HOLLISTON, Mass., Aug. 14, 2017 /PRNewswire/ -- Biostage, Inc.
(Nasdaq: BSTG), ("Biostage" or the "Company"), a biotechnology
company developing bioengineered organ implants to treat cancer,
congenital abnormalities and other life-threatening conditions of
the esophagus, bronchus and trachea, today announced financial
results for the three and six months ended June 30, 2017.
The Company also provided an update on its clinical and
financial progress. Closing this financing clears a major financial
overhang for the company. A successful first-in-patient use of the
Cellspan Esophageal Implant via FDA-approved single-use expanded
access program provided a meaningful validation of the company's
technology. Additionally, the company provided a rationale for
elevating the pediatric esophageal atresia indication to their lead
program. The large unmet medical need and the lack of surgical
alternatives was validated by several key pediatric surgeons and
advisors and provided a superior value case as compared to the
adult esophageal indication. The company will continue development
of both programs now prioritizing the pediatric atresia indication
as the lead program. As previously announced, Biostage management
will host a business update conference call and live webcast, with
accompanying presentation slides, for investors, analysts and other
interested parties today at 9 AM ET
(details below).
Recent Highlights
- Successful first-in-patient use of Cellspan Esophageal Implant
via FDA-approved single-use expanded access program;
- Securities Purchase Agreement with key investor closes and sets
the path for funding of the company through 2018 and with the
exercise of outstanding warrants to the end of 2019;
- Pediatric Esophageal Atresia indication demonstrates greatest
value following development review of the Cellspan platform;
and
- Company granted continued listing on NASDAQ.
A meaningful moment for Biostage
By securing the financing to extend the runway of the company
through 2018, Biostage is well positioned to advance its Cellframe
technology to the clinic. "I have been a long time investor in
Biostage," commented Chip Greenblatt
of First Pecos. "I strongly believe in the technology, and the
potential to dramatically help kids and want to see the company
increase its value and have enough cash to get to the finish line."
Additionally, successful first-in-patient use of the Cellspan
Esophageal Implant is an important milestone for Biostage. Further,
the company announced several positive data updates during the
quarter. Biostage continues to work closely with key collaborators
and advisors to validate its Cellspan's scientific and clinical
value.
A key company goal of 2017 was to transition Biostage to a
clinical-stage company. The company's most recent financial news
and in-human use demonstrates Biostage is making strong progress in
its clinical-stage transition. "In summary, the financial and
clinical validation of the company has now created a funding runway
through 2018," commented Jim McGorry, CEO of Biostage. "This is a
material moment for Biostage as the Company has reduced its
technical risk and is pursuing a speed to market strategy. We are
delighted to extend Biostage's horizon with a key investment from a
long-term strategic investor."
Rationale to prioritize pediatric atresia to lead
program
In conjunction with the financing arrangement, the company is
reprioritizing its product development program based on greatest
unmet medical need, analysis of surgical options, physician
validation and investor preference. Of the current programs, the
Cellspan Esophageal Implant program to treat pediatric esophageal
atresia provides the greatest overall value and shortest time to a
commercial product. Therefore, the company will elevate the
pediatric program to its lead program; it will continue to advance
the Cellspan Esophageal Implant adult program, but will not file an
IND at this time. The company also believes the pediatric
esophageal atresia program needs to advance in the first position
with the FDA to ensure eligibility for the pediatric voucher
program that could potentially provide tens of millions of dollars
of non-dilutive financing for additional development in other
indications.
"Pediatric esophageal atresia is a condition with a tremendous
unmet medical need," commented Dr. Saverio La Francesca, President
and CMO of Biostage. "We have had significant progress in our
esophageal atresia program and expect faster recruitment in
clinical trials based on the feedback received from the medical
community. Biostage continues to receive strong clinical interest
from the pediatric surgeon community. This reprioritization focuses
our technology on the greatest unmet need and makes more certain
our eligibility for a Priority Review Voucher through the FDA."
Summary of Financial Results for Second Quarter Ended
2017
For the three months ended June 30,
2017, the Company reported a net loss of approximately
$3.6 million, or a net loss per
diluted share of $0.10, compared to a
net loss of approximately $2.7
million, or a net loss per diluted share of $0.17 for the three months ended June 30, 2016. The increase of $0.9 million or 33% is primarily attributable to
additional spending within research and development on outsourced
preclinical studies and employee cost of $1.0 million, and a decrease in the gain on the
change in the fair value of warrants of $0.1
million. These were partially offset by a
decrease in general and administrative costs of $0.2 million primarily related to the
non-recurrence of re-branding costs incurred in 2016.
