018 Equity Inducement Plan is used exclusively for the grant of equity awards to individuals who were not previously an employee or non-employee director of Aeglea (or following a bona fide period of non-employment), as an inducement material to such individual’s entering into employment with Aeglea, pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules.

The options have an exercise price of $8.98 per share, which is equal to the closing price of Aeglea’s common stock on August 7, 2018. Each of the option awards vests as to 25% of the shares on the one-year anniversary of its grant, with the remainder of the shares vesting ratably over 36 months thereafter.

About Pegzilarginase in Arginase 1 Deficiency

Pegzilarginase is an enhanced human arginase that enzymatically degrades the amino acid arginine. Aeglea is developing pegzilarginase for the treatment of patients with Arginase 1 Deficiency, a debilitating urea cycle disorder caused by deficiency of a key arginine metabolizing enzyme that leads to severe and progressive hyperargininemia-related neurological abnormalities, hyperammonemia and early mortality. Pegzilarginase is intended for use as an enzyme replacement therapy in patients to reduce elevated blood arginine levels. The Company’s interim Phase 1/2 data demonstrated clinically relevant treatment effects and rapid and sustained lowering of plasma arginine in Arginase 1 Deficiency patients.

About Pegzilarginase in Cancer

Pegzilarginase is an enhanced human arginase that enzymatically degrades the amino acid arginine. In some cancers, tumor cells stop producing specific amino acids and must acquire them from the blood, making the tumor cells susceptible to starvation through depletion of those amino acids. Aeglea is developing pegzilarginase to exploit vulnerabilities in some cancers that lead to an increased dependency on extracellular arginine. Pegzilarginase targets these arginine dependent cancers by depleting blood arginine levels to below the normal range. Preclinical data demonstrated that the resulting arginine starvation inhibits proliferation, induces cell death, increases turnover of cell components and promotes anti-tumor immune responses. The Company’s Phase 1 data in advanced solid tumors demonstrated that pegzilarginase was well tolerated at doses that produced marked and sustained reductions in blood arginine levels below the normal range.

On August 9, 2018 IntelGenx Technologies Corp. (TSX-V:IGX) (OTCQX:IGXT) (the "Company" or "IntelGenx")reported financial results for the second quarter ended June 30, 2018 (Press release, IntelGenx, AUG 9, 2018, View Source [SID1234528595]). All dollar amounts are expressed in U.S. currency and results are reported in accordance with United States generally accepted accounting principles except where noted otherwise.

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2018 Second Quarter Financial Highlights:

Total revenue was $234,000, which reflected decreases in deferred revenues on monetization of $915,000.
Negative adjusted EBITDA was ($1.9 million), compared to negative adjusted EBITDA of ($390,000) in the same period last year.
Cash and short-term investments totalled $3.7 million as at June 30, 2018.
Recent Developments:

Received a Notice of Allowance from the Canadian Intellectual Property Office for the Company’s Canadian Patent Application Number 2,998,223 entitled "Loxapine Film Oral Dosage Form", covering the use of loxapine in an oral transmucosal film for the treatment of schizophrenia or bipolar 1 disorder. This was the Company’s first patent allowed in Canada and the first Canadian patent for its VersaFilm technology.
Announced that the European Patent Office issued a "Notice of Intention to Grant" for the Company’s European Patent Application Number 14832172.2 entitled, "Instantly Wettable Oral Film Dosage Form Without Surfactant or Polyalcohol." This was the first key patent allowed in Europe for the Company’s VersaFilm technology and covers the formulation of its Rizaport product.
Announced the publication of a peer-reviewed paper in the March 2018 issue of Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association, which highlighted one of the most significant unmet medical needs that may be addressed by IntelGenx’s Montelukast VersaFilm product candidate.
Announced the settlement of all Subxone patent litigation between the Company, Par Pharmaceutical, Inc., Indivior UK Limited and Aquestive Therapeutics, Inc.
"The advancement of our product pipeline toward commercialization continued to be a key priority in the 2018 second quarter," commented Dr. Horst G. Zerbe, President and CEO of IntelGenx. "To that end, we were pleased that two patent allowances – one in Canada and the other in Europe – imparted protection for our proprietary VersaFilm technology platform in those jurisdications for the first time, providing additional validation of the innovative work being carried out by our talented R&D team. More recently, we were also excited to learn from our Spanish marketing partner, Grupo Juste (now Exeltis Healthcare), that the Committee for Medicinal Products for Human Use has included RIZAPORT in the list of medicines within the Informative Note from its July 2018 meeting, one of the final steps needed before marketing authorization can be obtained from the Spanish Agency of Medicines and Medical Devices."

