On February 6, 2020 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the fourth quarter and full year 2019 and provided a business update (Press release, Regeneron, FEB 6, 2020, View Source [SID1234553973]).

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"Regeneron had a very productive 2019 marked by strong commercial growth for our core franchises, significant pipeline and regulatory progress, and positive financial results," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "In 2020, we are focused on driving continued growth with EYLEA, Dupixent, and Libtayo and anticipate several new regulatory approvals and submissions across our portfolio. Our expanding pipeline of innovative and complementary immuno-oncology therapies continues to advance, and we feel confident that we are positioned to bring new breakthroughs to cancer patients and be a leader in this rapidly evolving field."

"We continue to work constructively with Sanofi to finalize our modified antibody agreement for Praluent and Kevzara, which we expect to be accretive in 2020," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "We will provide financial guidance for full year 2020 by no later than the end of the first quarter."

Financial Highlights

Business Highlights

Key Pipeline Progress
Regeneron has 22 product candidates in clinical development, including five of the Company’s U.S. Food and Drug Administration (FDA) approved products for which it is investigating additional indications. Updates from the clinical pipeline include:

EYLEA (aflibercept) Injection

In December 2019, the Company launched the EYLEA pre-filled syringe in the United States.
Dupixent (dupilumab)

In October 2019, the European Commission (EC) approved Dupixent in chronic rhinosinusitis with nasal polyposis (CRSwNP).
The FDA accepted for priority review the supplemental Biologics License Application (sBLA) for children aged 6 to 11 years with moderate-to-severe atopic dermatitis, with a target action date of May 26, 2020. In addition, a Marketing Authorization Application (MAA) for children aged 6 to 11 years with moderate-to-severe atopic dermatitis was recently submitted in the European Union.
A Phase 2/3 study in bullous pemphigoid and Phase 3 studies in prurigo nodularis and chronic spontaneous urticaria were initiated.
Libtayo (cemiplimab)

A Phase 2 neoadjuvant study in cutaneous squamous cell carcinoma (CSCC) was initiated.
REGN1979, a bispecific antibody targeting CD20 and CD3

In December 2019, the Company reported updated results from the initial clinical trial in patients with non-Hodgkin lymphoma.
The potentially pivotal Phase 2 study has been expanded to include patients with diffuse large B-cell lymphoma (DLBCL) and other non-Hodgkin lymphomas.
REGN5458, a bispecific antibody targeting BCMA and CD3

In December 2019, the Company announced positive preliminary results from an initial clinical trial in patients with relapsed or refractory multiple myeloma.
Pozelimab, an antibody to C5

In December 2019, the Company announced positive top-line results from a Phase 2 trial in paroxysmal nocturnal hemoglobinuria (PNH).
Garetosmab, an antibody to Activin A

In January 2020, the Company announced encouraging results from a Phase 2 trial in fibrodysplasia ossificans progressiva (FOP).
REGN-EB3, a multi-antibody therapy to Ebola virus infection

The New England Journal of Medicine published results from the randomized, controlled PALM trial showing that Regeneron’s REGN-EB3 and another agent provided the highest overall survival rates among four investigational treatments for Ebola.
Business Development Update

The Company and Sanofi announced their intent to restructure their antibody collaboration for Kevzara and Praluent and enter into a royalty-based arrangement. Under the proposed terms of the agreement, Sanofi is expected to gain sole global rights to Kevzara and sole rights to Praluent outside of the United States. Regeneron is expected to gain sole U.S. rights to Praluent. Under the proposed terms, each party will be solely responsible for funding development and commercialization expenses in their respective territories. The proposed agreement, which is expected to be finalized in the first quarter of 2020, will not impact the companies’ existing collaboration relating to Dupixent and REGN3500.
The Company entered into a research collaboration and option licensing agreement with Vyriad, Inc. to discover and develop new oncolytic (cancer-killing) virus-based treatments for various forms of cancer.
Select 2020 Milestones

Programs

Milestones

Dupixent

–

FDA decision (target action date of May 26, 2020) on sBLA and EC decision for expanded atopic dermatitis indication in pediatric patients (6–11 years of age)

–

Report results from Phase 3 study for asthma in pediatric patients (6–11 years of age)

–

Report results from Phase 2 portion of Phase 2/3 study in eosinophilic esophagitis (EOE)

