WARRINGTON, Pa., Nov. 14, 2017 /PRNewswire/ -- Windtree
Therapeutics, Inc. (OTCQB: WINT), a biotechnology company focused
on developing aerosolized KL4 surfactant therapies for respiratory
diseases, today reported financial results for the third quarter
ended September 30, 2017.
"The third quarter was an important quarter for Windtree as we
implemented a financial restructuring plan to better position the
company for long-term stability and growth. The plan included
securing short-term cash needed to continue funding operations,
eliminating the financial overhang of $25
million long-term secured debt, closing a $10 million share purchase with an affiliate of
Lee's Pharmaceutical Holdings Limited, and lowering non-program
related cash burn. With the successful completion of these
strategic transactions, we believe we have an improved capital
structure, and are better positioned to secure the additional
capital necessary to realize the full potential of our KL4
surfactant and aerosol delivery platforms, beginning with
AEROSURF. We also now are part of a well-resourced
organization in Lee's Pharm that we believe is committed to the
diversification and growth of Windtree," commented Craig Fraser, President and Chief Executive
Officer. "In addition, we continue to advance our AEROSURF
development program with a 2018 focus on delivering our Next
Generation phase 3 / "go-to-market" aerosol delivery system (ADS),
conducting a bridging and confirmation to confirm that our device
and adding to our data base and work with regulators on phase 3
planning."
Select Financial Results for the Third Quarter ended
September 30, 2017
For the quarter ended September 30,
2017, the Company reported an operating loss of $4.8 million, compared to $7.7 million for the third quarter of 2016.
Grant revenue for the third quarter of 2017 was $17,000 compared to $1.0
million for the third quarter of 2016.
Research and development expenses were $3.1 million for the third quarter of 2017,
compared to $7.1 million for the
third quarter of 2016. The decrease was due to (i) a decrease in
AEROSURF phase 2 clinical development program costs; (ii) a
decrease in costs related to development activities under our
collaboration agreement with Battelle; and (iii) our ongoing
efforts, initiated in the second quarter of 2016, to conserve cash
and reduce costs.
General and administrative expenses were $1.7 million for the third quarter of 2017,
compared to $1.6 million for the
third quarter of 2016.
Interest expense for the third quarter of 2017 and 2016 was
$0.6 million and primarily represents
interest expense on $25 million of
long-term debt.
The Company reported a net loss of $5.4
million for the third quarter of 2017, compared to a net
loss of $8.4 million for the
comparable period in 2016.
In addition, in the third quarter of 2017, the Company reported
a $1.9 million non-cash deemed
dividend on preferred stock, resulting in a net loss attributable
to common shareholders of $7.4
million ($0.69 per basic
share) on 10.6 million weighted-average common shares outstanding,
compared to a net loss attributable to common shareholders of
$8.4 million ($1.00 per basic share) on 8.4 million weighted
average common shares outstanding for the comparable period in
2016.
As of September 30, 2017, the
Company had cash and cash equivalents of $1.8 million. In addition, as of September 30, 2017, the Company reported current
liabilities of $29.5 million
(including $12.5 million of long-term
debt, current portion and $2.6
million loan payable to Lee's Pharm) and long-term debt of
$12.5 million. Prior to the
restructuring, the current portion of long-term debt was due in
February 2018 and the non-current
portion of long-term debt was due in February 2019. Both
obligations were eliminated as part of the financial
restructuring.
Financial Restructuring Program
The Company recently announced completion of a financial
restructuring plan to provide short-term financing and improve
the Company's capital structure, including through a purchase by
LPH Investments Limited ("LPHIL"), a wholly-owned subsidiary of
Lee's Pharmaceutical Holdings Limited ("Lee's Pharm) of
$10 million of the Company's common
stock, giving Lee's Pharm a controlling interest in the Company,
and a simultaneous restructuring and retirement of $25 million of long-term debt under the 2013
secured loan facility agreement between the Company and affiliates
of Deerfield Management Company, L.P. ("Deerfield").