Financial Results:

Total revenues for the three-month period ended June 30, 2018 amounted to $234,000, compared to $1.1 million for the three-month period ended June 30, 2017. The decrease for the three-month period ended June 30, 2018 compared to last year’s corresponding period is mainly attributable to a decrease in deferred revenues on monetization of $915,000.

Operating costs and expenses were $2.4 million for the second quarter ended June 30, 2018, versus $1.7 million for the corresponding quarter in 2017. The increase for the three-month period ended June 30, 2018 is mainly attributable to a $203,000 increase in Research and Development expenses and a $496,000 increase in Selling, General and Administrative expenses.

For the second quarter ended June 30, 2018, the Company had an operating loss of $2.1 million, compared to an operating loss of $613,000 for the comparable period of 2017.

Net comprehensive loss was $2.4 million, or $0.04 on a basic and diluted per share basis, for the three-month period ended June 30, 2018, compared to a net comprehensive loss of $550,000, or $0.01 on a basic and diluted per share basis, for the comparable period of 2017.

As of June 30, 2018, the Company’s cash and short-term investments totalled $3.7 million.

Conference Call Details:

IntelGenx will host a conference call to discuss its second quarter 2018 financial results today, Aug 9, 2018, at 4:30 p.m. ET. The dial-in number for the conference call is (833) 231-8269 (Canada and United States) or (647) 689-4114 (International), conference ID 5888143. The call will also be webcast live and archived for twelve months at www.intelgenx.com.

On August 9, 2018 Stemline Therapeutics, Inc. (Nasdaq: STML), a clinical-stage biopharmaceutical company developing novel oncology therapeutics, reported its financial results for the quarter ended June 30, 2018 (Press release, Stemline Therapeutics, AUG 9, 2018, View Source [SID1234528708]). The Company also reviewed recent clinical and regulatory events, and outlined key upcoming milestones:

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ELZONRIS (SL-401, tagraxofusp) – BLA submission completed

We completed submission of a rolling Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for ELZONRIS, which has been granted breakthrough therapy designation (BTD), for the treatment of patients with blastic plasmacytoid dendritic cell neoplasm (BPDCN). If successful, we anticipate acceptance of our BLA within 60 days of submission (i.e. in the coming weeks) and potential U.S. marketing approval by 1Q19, or possibly sooner.

Data from our pivotal trial in patients with BPDCN was the subject of an oral presentation at the 23rdCongress of the European Hematology Association (EHA) (Free EHA Whitepaper) in Stockholm, Sweden.

We anticipate feedback from the European Medicines Agency (EMA) later this year regarding a potential ELZONRIS regulatory filing in Europe.

In preparation for potential marketing approval, we continue to build out our pre-launch and commercial activities, including our disease awareness campaign targeting key stakeholders including hematologist-oncologists, dermatologists, and pathologists.
ELZONRIS – Other potential indications

ELZONRIS is also being evaluated in clinical trials in additional indications including chronic myelomonocytic leukemia (CMML) and myelofibrosis (MF).

Clinical data from ongoing trials in patients with CMML and MF were selected for presentation at EHA (Free EHA Whitepaper) in June.

In relapsed/refractory CMML (n=16 patients), ELZONRIS demonstrated 100% (8/8) spleen responses in evaluable patients with baseline splenomegaly by physical exam and 2 bone marrow complete responses (BMCRs), coupled with a tolerable safety profile. Given the results observed to date, we are currently formulating registrational trial designs.

In relapsed/refractory MF (n=15 patients), ELZONRIS demonstrated 50% (6/12) spleen responses in evaluable patients with baseline splenomegaly (>5 cm palpable below the costal margin by physical exam), coupled with a tolerable safety profile. Given the results observed to date, we are currently evaluating next steps including possible registrational trial designs.
SL-801

Data from the ongoing Phase 1 trial of SL-801 in patients with advanced solid tumors were presented at the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting in June. Patient enrollment and dose escalation continues.
SL-701