For the six months ended June 30,
2017, the Company reported a net loss of approximately
$7.4 million, or a net loss per
diluted share of $0.23, compared to a
net loss of approximately $5.2
million, or a net loss per diluted share of $0.35 for the six months ended June 30, 2016. The increase of $2.2 million or 42% is primarily attributable to
additional spending within research and development on outsourced
preclinical studies, scientific conferences, and employee-related
costs totaling $1.7 million. Also contributing to the
increased loss was the change in the fair value of warrants of
$0.8 million. These were
partially offset by a decrease in general and administrative costs
of $0.3 million primarily related to
decreased non-cash share-based compensation to employees and
non-recurrence of re-branding costs incurred in 2016.
"Q2 was a great quarter for Biostage on many fronts; clinically,
scientifically and financially. We are extremely pleased with the
closing of the private placement and the signing of the definitive
agreement with First Pecos, LLC. This funding will eliminate the
financial overhang and will help fund the company's pediatric
program. Additionally, the future rights offering will allow our
shareholders to avoid involuntary dilution in future offerings,"
concluded Mr. McGorry.
Conference Call and Webcast Details:
Please click here to access the link to the webcast and slides
available for download.
Date and
Time:
|
Today, Monday, August
14, at 9:00 am ET
|
Call Dial In
#:
|
877-407-8293 U.S. or
201-689-8349 Int'l
|
Live
webcast/replay:
|
http://ir.biostage.com/Q2-2017-results
|
Telephone
replay:
|
877-660-6853 U.S. or
201-612-7415 Int'l
|
|
Access ID
#13666745
|
About Biostage
Biostage is a biotechnology company
developing bioengineered organ implants based on the Company's new
Cellframe™ technology which combines a proprietary
biocompatible scaffold with a patient's own stem cells to create
Cellspan organ implants. Cellspan implants are being developed to
treat life-threatening conditions of the esophagus, bronchus or
trachea with the hope of dramatically improving the treatment
paradigm for patients. Based on its preclinical data, Biostage has
selected life-threatening conditions of the esophagus as the
initial clinical application of its technology.
Cellspan implants are currently being advanced and tested in
collaborative preclinical studies. Preclinical, large-animal safety
studies, conducted in compliance with the FDA Good Laboratory
Practice ("GLP") regulations, for the Company's Cellspan Esophageal
Implant product candidate are ongoing.
For more information, please visit www.biostage.com and connect
with the Company on Twitter and LinkedIn.
Forward-Looking Statements:
Some of the statements in
this press release are "forward-looking" and are made pursuant to
the safe harbor provision of the Private Securities Litigation
Reform Act of 1995. These "forward-looking" statements in this
press release include, but are not limited to, statements relating
to the private placement, any rights offerings, development
expectations and regulatory approval of any of our products,
including those utilizing our Cellframe technology, by the U.S.
Food and Drug Administration, the European Medicines Agency or
otherwise, which closings, offerings, expectations or approvals may
not be achieved or obtained on a timely basis or at all; or success
with respect to any collaborations, clinical trials and other
development and commercialization efforts of our products,
including those utilizing our Cellframe technology, which such
success may not be achieved or obtained on a timely basis or at
all. These statements involve risks and uncertainties that may
cause results to differ materially from the statements set forth in
this press release, including, among other things, our ability to
obtain and maintain regulatory approval for our products and our
ability to complete the private placement on a timely basis or at
all; plus other factors described under the heading "Item 1A. Risk
Factors" in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2016 or described
in our other public filings. Our results may also be affected by
factors of which we are not currently aware. The forward-looking
statements in this press release speak only as of the date of this
press release. Biostage expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to such
statements to reflect any change in its expectations with regard
thereto or any changes in the events, conditions or circumstances
on which any such statement is based.
Investor Relations Contacts:
Tom McNaughton
Chief Financial Officer
774-233-7321
tmcnaughton@biostage.com
Media Contacts:
Maggie
Beller
Russo Partners LLC
646-942-5631
maggie.beller@russopartnersllc.com
EXHIBIT
1
|
|
BIOSTAGE,
INC.
