On November 4, 2021 Aligos Therapeutics, Inc. (Nasdaq: ALGS), a clinical stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in viral and liver diseases, reported recent business progress and financial results for the third quarter ended, September 30, 2021 (Press release, Aligos Therapeutics, NOV 4, 2021, View Source [SID1234594423]).

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"The last quarter has been busy and productive for Aligos," said Lawrence Blatt, PhD, MBA, Chairman and CEO of Aligos. "We now have three of our four drug candidates targeting chronic hepatitis B, each of which has a distinct additive or synergistic mechanism of action, dosing in the clinic. Additionally, enrollment of CHB patients has improved, and our planned safety and viral kinetic data readout for the first three cohorts of STOPS remains on track for the first half of 2022. In parallel to this effort, the Aligos team was able to successfully file the CTA for our first drug candidate for the treatment of NASH, ALG-055009. The progress made by our team over the last quarter positions us well to be able to deliver key data for multiple programs in 2022."

Recent Business Progress
Aligos’ portfolio of drug candidates has continued to advance during the quarter with the following accomplishments achieved:

S-Antigen Transport-Inhibiting Oligonucleotide Polymers (STOPS; ALG-010133)
Our Phase 1b dose range finding trial (NCT04485663) evaluating subjects with CHB is ongoing. Enrollment in the second cohort, evaluating the 200 mg dose level, was completed and enrollment in the third cohort, evaluating a 400 mg dose level, is now underway. We remain on track to unblind and share topline safety and viral kinetic data, including Hepatitis B S-antigen (HBsAg) data, from the first three cohorts in the first half of 2022.
Capsid Assembly Modulator (CAM; ALG-000184)
Our Phase 1b dose range finding trial (NCT04536337) evaluating CHB subjects is ongoing. Enrollment of hepatitis B E-antigen (HBeAg) negative subjects into 50 and 100 mg dose cohorts is now complete. Enrollment of a 10 mg dose cohort is underway to determine the minimum efficacious dose. A cohort of HBeAg-positive CHB patients receiving a 100 mg dose for 28 days has also been fully enrolled in China.
A poster describing the safety, PK, and antiviral activity of the 50 and 100 mg doses of ALG-000184 given for 28 days in HBeAg-negative CHB subjects will be presented at The Liver Meeting (American Association for the Study of Liver Disease) later this month.
Antisense Oligonucleotide (ASO; ALG-020572)
Our Phase 1a/b multi-part study (NCT05001022) evaluating ALG-020572 in healthy volunteers and CHB subjects has recently commenced. Enrollment of healthy volunteers in the single ascending dose (SAD) portion of the study was initiated in October 2021.
Nonalcoholic Steatohepatitis (NASH; ALG-055009, a thyroid hormone receptor beta (THR-B) agonist)
The CTA for ALG-055009 was filed in France to enable a SAD and multiple ascending dose (MAD) study in healthy volunteers and hyperlipidemic subjects, respectively.
Study startup activities remain on track with dosing in healthy volunteers expected to begin in the fourth quarter of 2021.
Aligos has a broad CHB portfolio that targets different clinically validated mechanisms of action in the hepatitis B virus life cycle. The portfolio includes a STOPS molecule, ALG-000184, a class II CAM, ALG-010133, ALG-020572, an ASO, and ALG-020755, an siRNA drug candidate. The properties of these candidates indicate that their use in combination could yield potentially best-in-class treatment regimens that may achieve higher rates of functional cure than current standard of care. For each of these drug candidates, Aligos plans to initially establish proof of concept as monotherapy in Phase 1 dose range finding trials before evaluating them in combination in subsequent trials.

Financial Results for the Third Quarter 2021
Net losses for the three months ended September 30, 2021 were $33.1 million or basic and diluted net loss per common share of $(0.78) compared to net losses of $33.3 million or basic and diluted net loss per common share of $(11.00) for the three months ended September 30, 2020.