Data from the Phase 2 trial of SL-701 in patients with second-line glioblastoma (GBM) were presented at the 2018 ASCO (Free ASCO Whitepaper) meeting in June. Notably, there were long-term (>12 month) overall survivors in the SL-701+bevacizumab cohort which consisted primarily of patients who demonstrated an elevated immune response (i.e. potentially representing an "immunocompetent" population). Further analyses, including registration-directed designs are ongoing.
Ivan Bergstein, MD, CEO of Stemline, commented, "We have completed our rolling BLA submission and are quickly approaching the very important milestone of a potential BLA acceptance for filing by the FDA. We continue to advance closer to our ultimate goal of potentially making ELZONRIS widely available to patients with BPDCN. In parallel, ELZONRIS continues to generate very promising clinical data in additional indications including CMML and MF, two settings of unmet medical need for which we are actively evaluating registration pathways. Additionally, we continue to expand our commercial infrastructure including the build out of our sales and marketing teams ahead of our potential approval."

Second Quarter 2018 Financial Results Review
Stemline ended the second quarter of 2018 with $97.1 million in cash, cash equivalents and investments, with a cash burn of $17.6 million in the second quarter. The Company ended the second quarter of 2018 with 30.9 million shares outstanding. For the second quarter of 2018, Stemline had a net loss of $18.9 million, or $0.66 per share, compared with a net loss of $15.5 million, or $0.66 per share, for the same period in 2017.

Research and development expense was $11.2 million for the quarter ended June 30, 2018, compared with $11.5 million for the quarter ended June 30, 2017, representing a decrease of $0.3 million.

General and administrative expense was $8.6 million for the quarter ended June 30, 2018, compared with $4.5 million for the quarter ended June 30, 2017, representing an increase of $4.1 million. The increase in expense was primarily attributed to a $3.0 million increase in pre-launch expenses in support of our potential commercialization of ELZONRIS in BPDCN, if marketing approval from the FDA is received. Additionally, the higher expense was also due to an increase of non-cash stock-based compensation expense and increased headcount.

On August 9, 2018 NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, reported financial results for its second quarter ended June 30, 2018 (Press release, NantHealth, AUG 9, 2018, View Source [SID1234528596]).

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Molecular Analysis – Highlights

In Q2 2018, at AHIP, the company’s Chief Medical Officer, Sandeep Reddy, M.D., and Vice President of Sales, Kristin Lee, presented "Demystifying the Convergence of Precision Medicine and Value-Based Care," which highlights the challenges and opportunities posed by precision medicine and value-based care and how health plans can navigate their convergence
In Q2 2018, at ASCO (Free ASCO Whitepaper):
Launched Liquid GPS, a powerful next-generation tool for blood-based tumor profiling and quantitative monitoring
Co-presented, with Shumei Kato, M.D., and Razelle Kurzrock, M.D., both at the University of California San Diego, data on next-generation sequencing of paired DNA and RNA analysis in patients with rare cancers
Co-presented data on three-fold overestimation of tumor mutation burden (TMB) using a 248 gene list as a panel to impute TMB
Co-presented, with Sumanta Pal, M.D., at City of Hope, findings on how targeting immune checkpoints can improve clinical trial design across a variety of tumor types
Co-presented findings on how 17 percent of DNA next generation sequencing (NGS) 50 gene panel variants are not expressed in RNA sequencing
Commercially Launched the Precision Insights Portal: GPS and Eviti
Precision Insights Portal is a web-based application for molecular test ordering and results and the only solution available to blend guidelines-based regimen information powered by Eviti with personalized insights from GPS Cancer
"The newest generation of clinical trials in immune oncology focus on novel checkpoint targets, T cells, and NK cells and NantHealth’s liquid tumor profiling service provides unparalleled data on quantitative expression of these and other related targets," said Dr. Reddy. "Circulating cell-free RNA is the newest frontier in the liquid biopsy field and NantHealth is proud to lead the way in these clinical trials."

Software and Services Highlights:

Payer Engagement (NaviNet):
In Q2 2018, closed a SaaS contract with major east coast-based health plan — expected to be a significant revenue contributor to the Payer Engagement business
In June 2018, launched Provider Initiated Document Exchange, which streamlines and automates the delivery of information between providers and payers; and, Authorizations Appeals, a product for automating the authorizations appeals process
Clinical Decision Support (Eviti):
Developed and deployed the Precision Insights Portal, the only solution available to blend guidelines-based regimen information powered by Eviti, with personalized insights from GPS Cancer, as mentioned above
Software release 7.0 successfully launched in May, with expanded policy guidance information for radiation oncology and drug management of high cost/abuse drugs, differentiating Eviti from the competition on standard of care policy guidance
Connected Care:
In Q2 2018, showcased medical device integration (MDI) product portfolio (including DeviceConX, VitalsConX and HBox) at Vitalis, the largest e-health event in Scandinavia
"Our Software as a Service business continued to generate solid year over year revenue growth," said Paul Holt, Chief Financial Officer of NantHealth. "Looking ahead, we are optimistic about several significant opportunities in our SaaS and software sales pipelines and the potential of our recently launched products."

