SAN DIEGO, March 6, 2017 /PRNewswire/ -- Mast
Therapeutics, Inc. (NYSE MKT: MSTX), a clinical-stage
biopharmaceutical company, today reported financial results for the
fourth quarter and year ended December 31,
2016.
"We are pleased with the progress made with AIR001 during the
year and anticipate the closing of the merger with Savara to take
place in the second quarter of this year," stated Brian M. Culley, Chief Executive Officer.
"We believe this merger offers our stockholders a diversified,
late-stage product development pipeline with important forthcoming
milestones."
Fourth Quarter 2016 Operating Results
The Company's net loss for the fourth quarter of 2016 was
$6.0 million, or $0.02 per share (basic and diluted), compared to
a net loss of $10.2 million, or
$0.06 per share (basic and diluted),
for the same period in 2015.
The Company recognized $83,000 of
revenue for the fourth quarter of 2016, representing reimbursement
of costs related to the nonclinical study of vepoloxamer that is
being funded by a Small Business Innovation Research (SBIR)
grant. The Company recognized no revenue for the same period
in 2015.
Research and development (R&D) expenses for the fourth
quarter of 2016 were $78,000, a
decrease of approximately $7.1
million, or 99%, compared to $7.2
million for the same period in 2015. This reduction in
R&D expense was due principally to the Company's decision to
discontinue clinical development of vepoloxamer in September
2016. External clinical study fees and expenses decreased by
$3.9 million, external nonclinical
study fees and expenses decreased by $2.9
million and R&D personnel costs decreased by
$0.3 million for the fourth quarter
of 2016 compared to the same period in 2015.
Selling, general and administrative (SG&A) expenses for the
fourth quarter of 2016 were $1.9
million, a decrease of $0.6
million, or 23%, compared to $2.5
million for the same period in 2015. The decrease was
primarily due to reduced fees for consulting and legal services and
personnel costs compared to the 2015 period.
Interest expense was $0.2 million
for the fourth quarter of 2016, compared to $0.5 million for the same period in 2015.
The decrease in interest expense was primarily due to the Company's
prepayment of $10.0 million of the
principal balance of its debt facility in October 2016, which lowered the overall principal
balance of the debt significantly. The principal balance was
$3.3 million at December 31, 2016 compared to $15.0 million at December
31, 2015.
Fiscal Year 2016 Financial Results
The Company's net loss for the year ended December 31, 2016 was $36.1 million, or $0.17 per share (basic and diluted), compared to
a net loss of $39.8 million, or
$0.25 per share (basic and diluted),
for the same period in 2015.
The Company recognized $128,000 of
revenue for the year ended December 31,
2016, representing reimbursement of costs related to the
nonclinical study of vepoloxamer that is being funded by a SBIR
grant. The Company recognized no revenue for the same period
in 2015.
R&D expenses for the year ended December 31, 2016 were $20.8 million, a decrease of $7.5 million, or 26%, compared to $28.3 million for the same period in 2015. The
decrease was due primarily to a $4.1
million decrease in external nonclinical study fees and
expenses, a $3.3 million decrease in
external clinical study fees and expenses, and a $0.3 million decrease in personnel costs, offset
by a $0.3 million increase in
share-based compensation expense.
The decrease in external nonclinical study fees and expenses
resulted primarily from decreases in research-related manufacturing
costs for vepoloxamer ($4.7 million)
and nonclinical studies of vepoloxamer ($1.5
million), offset by increased costs related to preparing a
new drug application for vepoloxamer ($1.9
million), which project was discontinued in September 2016, and research-related
manufacturing costs for AIR001 ($0.2
million). The decrease in external clinical study fees
and expenses was due primarily to decreases in costs for the Phase
3 study of vepoloxamer in sickle cell disease ($5.0 million) and the Phase 2 study of
vepoloxamer in ALI that was discontinued in the third quarter of
2015 ($0.5 million), offset by
increased costs related to the Phase 2 study of vepoloxamer in
heart failure ($1.3 million) and the
investigator-sponsored Phase 2 studies of AIR001 in HFpEF
($0.9 million). The
$0.3 million decrease in personnel
costs was due primarily to reductions in the Company's workforce
that occurred in the fourth quarter of 2016.
SG&A expenses for the year ended December 31, 2016 were $9.3 million, a decrease of $1.7 million, or 15%, compared to $11.0 million for the same period in 2015.
This decrease was due primarily to a $1.0
million decrease in personnel costs and a $0.5 million decrease in professional and
consulting fees.
Interest expense was $2.1 million
for the year ended December 31, 2016,
an increase of $1.5 million compared
to $0.6 million for the same period
in 2015. The increase in interest expense was primarily due
to interest expense on a $15 million
principal balance under the Company's debt facility for nine months
in 2016 versus approximately four months of interest expense on the
debt facility in 2015, as well as increased amortization of debt
issuance costs as a result of a change in the amortization schedule
of such costs due to prepayment of $10
million of the principal balance in October 2016.
