On November 6, 2019 NewLink Genetics Corporation (NASDAQ:NLNK) reported financial results for the third quarter ended September 30, 2019 and provided an update on corporate activities (Press release, NewLink Genetics, NOV 6, 2019, View Source [SID1234550399]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"We are excited about the proposed merger with Lumos Pharma that we announced at the close of the third quarter and continue to advance the process required to close the transaction," commented Brad Powers, General Counsel and member of NewLink’s Office of the CEO. "We believe this merger positions the company to improve therapeutic options for patients with pediatric growth hormone deficiency and other rare and neglected diseases, and to bring greater value to our shareholders."

Eugene Kennedy, MD, Chief Medical Officer and member of NewLink’s Office of the CEO added, "We are also pleased by the FDA’s recent acceptance of the biologic licensing application for priority review of our partnered investigational Ebola vaccine, which we licensed to Merck in 2014. We are encouraged, as well, that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has adopted a positive opinion recommending a conditional marketing authorization for V920 Ebola Zaire vaccine. We believe these actions demonstrate the urgency with which regulatory bodies are addressing this deadly disease in order to help the affected individuals and communities."

Proposed Merger and Related Milestones

On September 30, 2019, NewLink announced its intent to merge with Lumos Pharma, a private clinical-stage biopharmaceutical company targeting rare and neglected diseases. Under the terms of the merger agreement, Lumos and NewLink stockholders will each own approximately 50% of the combined company which will be renamed "Lumos Pharma" at the close of the transaction. Rick Hawkins, current CEO of Lumos Pharma, is expected to become CEO of the combined company. The proposed merger has been approved by the Boards of both companies and the major stockholders of Lumos Pharma and NewLink’s largest stockholder has entered into a support agreement with NewLink to vote in favor of various proposals relating to the Merger.

The combined company would focus initially on the development of Lumos Pharma’s lead product candidate, LUM-201 (ibutamoren), an oral growth hormone (GH) secretagogue targeting pediatric growth hormone deficiency (PGHD) and other rare endocrine disorders. If approved, LUM-201 has the potential to be the first orally administered growth hormone stimulating therapy for PGHD, a well-established and sizable market where daily recombinant human growth hormone injections represent current standard-of-care therapy.

The initiation of a Phase 2b trial for LUM-201 in a subset of PGHD patients meeting certain predictive enrichment markers (PEMs) is anticipated in mid-2020. The combined company is expected to have resources sufficient to support clinical development through the readout of this planned Phase 2b trial. Additional target indications are being evaluated for LUM-201 clinical development, including Turner Syndrome and children born Small for Gestational Age (SGA).

NewLink will file a proxy statement with the Securities and Exchange Commission (SEC) providing additional information about the proposed merger. The transaction is expected to close in the first quarter of 2020, subject to the satisfaction of customary closing conditions, including approval of certain proposals by the stockholders of NewLink.

Additional Updates

The combined company may receive additional, non-dilutive financing should the U.S. Food and Drug Administration (FDA) approve NewLink’s Ebola vaccine V920 partnered with Merck Sharp & Dohme Corp. (Merck). On September 17, 2019, Merck announced that the FDA has accepted its biologics license application (BLA) and granted priority review for the investigational Ebola vaccine V920 and the Prescription Drug User Fee Act (PDUFA), or target action date, is set for March 14, 2020. If the vaccine receives approval by the FDA, a priority review voucher will be issued, in which the Company owns a substantial interest and which the Company plans to monetize.

On October 18, 2019, the European Medicines Agency (EMA) Committee for Medicinal Products for Human Use(CHMP) adopted a positive opinion recommending a conditional marketing authorization for investigational V920 Ebola Zaire vaccine (rVSV∆G-ZEBOV-GP), as confirmed by our partner, Merck (NYSE:MRK). This Committee’s recommendation will now be reviewed by the European Commission (EC) for a centralized marketing authorization of the vaccine (brand name ERVEBO) across EU member countries.

Updated Phase 1b results for indoximod for the cohort of pediatric patients with newly diagnosed treatment-naïve diffuse intrinsic pontine glioma (DIPG) has been accepted for presentation at the upcoming ESMO (Free ESMO Whitepaper) Immuno-Oncology Congress 2019, 11-14 December 2019, Geneva, Switzerland. NewLink expects to continue to evaluate its oncology portfolio to determine value creation opportunities.

Financial Results for the Three-Month Period Ended September 30, 2019

Restructuring: On September 30, 2019, NewLink Genetics announced it had adopted a restructuring plan to reduce its headcount by approximately 60% to align with future priorities and to conserve resources. In conjunction with the restructuring and the departures of our former CEO and President, the company recorded restructuring and severance charges of $4.5 million during the third quarter.

Cash Position: NewLink Genetics ended the quarter on September 30, 2019, with cash and cash equivalents totaling $98.5 million compared to $120.7 millionDecember 31, 2018.

R&D Expenses: Research and development expenses for the third quarter of 2019 were $7.0 million, a decrease of $546,000 from $7.6 million for the same period in 2018. The decrease was primarily due to reductions of $1.1 million in personnel-related and stock compensation expense, $255,000 in contract research and manufacturing spend, and $333,000 in legal and consulting and supplies expense, offset by increases of $1.1 million in restructuring costs and $87,000 in clinical trial and licensing expense.

G&A Expenses: General and administrative expenses in the third quarter of 2019 were $8.3 million, an increase of $691,000 from $7.6 million for the same period in 2018. The increase was due primarily to increases of $2.0 million in restructuring and severance expense, and $1.2 million in legal and consulting expense, offset by decreases of $1.7 million in stock compensation expense, $431,000 in personnel-related expense, and $353,000 in supplies.

Net Loss: NewLink Genetics reported a net loss of $14.5 million or ($0.39) per diluted share for the third quarter of 2019 compared to a net loss of $7.4 million or ($0.20) per diluted share for the third quarter of 2018.

NewLink Genetics ended Q3 2019 with 37,314,076 shares outstanding.

Conference Call and Webcast Details

The Company has scheduled a conference call and webcast for 8:30 a.m. ET today to discuss its financial results and to give an update on clinical and business development activities.

Access to the live conference call is available five minutes prior to the start of the call by dialing (855) 469-0612 (U.S.) or (484) 756-4268 (international). The conference call will be webcast live and a link to the webcast can be accessed through the NewLink Genetics website at www.NewLinkGenetics.com in the "Investors & Media" section under "Events and Presentations" or through the link View Source To ensure a timely connection, it is recommended that users register at least 10 minutes prior to the scheduled webcast. A replay of the call will be available approximately two hours after the completion of the call and can be accessed by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and using the passcode 3794399. The replay will be available for two weeks from the date of the call.