Melinta Therapeutics, Inc. (NASDAQ: MLNT), a commercial-stage
company, developing and commercializing novel antibiotics to treat
serious bacterial infections, today reported financial results and
provided a business update for the first quarter ended March 31,
2019.
“During the first quarter of 2019, we continued
to execute against a number of strategic initiatives to help
streamline operations and strengthen Melinta’s balance
sheet, while continuing to advance our commercial plans and
sales efforts,” said John H. Johnson, chief executive officer
of Melinta. “We also recently filed a supplemental New Drug
Application (sNDA) with the U.S. Food and Drug Administration (FDA)
for Baxdela® (delafloxacin) for the treatment of
community-acquired bacterial pneumonia (CABP). We believe that the
potential market opportunity for CABP is substantial and that, if
approved, Baxdela may play a significant role in the treatment of
this life-threatening illness. We remain confident in the
strength of our long-term strategy to
position Melinta for future success as the largest
branded antibiotics-focused company and are committed to meeting
the growing global threat of antibiotic resistance."
“We are pleased with our swift execution of
cost-cutting initiatives during the first quarter of 2019, which
significantly drove down our operating expenses both on a
year-over-year and quarter-over-quarter basis,” said Peter
Milligan, chief financial officer of Melinta. “We believe that
we have the ability to sustain this disciplined approach to
stewardship of financial resources, which is critical for long-term
shareholder value.”
First Quarter 2019 Financial
ResultsMelinta reported revenue of $14.1 million for the
first quarter of 2019. Revenue from product sales was $11.8
million, flat with the first quarter of 2018. Strong performance by
Vabomere® (meropenem and vaborbactam) and Minocin® (minocycline)
for Injection were offset by softer sales of Baxdela and Orbactiv®
(oritavancin).
|
|
|
In USD
millions |
Q1 2019 |
Q1 2018 |
Product sales, net |
$ |
11,775 |
|
$ |
11,846 |
Contract research |
1,409 |
|
2,995 |
License |
900 |
|
— |
Total revenue
* |
$ |
14,084 |
|
$ |
14,841 |
|
|
|
|
|
|
Cost of goods sold (“COGS”) was $7.4 million and
$7.7 million, respectively, for the first quarter of 2019 and the
first quarter of 2018, of which $4.1 million and $4.7 million was
comprised of non-cash amortization of intangible assets.
Research and development (“R&D”) expenses
were $5.4 million for the first quarter of 2019, compared to $16.1
million for the same period in 2018. R&D expenses decreased
primarily as a result of the completion of the Company's Phase III
study for Baxdela in CABP as well as winding down its early
research and discovery programs, which was completed at the end of
March 2019. Selling, general and administrative (“SG&A”)
expenses were $25.9 million for the first quarter of 2019, compared
to $34.6 million for the same period in 2018. SG&A expenses
decreased primarily as a result of the cost-cutting measures the
Company initiated in the fourth quarter of 2018.
Net loss was $26.5 million, or $2.34 per share,
for the first quarter of 2019, compared to a net loss of $29.4
million, or $4.76 per share, for the first quarter of 2018. Net
loss per share year-over-year reflects changes in share count as a
result of the one-for-five reverse stock split effective on
February 22, 2019.
The Company ended the quarter with $116.9
million of cash and cash equivalents, which included the $75
million disbursement under the convertible loan facility with
Vatera in February 2019.
2019 GuidanceIn light of the
first quarter results, and to provide the Company with additional
time to evaluate the impact of its new strategic commercial
initiatives, the Company will update 2019 financial guidance as
part of its second quarter 2019 earnings communications. Previous
revenue guidance should no longer be relied upon.