About Mast Therapeutics
Mast Therapeutics, Inc.
is a publicly traded biopharmaceutical company headquartered in
San Diego, California. The
Company's lead product candidate, AIR001, is a sodium nitrite
solution for intermittent inhalation via nebulization in Phase 2
clinical development for the treatment of heart failure with
preserved ejection fraction (HFpEF). More information can be found
on the Company's web site at www.masttherapeutics.com. Mast
Therapeutics™ and the corporate logo are trademarks of Mast
Therapeutics, Inc.
Agreement and Plan of Merger and Reorganization
As previously announced, on January 6,
2017, the Company entered into an Agreement and Plan of
Merger and Reorganization with Savara Inc., a privately-held,
clinical-stage specialty pharmaceutical company focused on the
development and commercialization of novel therapies for the
treatment of serious or life-threatening rare respiratory
diseases. Under the terms of the merger agreement, pending
approval of the transaction by the Company's and Savara's
stockholders, Savara stockholders will receive newly issued shares
of the Company's common stock in exchange for their Savara stock.
The combined company, led by Savara's current management team, is
expected to be named Savara Inc. and be headquartered in
Austin, TX. Prior to
closing, the Company will seek stockholder approval to conduct a
reverse split of its outstanding shares to satisfy listing
requirements of the NYSE MKT. The combined company is expected to
trade on the NYSE MKT under a new ticker symbol. The merger
agreement has been unanimously approved by the board of directors
of each company.
The parties anticipate completing the transaction in the second
quarter of 2017, subject to approvals by the stockholders of the
Company and Savara, and other customary closing conditions.
The combined company's pipeline would include:
- Savara's AeroVanc, an inhaled dry-powder vancomycin to treat
chronic methicillin-resistant Staphylococcus aureus (MRSA)
pulmonary infection in cystic fibrosis (CF), which is in
preparation for a pivotal Phase 3 clinical study;
- Savara's Molgradex, an inhaled nebulized GM-CSF to treat
pulmonary alveolar proteinosis (PAP), which is currently in Phase
2/3 development; and
- AIR001, the Company's lead product candidate.
Receipt of Audit Opinion with Going Concern
Qualification
The audit opinion provided by the
Company's independent registered public accounting firm relating to
the Company's audited financial statements for the year ended
December 31, 2016 included a going
concern qualification. The financial statements are included in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2016, which the Company
expects to file with the Securities and Exchange Commission, or the
SEC, on or about March 6, 2017. The
opinion of the Company's independent registered public accounting
firm notes that the Company has suffered recurring losses and has
insufficient working capital to fund operations for the next twelve
months. The Company's independent registered public accounting firm
indicated in its opinion that these conditions raise substantial
doubt about the Company's ability to continue as a going
concern.
Safe Harbor Statements
Additional Information about the Proposed Merger and Where to
Find It
In connection with the proposed merger with
Savara, the Company has filed relevant materials with the SEC,
including a registration statement on Form S‑4 that contains a
prospectus, proxy statement and information statement.
Investors and security holders of the Company are urged to read
these materials when the registration statement becomes effective
because they contain important information about the Company,
Savara and the proposed merger. The proxy statement/prospectus/
information statement and other relevant materials, and any other
documents filed by the Company with the SEC, may be obtained free
of charge at the SEC web site at www.sec.gov. In addition,
investors and security holders may obtain free copies of the
documents filed with the SEC by the Company by directing a written
request to: Mast Therapeutics, Inc. 3611 Valley Centre Drive, Suite
500, San Diego, California 92130,
Attn: Investor Relations. Investors and security holders are urged
to read the proxy statement/prospectus/information statement and
the other relevant materials when they become available before
making any voting or investment decision with respect to the
proposed merger.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
in connection with the proposed merger shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Participants in the Solicitation
The Company
and its directors and executive officers and Savara and its
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of Mast and
Savara in connection with the proposed transaction. Information
regarding the special interests of these directors and executive
officers in the proposed merger are included in the proxy
statement/prospectus/information statement referred to above.
Additional information regarding the Company's directors and
executive officers is also included in the Company's Annual Report
on Form 10-K for the year ended December 31,
2016, to be filed with the SEC on or about March 6, 2017. These documents are available free
of charge at the SEC web site (www.sec.gov) and from Investor
Relations at the Company at the address described above.