Research and development (R&D) expenses for the three months ended September 30, 2021, were $28.1 million compared with $17.3 million for the same period of 2020. The increase in R&D expenses for this comparative period is primarily attributable to increased expenses related to the Company’s continued development and manufacturing of ALG-010133, ALG-000184 and ALG-020572 clinical trial activities, as well as increases in salaries and employee-related expenses and preclinical programs. Total R&D stock-based compensation expense incurred for the three months ended September 30, 2021, was $1.9 million compared with $0.3 million for the same period for 2020.

General and administrative (G&A) expenses for the three months ended September 30, 2021, were $6.5 million compared with $4.2 million for the same period of 2020. The increase in G&A expenses for this comparative period is primarily attributable to higher employee-related costs associated with the growth of the Company’s operations and additional professional, legal and consulting services related to being a public company. Total G&A stock-based compensation expense incurred for the three months ended September 30, 2021, was $1.7 million compared with $0.7 million for the same period for 2020.

Cash, cash equivalents and investments totaled $242.7 million as of September 30, 2021 compared with $243.5 million as of December 31, 2020.

On November 4, 2021 Bellicum Pharmaceuticals, Inc. (Nasdaq: BLCM), a leader in developing novel, controllable cellular immunotherapies for cancers, reported financial results for the third quarter 2021 and provided an operational update (Press release, Bellicum Pharmaceuticals, NOV 4, 2021, View Source [SID1234594422]).

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"In the third quarter, Bellicum broadened the potential impact of its CaspaCIDe technology through an additional licensing agreement with MD Anderson," said Rick Fair, President and Chief Executive Officer. "We remain focused on the clinical studies of our next generation GoCAR-T cell therapies, and plan to provide future updates later this year and in the first quarter of 2022 on our progress for both programs. We are also thrilled to announce the appointment of Charity Scripture as Chief Development Officer to lead our clinical and regulatory efforts."

Program Highlights and Current Updates

BPX-601 GoCAR-T

Enrollment in the Phase 1/2 dose escalation clinical trial in patients with previously treated metastatic castration-resistant prostate cancer (mCRPC) is ongoing. Bellicum expects to announce the first interim data in mCRPC in the first quarter of 2022.
BPX-603 GoCAR-T

Enrollment is ongoing in the Phase 1/2 clinical trial for BPX-603 in patients with solid tumors that express human epidermal growth factor 2 (HER2), including breast, endometrial, ovarian, gastric, and colorectal cancers. BPX-603 is the company’s first dual-switch GoCAR-T product candidate, which incorporates Bellicum’s iMC activation and CaspaCIDe safety switch technologies. The company expects to announce initial Phase 1 data from this trial in the fourth quarter of 2021.
CaspaCIDe License Agreements

In September, Bellicum entered into an additional license agreement with The University of Texas MD Anderson Cancer Center covering certain intellectual property and technology rights regarding the company’s CaspaCIDe (inducible caspase-9, or iC9) safety switch and related technologies, and the use of rimiducid. Under this agreement, MD Anderson will have the option to incorporate CaspaCIDe into certain cellular therapy programs. Upon exercise of each option – typically expected to be upon out-license of an MD Anderson program that incorporates iC9 – Bellicum will receive an upfront payment and will be entitled to a percentage of certain consideration paid to MD Anderson by the third party. Bellicum also will receive a single-digit-percent royalty on global sales of the product. Concurrent with the execution of the agreement, Bellicum granted a license to CaspaCIDe for two programs and received an upfront fee of $5 million.
Charity Scripture Named Chief Development Officer Effective December 1, 2021

Dr. Scripture rejoins Bellicum in a full-time capacity after spending the last year as VP, Business and Development Operations at ACELYRIN, a private biopharmaceutical company. Previously, Dr. Scripture was Vice President, Clinical & Medical Affairs at Bellicum. Prior to joining Bellicum, Dr. Scripture held clinical development leadership positions at AbbVie/Stemcentrx and Pharmacyclics, and spent almost a decade with Amgen in oncology clinical development and medical affairs. Prior to joining industry Dr. Scripture worked in clinical practice at Dartmouth-Hitchcock Medical Center. Dr. Scripture holds a Bachelor of Science degree from Hamilton College, a Master’s Degree in Pharmacology and Toxicology from Dartmouth Medical School, and a Doctorate of Pharmacy degree from University of North Carolina at Chapel Hill, and completed a Clinical Pharmacology Drug Development fellowship at the National Cancer Institute.
Update on Nasdaq Compliance

