Company continues to assess potential
strategic alternatives with the goal of maximizing shareholder
value
Strong balance sheet of $161 million in cash,
cash equivalents and marketable securities as of June 30, 2022
Sesen Bio (Nasdaq: SESN) today reported operating results
for the second quarter ended June 30, 2022. During the quarter, the
Company paused clinical development of its lead asset, Vicineum™
for the treatment of non-muscle invasive bladder cancer (NMIBC),
and turned its primary focus to the assessment of potential
strategic alternatives with the goal of maximizing shareholder
value, which it believes will be complete by the end of 2022.
Business Updates
- On July 11, 2022, Sesen Bio participated in a Type B Meeting
with the US Food and Drug Administration (FDA). During the
meeting, the Company and the FDA discussed outstanding items
related to the Company’s proposed protocol and statistical analysis
plan design elements for an additional Phase 3 clinical trial for
Vicineum for the treatment of NMIBC, which the Company had been
evaluating for potential resubmission of a Biologics License
Application for Vicineum.
- On July 15, 2022, the Company executed an asset purchase
agreement (the “Roche Asset Purchase Agreement”) with Roche for
legacy Interleukin-6 (IL-6) antagonist antibody technology owned by
Sesen Bio. Pursuant to the Roche Asset Purchase Agreement,
Roche purchased all patent rights and know-how related to the
monoclonal antibody EBI-031 and all other IL-6 antagonist
monoclonal antibody technology owned by Sesen Bio for up to $70
million. This includes a $40 million payment made by Roche to the
Company upon execution of the Roche Asset Purchase Agreement, and
an additional $30 million payable to Sesen Bio upon Roche’s
initiation of a Phase 3 clinical trial with EBI-031 for a defined
indication if initiated prior to December 31, 2026. As a result of
the Roche Asset Purchase Agreement, the Company’s previous license
agreement with Roche dated June 10, 2016 (the “Roche License
Agreement”) was terminated. Prior to the termination of the Roche
License Agreement, the Company had received $50 million in upfront
and milestone payments from Roche.
- On July 18, 2022, Sesen Bio announced that it had made the
strategic decision to voluntarily pause further development of
Vicineum in the US. The decision was based on a thorough
reassessment of Vicineum following recent discussions with the FDA,
which included feedback that had implications on the size,
timeline, and costs of the required additional Phase 3 clinical
trial for the treatment of NMIBC. The Company continues to believe
that Vicineum has benefits for patients and healthcare providers
that can be maximized through a company with a larger
infrastructure, and as such, intends to seek a partner that can
execute further development to realize the full potential of
Vicineum. As a result of this decision, the Company has turned its
primary focus to the careful assessment of strategic alternatives
with the goal of maximizing shareholder value. As previously
disclosed, the Company is actively working with an investment bank
in the assessment process, and believes it will be complete by the
end of 2022.
- On July 20, 2022, Sesen Bio announced the approval of a
restructuring plan to reduce operating expenses and to better align
its workforce with the needs of its business following the decision
to pause further development of Vicineum in the US. Execution
of the restructuring plan is expected to be substantially complete
by the end of the fourth quarter of 2022.
Second Quarter 2022 Financial Results
- Cash Position: Cash, cash equivalents and marketable
securities were $161.2 million as of June 30, 2022, compared to
$151.1 million as of June 30, 2021.
- R&D Expenses: Research and development expenses for
the second quarter of 2022 were $29.9 million compared to $7.2
million for the same period in 2021. The increase of $22.7 million
was primarily due to the expense of prepaid balances related to
consumables and manufacturing reservations, as the balances were
evaluated and deemed to have no future value ($25.2 million). This
increase was partially offset by lower costs associated with
manufacturing ($2.5 million).
- G&A Expenses: General and administrative expenses
for the second quarter of 2022 were $15.6 million compared to $6.8
million for the same period in 2021. The increase of $8.8 million
was primarily due to an increase in legal expense ($10.3 million).
This increase was driven by the preliminary settlement of the
securities and derivative litigation, net of expected insurance
recovery ($8.6 million), related legal fees ($0.9 million), legal
fees related to the internal review ($0.3 million), and other legal
expenses ($0.5 million). This increase was partially offset by a
decrease in marketing and commercial expenses, which were incurred
in the second quarter of 2021 in preparation for potential
commercial launch of Vicineum but were discontinued as a result of
the Complete Response Letter from the FDA received in August 2021
($1.5 million).