Libtayo

–

Interim analysis of overall survival in Phase 3 non-small cell lung cancer (NSCLC) monotherapy study in patients with high PD-L1 expression

–

Report results from potentially pivotal Phase 2 study in basal cell carcinoma (BCC)

REGN1979 (CD20 and CD3 Antibody)

–

Report updated results from initial study in certain B-cell malignancies

–

Continue to expand potentially pivotal Phase 2 study

REGN5458 (BCMA and CD3 Antibody)

–

Report updated results from initial study in multiple myeloma

Evinacumab (ANGPTL3 Antibody)

–

Submit BLA and MAA for homozygous familial hypercholesterolemia (HoFH)

Pozelimab (C5 Antibody)

–

Initiate Phase 3 program in PNH

–

Initiate combination program with Alnylam’s cemdisiran

Garetosmab (Activin A Antibody)

–

Discuss regulatory submission for FOP with regulatory authorities

Fasinumab (NGF Antibody)

–

Report results from Phase 3 studies in osteoarthritis pain of the knee or hip

REGN-EB3 (Multi-antibody therapy to Ebola)

–

Complete rolling BLA submission for Ebola

Fourth Quarter and Full Year 2019 Financial Results

Total Revenues: Total revenues increased by 13% to $2.170 billion in the fourth quarter of 2019, compared to $1.928 billion in the fourth quarter of 2018. Full year 2019 total revenues increased 17% to $7.863 billion, compared to $6.711 billion for the full year 2018.

Net product sales were $1.286 billion in the fourth quarter and $4.834 billion for the full year 2019, compared to $1.096 billion in the fourth quarter and $4.106 billion for the full year 2018. EYLEA net product sales in the United States were $1.222 billion in the fourth quarter and $4.644 billion for the full year 2019, compared to $1.079 billion in the fourth quarter and $4.077 billion for the full year 2018. Overall distributor inventory levels for EYLEA in the United States remained within the Company’s one-to-two-week targeted range.

Total revenues also include Sanofi and Bayer collaboration revenues(2) of $748 million in the fourth quarter and $2.616 billion for the full year 2019, compared to $729 million in the fourth quarter and $2.188 billion for the full year 2018. Sanofi collaboration revenue in the fourth quarter and full year 2019 included the Company’s share of profits from collaboration antibodies (Dupixent, Praluent, and Kevzara) of $104 million and $209 million, respectively, while Sanofi collaboration revenue in the fourth quarter and full year 2018 included the Company’s share of losses from collaboration antibodies of $(44) million and $(227) million, respectively. The increase in the Company’s share of profits from collaboration antibodies was primarily driven by higher Dupixent profits. Sanofi collaboration revenue in the fourth quarter of 2018 also included the recognition of a cumulative catch-up adjustment of $149 million arising from a change in the estimate of the stage of completion of the collaborations’ immuno-oncology programs primarily in connection with the Amended IO Discovery Agreement.

Refer to Table 4 for a summary of collaboration and other revenue.

Research and Development (R&D) Expenses: GAAP R&D expenses were $683 million in the fourth quarter and $3.037 billion for the full year 2019, compared to $601 million in the fourth quarter and $2.186 billion for the full year 2018. The higher R&D expenses in the fourth quarter of 2019 were principally due to additional costs incurred in connection with our earlier-stage pipeline and dupilumab, and higher headcount and headcount-related costs. The higher R&D expenses for the full year 2019 were principally due to a $400 million up-front payment to Alnylam, additional costs incurred in connection with our earlier-stage pipeline, and higher headcount and headcount-related costs. R&D-related non-cash share-based compensation expense was $72 million in the fourth quarter and $250 million for the full year 2019, compared to $68 million in the fourth quarter and $229 million for the full year 2018.

Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were $587 million in the fourth quarter and $1.835 billion for the full year 2019, compared to $491 million in the fourth quarter and $1.556 billion for the full year 2018. The higher SG&A expenses in the fourth quarter and full year 2019 were primarily due to higher headcount and headcount-related costs, an increase in commercialization-related expenses for Dupixent and EYLEA, additional accruals for loss contingencies associated with ongoing litigation, and higher contributions to independent not-for-profit patient assistance organizations. In addition, in the fourth quarter of 2019, the Company recorded a charge for restructuring-related costs, primarily related to employee separation costs, as the Company has eliminated certain commercialization activities and related headcount in connection with the proposed restructuring of the antibody agreement with Sanofi (as described above). SG&A-related non-cash share-based compensation expense was $45 million in the fourth quarter and $168 million for the full year 2019, compared to $51 million in the fourth quarter and $169 million for the full year 2018.

