On November 4, 2016 Lion Biotechnologies, Inc. (NASDAQ: LBIO), a biotechnology company developing novel cancer immunotherapies based on tumor-infiltrating lymphocyte technology (TIL), reported its third quarter 2016 financial results and provided a corporate update (Press release, Lion Biotechnologies, NOV 4, 2016, View Source [SID1234516328]).
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"Lion continues building momentum in broadening the utility of our TIL technology in new indications through internal R&D as well as with our collaborators. We recently announced our collaboration with the Karolinska Institute which expands the utility of TIL into two new indications, glioblastoma and pancreatic cancer. We also extended our Cooperative Research and Development Agreement (CRADA) with Professor Rosenberg at the National Cancer Institute (NCI) for an additional 5 years. We continue our process development work in optimizing the process of manufacturing TIL. Some of our preliminary work on developing a more robust and lower cost processes for growth of TIL will be presented at the upcoming 2016 SITC (Free SITC Whitepaper) meeting. We are building our team to become a fully integrated immuno-oncology company with new members with extensive expertise in cell-based therapy as evident by our recent hire of our CFO, Greg Schiffman. We have now doubled the number of our employees since June 2016 and moved to our San Carlos headquarters," said Dr. Maria Fardis, Chief Executive Officer of Lion Biotechnologies.
Recent Business Highlights and Anticipated Milestones
Appointed New Chief Financial Officer: In October 2016, Greg Schiffman, was appointed Chief Financial Officer (CFO) of Lion. Mr. Schiffman has extensive experience in drug development and therapeutics using cellular technologies. Prior to joining Lion Biotechnologies, Mr. Schiffman was Executive Vice President and CFO of StemCells, Inc, a publicly traded company engaged in the research, development, and commercialization of stem cell therapeutics. Prior to that he served as Executive Vice President and CFO of Dendreon Corporation, a publicly traded biotechnology company engaged in the discovery, development and commercialization of novel therapeutics using a proprietary cellular immunotherapy technology.
Entered into License with PolyBioCept AB and Related Clinical Trials Agreement with Karolinska University Hospital: In September 2016, the Company entered into an Exclusive License Agreement with PolyBioCept AB, a Swedish corporation. PolyBioCept has filed two patent applications with claims related to a cytokine cocktail for use in expansion of lymphocytes. Under the License Agreement, the Company received the exclusive right and license to PolyBioCept’s intellectual property to develop, manufacture, market and genetically engineer TIL produced by expansion, selection and enrichment using a cytokine cocktail. The Company also received a co-exclusive license (with PolyBioCept) to develop, manufacture and market genetically engineered TIL under the same intellectual property. The licenses are for the use in all cancers and are worldwide in scope, with the exception that the uses in melanoma are not included for certain countries of the former Soviet Union. The agreement has an initial term of 30 years. Under the terms of the clinical trials agreement, Lion will fund two clinical studies in glioblastoma and pancreatic cancer to be conducted at the Karolinska University Hospital in which TIL is manufactured using the licensed combination of cytokines. Both Phase 1 trials are expected to begin in 2017.
Cooperative Research and Development Agreement with NCI Extended: In August 2016, the Company entered into the second amendment of the CRADA with the NCI, for research and development related to an adoptive cell therapy utilizing TIL in the treatment of metastatic melanoma. The amendment extended the term of the CRADA by five years to August 2021 and modified the focus on the development of TIL as a stand-alone therapy or in combination with FDA-licensed products and commercially available reagents routinely used for adoptive cell therapy.
Two Additional Programs to Enter Phase 2 in 2017: The Company plans to initiate Phase 2 trials for LN-145 for the potential treatment of head and neck and cervical cancers in 2017.
Enrollment in LN-144 Phase 2 Melanoma Study Continues: Lion continues enrollment of patients in the LN-144 Phase 2 melanoma study and intends to present initial data at an upcoming medical conference in 2017.
Headcount: During the three months ended September 30, 2016, the Company increased its headcount from 23 employees to 45 employees to support the expansion of the Company’s clinical product pipeline and development activities including next generation TIL technologies.
Opened New Corporate Headquarters: Lion’s corporate headquarters has now moved to the San Carlos, California location. Lion will, however, retain its existing New York City and Tampa offices.
Third Quarter and Year-to-Date 2016 Financial Results
As of September 30, 2016 the Company held $179.3 million in cash and cash equivalents and short-term investments, compared to $103.7 million as of December 31, 2015.
