On November 12, 2019 Intec Pharma Ltd. (NASDAQ: NTEC) ("Intec" or "the Company") reported financial results for the three and nine months ended September 30, 2019 (Press release, Intech Pharmaceuticals, NOV 12, 2019, View Source [SID1234551031]).
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Highlights of the third quarter 2019 and recent weeks include:
Presented two posters highlighting data from the Company’s Phase 3 clinical development program for the Accordion Pill Carbidopa/Levodopa (AP-CD/LD) at the International Congress of Parkinson’s and Movement Disorder Society (MDS 2019);
Completed the qualification studies for the commercial scale manufacture of AP-CD/LD with our partner, LTS LohmanTherapie-Systeme (LTS);
Announced topline results from the Company’s pivotal Phase 3 trial (ACCORDANCE) evaluating the safety and efficacy of the AP-CD/LD compared with immediate release CD/LD (IR-CD/LD; Sinemet) as a treatment for the symptoms of advanced Parkinson’s disease (PD), reporting that AP-CD/LD provided treatment for Parkinson’s disease symptoms but did not demonstrate statistical superiority to IR-CD/LD in terms of reduction in OFF time from baseline under the conditions established in the protocol; and
Completed the pharmacokinetic (PK) study of the custom-designed AP developed for a proprietary compound under the previously announced feasibility and option agreement with Novartis Pharmaceuticals.
Management Commentary
"We gained important information and knowledge from the ACCORDANCE study that we believe makes AP-CD/LD an attractive partnership opportunity for late-stage development and commercialization. First, the ACCORDANCE results validate the AP platform and provide very important long-term safety data. The responder analysis and subset analyses provide key insights for future study design and dosing that should be invaluable to a potential partner. We have qualified the commercial scale manufacturing process with LTS, which can also be used to provide clinical supply for the next Phase 3 study. This is a key advantage as Chemistry, Manufacturing and Controls (CMC) is a critical component in drug development and one that often trips up small companies. Importantly, there continues to be a large unmet need for a better baseline LD, which we believe provides a significant market opportunity of between $200 – $500 million," stated Jeffrey A. Meckler, Vice Chairman and Chief Executive Officer of Intec Pharma.
"We were delighted to present two posters highlighting AP-CD/LD at MDS 2019 in late September. We were particularly pleased to have our Phase 3 ACCORDANCE clinical trial poster chosen for the conference’s Guided Tour, a distinction that drives attendees to view the approximately ten percent of posters selected for inclusion. Consequently, there was considerable interest in our program’s results. We believe the data underscored the potential of AP-CD/LD as a better baseline levodopa therapy in PD while highlighting its long-term safety data. In tandem, we are in the process of seeking to partner AP-CD/LD in PD and found it most beneficial to have these data delivered at this important medical meeting. The continued understanding of the full dataset from ACCORDANCE will be important as we seek to partner AP-CD/LD for late-stage clinical development and commercialization in PD patients.
"Moving forward, we continue to glean important learnings from the ongoing data analysis. As we present these to potential partners, we continue to advance the buildout of our commercial manufacturing process with LTS. As noted, having these state-of-the art commercial scale production facilities in place is expected to be of great value to any potential partner. We will also be completing the required regulatory submissions and reports that are necessary for clinical and CMC filings, which we expect to further enhance partnership opportunities.
"In July 2019, Intec provided Novartis with the results from a human PK study of a custom-designed AP for one of Novartis’ proprietary compounds. The study demonstrated that the AP met the technical requirements set forth by Novartis. Novartis undertook a full commercial assessment of the program, and to date, has not definitively decided whether they will opt into negotiations for a commercial agreement. As a result, we have determined that we will not need the volume of clinical manufacturing to support that program at this time and plan to restructure those dedicated to the Novartis program in order to reduce our burn.
"We continued to invest in building out the Company’s next phase of growth through the AP platform’s innovation engine as it can provide multiple opportunities for pipeline expansion. Toward that end, we were delighted to partner with Merck & Co. on a research collaboration to develop a custom-designed AP for one of Merck’s proprietary compounds in May 2019. Our team is hard at work constructing the films for this research collaboration and we aim to have a final construct completed and in-vitro tested by the middle of next year.
"The development of our AP containing synthetic tetrahydrocannabinol (THC), one of the primary cannabinoids contained in cannabis, completed an initial PK study earlier this year. The results showed that the delivery of THC did not meet our full expectations for this program. Our R&D team is in the process of refining the AP-THC in order to fully meet our specifications for the oral delivery of THC and CBD. We are seeking to launch a PK study with the optimized AP-THC next year.