Portfolio Updates
- sNDA submission to FDA for Baxdela for treatment of CABP in
adult patients in April 2019; awaiting official acceptance and
PDUFA date from the FDA
- Clinical study for a new formulation of Orbactiv scheduled to
commence in the second half of 2019, targeted to reduce infusion
time from three hours to one hour
- Presentation of portfolio data, including results from
real-world registry studies of Vabomere, Orbactiv and Minocin for
Injection at the Making a Difference in Infectious Diseases
(MAD-ID) 2019 Annual Meeting held from May 8-11,
2019 in Orlando, Florida
Business Highlights
- Recent execution of several new strategic commercial
initiatives, including the engagement of a contract sales
organization to sell Baxdela in the retail setting
- Implementation of operating cost-reduction initiatives,
delivering significant cost savings in 2019
Upcoming Potential
Catalysts
- European Commission approval decision for delafloxacin (to be
marketed under the brand name Quofenix) for acute bacterial skin
and skin structure infections (ABSSSI)
- Country approvals for Baxdela in South America and Central
America
- Latin America commercialization agreement execution for
Vabomere, Orbactiv and Minocin for Injection
- FDA approval for Baxdela for the treatment of CABP in
adults
Conference Call and
WebcastMelinta’s earnings conference call for the first
quarter of 2019 will be broadcast at 4:30 p.m. ET on May 9, 2019.
Investors wishing to participate in the call should dial:
877-377-7553 and international investors should dial: 253-237-1151,
using the conference ID# 5233509. A live webcast of the call will
be available online from the Investor Relations section of the
company website at www.melinta.com and will be archived there
for 30 days. A telephone replay of the call will be available by
dialing 855-859-2056 for domestic callers or 404-537-3406 for
international callers and entering the conference ID# 5233509.
About Melinta
TherapeuticsMelinta Therapeutics, Inc. is the largest
pure-play antibiotics company, dedicated to saving lives threatened
by the global public health crisis of bacterial infections through
the development and commercialization of novel antibiotics that
provide new therapeutic solutions. Its four marketed products
include Baxdela® (delafloxacin), Vabomere® (meropenem and
vaborbactam), Orbactiv® (oritavancin), and Minocin® (minocycline)
for Injection. This portfolio provides Melinta with the unique
ability to provide providers and patients with a range of solutions
that can meet the tremendous need for novel antibiotics treating
serious infections. Visit www.melinta.com for more
information.
Non-GAAP Financial Measures
To supplement our financial results presented on
a U.S. generally accepted accounting principles, or GAAP, basis, we
have included information about non-GAAP adjusted EBITDA, a
non‑GAAP financial measure, as a useful operating metric. We
believe that the presentation of this non‑GAAP financial measure,
when viewed with our results under GAAP and the accompanying
reconciliation, provides supplementary information to analysts,
investors, lenders, and our management in assessing the Company’s
performance and results from period to period. This non‑GAAP
measure closely aligns with the way management measures and
evaluates the Company’s performance. This non‑GAAP financial
measure should be considered in addition to, and not a substitute
for, or superior to, net income or other financial measures
calculated in accordance with GAAP. Non‑GAAP Adjusted EBITDA is not
based on any standardized methodology prescribed by GAAP and
represents GAAP net income (loss), which the Company believes is
the most directly comparable GAAP measure, adjusted to exclude
interest income, interest expense, depreciation and amortization,
stock‑based compensation expense, changes in the fair value of our
warrant liability, gains or losses on extinguishment of debt and
other liabilities, and acquisition-related costs. Non‑GAAP
financial measures used by us may be calculated differently from,
and therefore may not be comparable to, non‑GAAP measures used by
other companies.
Cautionary Note Regarding
Forward-Looking Statements
Certain statements in this communication
constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act and are usually identified by the use of words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “seeks,” “should,” “will,” and
variations of such words or similar expressions, including
statements related to guidance. We intend these forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act and
are making this statement for purposes of complying with those safe
harbor provisions. These forward-looking statements reflect our
current views about our plans, intentions, expectations, strategies
and prospects, which are based on the information currently
available to us and on assumptions we have made and include
statements regarding: expectations with respect to our financial
position, results and performance. Although we believe that our
plans, intentions, expectations, strategies and prospects as
reflected in or suggested by those forward-looking statements are
reasonable, we can give no assurance that the plans, intentions,
expectations, strategies or prospects will be attained or achieved.