On November 2, 2021, Nasdaq notified Bellicum that it had not regained compliance with the Market Value Rule by November 1, 2021, and unless the company requests a hearing before the Nasdaq Hearings Panel by November 9, 2021, the company’s securities will be delisted from Nasdaq. Bellicum intends to timely request a hearing before the Panel to appeal this determination, which the company expects will stay any further action by Nasdaq until the conclusion of the hearing process.
Financial Results for the Third Quarter and Nine Months Ended September 30, 2021

Revenues: Bellicum reported revenue of $5.0 million and $5.7 million for the three and nine months ended September 30, 2021, respectively, compared to $0.0 million during the nine months ended September 30, 2020. The increase in revenues in the nine months ended September 30, 2021 was primarily due to a license fee of $5.0 million received from MD Anderson for certain option and license rights to CaspaCIDe and related technologies, and $0.7 million earned from a supply agreement with Takeda Development for the supply of rimiducid for potential use in clinical trials of TAK-007 (CD19 CAR-NK cell therapy).

R&D Expenses: Research and development expenses were $6.3 million and $19.5 million for the three and nine months ended September 30, 2021, respectively, compared to $8.1 million and $30.3 million for the three and nine months ended September 30, 2020, respectively. The decrease in expenses in the third quarter of 2021 resulted primarily from reduced rivo-cel commercialization activities and the corporate restructuring implemented during the fourth quarter of 2020, which resulted in a reduction in force.

G&A Expenses: General and administrative expenses were $1.7 million and $5.5 million for the three and nine months ended September 30, 3021, respectively, compared to $4.2 million and $12.1 million for the three and nine months ended September 30, 2020, respectively. The decrease in expenses in the third quarter of 2021 was primarily due to the reduction in force.

Loss from Operations: Bellicum reported a loss from operations of $3.0 million and $19.8 million for the three and nine months ended September 30, 2021, respectively, compared to a loss from operations of $12.3 and $38.7 million for the three and nine months ended September 30, 2020, respectively. The results for the nine months ended September 30, 2021 include a net loss on dispositions of $0.5 million relating to the early termination of the South San Francisco office space during the first quarter of 2021. The results for the nine months ended September 30, 2020 included a net gain on dispositions of $3.8 million due to the sale of the Houston manufacturing facility in the second quarter of 2020. Cash used in operating activities was $17.1 million for the nine months ended September 30, 2021, compared to cash used in operating activities of $43.3 million for the nine months ended September 30, 2020.

Net Income/Loss: Bellicum reported net income of $1.2 million for the three months ended September 30, 2021 and a net loss of $12.2 million for the nine months ended September 30, 2021, compared to a net loss of $0.9 million and $26.5 million for the three and nine months ended September 30, 2020, respectively. The results in the third quarter of 2021 included revenue of $5.0 million from the license agreement with MD Anderson and a non-cash gain of $4.3 million recognized from the change in the derivative warrant and private placement option fair value liability.

Shares Outstanding: As of October 27, 2021, Bellicum had 8,397,803 shares of common stock and 452,000 shares of preferred stock outstanding. Each share of preferred stock is convertible into 10 shares of common stock.

Cash Position and Guidance: Bellicum reported cash and cash equivalents and restricted cash totaling $20.8 million as of September 30, 2021, compared to $37.0 million as of December 31, 2020. Based on current operating plans, Bellicum expects that current cash resources will be sufficient to meet operating requirements into the second quarter of 2022.

On November 4, 2021 Oncternal Therapeutics, Inc. (Nasdaq: ONCT), a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies, reported financial results for the third quarter of 2021. Oncternal management will host a webcast today at 5:00 p.m. ET to provide a business update and discuss its third quarter of 2021 financial results (Press release, Oncternal Therapeutics, NOV 4, 2021, View Source [SID1234594421]).