Under terms of the share purchase agreement, LPHIL purchased
from the Company $10 million of newly-issued common stock to
acquire a controlling interest of the Company at a price per share
of $0.2163, representing a 15 percent
premium to the average 10-day volume weighted average price per
share (VWAP) through October 27,
2017. As partial consideration for the share purchase, Lee's
Pharm cancelled $3.9 million
principal outstanding under an August
2017 loan agreement, which Lee's Pharm had advanced in three
equal installments in August, September, and October 2017, to support AEROSURF development
activities and sustain the Company's operations through
October 31, 2017, while the parties
negotiated the share purchase agreement.
To facilitate the share purchase by Lee's Pharm, Deerfield agreed to restructure its
$25 million secured loan to the
Company effective as of the closing of the share purchase
agreement. Under the loan restructuring agreement, in exchange for
return and cancellation of the Deerfield notes, the Company paid to
Deerfield $2.5 million in cash, and issued to Deerfield shares of common stock representing
two percent of the Company's common stock post-closing on a
fully-diluted basis, as defined in the loan restructuring
agreement. In addition, Deerfield
will be entitled to receive up to $15
million in future AEROSURF regulatory and commercial
milestones, beginning with the filing for marketing approval in
the United States.
In addition, the Company entered into a nonbinding memorandum of
understanding with Battelle Memorial Institute (Battelle MOU)
outlining potential terms to restructure payment terms of certain
accounts payable related to the Company's device development
activities with Battelle. In connection with the Battelle
MOU, Battelle executed and delivered a waiver of its rights to
receive payments under a liquidation preference pursuant to Series
A Convertible Preferred Stock held by Battelle and the related
Certificate of Designation of Preferences, Rights and Limitations
effective February 15, 2017.
After implementation of the financial restructuring, as of
November 1, 2017, the Company had
cash and cash equivalents of $5.4
million. The Company believes that, before any
additional financings, it will have sufficient cash resources
to support development activities, partially satisfy existing
obligations and fund operations into January
2018.
Readers are referred to, and encouraged to read in its entirety,
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017 which was filed
with the Securities Exchange Commission on November 14, 2017, and includes discussion about
the Company's business plans and operations, financial condition
and results of operations.
About Windtree Therapeutics
Windtree Therapeutics,
Inc. is a clinical-stage biotechnology company focused on
developing novel surfactant therapies for respiratory diseases and
other potential applications. Windtree's proprietary technology
platform includes a synthetic, peptide-containing surfactant (KL4
surfactant) that is structurally similar to endogenous pulmonary
surfactant and novel drug-delivery technologies being developed to
enable noninvasive administration of aerosolized KL4 surfactant.
Windtree is focused initially on improving the management of
respiratory distress syndrome (RDS) in premature infants and
believes that its proprietary technology may make it possible, over
time, to develop a pipeline of KL4 surfactant product candidates to
address a variety of respiratory diseases for which there are few
or no approved therapies.
For more information, please visit the Company's website at
www.windtreetx.com.
Forward-Looking Statements
To the extent that
statements in this press release are not strictly historical, all
such statements are forward-looking, and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results,
including projections of future cash balances and anticipated cash
outflows, to differ materially from the statements made.