Furthermore, actual results may differ materially from those
described in the forward-looking statements and will be affected by
a variety of risks and factors that are beyond our control.
Risks and uncertainties for Melinta include, but
are not limited to, the fact that we have incurred significant
operating losses since inception and will incur continued losses
for the foreseeable future; our limited operating history; our need
for future capital and risks related to our ability to obtain
additional capital to fund future operations; risks related to the
satisfaction of the closing conditions for the remaining two
disbursements under the loan agreement with Vatera, including any
consequences of a failure to close on the two disbursements under
the Vatera loan financing; risks related to compliance with the
covenants under our facilities with Vatera and Deerfield;
uncertainties of cash flows and inability to meet working capital
needs as well as other milestone, royalty and payment obligations,
including as a result of the outcome of the pending litigation with
respect to, and any requirement to make, payments potentially due
to The Medicines Company; risks that may arise from the
consummation of the Vatera loan financing and the effectiveness of
the amendment to the Deerfield facility agreement, including
potential dilution to our stockholders and the fact that Vatera
will beneficially own a substantial portion of our common stock;
the fact that our independent registered public accounting firm’s
report on the Company’s 2016, 2017, and 2018 financial statements
contains an explanatory paragraph that states that our recurring
losses from operations and our need to obtain additional capital
raises substantial doubt about our ability to continue as a going
concern; our substantial indebtedness; risks related to the
commercial launches of our products and our inexperience as a
company in marketing drug products; the degree of market acceptance
of our products among physicians, patients, health care payors and
the medical community; the pricing we are able to achieve for our
products; failure to obtain and sustain an adequate level of
reimbursement for our products by third-party payors; inaccuracies
in our estimates of the market for and commercialization potential
of our products; failure to maintain optimal inventory levels to
meet commercial demand for any of our products; risks that our
competitors are able to develop and market products that are
preferred over our products; our dependence upon third parties for
the manufacture and supply of our marketed products; failure to
achieve the benefits of our recently completed transactions with
Cempra and The Medicines Company; failure to establish and maintain
development and commercialization collaborations; uncertainty in
the outcome or timing of clinical trials and/or receipt of
regulatory approvals for our product candidates; undesirable side
effects of our products; failure of third parties to conduct
clinical trials in accordance with their contractual obligations;
our ability to identify, develop, acquire or in-license products;
difficulties in managing the growth of our company; the effects of
recent comprehensive tax reform; risks related to failure to comply
with extensive laws and regulations; product liability risks
related to our products; failure to retain key personnel; inability
to obtain, maintain and enforce patents and other intellectual
property rights or the unexpected costs associated with such
enforcement or litigation; risks relating to third party
infringement of intellectual property rights; our ability to
maintain effective internal control over financial reporting;
unfavorable outcomes in any of the class action and shareholder
derivative lawsuits currently pending against the Company; and the
fact that a substantial number of shares of common stock may be
sold into the public markets by one or more of our large
stockholders in the near future. Many of these factors that will
determine actual results are beyond Melinta’s ability to control or
predict.
Other risks and uncertainties are more fully
described in our Annual Report on Form 10-K for the year ended
December 31, 2018, our Revised Definitive Proxy Statement filed
January 29, 2019, and in other filings that Melinta makes and
will make with the SEC. Existing and prospective investors are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The statements
made in this press release speak only as of the date stated herein,
and subsequent events and developments may cause our expectations
and beliefs to change. While we may elect to update these
forward-looking statements publicly at some point in the future, we
specifically disclaim any obligation to do so, whether as a result
of new information, future events or otherwise, except as required
by law. These forward-looking statements should not be relied upon
as representing our views as of any date after the date stated
herein.