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"We are excited about the progress of our pipeline during this quarter, especially as we continue to advance towards a registration study for our lead asset, zilovertamab, which we believe can play a key role in the treatment paradigm of patients with mantle cell lymphoma," said James Breitmeyer, M.D., Ph.D., Oncternal’s President and CEO. "We are also very pleased to introduce ONCT-534, a pre-clinical first-in-class dual-action androgen inhibitor, as part of our pipeline. Tumor-resistance mechanisms related to the expression of splice variants such as AR-V7 represents an important unmet need for prostate cancer patients, and we are committed to developing new treatment options for them. Finally, our cell therapy program targeting ROR1 continues to move forward, with progress on both our lead candidate ONCT-808, an autologous CAR-T, and potential next-generation therapies based on NK cells."

Recent Highlights

Zilovertamab (ROR1 antibody, formerly cirmtuzumab or UC-961):

Interactions with FDA continue on potential registration pathways.
An abstract titled Phase 1b/2 Study of Cirmtuzumab and Ibrutinib in Mantle Cell Lymphoma (MCL) or Chronic Lymphocytic Leukemia (CLL) (Abstract 3534) (NCT0308887) has been accepted for a poster presentation at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in Atlanta on December 13, 2021. Abstracts are available on the ASH (Free ASH Whitepaper) website at www.hematology.org.
This abstract reflects early data from June 2021, shortly after our interim data was presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2021 Annual Meeting. The results remain encouraging and consistent with previous data releases and will be further updated with additional patients and follow-up at the ASH (Free ASH Whitepaper) meeting.
The investigator-sponsored study of zilovertamab and paclitaxel for metastatic or locally advanced, unresectable breast cancer at UC San Diego (NCT02776917) has completed enrollment and the results are expected to be presented at a scientific conference or in a publication.
The investigator-sponsored study of zilovertamab for treatment of patients with detectable CLL on venetoclax at UC San Diego (NCT04501939) is actively enrolling patients.
ONCT-216 (ETS inhibitor, formerly TK216):

Interim clinical data update for ONCT-216 in patients with relapsed or refractory Ewing sarcoma was accepted for oral presentation at the 2021 Connective Tissue Oncology Society (CTOS) Virtual Annual Meeting on November 13, 2021.
The Phase 2 expansion cohort targeting up to 21 Ewing sarcoma patients is active and enrolling patients, designed to evaluate clinical responses to single agent ONCT-216 using an optimized dosing regimen, treating for 28 days per cycle, to intensify the amount of ONCT-216 administered over time.
ROR1 Cell-Therapy Program:

Selected ONCT-808 as our lead autologous CAR-T targeting ROR1 candidate and made progress on key IND-enabling activities.
Initiated a collaboration with Celularity Inc. to evaluate placental derived T and NK-cell therapies targeting ROR1.
Formed a cell therapy scientific advisory board (SAB) with cross-disciplinary industry and academic experts to support the advancement of our ROR1 cell therapy pipeline.
Joined Karolinska Institutet’s NextGenNK Competence Center for the development of next generation NK cell-based cancer immunotherapies.
Dual-Action Androgen Inhibitor (DAARI) Program:

Selected ONCT-534 (formerly GTx-534) as our lead DAARI preclinical product candidate, based on significant new preclinical data and assessments. We believe ONCT-534 will address unmet medical needs related to tumor resistance to currently approved products for patients with advanced prostate cancer.
Presented preclinical in-vitro and in-vivo data as a virtual poster presentation at the AACR (Free AACR Whitepaper)-NCI-EORTC Virtual AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper) in October. The data presented showed that ONCT-534 binds to the AR-AF-1, or N-terminal domain of the androgen receptor (AR) and induces degradation of both AR full length proteins and AR-SV proteins, including the AR-V7 splice variant. ONCT-534 demonstrated potent anti-tumor activity in AR-V7 expressing tumor xenografts in an animal model.
Corporate:

Appointed Steven Hamburger, Ph.D. as Senior Vice President, Regulatory Affairs and Quality Assurance.
Expected Upcoming Milestones