Business and Financial Highlights

The company adopted a new revenue recognition standard on January 1, 2018. Please note that the financial results presented below include both amounts "as presented," which reflect implementation of the new revenue recognition standard, as well as amounts prior to the impact of the new revenue recognition standard to allow for comparability against historical results. Starting in fiscal year 2019, the company will no longer present its GAAP and Non-GAAP financial results under the previous revenue recognition standard. For additional information and reconciliations of our financial results between the new and previous revenue recognition standard, see the additional tables included in this press release and in the company’s Form 10-Q to be filed with the Securities and Exchange Commission.

For the 2018 second quarter, total net revenue as presented was $22.0 million. Total 2018 second quarter net revenue prior to the impact of the new revenue recognition standard decreased 10% to $21.2 million from $23.5 million in 2017 second quarter. The prior year quarter included approximately $4.0 million in revenue recognized from the completion of a large implementation. Gross profit as presented was $11.5 million, or 52% of total net revenue. Gross profit prior to the impact of the new revenue recognition standard was $10.7 million, or 50% of total net revenue, compared with $13.9 million, or 59% of total net revenue, for the prior-year second quarter. Selling, general and administrative (SG&A) expenses as presented were $18.4 million. SG&A prior to the impact of the new revenue recognition standard was $18.4 million compared with $19.2 million in 2017 second quarter. Research and development (R&D) expenses as presented decreased to $5.9 million from $8.4 million; the new revenue recognition standard did not impact R&D expenses.

Net loss from continuing operations, net of tax, as presented was $21.8 million, or $0.20 per share. Net loss from continuing operations, net of tax, prior to the impact of the new revenue recognition standard narrowed to $22.5 million, or $0.21 per share, from $57.7 million, or $0.48 per share for the 2017 second quarter. Loss from discontinued operations, net of tax, as presented was $1.6 million, or $0.01 per share, compared with $12.4 million, or $0.10 per share; the new revenue recognition standard did not impact loss from discontinued operations. Net loss as presented was $23.4 million, or $0.21 per share. Net loss prior to the impact of the new revenue recognition standard was $24.1 million, or $0.22 per share, compared with $70.1 million, or $0.58 per share, for 2017 second quarter.

For the 2018 second quarter, on a non-GAAP basis, adjusted net loss from continuing operations as presented was $11.1 million, or $0.10 per share, for the 2018 second quarter. On a non-GAAP basis, adjusted net loss from continuing operations prior to the impact of the new revenue recognition standard was $11.8 million, or $0.11 per share, compared with $13.1 million, or $0.11 per share, for the 2017 second quarter.

In August 2017, NantHealth sold its provider/patient engagement assets to Allscripts to focus on core competencies and accelerate the plan to achieve profitability. As a result, the company has classified the current and prior period operating results of its provider/patient engagement business as discontinued operations. All results presented below represent the company’s continuing operations.

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) to review its results of operations for the second quarter ended June 30, 2018. The conference call will be available to interested parties by dialing 844-309-3709 from the U.S. or Canada, or 281-962-4864 from international locations, passcode 3132409. The call will be broadcast via the Internet at www.nanthealth.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding topics such as the company’s financial status and performance, regulatory and operational developments, and other comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures

This news release contains references to Non-GAAP financial measures, including adjusted net loss and adjusted net loss per share, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). The Company’s management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the Company’s core business. Additionally, it provides a basis for the comparison of the financial results for the Company’s core business between current, past and future periods. Other companies may define these measures in different ways. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP. Non-GAAP per share numbers are calculated based on one class of common stock and do not incorporate the effects, if any, of using the two-class method.

On August 9, 2018 Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) reported financial results and corporate updates for the first half of 2018 (Press release, Evotec, AUG 9, 2018, View Source;announcements/press-releases/p/evotec-ag-reports-first-half-year-2018-results-and-corporate-updates-5709 [SID1234528620]).