Melinta Therapeutics, Inc.
Condensed Consolidated Balance
Sheets
(In thousands, except share and per share
amounts)
|
March 31, 2019 |
December 31, 2018 |
Assets |
|
|
Cash and cash equivalents |
$ |
116,901 |
|
|
$ |
81,808 |
|
Receivables |
14,892 |
|
|
22,485 |
|
Inventory |
44,451 |
|
|
41,341 |
|
Prepaid expenses and other current assets |
5,512 |
|
|
3,848 |
|
Total current assets |
181,756 |
|
|
149,482 |
|
Property and equipment, net |
1,465 |
|
|
1,586 |
|
Intangible assets, net |
225,073 |
|
|
229,196 |
|
Other assets |
62,155 |
|
|
61,326 |
|
Total assets |
$ |
470,449 |
|
|
$ |
441,590 |
|
Liabilities |
|
|
Accounts payable |
$ |
8,321 |
|
|
$ |
16,765 |
|
Accrued expenses |
22,625 |
|
|
33,924 |
|
Deferred purchase price and other liabilities |
82,316 |
|
|
78,394 |
|
Accrued interest on notes payable |
4,440 |
|
|
4,485 |
|
Warrant liability |
23 |
|
|
38 |
|
Conversion liability |
12,236 |
|
|
— |
|
Total current liabilities |
129,961 |
|
|
133,606 |
|
Notes payable, net of debt discount and costs |
91,397 |
|
|
110,476 |
|
Convertible notes payable to related parties, net of debt discount
and costs |
62,350 |
|
|
— |
|
Other long-term liabilities |
10,225 |
|
|
7,444 |
|
Total long-term liabilities |
163,972 |
|
|
117,920 |
|
Total liabilities |
$ |
293,933 |
|
|
$ |
251,526 |
|
|
|
|
Shareholders'
Equity |
|
|
Common stock |
12 |
|
|
11 |
|
Additional paid-in capital |
924,821 |
|
|
909,896 |
|
Accumulated deficit |
(748,317 |
) |
|
(719,843 |
) |
Total shareholders’ equity |
$ |
176,516 |
|
|
$ |
190,064 |
|
Total liabilities and shareholders’ equity |
$ |
470,449 |
|
|
$ |
441,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melinta Therapeutics, Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share amounts)
|
Quarter Ended March 31, |
|
2019 |
|
2018 |
Revenue |
|
|
|
Product sales, net |
$ |
11,775 |
|
|
$ |
11,846 |
|
Contract research |
1,409 |
|
|
2,995 |
|
License |
900 |
|
|
— |
|
Total revenue |
14,084 |
|
|
14,841 |
|
Operating expenses |
|
|
|
Cost of goods sold |
7,365 |
|
|
7,686 |
|
Research and development |
5,364 |
|
|
16,129 |
|
Selling, general and administrative |
25,941 |
|
|
34,624 |
|
Total operating expenses |
38,670 |
|
|
58,439 |
|
Loss from operations |
(24,586 |
) |
|
(43,598 |
) |
Other income (expenses) |
|
|
|
Interest income |
187 |
|
|
210 |
|
Interest expense |
(7,103 |
) |
|
(10,196 |
) |
Interest expense on convertible notes |
(564 |
) |
|
— |
|
Change in fair value of warrant & conversion liabilities |
6,015 |
|
|
24,085 |
|
Loss on extinguishment of debt |
(346 |
) |
|
(2,595 |
) |
Grant income (expense) |
(62 |
) |
|
2,658 |
|
Other income and expense |
(73 |
) |
|
4 |
|
Total other income (expense), net |
(1,946 |
) |
|
14,166 |
|
Net loss |
$ |
(26,532 |
) |
|
$ |
(29,432 |
) |
Basic and diluted net loss per
share |
$ |
(2.34 |
) |
|
$ |
(4.76 |
) |
Basic and diluted
weighted-average shares outstanding |
11,330,019 |
|
|
6,183,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melinta Therapeutics, Inc.