Zilovertamab (ROR1 antibody) program
Clinical data update for patients with MCL and CLL treated with zilovertamab plus ibrutinib in the ongoing Phase 1b/2 study to be presented at the American Society for Hematology (ASH) (Free ASH Whitepaper) 2021 Annual Meeting in Atlanta in December 2021
Ongoing FDA interactions regarding potential registration pathways for zilovertamab in patients with MCL
ONCT-216 (ETS inhibitor) programs
Clinical data update for patients with relapsed or refractory Ewing sarcoma to be shared in an oral presentation at the Connective Tissue Oncology Society (CTOS) 2021 Virtual Annual Meeting in November 2021
ROR1 CAR-T program
IND submission in the first half of 2022
The Company will host an R&D Day on January 25, 2022 to provide a comprehensive update of its pipeline of product candidates and key development priorities, which will include key opinion leaders in the fields of MCL therapies, cellular immunotherapies, and androgen receptor resistance in prostate cancer
Third Quarter 2021 Financial Results

Our grant revenue was $2.1 million for the third quarter ended September 30, 2021. Our grant revenue is derived from a sub-award under a grant from the California Institute for Regenerative Medicine (CIRM) to UC San Diego, which was awarded to advance our Phase 1b/2 clinical trial evaluating zilovertamab in combination with ibrutinib for the treatment of patients with MCL or CLL, and from two grant awards received from the National Institutes of Health, or NIH, during the third quarter ended September 30, 2021 for up to $2.2 million to support pre-clinical and other research activities for our ONCT-216 and ONCT-534 programs, including $0.7 million payable to subawardees.

Our total operating expenses for the third quarter ended September 30, 2021 were $11.8 million, including $1.5 million in non-cash stock-based compensation. Research and development expenses for the quarter totaled $9.0 million, and general and administrative expenses for the quarter totaled $2.8 million. Net loss for the third quarter was $9.6 million, or a loss of $0.19 per share, basic and diluted.

As of September 30, 2021, we had $97.4 million in cash and cash equivalents. We believe these funds will be sufficient to fund our operations into 2023. As of September 30, 2021, we had approximately 49.4 million shares of common stock outstanding.

Management Webcast

As previously announced, Oncternal will host a webcast today, November 4, 2021, at 5:00 p.m. ET (2:00 p.m. PT). The live webcast will be available online at investor.oncternal.com. A replay of the webcast will be available beginning approximately one hour after the conclusion of the call and will remain available for at least 30 days thereafter.

On November 4, 2021 Alector, Inc. (Nasdaq: ALEC), a clinical-stage biotechnology company pioneering immuno-neurology, reported third quarter 2021 financial results and summarized recent portfolio and business updates. As of September 30, 2021, Alector’s cash, cash equivalents and investments totaled $777.9 million (Press release, Alector, NOV 4, 2021, View Source [SID1234594420]).

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"During the third quarter, Alector reached a significant inflection point, validating our immuno-neurology approach and advancing our lead programs as we strive to help patients with neurodegenerative diseases," said Arnon Rosenthal, Ph.D., co-founder and Chief Executive Officer of Alector. "We reported 12-month Phase 2 data for our lead therapeutic candidate, AL001, in which progranulin levels in frontotemporal dementia patients reverted to normal, and for the first time, showed encouraging early evidence of a slowing of disease progression across diverse datapoints. The signing of a collaborative agreement with GSK will further enable us to develop our progranulin franchise programs to their full potential in frontotemporal dementia, amyotrophic lateral sclerosis, Parkinson’s disease and Alzheimer’s disease. These achievements, alongside steady progress across our portfolio, are moving us ever closer to realizing our mission of harnessing the innate immune system to halt the destruction of neurodegenerative diseases."

