Strengthened Cash Position to Support Ongoing
R&D and Commercial Activities; Reported $107 Million in Cash at
the End of the Third Quarter
Aptevo Therapeutics Inc. (Nasdaq:APVO), a biotechnology company
focused on developing novel oncology and hematology therapeutics,
today provided a business review and reported its financial results
for the third quarter ended September 30, 2017.
“The third quarter was a transformative period
for Aptevo,” said Marvin L. White, President and Chief Executive
Officer. “During this time we delivered on two key objectives
– continuing to ensure that Aptevo is solidly financed to execute
on our commercial and R&D strategy, and expanding our
innovative portfolio of bispecific antibody candidates where we see
the highest potential for long-term shareholder value
creation.”
“By monetizing our non-core commercial assets
through the sale of our three hyperimmune products to Saol
Therapeutics, Aptevo secured up to an additional $74.5 million in
non-dilutive funding – strengthening our financial position and
sharpening our focus on our most promising commercial and pipeline
assets. In addition, the amendment with MidCap Financial
completed during the third quarter, enabled us to further extend
our cash runway by an additional $20 million.”
“We also made important strides expanding
opportunities around our innovative ADAPTIR bispecific antibody
platform. Awareness of the differentiating characteristics of our
ADAPTIR platform continues to grow in the scientific community and
we were pleased to partner with Alligator Bioscience to develop
ALG.APV-527, a promising new targeted immunotherapeutic with a
novel mechanism of action aimed at recruiting the immune system
against various types of solid tumors. This new mechanism of
action illustrates the versatility of our ADAPTIR platform in
generating novel bispecific candidates with the potential to engage
the immune system through a variety of different cellular
pathways,” said Mr. White. “We look forward to advancing our
ADAPTIR portfolio in 2018, which includes, otlertuzumab, APVO414,
APVO436, APVO210 and ALG.APVO-527.”
Third Quarter 2017
Highlights
- Monetized non-core commercial assets and completed the sale of
Aptevo’s three hyperimmune products, (WinRho® SDF, HepaGam B®, and
VARIZIG®) to Saol Therapeutics for total consideration of up to
$74.5 million, raising significant non-dilutive funding to support
Aptevo’s ongoing commercial and R&D efforts
- Amended the terms of a credit agreement with MidCap Financial
allowing Aptevo to retain a $20 million investment by MidCap,
further extending Aptevo’s cash runway
- Signed a collaboration agreement with Alligator Bioscience to
jointly develop and advance a lead bispecific antibody candidate,
ALG.APV-527, with a novel mechanism of action targeting 4-1BB and
5T4, a tumor antigen widely overexpressed in a number of different
types of cancer
- Demonstrated the versatility of the ADAPTIR platform with the
development of ALG.APV-527, which targets a co-stimulatory receptor
found on activated T cells, illustrating the capability of the
ADAPTIR platform to generate immunotherapeutic antibodies with
different mechanisms of immune system engagement
- Initiated CMC and IND-enabling activities for APVO436, APVO210,
and ALG.APV-527
- Presented preliminary data from an ongoing Phase 1 study of
APVO414 (formerly MOR209/ES414) suggesting that administration by
continuous infusion, rather than weekly intravenous (IV) dosing,
was effective at reducing the level of anti-drug antibodies
previously seen in the weekly IV dosing study cohorts
- Continued to advance APVO414 in a dose escalation Phase 1 study
following a decision by MorphoSys to end the companies’ joint
development and commercialization agreement for APVO414 (formerly
MOR209/ES414)
- Continued to expand Aptevo’s new patient acquisition efforts
for IXINITY following the introduction of new IXINITY supply in May
2017
Third Quarter 2017 Financial
Results
As a result of the sale of Aptevo’s three
hyperimmune products (WinRho SDF, HepaGam B, and VARIZIG) to Saol
Therapeutics, completed on September 28, 2017, Aptevo’s hyperimmune
business has been excluded from its continuing operations.