Condensed Consolidated Statement of Cash
Flows
(In thousands)
|
Quarter Ended March 31, |
|
2019 |
|
2018 |
Operating
activities |
|
|
|
Net loss |
$ |
(26,532 |
) |
|
$ |
(29,432 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
4,474 |
|
|
4,805 |
|
Non-cash interest expense |
3,230 |
|
|
5,954 |
|
Share-based compensation |
892 |
|
|
955 |
|
Change in fair value of warrant & conversion liabilities |
(6,015 |
) |
|
(24,085 |
) |
Loss on extinguishment of debt |
346 |
|
|
2,595 |
|
Gain on extinguishment of lease liabilities |
(792 |
) |
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Receivables |
7,593 |
|
|
(5,868 |
) |
Inventory |
(3,093 |
) |
|
(2,002 |
) |
Prepaid expenses and other current assets |
(1,551 |
) |
|
(1,293 |
) |
Accounts payable |
(8,372 |
) |
|
3,983 |
|
Accrued expenses |
(9,711 |
) |
|
(4,817 |
) |
Accrued interest on notes payable |
(46 |
) |
|
(284 |
) |
Other non-current assets and liabilities |
2,256 |
|
|
(1,930 |
) |
Net cash used in operating activities |
(37,321 |
) |
|
(51,419 |
) |
Investing
activities |
|
|
|
IDB acquisition |
— |
|
|
(166,383 |
) |
Purchases of intangible assets |
(1,209 |
) |
|
— |
|
Purchases of property and equipment |
(12 |
) |
|
(504 |
) |
Net cash provided by (used in) investing activities |
(1,221 |
) |
|
(166,887 |
) |
Financing
activities |
|
|
|
Proceeds from financing under Deerfield arrangement: |
|
|
|
Proceeds from the issuance of notes payable |
— |
|
|
111,421 |
|
Costs associated with the issuance of notes payable |
— |
|
|
(6,455 |
) |
Proceeds from the issuance of warrants |
— |
|
|
33,264 |
|
Proceeds from the issuance of royalty agreement |
— |
|
|
1,472 |
|
Purchase of notes payable disbursement option |
— |
|
|
(7,609 |
) |
Proceeds from issuance of common stock, net, to lender |
— |
|
|
51,452 |
|
Other financing activities: |
|
|
|
Proceeds from issuance of common stock, net |
8 |
|
|
40,000 |
|
Proceeds from the issuance of convertible promissory notes |
— |
|
|
— |
|
Payment of debt extinguishment fees |
— |
|
|
(2,150 |
) |
Issuance of convertible notes |
75,000 |
|
|
|
Convertible notes issuance costs |
(1,301 |
) |
|
|
IDB acquisition deferred payments |
(72 |
) |
|
— |
|
Proceeds from the exercise of stock options, net of
cancellations |
— |
|
|
3 |
|
Repayment of notes payable and other |
— |
|
|
(40,000 |
) |
Net cash provided by (used in) financing activities |
73,635 |
|
|
181,398 |
|
Net change in cash and
equivalents |
35,093 |
|
|
(36,908 |
) |
Cash, cash equivalents
and restricted cash at beginning of the period |
82,008 |
|
|
128,587 |
|
Cash, cash equivalents
and restricted cash at end of the period |
$ |
117,101 |
|
|
$ |
91,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melinta Therapeutics
GAAP to Non-GAAP Adjustments
for the Quarters Ended March 31, 2019 and
2018
(In thousands)
Three Months Ended March 31, 2019 |