Clinical Updates

Progranulin Franchise

In September, Alector initiated a Phase 2 clinical trial of AL001 in amyotrophic lateral sclerosis (ALS) patients with a C9orf72 genetic mutation. The six-month, randomized, double-blind, placebo-controlled, multicenter study is expected to enroll approximately 45 adult participants with C9orf72-associated ALS. The primary endpoint of the study is safety, tolerability, pharmacokinetics and pharmacodynamics of AL001, including plasma and cerebrospinal fluid (CSF) progranulin levels. The Phase 2 will also gather data on changes to multiple liquid biomarkers. ALS is the first of several indications beyond frontotemporal dementia where elevating progranulin levels is thought to have potential neuroprotective benefits.

AL001 received orphan drug designation from the European Commission for the treatment of frontotemporal dementia. Orphan drug designation in the EU may be granted for medicines in development for debilitating or life-threatening conditions that affect fewer than five in 10,000 people in the EU and provides benefits to the sponsor such as protocol assistance, reduced regulatory fees and extended market exclusivity. AL001 has previously received Fast Track and Orphan Drug designations from the U.S. Food and Drug Administration.

Twelve-month data from the open-label INFRONT-2 Phase 2 clinical trial of AL001 in patients with frontotemporal dementia with a progranulin mutation (FTD-GRN) were presented at the Alzheimer’s Association International Conference (AAIC) held in July 2021. AL001 showed a favorable safety profile, successful elevation of progranulin levels and encouraging evidence that treatment may slow disease progression.(1)

In July, Alector and GlaxoSmithKline (GSK) entered into a global collaboration to co-develop and co-commercialize AL001 and AL101 for the treatment of neurodegenerative diseases, including FTD-GRN, as well as other forms of FTD, ALS, Alzheimer’s disease and Parkinson’s disease. Under the terms of the agreement, Alector will receive $700 million in upfront payments, $500 million of which was received in August 2021 with a second payment to occur in the first quarter of 2022.
Alzheimer’s Disease Portfolio

Two posters were presented at the 2021 AAIC for Alector’s AL002 program providing data from a Phase 1 study in healthy volunteers and details on the design of the ongoing INVOKE-2 Phase 2 clinical trial. AL002 is Alector’s first-in-class monoclonal antibody that binds to the TREM2 receptor to optimize microglial activity in the brain. Alector is developing AL002 as a potential treatment for Alzheimer’s disease in collaboration with AbbVie.
Corporate News

Sam Jackson, M.D., MBA, and Linda Rubinstein joined Alector’s executive leadership team assuming the roles of interim Chief Medical Officer and interim Chief Financial Officer, respectively.
Dr. Jackson joined Alector in 2020 as Senior Vice President, Clinical Sciences overseeing Alector’s clinical science and clinical operations functions.
Ms. Rubinstein brings significant industry and financial experience to Alector, having served as Chief Financial Officer or interim Chief Financial Officer to numerous biotechnology companies.
Elizabeth Garofalo, M.D., a veteran biopharmaceutical executive with more than 25 years of experience in global clinical development and regulatory affairs with a focus on neurology, was appointed to Alector’s Board of Directors.
Third Quarter 2021 Financial Results

Revenue. Collaboration revenue for the quarter ended September 30, 2021, was $182.4 million, compared to $5.9 million for the same period in 2020. In August, Alector received $500 million as part of the collaboration agreement with GSK. The increase in 2021 third quarter revenue was mainly due to the recognition of $179.8 million of the upfront payment from GSK.

R&D Expenses. Total research and development expenses for the quarter ended September 30, 2021, were $43.1 million, compared to $43.8 million for the quarter ended September 30, 2020. The decrease in R&D expenses was attributable to timing of manufacturing of drug supply and clinical trials start-up costs.

G&A Expenses. Total general and administrative expenses for the quarter ended September 30, 2021, were $13.0 million, compared to $15.8 million for the same period in 2020. This decrease was primarily due to reduced legal fees.

Net Income (Loss). For the quarter ended September 30, 2021, Alector reported a net income of $126.6 million, or $1.56 net income per share, compared to a net loss of $52.7 million, or $0.67 net loss per share, for the same period in 2020.

Cash Position. Cash, cash equivalents, and marketable securities were $777.9 million as of September 30, 2021.

On November 4, 2021 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the third quarter ended September 30, 2021 (Press release, Emergent BioSolutions, NOV 4, 2021, View Source [SID1234594419]).

