NewLink Genetics Corporation (NASDAQ:NLNK) today announced
financial results for the third quarter ended September 30, 2019
and provided an update on corporate activities.
“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 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 million December 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
https://edge.media-server.com/mmc/p/sm3cyp39. 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.
About NewLink Genetics
Corporation
NewLink Genetics is a clinical-stage
biopharmaceutical company that has historically focused on
developing novel immunotherapeutic products for the treatment of
patients with cancer. On September 30, 2019, NewLink announced its
intent to merge with Lumos Pharma, a private clinical-stage
biopharmaceutical company targeting rare and neglected diseases. At
the close of the proposed merger, the combined company will operate
as Lumos Pharma focused on 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 represent the
first orally administered growth hormone stimulating therapy for
PGHD, a well-established and sizable market where daily recombinant
human growth hormone injections represent the current
standard-of-care treatment regimen. For more information, please
visit www.NewLinkGenetics.com.
Additional Information and Where to Find
It
In connection with the proposed transaction,
NewLink will be filing documents with the SEC, including
preliminary and definitive proxy statements relating to the
proposed transaction. The definitive proxy statement will be mailed
to NewLink’s stockholders in connection with the proposed
transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY AND DEFINITIVE
PROXY STATEMENTS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC
IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY
REFERENCE IN THE PROXY STATEMENT WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders may obtain free copies
of these documents (when they are available) and other related
documents filed with the SEC at the SEC’s web site at www.sec.gov,
on NewLink’s website at www.newlinkgenetics.com or by
contacting NewLink Genetics’ Investor Relations at
515-598-2555.
Participants in the
Solicitation
NewLink and Lumos Pharma and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from NewLink stockholders in
connection with the proposed transaction. Information about
NewLink’s directors and executive officers and their ownership of
NewLink’s securities is set forth in NewLink Genetics’ proxy
statement for its 2019 Annual Meeting of Stockholders, which was
filed with the SEC on April 5, 2019, as modified or supplemented by
any Form 3 or Form 4 filed with the SEC since the date of such
filing. Other information regarding the proposed transaction,
including information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in
the proxy statements described above and other relevant materials
to be filed with the SEC when they become available. These
documents are or will be available free of charge at the SEC’s web
site at www.sec.gov and from other sources indicated above.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements of NewLink Genetics that involve substantial
risks and uncertainties. All statements contained in this press
release are forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. The words
“forecast,” “projected,” "guidance," "upcoming," "will," "plan,"
“intend,” "anticipate," "approximate," "expect," “potential,” or
the negative of these terms or other similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. These
forward-looking statements include, among others, statements
about NewLink’s expectation regarding the management, strategy
and development focus of the combined company post consummation of
the proposed merger; results of NewLink’s and the combined
company’s clinical trials for product candidates; NewLink’s and the
combined company’s timing of release of data from ongoing clinical
studies; NewLink’s and the combined company’s plans related to
execution of clinical trials; plans related to moving additional
indications into clinical development; NewLink
Genetics' future financial performance; NewLink Genetics’
expectations regarding the capitalization, resources, ownership
structure, management structure and operations of the combined
company; NewLink Genetics’ expectations regarding the sufficiency
of the combined company's resources to fund the advancement of any
development program or the completion of any clinical trial; the
potential benefits of the transaction; NewLink Genetics’ plan to
monetize its interest in the priority review voucher; the expected
economic benefit from the issuance of the priority review voucher;
the expected completion and timing of the transaction and other
information relating to the transaction; and any other statements
other than statements of historical fact. Actual results or events
could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements
that NewLink Genetics makes due to a number of important
factors, including (i) the risk that the transaction may not be
completed in a timely manner or at all, which may adversely affect
the NewLink Genetics’ business and the price of the common stock of
NewLink Genetics, (ii) the failure to satisfy the conditions to the
consummation of the transaction, including approval of the issuance
of shares of NewLink Genetics common stock in the transaction or
the contemplated reverse stock split, (iii) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement, (iv) the risk that the
definitive merger agreement may be terminated in circumstances that
require NewLink Genetics to pay a termination fee to Lumos Pharma;
(v) risks related to the ability to realize the anticipated
benefits of the transaction, including the risk that the businesses
will not be integrated successfully, (vi) the effect of the
announcement or pendency of the transaction on NewLink Genetics’
business relationships, operating results and business generally,
(vii) risks that the proposed transaction disrupts current plans
and operations, (viii) risks related to diverting management’s
attention from NewLink Genetics’ ongoing business operations, (ix)
other business effects, including the effects of industry, market,
economic, political or regulatory conditions, future exchange and
interest rates, and changes in tax and other laws, regulations,
rates and policies, (x) the uncertainties inherent in research and
development, including the ability to meet anticipated clinical
endpoints, commencement and/or completion dates for clinical
trials, regulatory submission dates, regulatory approval dates
and/or launch dates, as well as the possibility of unfavorable new
clinical data and further analyses of existing clinical data, (xi)
the risk that clinical trial data are subject to differing
interpretations and assessments by regulatory authorities; (xii)
risks related to cost reduction efforts; and (xiii) the outcome of
any legal proceedings that may be instituted against NewLink
Genetics related to the merger agreement or the transaction.
Further risks that could cause actual results to differ materially
from those matters expressed in or implied by such forward-looking
statements are discussed in "Risk Factors" and elsewhere
in NewLink Genetics' Quarterly Report on Form 10-Q for
the quarter ended September 30, 2019 and other reports
filed with the SEC. The forward-looking statements in this
press release represent NewLink Genetics’ views as of the
date of this press release. NewLink Genetics anticipates
that subsequent events and developments will cause its views to
change. However, while it may elect to update these forward-looking
statements at some point in the future, it specifically disclaims
any obligation to do so. You should, therefore, not rely on these
forward-looking statements as representing NewLink
Genetics' views as of any date subsequent to the date of this
press release.