- Non-Cash Related Expenses:
- Intangibles impairment charge for the second quarter of 2022
was $27.8 million. In light of assumption changes in market share
for Vicineum and the Company’s strategic decision to voluntarily
pause further development of Vicineum in the US, the Company
performed an interim impairment test for In-Process Research and
Development (IPR&D) assets and goodwill. This resulted in the
full impairment of IPR&D assets ($14.7 million) and goodwill
($13.1 million).
- The change in the fair value of contingent consideration was a
decrease of $37.3 million for the second quarter of 2022, compared
to an increase of $13.6 million for the same period in 2021. This
decrease was due to a change in projected net sales for Vicineum
subject to contingent consideration liability, which was based upon
projected net sales in the Greater China region in the second
quarter of 2022 compared to projected net sales worldwide in the
second quarter of 2021.
- Income Tax Benefit: Benefit from income tax was $3.9
million for the second quarter of 2022. In connection with the
intangibles impairment charge for the second quarter of 2022, the
Company wrote-down the associated deferred tax liability by $4.0
million as a benefit. This was partially offset by $0.1 million in
income tax paid to foreign jurisdictions pursuant to the Company's
license agreement with Qilu Pharmaceutical. There was no tax
benefit or provision in the second quarter of 2021.
- Net Loss: Net loss was $32.0 million, or $0.16 per basic
and per diluted share, for the second quarter of 2022, compared to
net loss of $25.4 million, or $0.15 per basic and diluted share,
for the same period in 2021. The change was primarily attributable
to increases in R&D and G&A expenses ($31.5 million),
primarily driven by the reduction of prepaid balances related to
consumables and manufacturing reservations and the preliminary
settlements of the securities and derivative litigation.
Additionally, license and related revenue recognized decreased
($2.2 million). This was partially offset by favorable changes in
non-cash related expenses of $27.0 million (including tax
benefit).
About Vicineum™
Vicineum, a locally administered fusion protein, is comprised of
a recombinant fusion protein that targets epithelial cell adhesion
molecule (EpCAM) antigens on the surface of tumor cells to deliver
a potent protein payload, Pseudomonas Exotoxin A. Vicineum is
constructed with a stable, genetically engineered peptide tether to
ensure the payload remains attached to the antibody binding
fragment until it is internalized by the cancer cell. This fusion
protein design is believed to decrease the risk of toxicity to
healthy tissues, thereby improving its safety. In prior clinical
trials conducted by Sesen Bio, EpCAM has been shown to be
overexpressed in non-muscle invasive bladder cancer (NMIBC) cells
with minimal to no EpCAM expression observed on normal bladder
cells. Sesen Bio has completed the follow-up stage of a Phase 3
clinical trial in the US for the treatment of BCG-unresponsive
NMIBC. In February 2021, the FDA accepted the Company’s Biologics
License Application (BLA) file for Vicineum for the treatment of
BCG-unresponsive NMIBC, granted Priority Review for the BLA and set
a Prescription Drug User Fee Act (PDUFA) date of August 18, 2021.
On August 13, 2021, the Company received a Complete Response Letter
(CRL) from the FDA regarding its BLA for Vicineum. On July 18,
2022, Sesen Bio announced that it had made the strategic decision
to voluntarily pause further development of Vicineum in the US. The
decision was based on a thorough reassessment of Vicineum, which
included the incremental development timeline and associated costs,
following recent discussions with the FDA. The Company continues to
believe that Vicineum has benefits for patients and healthcare
providers that can be maximized through a company with a larger
infrastructure, and as such intends to seek a partner for further
development of Vicineum while it continues to assess potential
strategic alternatives with the goal of maximizing shareholder
value. Additionally, Sesen Bio believes that cancer cell-killing
properties of Vicineum promote an anti-tumor immune response that
may potentially combine well with immuno-oncology therapies, such
as checkpoint inhibitors. For this reason, the activity of Vicineum
in BCG-unresponsive NMIBC is also being explored at the US National
Cancer Institute in combination with AstraZeneca’s immune
checkpoint inhibitor durvalumab.