Readers are referred to and encouraged to read the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2017 for a more thorough discussion of the Saol transaction and
Aptevo’s business plans and operations, financial condition and
results of operations.
Cash Position: Aptevo had
cash, cash equivalents, and short-term investments as of September
30, 2017 totaling $107.2 million, including $10.4 million in
restricted cash related to Aptevo’s borrowing facility and company
credit cards.
Product Revenue: Revenue
for IXINITY for the three months ended September 30, 2017 was $2.5
million compared to $2.8 million for the three months ended
September 30, 2016. This decrease was primarily related to
decreased volumes shipped in the third quarter of 2017 as customers
increased stock levels with increased orders in the second quarter
of 2017 when additional IXINITY product came back on the market.
Cost of Product Sales:
Cost of product sales decreased by $2.2 million, or 54%, to $1.9
million for the three months ended September 30, 2017 from $4.1
million for the three months ended September 30, 2016. Due to
challenges related to the bulk drug substance manufacture of
IXINITY encountered in 2016, in the third quarter of 2016 Aptevo
wrote off approximately $2.9 million in unsaleable IXINITY
inventory that was in the process of being manufactured. This cost
is included in cost of product sales.
Research and Development
Expenses: Research and development expenses did not
change meaningfully between the three months ended September 30,
2017 and 2016, and were approximately $7.1 million during both
periods.
Selling, General and Administrative
Expenses: Selling, general and administrative
expenses decreased by $3.7 million, or 33%, to $7.5 million for the
three months ended September 30, 2017, compared to $11.1 million
for the same period in 2016. The change was primarily due to
higher one-time onboarding expenses incurred during the third
quarter of 2016.
Net Income from Discontinued
Operations: In connection with the sale of its
hyperimmune business, the Company reclassified the operating
results of the hyperimmune business for all periods presented and
the gain recognized on the sale of the hyperimmune business of
$52.5 million in income from discontinued operations. The
income from discontinued operations also includes an allocation of
income tax expense for all periods, which is required by Generally
Accepted Accounting Principles (GAAP). Additionally, in the
consolidated and condensed balance sheets as of December 31, 2016,
the assets and liabilities of the hyperimmune business have been
presented separately as held for sale.
Net Income (Loss):
Aptevo’s net income for the three months ended September 30, 2017
was $37.9 million or $1.77 per share, compared to a net loss of
$71.7 million or ($3.55) per share for the corresponding period in
2016. Net income includes the Company’s losses from operations,
offset by an allocation of income tax benefit as required by GAAP
and net income from discontinued operations. The benefit from
income taxes for the quarter resulted in the Company reporting net
income from continuing operations in the third quarter, which was
driven by the expected use of deferred taxes related to net
operating losses to offset taxes payable for the quarter. The
income tax expense resulting from the sale of Aptevo’s hyperimmune
business is expected to be reversed in the fourth quarter of
2017.