Examples of such risks and uncertainties include: the risk that, as
a development company, with limited resources and no operating
revenues, the Company's ability to continue as a going concern in
the near term is highly dependent upon the success of AEROSURF
clinical trials and whether they are sufficient to support a
strategic or financing transaction and enable initiation of phase 3
development; risks that Windtree will be unable to secure
significant additional capital as and when needed, if at all,
whether through debt or equity financings or other strategic
transaction; risks related to having the Company's common stock
quoted on the OTCQB® market; risks related to
Windtree's AEROSURF development program and other development
programs in the future, which may involve time-consuming and
expensive pre-clinical studies and clinical trials and which may be
subject to potentially significant delays or regulatory holds, or
fail; risks related to the development of aerosol delivery systems
(ADS) and related components; risks related to technology transfers
to contract manufacturers and problems or delays encountered by
Windtree, contract manufacturers or suppliers in manufacturing,
testing and releasing drug products, drug substances, and ADS on a
timely basis and in sufficient amounts; risks relating to rigorous
regulatory requirements, including those of: (i) the FDA or
other regulatory authorities that may require significant
additional activities, or may not accept or may withhold or delay
consideration of applications, or may not approve or may limit
approval of Windtree's products,
and (ii) changes in the national or
international political and regulatory environment may make it more
difficult to gain regulatory approvals; and other risks and
uncertainties described in Windtree's filings with the Securities
and Exchange Commission including the most recent reports on Forms
10-K, 10-Q and 8-K, and any amendments thereto.
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|
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Windtree
Therapeutics, Inc.
|
|
|
|
Condensed
Consolidated Statement of Operations
|
|
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Grant
revenue
|
$
17
|
|
$
961
|
|
$
1,383
|
|
$
1,142
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
3,062
|
|
7,081
|
|
14,958
|
|
25,757
|
|
General and
administrative
|
1,749
|
|
1,613
|
|
5,475
|
|
7,053
|
|
Total
expenses
|
4,811
|
|
8,694
|
|
20,433
|
|
32,810
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
(4,794)
|
|
(7,733)
|
|
(19,050)
|
|
(31,668)
|
|
|
|
|
|
|
|
|
|
|
Change in fair value
of common stock warrant
liability
|
|
–
|
|
–
|
|
–
|
|
223
|
|
|
|
|
|
|
|
|
|
Other income /
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
3
|
|
3
|
|
9
|
|
15
|
|
Interest
expense
|
(652)
|
|
(648)
|
|
(1,878)
|
|
(1,907)
|
|
Other
income
|
–
|
|
15
|
|
–
|
|
449
|
Net loss
|
$
(5,443)
|
|
$
(8,363)
|
|
$
(20,919)
|
|
$
(32,888)
|
|
|
|
|
|
|
|
|
Deemed dividend on
preferred stock
|
(1,915)
|
|
–
|
|
(6,051)
|
|
–
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
$
(7,358)
|
|
$
(8,363)
|
|
$
(26,970)
|
|
$
(32,888)
|
|
|
|
|
|
|
|
|
Net loss per common
share – basic and diluted
|
$
(0.69)
|
|
$
(1.00)
|
|
$
(2.76)
|
|
$
(3.98)
|
|
|
|
|
|
|
|
|
Weighted avg. common
shares outstanding – basic
and diluted
|
10,647
|
|
8,355
|
|
9,766
|
|
8,262
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|
|
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|
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|
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|
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Windtree
Therapeutics, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,752
|
|
$
5,588
|
|
Prepaid interest,
current portion
|
|
1,094
|
|
1,094
|
|
Prepaid expenses and
other current assets
|
|
248
|
|
512
|
|
Total
current assets
|
|
3,094
|
|
7,194
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
930
|
|
1,054
|
Restricted
cash
|
|
225
|
|
225
|
Prepaid interest,
non-current portion
|
|
408
|
|
1,226
|
|
Total
Assets
|
|
$
4,657
|
|
$
9,699
|
|
|
|
|
|
|
|
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LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
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Current
Liabilities:
|
|
|
|
|
|
Accounts payable,
collaboration payable, accrued expenses, deferred
revenue
|
|
$
14,388
|
|
$
13,391
|
|
Loan
payable
|
|
2,600
|
|
–
|
|
Long-term debt,
current portion
|
|
12,500
|
|
–
|
|
|
|
|
|
|
|
|
Long-term debt,
non-current portion
|
|
12,500
|
|
25,000
|
Other
liabilities
|
|
117
|
|
138
|
Stockholders'
Equity
|
|
(37,448)
|
|
(28,830)
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
4,657
|
|
$
9,699
|
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SOURCE Windtree Therapeutics, Inc.