Cost of Goods Sold (COGS): GAAP COGS was $109 million in the fourth quarter and $362 million for the full year 2019, compared to $44 million in the fourth quarter and $180 million for the full year 2018. The increase in COGS was primarily due to our obligation to pay Sanofi its share of Libtayo U.S. gross profits, third-party royalties on Libtayo U.S. sales, and higher inventory write-downs and reserves.

Cost of Collaboration and Contract Manufacturing (COCM): GAAP COCM was $115 million in the fourth quarter and $420 million for the full year 2019, compared to $73 million in the fourth quarter and $254 million for the full year 2018. The increase in COCM for the full year 2019 was primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent.

Other Income (Expense): GAAP other income (expense), net, includes the recognition of net gains on equity securities of $189 million in the fourth quarter and $118 million for the full year 2019, compared to net losses of $(63) million in the fourth quarter and $(42) million for the full year 2018.

Income Taxes: GAAP income tax expense was $98 million and the effective tax rate was 11.0% in the fourth quarter of 2019, compared to a GAAP income tax benefit of $(144) million and (21.3%) in the fourth quarter of 2018. GAAP income tax expense was $313 million and the effective tax rate was 12.9% for the full year 2019, compared to $109 million and 4.3% for the full year 2018. The effective tax rate for the fourth quarter and full year 2019 was positively impacted, compared to the U.S. federal statutory rate, primarily by stock-based compensation, income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate, and federal tax credits for research activities. The Company’s effective tax rate for the fourth quarter and full year 2018 was positively impacted, compared to the U.S. federal statutory rate, primarily by the Company’s fourth quarter sale of non-inventory related assets between foreign subsidiaries, which had a net impact on the rate by 24.0% and 6.3% for the fourth quarter and full year 2018, respectively. During the fourth quarter and full year 2018, the Company also recorded an income tax benefit of $56 million and $68 million, respectively, as an adjustment to the provisional amount recorded as of December 31, 2017 for the U.S. Tax Reform Act.

GAAP and Non-GAAP Net Income(1): GAAP net income was $792 million, or $6.93 per diluted share, in the fourth quarter of 2019, compared to GAAP net income of $820 million, or $7.15 per diluted share, in the fourth quarter of 2018. GAAP net income was $2.116 billion, or $18.46 per diluted share, for the full year 2019, compared to GAAP net income of $2.444 billion, or $21.29 per diluted share, for the full year 2018.

Non-GAAP net income was $858 million, or $7.50 per diluted share, in the fourth quarter of 2019, compared to non-GAAP net income of $786 million, or $6.84 per diluted share, in the fourth quarter of 2018. Non-GAAP net income was $2.827 billion, or $24.67 per diluted share, for the full year 2019, compared to non-GAAP net income of $2.622 billion, or $22.84 per diluted share, for the full year 2018.

A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

2020 Financial Guidance

Given the announcement regarding the intent to restructure the antibody collaboration for Kevzara and Praluent with Sanofi, Regeneron will provide financial guidance for full year 2020 by the end of the first quarter of 2020.

This press release uses non-GAAP net income and non-GAAP net income per share, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the estimated income tax effect of reconciling items.

The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company’s control (such as the Company’s stock price on the dates share-based grants are issued or changes in the fair value of the Company’s equity investments) or items that are not associated with normal, recurring operations (such as restructuring-related expenses, including employee separation costs). Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company’s core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company’s non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company’s historical GAAP to non-GAAP results is included in Table 3 of this press release.

The Company’s collaborators provide it with estimates of the collaborators’ respective sales and the Company’s share of the profits or losses from commercialization of products for the most recent fiscal quarter. The Company’s estimates for such quarter are reconciled to actual results in the subsequent fiscal quarter, and the Company’s share of the profit or loss is adjusted on a prospective basis accordingly, if necessary.

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2019 financial and operating results on Thursday, February 6, 2020, at 8:00 AM. To access this call, dial (800) 708-4540 (U.S.) or (847) 619-6397 (International). A link to the webcast may be accessed from the "Investors and Media" page of Regeneron’s website at www.regeneron.com. A replay of the conference call and webcast will be archived on the Company’s website and will be available for at least 30 days.