Financial Statements Follow
|
|
Aptevo Therapeutics Inc. |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(in thousands, except share and per share
amounts, unaudited) |
|
|
|
ASSETS |
|
September 30,2017 |
|
|
December 31,2016 |
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
75,830 |
|
|
$ |
9,676 |
|
Restricted cash |
|
|
10,400 |
|
|
|
400 |
|
Short-term investments |
|
|
20,946 |
|
|
|
44,849 |
|
Accounts
receivable |
|
|
528 |
|
|
|
307 |
|
Inventories |
|
|
1,237 |
|
|
|
461 |
|
Current
assets held for sale |
|
|
— |
|
|
|
10,155 |
|
Prepaid
expenses and other current assets |
|
|
6,381 |
|
|
|
5,566 |
|
Total
current assets |
|
|
115,322 |
|
|
|
71,414 |
|
Property
and equipment, net |
|
|
6,163 |
|
|
|
5,910 |
|
Intangible assets, net |
|
|
6,287 |
|
|
|
6,910 |
|
Long-term
assets held for sale |
|
|
— |
|
|
|
7,624 |
|
Other
long-term assets |
|
|
3,250 |
|
|
|
— |
|
Total
assets |
|
$ |
131,022 |
|
|
$ |
91,858 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable and other accrued liabilities |
|
$ |
7,512 |
|
|
$ |
10,518 |
|
Accrued
compensation |
|
|
3,815 |
|
|
|
4,009 |
|
Sales
rebates and discounts |
|
|
378 |
|
|
|
278 |
|
Due to
acquirer of discontinued operations |
|
|
878 |
|
|
|
— |
|
Deferred
revenue, current portion |
|
|
— |
|
|
|
811 |
|
Other
short-term liabilities |
|
|
2,287 |
|
|
|
— |
|
Current
liabilities held for sale |
|
|
— |
|
|
|
3,928 |
|
Total
current liabilities |
|
|
14,870 |
|
|
|
19,544 |
|
Deferred
revenue, net of current portion |
|
|
— |
|
|
|
2,896 |
|
Long-term
debt, net |
|
|
17,484 |
|
|
|
18,383 |
|
Other
liabilities |
|
|
8,358 |
|
|
|
469 |
|
Total
liabilities |
|
|
40,712 |
|
|
|
41,292 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
|
|
|
|
Preferred stock: $0.001
par value; 15,000,000 shares authorized, zero shares issued or
outstanding |
|
|
— |
|
|
|
— |
|
Common stock: $0.001
par value; 500,000,000 shares authorized; 21,426,731 and
20,271,737 shares issued and outstanding at September 30, 2017
and December 31, 2016, respectively |
|
|
21 |
|
|
|
20 |
|
Additional paid-in
capital |
|
|
154,257 |
|
|
|
151,271 |
|
Accumulated other
comprehensive loss |
|
|
(10 |
) |
|
|
(33 |
) |
Contribution receivable
from former parent |
|
|
— |
|
|
|
(20,000 |
) |
Accumulated
deficit |
|
|
(63,958 |
) |
|
|
(80,692 |
) |
Total stockholders'
equity |
|
|
90,310 |
|
|
|
50,566 |
|
Total liabilities and
stockholders' equity |
|
$ |
131,022 |
|
|
$ |
91,858 |
|
|
|
|
|
|
|
|
|
|
|
|
Aptevo Therapeutics Inc. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except share and per share
amounts, unaudited) |
|
|
|
|
|
For the Three Months
EndedSeptember 30, |
|
|
For the Nine Months
EndedSeptember 30, |
|
|
|
2017 |
|
|
2016Restated |
|
|
2017 |
|
|
2016Restated |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
sales |
|
$ |
2,506 |
|
|
$ |
2,816 |
|
|
$ |
8,131 |
|
|
$ |
7,050 |
|
Collaborations |
|
|
3,666 |
|
|
|
— |
|
|
|
3,709 |
|
|
|
153 |
|
Total revenues |
|
|
6,172 |
|
|
|
2,816 |
|
|
|
11,840 |
|
|
|
7,203 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
product sales |
|
|
1,872 |
|
|
|
4,110 |
|
|
|
3,114 |
|
|
|
7,387 |
|
Research
and development |
|
|
7,175 |
|
|
|
7,077 |
|
|
|
19,835 |
|
|
|
22,759 |
|
Selling,
general and administrative |
|
|
7,473 |
|
|
|
11,141 |
|
|
|
26,019 |
|
|
|
27,950 |
|
