Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN), a
cutting-edge biotechnology company developing new treatments for
life-threatening medical conditions by improving the body’s ability
to bring oxygen to the areas where it is needed most, today
reported financial results for the year ended December 31, 2018 and
provided a business update.
2018 was marked by significant developments
related to the Company’s lead drug candidate, trans sodium
crocetinate (TSC), for the treatment of stroke and cancer. During
the third quarter Diffusion received approval from the U.S. Food
and Drug Administration (FDA) to enroll patients in an
ambulance-based Phase 2 clinical trial testing TSC for the
treatment of acute stroke, while the in-ambulance trial design was
presented at several important medical conferences. The trial,
named PHAST-TSC (Pre-Hospital Administration of Stroke
Therapy-TSC), will involve 23 hospitals across urban, suburban and
rural areas in Los Angeles County and Central Virginia, working
closely with approximately 150 emergency medical transport
groups. PHAST-TSC will be led by researchers at the
University of California Los Angeles (UCLA) and the University of
Virginia (UVA). Diffusion is working to engage local
ambulance companies and expects the first patients to be treated in
the coming months. Results for the trial will potentially be
available in just under two years, subject to Diffusion receiving
the necessary funding.
The Company continues to screen and enroll
patients in its Phase 3 INTACT (INvestigation of TSC Against
Cancerous Tumors) program, using TSC to treat inoperable
glioblastoma multiforme (GBM) brain cancer. In Phase 2 testing TSC
demonstrated a nearly four-fold improvement in overall survival at
two years for the subset of inoperable GBM patients compared with
the control group of GBM patients.
Commenting on 2018 and plans for 2019, David
Kalergis, chairman and chief executive officer of Diffusion, said,
“In the coming weeks we expect to complete enrollment in the
initial dose-escalation cohort of the INTACT trial. In
addition, we expect to begin enrollment in PHAST-TSC during the
second quarter of 2019. We continue to be excited about the
potential for TSC to bring new hope to patients with
life-threatening unmet medical needs and making TSC a commercial
success.
Several patents were allowed and issued during
the course of 2018, strengthening the Company’s intellectual
property portfolio around broad uses of TSC in hypoxic conditions
such as stroke, and as a treatment for solid cancerous tumors in
conjunction with radiation and chemotherapy. Of note, a U.S.
patent was issued for TSC in conjunction with tissue plasminogen
activator (tPA) for the treatment of stroke. tPA is the only
FDA-approved therapeutic for this indication. At the end of 2018,
the company had 56 issued patents in the U.S. and abroad.
2018 Financial Results
Diffusion had cash and cash equivalents of $8.0
million as of December 31, 2018. The Company believes its
cash and cash equivalents are sufficient to fund operations into
July 2019.
Diffusion recognized $5.8 million in research
and development expenses during 2018, compared with $5.1 million
during 2017. This increase was primarily attributable to a $1.7
million increase in Phase 3 GBM trial expenses and to a $0.2
million increase in salary and wages expenses, partially offset by
a $1.2 million decrease in manufacturing and other costs.
General and administrative expenses were $6.2
million during 2018, which were flat compared with 2017. Salaries
and wages expense increased by $0.6 million, which was offset by a
$0.6 million decrease in professional fees.
The Company recognized a non-cash goodwill
impairment charge of $6.9 million during the year ended December
31, 2018 as a result of a sustained decrease in our market
capitalization during the second half of 2018. There was no such
charge in 2017.
Net cash used in operating activities for 2018
was $10.8 million, compared with $12.3 million during 2017.
About Diffusion Pharmaceuticals
Inc.
Diffusion Pharmaceuticals Inc. is an innovative
biotechnology company developing new treatments that improve the
body’s ability to bring oxygen to the areas where it is needed
most, offering new hope for the treatment of life-threatening
medical conditions.
Diffusion’s lead drug TSC was originally
developed in conjunction with the Office of Naval Research, which
was seeking a way to treat hemorrhagic shock caused by massive
blood loss on the battlefield.
Evolutions in research have led to Diffusion’s
focus today: Fueling Life by taking on some of medicine’s most
intractable and difficult-to-treat diseases, including stroke and
GBM brain cancer. In each of these diseases, hypoxia – oxygen
deprivation of essential tissue in the body – has proved to be a
significant obstacle for medical providers and the target for TSC’s
novel mechanism.
In 2018 the Company began enrolling patients in
its Phase 3 INTACT program, using TSC to target inoperable GBM
brain cancer. Its on-ambulance PHAST-TSC acute stroke protocol was
granted FDA clearance to proceed in September 2018.
Additional preclinical data supports the potential use of TSC as a
treatment for other conditions where hypoxia plays a major role,
such as myocardial infarction, respiratory diseases such as COPD,
peripheral artery disease, and neurodegenerative conditions such as
Alzheimer’s and Parkinson’s disease.
In addition, RES-529, the Company’s
PI3K/AKT/mTOR pathway inhibitor that dissociates the mTORC1 and
mTORC2 complexes, is in preclinical testing for GBM.
Diffusion is headquartered in Charlottesville,
Virginia - a hub of advancement in the life science and
biopharmaceutical industries - and is led by CEO David Kalergis, a
30-year industry veteran and company co-founder.