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STRONG FINANCIAL PERFORMANCE FROM BOTH SEGMENTS
Group revenues: 67% increase to € 173.8 m (H1 2017: € 104.3 m);
EVT Execute revenues up 61% to € 163.3 m (H1 2017: € 101.3 m);
EVT Innovate revenues up 52% to € 32.0 m (H1 2017: € 21.1 m)
Adjusted Group EBITDA up 47% to € 38.6 m (H1 2017: € 26.2 m);
Adjusted EBITDA for EVT Execute of € 36.3 m (H1 2017: € 28.6 m);
Adjusted EBITDA for EVT Innovate of € 2.3 m (H1 2017: € (2.4) m)
Group R&D expenses up 17% to € 10.0 m (H1 2017: € 8.5 m)
Very strong performance in Q2 2018 due to Aptuit contribution, milestone achievements and signing of new partnerships
Acquisition loan from 2017 repaid by 50% (partially after period-end) mainly from operational cash flows
Strong liquidity position of € 109.8 m

EVT EXECUTE
Clinical Phase I and Phase II starts in Bayer alliance and strong progress within ongoing alliances (e.g. Forge, Dermira, C4X, Blackthorn, Abivax)
New and extended drug discovery and development agreements (e.g. Katexco)
Continued strong performance of high-throughput ADME-tox testing (Cyprotex, an Evotec company)
Aptuit integration according to plan:
Positive development of business and good uptake of INDiGO solution to accelerate drug candidate delivery (e.g. Carna Biosciences, Petra Pharma); expansion of INDiGO capacity initiated

EVT INNOVATE
Takeover of Sanofi’s infectious disease unit effective 01 July 2018, creating largest global footprint in infectious disease capabilities plus a broad project pipeline – Evotec at the same time receives an upfront payment of € 60 m (after period-end) and R&D cost coverage for the first five years
New long-term partnership with Celgene in oncology with upfront payment of $ 65 m
Important milestone achievements (e.g. iPSC diabetes alliance with Sanofi, iPSC neurodegeneration alliance with Celgene)
Continued focus on expansion of iPSC platform and patient-centric approaches to drug discovery
Academic BRIDGE model continues momentum (e.g. expansion of funded projects under LAB150 and LAB282; LAB591 as first US BRIDGE established)

CORPORATE
Conversion into European Company (SE) initiated

GUIDANCE UPDATE H2 2018
Guidance on Group revenues – Growth of >30% confirmed
Guidance on adjusted Group EBITDA – Growth of approx. 30% confirmed
Guidance on R&D expenses increased – R&D expenses for 2018 will increase to € 35-45 m (from € 20-30 m) due to investments in newly started anti-infectives initiatives; there will be no impact on adjusted Group EBITDA since the costs for the first five years will be covered by Sanofi

1. STRONG FINANCIAL PERFORMANCE FROM BOTH SEGMENTS

Evotec’s Group revenues for the first half of 2018 grew to € 173.8 m, a significant increase of 67% compared to the same period of the previous year (H1 2017: € 104.3 m). This increase is due to a strong performance in the base business, a positive Aptuit contribution (€ 53.6 m) as well as increased milestone achievements in existing alliances. The total revenues from milestones, upfronts and licences for the first half of 2018 amounted to € 15.5 m and increased by 17% over the same period of the previous year (H1 2017: € 13.3 m). In the first six months of 2018, the gross margin amounted to 28.9% (H1 2017: 35.7%). This margin change compared to 2017 reflects a new business mix with different margin expectations following the acquisition of Aptuit, higher amortisation of intangible assets and adverse FX effects. Gross margin excluding total amortisation amounted to 32.5%. The second quarter of 2018 recorded a very strong financial performance. Group revenues increased by 78% to € 94.8 m (Q2 2017: € 53.4 m), following the Aptuit contribution, strong milestone achievements and the signing of new partnerships (e.g. Celgene partnership in oncology). The significant milestone achievements were also reflected in the gross margin of Q2 2018 of 33.6% (Q2 2017: 34.1%). Q2 2018 gross margin excluding total amortisation amounted to 36.7% (Q2 2017: 37.1%). The adjusted Group EBITDA increased from € 12.8 m in the second quarter of 2017 to € 24.6 m in the second quarter of 2018.