About Sesen Bio
Sesen Bio, Inc. is a late-stage clinical company focused on
targeted fusion protein therapeutics for the treatment of patients
with cancer. The Company’s lead program, Vicineum™, also known as
oportuzumab monatox, has completed the follow-up stage of a Phase 3
clinical trial for the treatment of BCG-unresponsive NMIBC. In
February 2021, the FDA accepted the Company’s BLA file for Vicineum
for the treatment of BCG-unresponsive NMIBC, granted Priority
Review for the BLA and set a PDUFA date of August 18, 2021. On
August 13, 2021, the Company received a CRL from the FDA regarding
its BLA for Vicineum. The Company intends to seek a partner for
further development of Vicineum while it continues to assess
potential strategic alternatives with the goal of maximizing
shareholder value. Sesen Bio retains worldwide rights to Vicineum
with the exception of Greater China, for which the Company has
partnered with Qilu Pharmaceutical for commercialization. Vicineum
is a locally administered targeted fusion protein composed of an
anti-EpCAM antibody fragment tethered to a truncated form of
Pseudomonas Exotoxin A. For more information, please visit the
Company’s website at www.sesenbio.com.
COVID-19 Pandemic Potential Impact
Sesen Bio continues to monitor the rapidly evolving environment
regarding the potential impact of the COVID-19 pandemic on the
Company. The Company has not yet experienced any disruptions to its
operations as a result of COVID-19, however, the Company is not
able to quantify or predict with certainty the overall scope of
potential impacts to its business, including, but not limited to,
its ability to identify and assess potential strategic alternatives
and seek a partner for the further development of Vicineum. Sesen
Bio remains committed to the health and safety of patients,
caregivers and employees.
Cautionary Note on Forward-Looking Statements
Any statements in this press release about future expectations,
plans and prospects for the Company, the Company’s strategy, future
operations, and other statements containing the words “anticipate,”
“believe,” “expect,” “intend,” “may,” “plan,” “predict,” “target,”
“potential,” “will,” “would,” “should,” “continue,” and similar
expressions, constitute forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
For example, statements regarding the Company’s plans to continue
to assess potential strategic alternatives with the goal of
maximizing shareholder value, the Company’s belief that such
process will be complete by the end of 2022, the Company’s
intentions to seek a partner for the further development of
Vicineum, any future payments from Roche to the Company pursuant to
the Roche Asset Purchase Agreement, the Company’s belief that
Vicineum has benefits for patients and healthcare providers that
can be maximized through a company with larger infrastructure, the
expected timing for incurring costs associated with the
restructuring plan, and the impact of COVID-19 on the Company,
including its ability to identify and assess potential strategic
alternatives and seek a partner for the further development of
Vicineum. Actual results may differ materially from those indicated
by such forward-looking statements as a result of various important
factors, including: the risk that the Company may not be successful
in identifying one or more strategic alternatives or a partner for
the further development of Vicineum, the risk that the Company may
not ultimately be successful in seeking such a partner or pursuing
a strategic alternative that delivers the anticipated benefits or
enhances shareholder value within the anticipated timeframe or at
all, the risk that the Company’s assessment of strategic
alternatives or its intentions to seek a partner for the further
development of Vicineum may cause the Company’s stock price to
fluctuate significantly, the risk that the Company’s assessment of
strategic alternatives or its intentions to seek a partner for the
further development of Vicineum may be time consuming and involve
the dedication of significant resources and may require the Company
to incur significant costs and expenses, the risk that the
Company’s assessment of strategic alternatives or its intentions to
seek a partner for the further development of Vicineum could
negatively impact the Company’s ability to attract, retain and
motivate key employees and expose the Company to potential
litigation in connection with such intentions to seek a partner or
the process of assessing strategic alternatives or any resulting
transaction, the risk that the Company may not be entitled to or
receive any future payments from Roche pursuant to the Roche Asset
Purchase Agreement, the risk that the Company may not be able to
implement the restructuring plan as currently anticipated or within
the timing currently anticipated, unanticipated difficulties with
preserving capital, unanticipated difficulties in terminating
certain contracts and arrangements pursuant to the restructuring
plan, unanticipated charges not currently contemplated that may
occur as a result of the restructuring plan, and other factors
discussed in the “Risk Factors” section of the Company’s Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and other
reports filed with the Securities and Exchange Commission. In
addition, the forward-looking statements included in this press
release represent the Company’s views as of the date hereof. The
Company anticipates that subsequent events and developments will
cause the Company’s views to change. However, while the Company may
elect to update these forward-looking statements at some point in
the future, the Company specifically disclaims any obligation to do
so. These forward-looking statements should not be relied upon as
representing the Company’s views as of any date subsequent to the
date hereof.