Impairment of goodwill and intangible assets |
|
|
— |
|
|
|
71,013 |
|
|
|
— |
|
|
|
71,013 |
|
Loss from
operations |
|
|
(10,348 |
) |
|
|
(90,525 |
) |
|
|
(37,128 |
) |
|
|
(121,906 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense, net |
|
|
(436 |
) |
|
|
(492 |
) |
|
|
(1,356 |
) |
|
|
(417 |
) |
Total other expense,
net |
|
|
(436 |
) |
|
|
(492 |
) |
|
|
(1,356 |
) |
|
|
(417 |
) |
Loss before income
taxes |
|
|
(10,784 |
) |
|
|
(91,017 |
) |
|
|
(38,484 |
) |
|
|
(122,323 |
) |
Benefit from income
taxes |
|
|
13,768 |
|
|
|
17,608 |
|
|
|
15,587 |
|
|
|
18,590 |
|
Net income (loss) from
continuing operations |
|
|
2,984 |
|
|
|
(73,409 |
) |
|
|
(22,897 |
) |
|
|
(103,733 |
) |
Discontinued operations
(Note 2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations, before income taxes |
|
|
56,140 |
|
|
|
3,959 |
|
|
|
62,706 |
|
|
|
9,514 |
|
Income
tax expense |
|
|
(21,257 |
) |
|
|
(2,291 |
) |
|
|
(23,076 |
) |
|
|
(3,250 |
) |
Income from
discontinued operations |
|
|
34,883 |
|
|
|
1,668 |
|
|
|
39,630 |
|
|
|
6,264 |
|
Net income (loss) |
|
$ |
37,867 |
|
|
$ |
(71,741 |
) |
|
$ |
16,733 |
|
|
$ |
(97,469 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations |
|
$ |
0.14 |
|
|
$ |
(3.63 |
) |
|
$ |
(1.08 |
) |
|
$ |
(5.13 |
) |
Net income from
discontinued operations |
|
$ |
1.63 |
|
|
$ |
0.08 |
|
|
$ |
1.87 |
|
|
$ |
0.31 |
|
Net income (loss) |
|
$ |
1.77 |
|
|
$ |
(3.55 |
) |
|
$ |
0.79 |
|
|
$ |
(4.82 |
) |
Weighted-average shares
used to compute per share calculation |
|
|
21,385,381 |
|
|
|
20,235,987 |
|
|
|
21,138,332 |
|
|
|
20,231,910 |
|
|
|
Diluted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations |
|
$ |
0.14 |
|
|
$ |
(3.63 |
) |
|
$ |
(1.08 |
) |
|
$ |
(5.13 |
) |
Net income from
discontinued operations |
|
$ |
1.61 |
|
|
$ |
0.08 |
|
|
$ |
1.87 |
|
|
$ |
0.31 |
|
Net income (loss) |
|
$ |
1.75 |
|
|
$ |
(3.55 |
) |
|
$ |
0.79 |
|
|
$ |
(4.82 |
) |
Weighted-average shares
used to compute per share calculation |
|
|
21,672,269 |
|
|
|
20,235,987 |
|
|
|
21,138,332 |
|
|
|
20,231,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADAPTIR Clinical and Preclinical Portfolio:
- APVO414 – a bispecific ADAPTIR candidate,
currently in Phase 1 development, targeting prostate specific
membrane antigen (PSMA), an enzyme that is expressed on the surface
of prostate cancer cells, and, CD3, a component of the T cell
receptor complex expressed on all T cells. APVO414 redirects
T cells to specifically kill PSMA expressing tumors and is being
developed for metastatic castration-resistant prostate cancer,
which is advanced prostate cancer that has spread to other organs
and no longer responds to hormone blocking therapies.
- Otlertuzumab – a monospecific ADAPTIR
candidate currently in Phase 2 development for the treatment of
chronic lymphocytic leukemia (CLL). Data from a Phase 2
clinical trial evaluating otlertuzumab in combination with
bendamustine, compared to bendamustine alone, demonstrated a
significant increase in median progression free survival for the
combination, from approximately 10 to 16 months.
- APVO436 – a bispecific ADAPTIR candidate
currently in preclinical development targeting CD123, a cell
surface receptor highly expressed on several hematological
malignancies and CD3, a component of the T cell receptor. APVO436
engages T cells to kill tumor cells.