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except par value and share data)
|
|
|
|
June
30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
3,424
|
|
$
|
2,941
|
Accounts
receivable
|
|
|
-
|
|
|
42
|
Prepaid
expenses
|
|
|
178
|
|
|
291
|
Other current
assets
|
|
|
97
|
|
|
212
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
3,699
|
|
|
3,486
|
Property, plant and
equipment, net
|
|
|
957
|
|
|
1,065
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
4,656
|
|
$
|
4,551
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
687
|
|
$
|
962
|
Accrued and other
current liabilities
|
|
|
1,164
|
|
|
1,210
|
Warrant
liabilities
|
|
|
1,525
|
|
|
605
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
3,376
|
|
|
2,777
|
|
|
|
|
|
|
|
Total
liabilities
|
|
$
|
3,376
|
|
$
|
2,777
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Undesignated
Preferred stock, $0.01 par value; 1,000,000 shares authorized;
none
issued and outstanding
|
|
|
-
|
|
|
-
|
Series B convertible
preferred stock, $0.01 par value; 1,000,000 shares
authorized;
695,857 shares issued and none
outstanding
|
|
|
-
|
|
|
-
|
Common stock, $0.01
par value; 120,000,000 shares and 60,000,000 shares
authorized as of June 30, 2017 and
December 31, 2016, respectively, and
37,116,570 and 17,108,968 shares
issued and outstanding as of June 30, 2017 and
December 31, 2016,
respectively
|
|
|
371
|
|
|
171
|
Additional paid-in
capital
|
|
|
44,671
|
|
|
37,921
|
Accumulated
deficit
|
|
|
(43,762)
|
|
|
(36,318)
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
1,280
|
|
|
1,774
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
4,656
|
|
$
|
4,551
|
EXHIBIT
2
|
|
BIOSTAGE, INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
(In thousands,
except per share amounts)
|
|
|
|
Three Months
ended
June
30,
|
|
Six Months
ended
June
30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
28
|
|
$
|
-
|
|
|
$
|
28
|
Cost of
revenues
|
|
|
-
|
|
|
|
44
|
|
|
-
|
|
|
|
44
|
Gross profit
(deficit)
|
|
|
-
|
|
|
|
(16)
|
|
|
-
|
|
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
2,688
|
|
|
|
1,676
|
|
|
4,757
|
|
|
|
3,054
|
Selling, general and
administrative
|
|
|
1,039
|
|
|
|
1,230
|
|
|
2,018
|
|
|
|
2,324
|
Total operating
expenses
|
|
|
3,727
|
|
|
|
2,906
|
|
|
6,775
|
|
|
|
5,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(3,727)
|
|
|
|
(2,922)
|
|
|
(6,775)
|
|
|
|
(5,394)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair
value of warrant liability
|
|
|
124
|
|
|
|
210
|
|
|
(669)
|
|
|
|
210
|
Other
expense
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
124
|
|
|
|
210
|
|
|
(669)
|
|
|
|
210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(3,603)
|
|
|
|
(2,712)
|
|
|
(7,444)
|
|
|
|
(5,184)
|
Income
taxes
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,603)
|
|
|
$
|
(2,712)
|
|
$
|
(7,444)
|
|
|
$
|
(5,184)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
|
$
|
(0.10)
|
|
|
$
|
(0.17)
|
|
$
|
(0.23)
|
|
|
$
|
(0.35)
|
Weighted average
common shares, basic and diluted
|
|
|
37,117
|
|
|
|
15,535
|
|
|
32,143
|
|
|
|
14,822
|
EXHIBIT
3
|
|
BIOSTAGE,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In
thousands)
|
|
|
|
Six Months
Ended
June 30,
|
|
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,444)
|
|
$
|
(5,184)
|
Adjustments to
reconcile net loss to net cash flows used in operating
activities:
|
|
|
|
|
|
|
Share-based
compensation expense
|
|
|
397
|
|
|
665
|
Depreciation
|
|
|
236
|
|
|
224
|
Change in fair value
of warrant liability
|
|
|
669
|
|
|
(210)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
42
|
|
|
(19)
|
Inventories
|
|
|
-
|
|
|
28
|
Prepaid expenses and
other current assets
|
|
|
228
|
|
|
174
|
Accounts
payable
|
|
|
(275)
|
|
|
230
|
Accrued and other
current liabilities
|
|
|
(46)
|
|
|
108
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
|
(6,193)
|
|
|
(3,984)
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(125)
|
|
|
(217)
|
Net cash used in
investing activities
|
|
|
(125)
|
|
|
(217)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Proceeds from
issuance of common stock and warrants, net of issuance
costs
|
|
|
6,801
|
|
|
4,496
|
Proceeds from
issuance of common stock, net of issuance costs
|
|
|
-
|
|
|
349
|
|
|
|
|
|
|
|
Net cash provided by
financing activities
|
|
|
6,801
|
|
|
4,845
|
|
|
|
|
|
|
|
Net increase in
cash
|
|
|
483
|
|
|
644
|
Cash at beginning of
period
|
|
|
2,941
|
|
|
7,456
|
Cash at end of
period
|
|
$
|
3,424
|
|
$
|
8,100
|
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SOURCE Biostage Inc.