GAAP and Non-GAAP net loss attributable to common stockholders
GAAP net loss attributable to common stockholders, which included a one-time deemed dividend charge of $49.5 million incurred as a result of the conversion feature of the Series B convertible preferred stock, for the quarter ended September 30, 2016 was $68.2 million, or ($1.15) per share, compared to GAAP net loss attributable to common stockholders of $7.6 million or ($0.16) per share for the quarter ended September 30, 2015. The deemed dividend did not have any monetary impact for the Company.
Non-GAAP net loss attributable to common stockholders, which excludes amounts related to stock-based compensation and the non-cash deemed dividend, for the quarter ended September 30, 2016 was $10.1 million, or ($0.17) per share, compared to non-GAAP net loss attributable to common stockholders of $5.2 million, or ($0.11) per share for the quarter ended September 30, 2015. The non-GAAP net loss attributable to common stockholders for the three months ended September 30, 2016 excludes $8.6 million of non-cash stock-based compensation and a non-cash deemed dividend of $49.5 million. The stock compensation increase year-over-year of $6.3 million is primarily driven by the departure of the Company’s former CFO. The deemed dividend will only impact the current quarter’s financial statements.
GAAP net loss attributable to common stockholders for the nine months ended September 30, 2016, which includes a one-time deemed dividend related to a charge of $49.5 million incurred as a result of the conversion feature of the Series B convertible preferred stock was $86.7 million, or ($1.64) per share, compared to GAAP net loss attributable to common stockholders of $19.3 million or ($0.44) per share for the nine months ended September 30, 2015. Non-GAAP net loss, which excludes amounts related to stock-based compensation and the non-cash deemed dividend for the nine months ended September 30, 2016 was $21.4 million, or ($0.40) per share, compared to non-GAAP net loss of $13.5 million or ($0.31) per share for the nine months ended September 30, 2015.
The Company believes that it is important for investors to understand these non-cash charges as they are materially impacting the quarterly loss and EPS calculations. See "Use of Non-GAAP Financial Measures" below for a description of the Company’s Non-GAAP Financial Measures. Reconciliation between certain GAAP and Non-GAAP measures is provided at the end of this press release.
GAAP and Non-GAAP expenses
GAAP research and development (R&D) expenses of $8.5 million for the quarter ended September 30, 2016 increased by $3.5 million compared to the quarter ended September 30, 2015. The increase in R&D expense is due to increased spending on clinical activities for LN-144. In addition, R&D-associated stock option expenses were $0.6 million for the three months ended September 30, 2016 and $1.8 million for the nine months ended September 30, 2016. Non-GAAP R&D expenses of $7.8 million for the quarter ended September 30, 2016 increased by $3.7 million, compared to $4.1 million for the quarter ended September 30, 2015.
GAAP general and administrative (G&A) expenses of $10.5 million increased by $7.8 million compared to the quarter ended September 30, 2015. Non-GAAP G&A expenses of $2.5 million for the quarter ended September 30, 2016 increased by $1.3 million, compared to $1.2 million for the quarter ended September 30, 2015.
Reconciliation between certain GAAP and Non-GAAP measures is provided at the end of this press release.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including expenses adjusted to exclude certain non-cash expenses. These measures are not in accordance with, or an alternative to, generally accepted accounting principles, or GAAP, and may be different from non-GAAP financial measures used by other companies. The items included in GAAP presentations but excluded for purposes of determining non-GAAP financial measures for the periods presented in this press release are: (i) the non-cash stock-based compensation expense which may fluctuate from period to period based on factors including the timing and accounting of grants for stock options and changes in the Company’s stock price which impacts the fair value of options granted, and (ii) the one-time non-cash deemed dividend related to the conversion feature of the Series B Preferred Stock. The Company believes the presentation of non-GAAP financial measures provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of our ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. To the extent this release contains historical or future non-GAAP financial measures, the Company has also provided corresponding GAAP financial measures for comparative purposes. Reconciliation between certain GAAP and non-GAAP measures is provided at the end of this press release.
2016 Cash Expectations
Lion anticipates the ending cash, cash equivalents and short-term investments as of December 31, 2016, to be in excess of $164.0 million.
Upcoming Events & Presentations
Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)’s (SITC) (Free SITC Whitepaper) 31st Annual Meeting & Associated Programs in National Harbor, Maryland, November 9-13, 2016
Piper Jaffray 28th Annual Health Care Conference, at the Lotte New York Palace hotel in New York City, November 30 at 2:30 p.m. ET