Forward-Looking Statements
To the extent any statements made in this news
release deal with information that is not historical, these are
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. Such statements include, but are not limited
to, statements about the company's plans, objectives,
expectations and intentions with respect to future operations
and products, the potential of the company's technology and product
candidates, the anticipated timing of future clinical trials, and
other statements that are not historical in nature, particularly
those that utilize terminology such as "would," "will," "plans,"
"possibility," "potential," "future," "expects," "anticipates,"
"believes," "intends," "continue," "expects," other words of
similar meaning, derivations of such words and the use of future
dates. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. Uncertainties and risks
may cause the Diffusion’s actual results to be materially different
than those expressed in or implied by such forward-looking
statements. Particular uncertainties and risks include: the
difficulty of developing pharmaceutical products, obtaining
regulatory and other approvals and achieving market acceptance;
general business and economic conditions; the company's need for
and ability to obtain additional financing or partnering
arrangements; and the various risk factors (many of which are
beyond Diffusion’s control) as described under the heading “Risk
Factors” in Diffusion’s filings with the United States Securities
and Exchange Commission. All forward-looking statements in this
news release speak only as of the date of this news release and are
based on management's current beliefs and expectations. Diffusion
undertakes no obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
Contacts:David Kalergis,
CEODiffusion Pharmaceuticals Inc.(434)
220-0718dkalergis@diffusionpharma.com
LHA Investor RelationsKim Sutton Golodetz(212)
838-3777kgolodetz@lhai.com
(Tables to follow)
Diffusion Pharmaceuticals
Inc.Consolidated Balance Sheets
|
December 31, |
|
2018 |
|
2017 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
7,991,172 |
|
|
$ |
8,896,468 |
|
Prepaid
expenses, deposits and other current assets |
923,059 |
|
|
769,946 |
|
Total
current assets |
8,914,231 |
|
|
9,666,414 |
|
Property and equipment,
net |
350,281 |
|
|
460,652 |
|
Intangible asset |
8,639,000 |
|
|
8,639,000 |
|
Goodwill |
— |
|
|
6,929,258 |
|
Other assets |
298,480 |
|
|
450,491 |
|
Total
assets |
$ |
18,201,992 |
|
|
$ |
26,145,815 |
|
Liabilities,
Convertible Preferred Stock and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
portion of convertible debt |
$ |
— |
|
|
$ |
550,000 |
|
Accounts
payable |
198,818 |
|
|
511,956 |
|
Accrued
expenses and other current liabilities |
605,226 |
|
|
1,628,851 |
|
Total
current liabilities |
804,044 |
|
|
2,690,807 |
|
Deferred income
taxes |
1,786,389 |
|
|
2,223,678 |
|
Other liabilities |
— |
|
|
1,386 |
|
Total
liabilities |
2,590,433 |
|
|
4,915,871 |
|
Commitments and
Contingencies |
|
|
|
Convertible preferred
stock, $0.001 par value: |
— |
|
|
— |
|
Series A - No shares
authorized, issued or outstanding at December 31, 2018. 13,750,000
shares authorized, 12,376,329 shares issued and 8,306,278 shares
outstanding at December 31, 2017 |
— |
|
|
— |
|
Stockholders’
Equity: |
|
|
|
Common
stock, $0.001 par value: |
|
|
|
1,000,000,000 shares
authorized; 3,376,230 and 967,976 shares issued and outstanding at
December 31, 2018 and 2017, respectively |
3,377 |
|
|
968 |
|
Additional paid-in capital |
95,532,881 |
|
|
82,783,865 |
|
Accumulated deficit |
(79,924,699 |
) |
|
(61,554,889 |
) |
Total
stockholders' equity |
15,611,559 |
|
|
21,229,944 |
|
Total liabilities,
convertible preferred stock and stockholders' equity |
$ |
18,201,992 |
|
|
$ |
26,145,815 |
|
|
|
|
|
|
|
|
|
Diffusion Pharmaceuticals
Inc.Consolidated Statements of
Operations
|
Year Ended December 31, |
|
2018 |
|
2017 |
Operating
expenses: |
|
|
|
Research
and development |
$ |
5,751,940 |
|
|
$ |
5,088,621 |
|
General
and administrative |
6,167,177 |
|
|
6,191,845 |
|
Goodwill
impairment |
6,929,258 |
|
|
— |
|
Depreciation |
110,371 |
|
|
67,981 |
|
Loss from
operations |
18,958,746 |
|
|
11,348,447 |
|
Interest (income)
expense, net |
(151,647 |
) |
|
48,006 |
|
Change in fair value of
warrant liability |
— |
|
|
(22,072,322 |
) |
Warrant related
expenses |
— |
|
|
10,225,846 |
|
Other financing
expenses |
— |
|
|
2,870,226 |
|
Loss from
operations before income tax benefit |
(18,807,099 |
) |
|
(2,420,203 |
) |
Income tax benefit |
(437,289 |
) |
|
(1,055,685 |
) |
Net loss |
$ |
(18,369,810 |
) |
|
$ |
(1,364,518 |
) |
Accretion of Series A
cumulative preferred dividends |
(85,993 |
) |
|
(1,252,394 |
) |
Deemed dividend related
to the make-whole provision for the conversion of Series A
convertible preferred stock into common stock |
(8,167,895 |
) |
|
— |
|
Net loss attributable
to common stockholders |
$ |
(26,623,698 |
) |
|
$ |
(2,616,912 |
) |
|
|
|
|
Per share
information: |
|
|
|
Net loss per share of
common stock, basic |
$ |
(8.21 |
) |
|
$ |
(3.16 |
) |
Net loss per share of
common stock, diluted |
$ |
(8.21 |
) |
|
$ |
(29.11 |
) |
Weighted average shares
outstanding, basic |
3,242,301 |
|
|
827,575 |
|
Weighted average shares
outstanding, diluted |
3,242,301 |
|
|
848,090 |
|
|
|
|
|
|
|
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