Forward Looking Statements
The Company cautions
you that statements in this press release that are not a
description of historical fact are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by the use of
words referencing future events or circumstances such as "expect,"
"intend," "plan," "anticipate," "believe," and "will," among
others. Such statements include, but are not limited to, statements
regarding the structure, timing and completion of the Company's
proposed merger with Savara; the Company's continued listing on
NYSE MKT prior to and after the proposed merger; the Company's
expectations regarding the capitalization, resources and ownership
structure of the combined organization; the Company's expectations
regarding the sufficiency of the combined organization's resources
to fund the advancement of any development program or the
completion of any clinical trial; the nature, strategy and focus of
the combined organization; the safety, efficacy and projected
development timeline and commercial potential of any product
candidates; the executive officer and board structure of the
combined organization; and the expectations regarding voting by the
Company's and Savara's stockholders. The Company may not actually
achieve the proposed merger with Savara, or any plans or product
development goals in a timely manner, if at all, or otherwise carry
out the intentions or meet the expectations or projections
disclosed in the Company's forward-looking statements, and you
should not place undue reliance on these forward-looking
statements. Because such statements are subject to risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. These
forward-looking statements are based upon the Company's current
expectations and involve assumptions that may never materialize or
may prove to be incorrect. Actual results and the timing of
events could differ materially from those anticipated in such
forward-looking statements as a result of various risks and
uncertainties, which include, without limitation, risks and
uncertainties associated with stockholder approval of and the
ability to consummate the proposed merger through the process being
conducted by the Company and Savara, the ability to project future
cash utilization and reserves needed for contingent future
liabilities and business operations, the availability of sufficient
resources for combined company operations and to conduct or
continue planned clinical development programs, the timing and
ability of the Company or Savara to raise additional equity capital
to fund continued operations; the ability to successfully develop
any of Savara's product candidates, and the risks associated with
the process of developing, obtaining regulatory approval for and
commercializing drug candidates that are safe and effective for use
as human therapeutics. Risks and uncertainties facing the
Company are described more fully in the Company's periodic reports
filed with the SEC available at www.sec.gov. You are cautioned not
to place undue reliance on forward-looking statements, which speak
only as of the date on which they were made. The Company undertakes
no obligation to update such statements to reflect events that
occur or circumstances that exist after the date on which they were
made, except as may be required by
law.
[Tables to Follow]
Mast Therapeutics,
Inc.
Condensed
Consolidated Statements of Operations
(In thousands, except
per share data)
|
|
|
|
Three months
ended December
31, (Unaudited)
|
|
|
Year
ended December 31,
(1)
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Total net
revenue
|
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
78
|
|
|
|
7,158
|
|
|
|
20,793
|
|
|
|
28,264
|
|
Selling,
general and administrative
|
|
|
1,934
|
|
|
|
2,515
|
|
|
|
9,342
|
|
|
|
10,963
|
|
Transaction-related expenses
|
|
|
301
|
|
|
|
—
|
|
|
|
301
|
|
|
|
—
|
|
Impairment of IPR&D
|
|
|
6,049
|
|
|
|
—
|
|
|
|
6,049
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
13
|
|
|
|
41
|
|
|
|
99
|
|
|
|
146
|
|
Total operating
expenses
|
|
|
8,375
|
|
|
|
9,714
|
|
|
|
36,584
|
|
|
|
39,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(8,292)
|
|
|
|
(9,714)
|
|
|
|
(36,456)
|
|
|
|
(39,373)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
(expense)/income, net
|
|
|
(152)
|
|
|
|
(449)
|
|
|
|
(2,053)
|
|
|
|
(469)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before
income taxes
|
|
|
(8,444)
|
|
|
|
(10,163)
|
|
|
|
(38,509)
|
|
|
|
(39,842)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax benefit
|
|
|
2,409
|
|
|
|
—
|
|
|
|
2,409
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,035)
|
|
|
$
|
(10,163)
|
|
|
$
|
(36,100)
|
|
|
$
|
(39,842)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share –
basic and diluted
|
|
$
|
(0.02)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares – basic and diluted
|
|
|
244,094
|
|
|
|
163,614
|
|
|
|
208,484
|
|
|
|
162,219
|
|
|
(1) The condensed
consolidated statements of operations for the years ended December
31, 2016 and 2015 have been derived from the audited financial
statements, but do not include all of the information and footnotes
required by accounting principles generally accepted in the United
States for the complete financial statements.
|
Mast Therapeutics,
Inc.
Balance Sheet
Data
(In
thousands)
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
Cash, cash
equivalents and investment securities
|
|
$
|
11,282
|
|
|
$
|
40,981
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
|
|
7,319
|
|
|
|
19,079
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
17,922
|
|
|
|
54,217
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
8,163
|
|
|
|
30,328
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
9,759
|
|
|
|
23,889
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mast-therapeutics-reports-fourth-quarter-and-full-year-2016-financial-results-300418179.html
SOURCE Mast Therapeutics, Inc.