On February 6, 2020 Cardinal Health (NYSE: CAH) reported financial results for the second quarter of fiscal 2020 ended December 31, 2019 (Press release, Cardinal Health, FEB 6, 2020, View Source [SID1234553972]). Second quarter revenue was $39.7 billion, an increase of 5% from the second quarter of last year.

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Second quarter GAAP operating earnings decreased 34% to $334 million, which included a $96 million charge in connection to the recently announced voluntary surgical gown-related recalls. Non-GAAP operating earnings increased 1% to $646 million. GAAP diluted earnings per share (EPS) decreased 19% to $0.75, while non-GAAP diluted EPS increased 18% to $1.52. Non-GAAP diluted EPS benefited from a lower effective tax rate and a lower share count.

"With the first half of the year behind us, we are raising our fiscal year 2020 guidance," said Mike Kaufmann, CEO of Cardinal Health. "This increase was driven by improved performance across our Pharmaceutical segment, particularly within our generics program. As we look forward, we remain focused on executing our strategic growth initiatives."

Second quarter revenue for the Pharmaceutical segment increased 6% to $35.7 billion, due to sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical segment profit increased 4% to $462 million in the second quarter, reflecting positive performance in the company’s generics program and Specialty Solutions business. This was partially offset by the adverse impact of Pharmaceutical Distribution customer contract renewals.

Medical segment

1Medical segment profit does not include the $96 million charge incurred for inventory write-offs and certain remediation and supply disruption costs associated with the recently announced voluntary surgical gown-related recalls.

Second quarter revenue for the Medical segment was flat at $4.0 billion. Growth in Cardinal Health at Home was offset by a decline in products and distribution.

Medical segment profit increased 4% to $195 million in the second quarter. This increase reflects benefits from cost savings initiatives, partially offset by a decline in products and distribution.

Tax rate

During the second quarters of fiscal 2020 and 2019, GAAP effective tax rates were 21.0% and 31.0%, respectively. Non-GAAP effective tax rates were 24.8% and 28.5%, respectively. The GAAP effective tax rate benefitted from jurisdictional mix and discrete items recognized in the second quarter of 2020, largely driven by changes as a result of tax reform. The Non-GAAP effective tax rate benefitted from jurisdictional mix.

Fiscal year 2020 outlook

The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.

The company raises its fiscal year 2020 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to the range of $5.20 to $5.40 from the range of $4.85 to $5.10.

Recent highlights

For the 12th consecutive year in a row, Cardinal Health was honored as one of the "Best Places to Work for LGBTQ Equality" by the Human Rights Campaign (HRC) Foundation, achieving 100% on the HRC’s 2020 Corporate Equality Index (CEI).
Cardinal Health was recognized by the Women’s Forum of New York for having at least 40% of board seats held by women.
Webcast

Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss second quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.

Presentation slides and a webcast replay will be available until February 5, 2021.

Upcoming webcasted investor events

Barclays Global Healthcare Conference on March 10 at 8:30 a.m. Eastern in Miami Beach, Fla.

On February 6, 2020 Sierra Oncology, Inc. (SRRA), a late-stage drug development company focused on the development and commercialization of momelotinib, a JAK1, JAK2 & ACVR1 inhibitor with a potentially differentiated therapeutic profile for the treatment of myelofibrosis, reported that the Series A convertible voting preferred stock issued in its recently completed $103.0 million financing (gross proceeds) have been fully converted into shares of common stock (Press release, Sierra Oncology, FEB 6, 2020, View Source [SID1234553971]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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In addition, Gilead Sciences, Inc. (Gilead) has been issued 725,283 shares of common stock and a warrant to purchase an equivalent amount of common stock, in consideration for meaningfully reduced royalty rates and elimination of a near term milestone in an amendment to the Asset Purchase Agreement with Gilead for momelotinib, as previously announced.

"These announcements bring clarity to Sierra’s simplified go-forward capital structure. We are fortunate to have built both a healthy balance sheet and a critical mass of high quality, supportive shareholders, led by Vivo Capital, Longitude Capital, OrbiMed and Abingworth, investors in our recent financing and from which we appointed four new directors to Sierra’s Board, as well as Gilead. These stakeholders are aligned with Management in our focus on achieving regulatory and commercial success with our Phase 3 drug candidate, momelotinib, which has the potential to become an important therapeutic for both first and second line myelofibrosis patients, including the majority that suffer from anemia and thrombocytopenia," said Dr. Nick Glover, President and CEO of Sierra Oncology.