- ALG.APV-527 – a bispecific antibody candidate,
partnered with Alligator Bioscience, featuring a novel mechanism of
action designed to simultaneously target 4-1BB (CD137) and 5T4, a
tumor antigen widely overexpressed in a number of different types
of cancer. 4-1BB, a costimulatory receptor on T cells, is
known to enhance the immune response to cancer through activation
of tumor-specific T cells and is believed to be a promising target
for new immunotherapeutic approaches. ALG.APV-527 could potentially
have utility in the treatment of a broad spectrum of cancers
over-expressing the tumor antigen, including breast, cervical,
non-small-cell-lung, prostate, renal, gastric, colorectal and
bladder cancers.
- APVO210 – a bispecific ADAPTIR preclinical
candidate with a novel mechanism of action based on targeted
cytokine delivery. APVO210 is composed of a humanized
anti-CD86 antibody fused with a modified form of IL-10 that
specifically induces IL-10 signaling on antigen presenting cells,
but not on lymphoid populations. APVO210 functions by suppressing
immune responses and inducing certain tolerogenic responses and
therefore may have potential benefit for the treatment of
autoimmune and inflammatory diseases.
- ROR1 Bispecific – a proof-of-concept
bispecific candidate targeting ROR1, an antigen found on several
solid tumors and hematologic, or blood-related malignancies.
Initial preclinical data demonstrate redirected T cell killing of
tumors expressing ROR1 in vitro and in vivo in animal models.
About Aptevo Therapeutics
Inc.
Aptevo Therapeutics Inc. is a clinical-stage
biotechnology company focused on novel oncology and hematology
therapeutics to meaningfully improve patients’ lives. Aptevo
has a commercial product, IXINITY® coagulation factor IX
(recombinant), approved and marketed in the United States for the
treatment of Hemophilia B, and a versatile core technology – the
ADAPTIR™ modular protein technology platform capable of generating
highly-differentiated bispecific antibodies with unique mechanisms
of action to treat cancer and autoimmune diseases. Aptevo has
two ADAPTIR antibody candidates currently in clinical development
and a broad pipeline of novel investigational-stage bispecific
antibody candidates focused in immuno-oncology and autoimmune
disease and inflammation. For more information, please visit
www.aptevotherapeutics.com
Safe Harbor Statement
This press release includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any statements, other than statements of
historical fact, including, without limitation, statements
regarding potential milestone payments, Aptevo’s outlook, financial
performance or financial condition, Aptevo’s technology and related
pipeline, collaboration and partnership opportunities, commercial
portfolio, and any other statements containing the words
“believes,” “expects,” “anticipates,” “intends,” “plans,”
“forecasts,” “estimates,” “will” and similar expressions are
forward-looking statements. These forward-looking statements are
based on Aptevo’s current intentions, beliefs and expectations
regarding future events. Aptevo cannot guarantee that any
forward-looking statement will be accurate. Investors should
realize that if underlying assumptions prove inaccurate or unknown
risks or uncertainties materialize, actual results could differ
materially from Aptevo’s expectations. Investors are, therefore,
cautioned not to place undue reliance on any forward-looking
statement. Any forward-looking statement speaks only as of the date
of this press release, and, except as required by law, Aptevo does
not undertake to update any forward-looking statement to reflect
new information, events or circumstances.
There are a number of important factors that
could cause Aptevo’s actual results to differ materially from those
indicated by such forward-looking statements, including a
deterioration in Aptevo’s business or prospects; adverse
developments in research and development; adverse developments in
the U.S. or global capital markets, credit markets or economies
generally; and changes in regulatory, social and political
conditions. Additional risks and factors that may affect results
are set forth in Aptevo’s filings with the Securities and Exchange
Commission, including its most recent Annual Report on Form 10-K,
as filed on March 31, 2017, and its subsequent reports on Form 10-Q
and current reports on Form 8-K. The foregoing sets forth many, but
not all, of the factors that could cause actual results to differ
from Aptevo’s expectations in any forward-looking statement.
Source:
Aptevo Therapeutics Stacey JurchisonSenior Director, Investor
Relations and Corporate Communications206-859-6628
JurchisonS@apvo.com
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