SESEN BIO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; In thousands, except share and per share data)
June 30, 2022 December 31, 2021 Assets
Current assets: Cash and cash equivalents
$
72,090
$
162,636
Short term marketable securities
69,454
Accounts receivable
73
21,011
Other receivables
14,046
3,482
Prepaid expenses and other current assets
757
18,476
Total current assets
156,420
205,605
Non-current assets: Restricted cash
30
20
Marketable securities
19,641
-
Property and equipment, net
30
43
Intangible assets
-
14,700
Goodwill
-
13,064
Long term prepaid expenses
-
7,192
Other assets
42
123
Total non-current assets
19,743
35,142
Total Assets
$
176,163
$
240,747
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable
$
1,667
$
2,853
Accrued expenses
29,851
8,255
Other current liabilities
487
460
Total current liabilities
32,005
11,568
Non-current liabilities: Contingent consideration
1,800
52,000
Deferred tax liability
-
3,969
Deferred revenue
-
1,500
Total non-current liabilities
1,800
57,469
Total liabilities
33,805
69,037
Stockholders’ Equity: Preferred stock, $0.001 par value per
share; 5,000,000 shares authorized at June 30, 2022 and December
31, 2021; no shares issued and outstanding at June 30, 2022 and
December 31, 2021
-
-
Common stock, $0.001 par value per share; 400,000,000 shares
authorized at June 30, 2022 and December 31, 2021; 199,463,645
shares issued and outstanding at June 30, 2022 and December 31,
2021
199
199
Additional paid-in capital
491,464
487,768
Other comprehensive loss
(281
)
-
Accumulated deficit
(349,024
)
(316,257
)
Total Stockholders’ Equity
142,358
171,710
Total Liabilities and Stockholders’ Equity
$
176,163
$
240,747
SESEN BIO, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited; In thousands, except per share
data) Three Months Ended June 30, Six Months
Ended June 30,
2022
2021
2022
2021
Revenue: License and related revenue
$
-
$
2,234
$
-
$
6,544
Total revenue
$
-
$
2,234
$
-
$
6,544
Operating expenses: Research and development
$
29,944
$
7,228
$
34,705
$
13,306
General and administrative
15,589
6,805
24,564
12,098
Intangibles impairment charge
27,764
-
27,764
-
Change in fair value of contingent consideration
(37,300
)
13,600
(50,200
)
61,760
Total operating expenses
$
35,997
$
27,633
$
36,833
$
87,164
Loss from Operations
$
(35,997
)
$
(25,399
)
$
(36,833
)
$
(80,620
)
Other income (expense), net
162
(43
)
191
(46
)
Loss Before Taxes
$
(35,835
)
$
(25,442
)
$
(36,642
)
$
(80,666
)
Benefit for income taxes
3,875
-
3,875
(288
)
Net Loss After Taxes
$
(31,960
)
$
(25,442
)
$
(32,767
)
$
(80,954
)
Net loss attributable to common stockholders - basic and
diluted
$
(31,960
)
$
(25,442
)
$
(32,767
)
$
(80,954
)
Net loss per common share - basic and diluted
$
(0.16
)
$
(0.15
)
$
(0.16
)
$
(0.49
)
Weighted-average common shares outstanding - basic and diluted
199,464
175,393
199,464
166,264
SESEN BIO, INC. CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS (Unaudited; In thousands,
except per share data) Three Months Ended June
30, Six Months Ended June 30,
2022
2021
2022
2021
Net loss
$
31,960
$
25,442
$
32,767
$
80,954
Unrealized loss on marketable securities
(281
)
-
(281
)
-
Total comprehensive loss
$
32,241
$
25,442
$
33,048
$
80,954
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220808005070/en/
Investors: Erin Clark, Vice President, Corporate Strategy &
Investor Relations ir@sesenbio.com
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