Investor & Media Contact:
Lisa MillerDirector of Investor RelationsNewLink
Genetics515-598-2555lmiller@linkp.com
NewLink Genetics Corporation |
Consolidated Statements of Operations |
(unaudited) |
(In thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Operating Revenues: |
|
|
|
|
|
|
|
Grant revenue |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,268 |
|
Licensing and collaboration revenue |
246 |
|
|
120 |
|
|
503 |
|
|
1,004 |
|
Total operating revenues |
246 |
|
|
120 |
|
|
503 |
|
|
12,272 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and
development |
7,024 |
|
|
7,570 |
|
|
17,464 |
|
|
39,972 |
|
General and
administrative |
8,279 |
|
|
7,588 |
|
|
19,484 |
|
|
23,792 |
|
Total operating expenses |
15,303 |
|
|
15,158 |
|
|
36,948 |
|
|
63,764 |
|
Loss from operations |
(15,057 |
) |
|
(15,038 |
) |
|
(36,445 |
) |
|
(51,492 |
) |
Other income and expense: |
|
|
|
|
|
|
|
Miscellaneous (expense)
income, net |
(33 |
) |
|
(18 |
) |
|
(38 |
) |
|
16 |
|
Interest income |
567 |
|
|
664 |
|
|
1,815 |
|
|
1,510 |
|
Interest expense |
(25 |
) |
|
(2 |
) |
|
(50 |
) |
|
(51 |
) |
Other income, net |
509 |
|
|
644 |
|
|
1,727 |
|
|
1,475 |
|
Net loss before taxes |
(14,548 |
) |
|
(14,394 |
) |
|
(34,718 |
) |
|
(50,017 |
) |
Income tax benefit |
— |
|
|
6,991 |
|
|
— |
|
|
6,991 |
|
Net loss |
$ |
(14,548 |
) |
|
$ |
(7,403 |
) |
|
$ |
(34,718 |
) |
|
$ |
(43,026 |
) |
|
|
|
|
|
|
|
|
Basic and diluted loss per
share |
$ |
(0.39 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.93 |
) |
|
$ |
(1.16 |
) |
|
|
|
|
|
|
|
|
Basic and diluted average
shares outstanding |
37,308,523 |
|
|
37,214,363 |
|
|
37,286,930 |
|
|
37,178,542 |
|
NewLink Genetics Corporation |
Condensed Consolidated Balance Sheets |
(unaudited) |
(In thousands) |
|
|
|
September 30, |
|
December 31, |
|
2019 |
|
2018 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
98,527 |
|
|
$ |
120,738 |
|
Prepaid expenses and other current assets |
3,311 |
|
|
5,536 |
|
Income tax receivable |
76 |
|
|
339 |
|
Other receivables |
740 |
|
|
459 |
|
Total current assets |
102,654 |
|
|
127,072 |
|
Property and equipment, net |
2,889 |
|
|
3,727 |
|
Right-of-use asset |
1,042 |
|
|
— |
|
Income tax receivable |
69 |
|
|
140 |
|
Total non-current assets |
4,000 |
|
|
3,867 |
|
Total
assets |
$ |
106,654 |
|
|
$ |
130,939 |
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
145 |
|
|
$ |
555 |
|
Accrued expenses |
12,125 |
|
|
8,139 |
|
Current portion of deferred rent |
— |
|
|
92 |
|
Current portion of lease liability |
1,712 |
|
|
— |
|
Current portion of notes payable |
58 |
|
|
61 |
|
Total current liabilities |
14,040 |
|
|
8,847 |
|
Long-term liabilities: |
|
|
|
Royalty obligation payable to Iowa Economic Development
Authority |
6,000 |
|
|
6,000 |
|
Notes payable |
— |
|
|
43 |
|
Lease Liability |
217 |
|
|
— |
|
Deferred rent |
— |
|
|
906 |
|
Total long-term liabilities |
6,217 |
|
|
6,949 |
|
Total liabilities |
20,257 |
|
|
15,796 |
|
Stockholders' equity: |
|
|
|
Blank check preferred stock, $0.01 par value: Authorized shares —
5,000,000 at September 30, 2019 and December 31, 2018; issued and
outstanding shares — 0 at September 30, 2019 and December 31,
2018 |
— |
|
|
— |
|
Common stock, $0.01 par value: Authorized shares — 75,000,000 at
September 30, 2019 and December 31, 2018; issued 37,426,844
and 37,343,547 at September 30, 2019 and December 31, 2018,
respectively, and outstanding 37,314,076 and 37,251,220 at
September 30, 2019 and December 31, 2018, respectively |
373 |
|
|
373 |
|
Additional paid-in capital |
413,205 |
|
|
407,199 |
|
Treasury stock, at cost: 112,768 and 92,327 shares at September 30,
2019 and December 31, 2018, respectively |
(1,451 |
) |
|
(1,417 |
) |
Accumulated deficit |
(325,730 |
) |
|
(291,012 |
) |
Total stockholders' equity |
86,397 |
|
|
115,143 |
|
Total liabilities and
stockholders' equity |
$ |
106,654 |
|
|
$ |
130,939 |
|
Merck (NYSE:MRK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Merck (NYSE:MRK)
Historical Stock Chart
From Apr 2023 to Apr 2024