|
Revenue |
Cost ofProduct Sales |
R&D |
SG&A |
OtherIncome (Expense), Net |
Total |
Net loss, as reported under GAAP |
|
$ |
14,084 |
|
$ |
(7,365 |
) |
$ |
(5,364 |
) |
$ |
(25,941 |
) |
$ |
(1,946 |
) |
$ |
(26,532 |
) |
EBITDA adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
— |
|
— |
|
— |
|
— |
|
7,667 |
|
7,667 |
|
Interest income |
|
— |
|
— |
|
— |
|
— |
|
(187 |
) |
(187 |
) |
Depreciation and amortization |
|
— |
|
4,123 |
|
29 |
|
322 |
|
— |
|
4,474 |
|
Total EBITDA adjustments |
|
— |
|
4,123 |
|
29 |
|
322 |
|
7,480 |
|
11,954 |
|
EBITDA |
|
$ |
14,084 |
|
$ |
(3,242 |
) |
$ |
(5,335 |
) |
$ |
(25,619 |
) |
$ |
5,534 |
|
$ |
(14,578 |
) |
Other adjustments: |
|
|
|
|
|
|
|
Stock-based compensation |
|
— |
|
— |
|
79 |
|
813 |
|
— |
|
892 |
|
Change in fair value of warrant & conversion liabilities |
|
— |
|
— |
|
— |
|
— |
|
(6,015 |
) |
(6,015 |
) |
Gain on extinguishment of lease liabilities |
|
— |
|
— |
|
— |
|
(792 |
) |
— |
|
(792 |
) |
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
— |
|
346 |
|
346 |
|
Total other adjustments |
|
— |
|
— |
|
79 |
|
21 |
|
(5,669 |
) |
(5,569 |
) |
Adjusted
EBITDA |
|
$ |
14,084 |
|
$ |
(3,242 |
) |
$ |
(5,256 |
) |
$ |
(25,598 |
) |
$ |
(135 |
) |
$ |
(20,147 |
) |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018 |
|
|
|
|
|
|
|
Net loss, as reported
under GAAP |
|
$ |
14,841 |
|
$ |
(7,686 |
) |
$ |
(16,129 |
) |
$ |
(34,624 |
) |
$ |
14,166 |
|
$ |
(29,432 |
) |
EBITDA adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
— |
|
— |
|
— |
|
— |
|
10,196 |
|
10,196 |
|
Interest income |
|
— |
|
— |
|
— |
|
— |
|
(210 |
) |
(210 |
) |
Depreciation and amortization |
|
— |
|
4,683 |
|
53 |
|
69 |
|
— |
|
4,805 |
|
Total EBITDA adjustments |
|
— |
|
4,683 |
|
53 |
|
69 |
|
9,986 |
|
14,791 |
|
EBITDA |
|
$ |
14,841 |
|
$ |
(3,003 |
) |
$ |
(16,076 |
) |
$ |
(34,555 |
) |
$ |
24,152 |
|
$ |
(14,641 |
) |
Other adjustments: |
|
|
|
|
|
|
|
Stock-based compensation |
|
— |
|
37 |
|
217 |
|
701 |
|
— |
|
955 |
|
Change in fair value of warrant liability |
|
— |
|
— |
|
— |
|
— |
|
(24,085 |
) |
(24,085 |
) |
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
— |
|
2,595 |
|
2,595 |
|
Acquisition-related costs |
|
— |
|
— |
|
— |
|
2,069 |
|
— |
|
2,069 |
|
Total other adjustments |
|
— |
|
37 |
|
217 |
|
2,770 |
|
(21,490 |
) |
(18,466 |
) |
Adjusted
EBITDA |
|
$ |
14,841 |
|
$ |
(2,966 |
) |
$ |
(15,859 |
) |
$ |
(31,785 |
) |
$ |
2,662 |
|
$ |
(33,107 |
) |
|
|
|
|
|
|
|
|
For More Information:
Media Inquiries:Lindsay RoccoElixir Health
Public
Relations+1 862-596-1304lrocco@elixirhealthpr.com
Investor Inquiries:Susan Blum(312)
767-0296ir@melinta.com
Melinta Therapeutics (NASDAQ:MLNT)
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Melinta Therapeutics (NASDAQ:MLNT)
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