R&D expenses for the first half of 2018 increased by 17% to € 10.0 m (H1 2017: € 8.5 m) reflecting continued development of predominantly initiatives in the fields of CNS and metabolic diseases as well as a focus on academic BRIDGE initiatives. SG&A expenses for the first half of 2018 increased as expected by 72% to € 27.1 m (H1 2017: € 15.8 m). Q2 2018 SG&A expenses remained on a similar level as in Q4 2017 and Q1 2018, which were the first full quarters following the Aptuit acquisition. SG&A expenses in the first six months of 2018 were mainly impacted by the addition of Aptuit as well as an increase in headcount in response to overall Company growth.

In the first six months of 2018, Evotec recorded impairments of intangible assets of € 4.2 m in total (H1 2017: € 0.0 m). The EVT770 programme was fully impaired (€ 4.0 m) as the project was put on hold. At the same time, correlated earn-out accruals of € 2.3 m were relieved under other operating income, which is a counter-effect to the impairment. The developed assets within the Panion joint venture were fully impaired (€ 0.2 m) as it was decided to discontinue the one programme.

Evotec’s adjusted Group EBITDA in the first six months of 2018 significantly increased by 47% to € 38.6 m (H1 2017: € 26.2 m). Evotec’s operating result for the first half of 2018 amounted to € 21.7 m (H1 2017: € 18.4 m). The net result in the first half of 2018 increased to € 17.9 m (H1 2017: € 10.3 m).

Liquidity, which includes cash and cash equivalents (€ 91.3 m) and investments (€ 18.5 m) amounted to € 109.8 m at the end of June 2018 (31 December 2017: € 91.2 m). On 31 July 2018, Evotec announced the repayment of 50% of the € 140 m debt facility, which was taken to fund the acquisition of Aptuit in 2017. This repayment was enabled mainly through the strong cash inflow from Evotec’s operational activities in the first half of 2018; in addition, part of the loan has been refinanced at highly attractive terms.

In the first half of 2018, revenues from the EVT Execute segment amounted to € 163.3 m, an increase of 61% compared to the same period of the previous year (H1 2017: € 101.3 m). This increase is primarily attributable to the strong performance in the base business and the Aptuit contribution for the first six months of 2018. Included in this amount are € 21.5 m of intersegment revenues (H1 2017: € 18.0 m). The EVT Execute segment recorded costs of revenue of € 126.8 m in the first six months of 2018 (H1 2017: € 71.6 m), resulting in a gross margin of 22.4% (H1 2017: 29.3%). The drivers behind this change in gross margin are the same drivers, which affected the Group gross margin. In the first six months of 2018, the EVT Execute segment recorded a significant upswing of its adjusted EBITDA of 27% to € 36.3 m against the prior-year period (H1 2017: € 28.6 m).

The EVT Innovate segment generated revenues in the amount of € 32.0 m (H1 2017: € 21.1 m), consisting entirely of third-party revenues. This 52% increase in EVT Innovate revenues primarily resulted from milestone achievements in key alliances in the first half of 2018. The EVT Innovate segment reported costs of revenue of € 15.9 m (H1 2017: € 11.4 m), resulting in a gross margin of 50.4% compared to 46.1% in the prior-year period. R&D expenses for the EVT Innovate increased from € 10.4 m in the first six months of 2017 to € 12.0 m in the first six months of 2018. The EVT Innovate segment reported a positive adjusted EBITDA of € 2.3 m (H1 2017: € (2.4) m) mainly due to milestone achievements. All key projects to achieve significant milestones in 2018 are on track.

2. EVT EXECUTE & EVT INNOVATE
EVT EXECUTE
In the first half of 2018, the EVT Execute segment continued its strong operational performance of the previous quarters. The Aptuit integration into the Evotec Group is proceeding according to plan. Evotec’s INDiGO offering, which was part of the strategic rationale behind the Aptuit acquisition, was launched in March 2018 and has started to attract very good interest from the industry, resulting in new INDiGO deals being signed with Carna Biosciences and Petra Pharma, among others. INDiGO is an integrated and highly efficient process to IND submission. In addition, Aptuit’s stand-alone development services and integrated CMC continued to deliver and sign new programmes. The expansion of the Active Pharmaceutical Ingredient ("API") capacity volume in Oxford and Verona will be completed in the second half of 2018, affording significant important scale to maximise on INDiGO opportunities. The Cyprotex business (acquired in December 2016) has continued its excellent performance of the previous quarters.