"In addition to our current development pipeline, our team continues to advance discussions with other potential pharmaceutical partners for the development of new custom-designed APs. We believe the data from our ACCORDANCE trial enhances those discussions as it validates the AP platform and provides long-term safety data. Our goal remains to add one or two new programs per year. We believe this is the most efficient strategy for building our pipeline and for creating value from our platform.
"Our mission remains steadfast; to build value by leveraging the potential of our AP platform to enhance the characteristics of a number of proprietary compounds and to develop innovative approaches to the treatment of diseases. Our growth strategy continues to focus on advancing a mix of internally-led programs with partnered programs believing that having a variety of ‘shots on goal’ will provide Intec with a growing pipeline and long-term royalty stream with the potential to create significant value over time," concluded Mr. Meckler.
Financial Highlights for the Three and Nine Months Ended September 30, 2019
Research and development expenses, net, for the three-month period ended September 30, 2019 were approximately $8.4 million, an increase of approximately $600,000 or 8%, compared with approximately $7.8 million for the third quarter of 2018. The increase for the three-month period was primarily due to an increase in expenses related to the open label extension study. This increase was offset by a decrease in expenses related to the ACCORDANCE study and a decrease in expenses related to the scale up activities for the commercial scale production capabilities for AP-CD/LD at LTS. Research and development expenses, net, for the nine-month period ended September 30, 2019 amounted to approximately $24.9 million, a decrease of approximately $200,000, or 1%, compared with approximately $25.1 million in the nine-month period ended September 30, 2018. The decrease for the nine-month period was primarily due to a decrease in expenses related to the ACCORDANCE study. This decrease was offset by an increase in expenses related to the scale up activities for the commercial scale production capabilities for AP-CD/LD at LTS and expenses related to our open label extension study.
General and administrative expenses for the three-month period ended September 30, 2019 were approximately $2.2 million, an increase of approximately $500,000 or 29%, compared with approximately $1.7 million in third quarter of 2018. General and administrative expenses for the nine-month period ended September 30, 2019 amounted to approximately $6.5 million, an increase of approximately $700,000, or 12%, compared with approximately $5.8 million in the nine-month period ended September 30, 2018. The increase for the three and nine-month periods was primarily related to the increase in payroll and related expenses mainly due to salary raises and increase in insurance expenses, offset by a decrease in professional services.
Impairment of long-lived assets was recorded as the top-line results of the ACCORDANCE trial were considered a triggering event for impairment. For the three and nine months ended September 30, 2019, we recorded an impairment charge of approximately $9.8 million. This impairment represents the excess carrying value of the long-lived assets compared to its fair value.
Net loss for the three-month period ended September 30, 2019 was approximately $20.4 million, compared with a net loss of $9.2 million in the prior year’s third quarter. Net loss for the nine-month period ended September 30, 2019 was $41.0 million compared with $30.9 million during the nine-month period ended September 30, 2018.
Loss per ordinary share for the three-month period ended September 30, 2019 was $0.61 compared with a loss per ordinary share of $0.28 for the three-month period ended September 30, 2018. Loss per ordinary share for the nine-month period ended September 30, 2019 was $1.23 compared with a loss per ordinary share of $1.01 for the nine-month period ended September 30, 2018.
As of September 30, 2019, the Company had cash and cash equivalents and marketable securities of approximately $15.7 million compared with approximately $40.6 million at December 31, 2018.
Net cash used in operating activities during the nine-month period ended September 30, 2019 was approximately $23.9 million compared with net cash used in operating activities of approximately $30.9 million during the nine-month period ended September 30, 2018. This decrease resulted from changes in operating assets and liabilities items of approximately $6.5 million and a decrease in the net loss for the period in the amount of $500,000.
The Company had negative cash flow from investing activities of approximately $2.5 million during the nine-month period ended September 30, 2019 compared to negative cash flow from investing activities of approximately $5.1 million during the nine-month period ended September 30, 2018. This decrease resulted primarily from a decrease in purchase of property and equipment in the amount of approximately $1.8 million, an increase in proceeds from the disposal of marketable securities in the amount of approximately $576,000 and a decrease of approximately $135,000 in investment in other assets related to the establishment of the commercial scale production capabilities for AP-CD/LD at LTS.
Net cash provided by financing activities during the nine-month period ended September 30, 2019 was approximately $2.2 million, which was provided by approximately $2.0 million in funds received from the sale of 1,716,679 ordinary shares under the Company’s "at-the-market" equity offering program and $268,000 in proceeds from the exercise of options by employees.