Full Press Release Details
APTEVO THERAPEUTICS REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS
Strengthened Cash Position to Support Ongoing R&D and Commercial Activities;
Reported $107 Million in Cash at the End of the Third Quarter
Expanded Novel Bispecific Antibody Portfolio Through Collaboration with Alligator Bioscience; Advanced New Bispecific Candidates Targeting Cancer and Autoimmune Diseases
SEATTLE, WA - November 9, 2017 -- 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
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 Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 Restated | 2017 | 2016 Restated | |||||||||||||
| 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:
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.
Senior Director, Investor Relations and Corporate Communications