Good progress was achieved in Evotec’s existing alliances (e.g. Forge, Dermira, C4X, Blackthorn, Abivax) and new and expanded alliances were also signed (e.g. Katexco). In Evotec’s multi-target alliance with Bayer, further promising small molecules for the treatment of endometriosis advanced into Phase I and for the treatment of chronic cough into Phase II (after period-end). Since the beginning of the collaboration in 2012, six first-in-class/best-in-class non-hormonal pre-clinical candidates have been generated, out of which three programmes have progressed into Phase I/Phase II clinical trials.

EVT INNOVATE
The EVT Innovate segment also had a very strong first half of 2018. Significant progress was recorded across the various different ventures within this segment.

With the closing of the agreement with Sanofi in infectious diseases effective 01 July 2018 triggering an upfront of € 60 m (€ 43 m in cash plus € 17 m cash of the acquired company), Evotec now has the largest global footprint in infectious disease capabilities in the industry and a broad pipeline of drug candidates and discovery projects. Furthermore, Evotec broadened its existing relationship with Celgene with the start of a major long-term strategic agreement with Celgene in oncology resulting in an upfront payment of $ 65 m. This collaboration leverages Evotec’s phenotypic screening capabilities and unique compound libraries as well as associated target deconvolution capabilities.

Evotec’s existing key programmes are also on track, demonstrated by significant milestone achievements in the strategic iPSC alliance with Sanofi in the field of diabetes (TargetBCD) (milestone payment of € 3 m) and in the iPSC-based alliance with Celgene in neurodegeneration (milestone payment of $ 6 m). Evotec continues to place great emphasis on the expansion and development of its iPSC platform and patient-centric approaches to drug discovery.

Evotec’s academic BRIDGE model continues to attract significant interest from academia and industry partners. LAB591, the first US-based BRIDGE, was formed in May in partnership with Fred Hutchinson and Arix Bioscience. Evotec’s existing BRIDGES LAB282 and LAB150 also recorded progress with projects being selected for future activities in the course of the first six months of 2018.

3. CORPORATE
CONVERSION INTO EUROPEAN COMPANY (SE) INITIATED
At the Annual General Meeting held on 20 June 2018 in Hamburg, Evotec’s shareholders voted to support the conversion of Evotec AG into a European Company with a majority of 99.96%. After finalising the mandatory negotiation process regarding the future arrangements for employee involvement, Evotec AG will be transferred into Evotec SE with the registered seat and headquarters remaining in Hamburg, Germany.

4. GUIDANCE UPDATE H2 2018
Following the closing of the agreement to take over Sanofi’s infectious disease unit, the financial guidance 2018 was updated. Evotec now expects R&D expenses to range from € 35-45 m (previously: € 20-30 m). All other elements of the guidance 2018 are confirmed. In particular, the additional R&D efforts are not expected to impact the adjusted EBITDA since these extra R&D expenses will be covered by other operating income recognised in context of this new agreement with Sanofi.

Webcast/Conference Call
The Company is going to hold a conference call to discuss the results as well as to provide an update on its performance. The conference call will be held in English.

Conference call details

Date: Thursday, 09 August 2018

Time: 02.00 pm CEST (01.00 pm BST/08.00 am EDT)

From Germany: +49 69 22 22 29 043

From France: +33 170 750 705

From Italy: +39 023 601 3806

From UK: +44 20 3009 2452

From USA: +1 855 402 7766

Access Code: 37969784#

A simultaneous slide presentation for participants dialling in via phone is available at View Source

Webcast details

To join the audio webcast and to access the presentation slides you will find a link on our homepage www.evotec.com shortly before the event.

A replay of the conference call will be available for 24 hours and can be accessed in Europe by dialling +49 69 22 22 33 985 (Germany) or +44 20 3426 2807 (UK) and in the USA by dialling +1 866 535 8030. The access code is 654573#. The on-demand version of the webcast will be available on our website: View Source

Note: The 2017 and 2018 results are not fully comparable. The difference stems from the acquisition of Aptuit, effective 11 August 2017. The results from Aptuit are only included from 11 August 2017 onwards. The accounting policies used to prepare this interim information are the same as those used to prepare the audited consolidated financial statements for the year ended 31 December 2017, except for the adoption of new standards effective as of 01 January 2018.

From 01 January 2018 onwards, Evotec applies IFRS 15. The comparison period 2017 is adjusted from the first time application of IFRS 15.