There are now 10,395,732 total shares of common stock outstanding and warrants to purchase 11,102,251 shares of common stock, with an exercise price equal to $13.20 per share. Of these warrants, warrants to purchase approximately 2,574,727 shares of common stock (the Series B warrants) may only be exercised by paying the exercise price in cash, and will expire on the 75th day anniversary following the announcement of top-line data from MOMENTUM, Sierra Oncology’s ongoing Phase 3 clinical trial of momelotinib. If these Series B warrants are fully exercised, the company will receive approximately $34.0 million in proceeds.

Sierra Oncology previously reported its cash and cash equivalents totaled $67.7 million as of September 30, 2019, and that subsequently it had closed an underwritten public offering with gross proceeds to Sierra Oncology of $103.0 million. Prior to the end of 2019, a term loan of $5.0 million was repaid to Silicon Valley Bank.

On February 6, 2020 Palatin Technologies, Inc. (NYSE American: PTN) reported that it will announce its second quarter fiscal year 2020 operating results on Tuesday, February 11, 2020 before the open of the U.S. financial markets (Press release, Palatin Technologies, FEB 6, 2020, View Source [SID1234553970]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Palatin will also conduct a conference call and live audio webcast hosted by its executive management team on February 11, 2020 at 11:00 a.m. ET. The conference call will include a review of the company’s operating results and an update on programs under development.

Schedule for the Operating Results Press Release, Conference Call / Audio Webcast

Q2 Fiscal Year 2020 Financial Results Press Release

2/11/2020 at 7:30 a.m. ET

Q2 Fiscal Year 2020 Conference Call-Live

2/11/2020 at 11:00 a.m. ET

US/Canada Dial-In Number:

1-800-353-6461

International Dial-In Number:

1-334-323-0501

Conference ID:

7551093

Q2 Fiscal Year 2020 Conference Call-Replay

2/11/2020-2/18/2020

US/Canada Dial-In Number:

1-888-203-1112

International Dial-In Number:

1-719-457-0820

Replay Passcode:

7551093

Audio Webcast Live and Replay Access

View Source

The audio webcast and replay can be accessed by logging on to the "Investors-Webcasts" section of Palatin’s website at View Source.

On February 6, 2020 Kleo Pharmaceuticals, Inc., an immuno-oncology company developing next-generation, fully synthetic bispecific compounds designed to emulate or enhance the activity of biologics, reported that it has received Investigational New Drug (IND) authorization to proceed from the U.S. Food and Drug Administration (FDA) to initiate a safety and tolerability clinical study combining KP1237, a CD38-targeting antibody recruiting molecule (ARM), with patients’ own Natural Killer (NK) cells to treat multiple myeloma (MM) in post-transplant patients (Press release, Kleo Pharmaceuticals, FEB 6, 2020, View Source [SID1234553969]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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The single-arm study will be conducted in 25-30 patients with exploratory endpoints that assess the MRD (minimal residual disease) conversion rate at 90-100 days after transplantation. Recent clinical trials have identified MRD negativity post-transplant as a potential surrogate of long-term remission in MM. The trial is expected to begin enrollment in the first half of 2020, and topline data are expected in the second half of 2021.

"We are excited to have clearance to initiate a clinical trial in the US that addresses a significant unmet medical need in newly diagnosed, post-transplant multiple myeloma patients," said Kleo CEO Doug Manion, MD. "Approximately 30,000 individuals are diagnosed with multiple myeloma in the United States each year, with at least 1/3 of those patients undergoing autologous stem cell transplants."

In this trial, KP1237 is being investigated as a "cell homing" molecule to target the patient’s activated NK cells to the CD38-expressing tumor. Current anti-CD38 therapeutic antibodies kill NK cells and are not approved for use in this clinical settingi.

Nonclinical efficacy data presented at the 2019 American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting demonstrated that CD38-ARMs are able to kill multiple myeloma cells by antibody-dependent cellular cytotoxicity without depleting CD38-expressing immune cells. Nonclinical data also demonstrated that the CD38-ARM molecule did not induce complement-dependent cytotoxicity (CDC) suggesting it is not likely to cause CDC in humans. Kleo’s 2019 ASH (Free ASH Whitepaper) posters can be viewed here and here.