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"Emergent’s core products and service businesses remain strong as evidenced by our accomplishments this quarter," said Robert G. Kramer, president and CEO of Emergent BioSolutions. "We have secured renewals of multiple medical countermeasure supply contracts, made pipeline advancements, implemented organizational enhancements that better serve our customers, and are pursuing new business prospects. We are confident in our 2024 growth plan and remain focused on our mission – to protect and enhance life."

Q3 2021 AND OTHER RECENT BUSINESS

Announced a mutual agreement with the U.S. Department of Health and Human Services (HHS) to terminate the Company’s 2012 Center for Innovation in Advanced Development and Manufacturing (CIADM) contract to establish a public-private partnership for pandemic preparedness, along with all associated task orders, including the 2020 task order to reserve capacity and expand manufacturing for third-party COVID-19 vaccine and therapeutic candidates
Initiated a pivotal Phase 3 safety and immunogenicity study to evaluate CHIKV VLP, the company’s single-dose chikungunya virus virus-like particle vaccine candidate
Secured a multi-year development and manufacturing agreement with Providence Therapeutics, valued at approximately $90 million, for its mRNA COVID-19 vaccine candidate
Received a contract modification to the 2016 AV7909 (Anthrax Vaccine Adsorbed with Adjuvant) development and procurement contract with the U.S. government, valued at approximately $399 million, to deliver doses of AV7909 to the Strategic National Stockpile (SNS) over 18 months
Received Orphan Drug designation from the U.S. Food and Drug Administration (FDA) for AV7909
Announced inclusion of the company’s SARS-CoV-2 Immune Globulin Intravenous (Human) (COVID-HIG) plasma-derived therapy in a Phase 3 safety and efficacy study, INSIGHT-012, sponsored by the National Institute of Allergy and Infectious Diseases of the National Institutes of Health, evaluating hyperimmune intravenous immunoglobulin for outpatient COVID-19 treatment
Q3 2021 FINANCIAL PERFORMANCE (1)

Product Sales, net
NARCAN Nasal Spray
For Q3 2021, revenues from NARCAN (naloxone HCI) Nasal Spray increased $44.5 million as compared to Q3 2020. The increase is driven by continued growth in unit sales to the U.S. public interest and commercial retail markets as well as customer channels in Canada.

ACAM2000
For Q3 2021, revenues from ACAM2000 (Smallpox (Vaccinia) Vaccine, Live) increased $79.7 million as compared to Q3 2020. The increase is largely driven by the timing of deliveries to the U.S. government (USG), specifically the Strategic National Stockpile (SNS). The revenues recognized in Q3 2021 are a result of a recent option exercise in July 2021 by the USG valued at approximately $182 million. The Company expects to deliver the remaining units under this option exercise during the fourth quarter of 2021.

Anthrax vaccines
For Q3 2021, revenues from Anthrax vaccines decreased $58.3 million as compared to Q3 2020. The decrease is largely driven by timing of deliveries to the USG, specifically the SNS. The Company received an AV7909 contract modification in September 2021 wherein the Company expects to deliver additional doses of AV7909 over 18 months from the date of execution of the contract modification valued at approximately $399 million.

Other (4)
For Q3 2021, revenues from other product sales were consistent as compared to Q3 2020. During the quarter, an increase in sales of VIGIV [Vaccinia Immune Globulin Intravenous (Human)] was offset by a decline in sales of BAT [Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G) – (Equine)], largely driven by timing of deliveries to the USG, specifically the SNS.

CDMO Services
For Q3 2021, revenue from contract development and manufacturing services increased $59.5 million as compared to Q3 2020. This increase is largely due to arrangements with innovator manufacturers to address the COVID-19 pandemic, specifically Johnson & Johnson, as well as out-of-period adjustments (see discussion below entitled "Out-of-Period Adjustments").

CDMO Leases
During Q3 2021, the Company determined that it was necessary to classify the public-private partnership with the Biomedical Advanced Research and Development Authority (BARDA) as a lease rather than a stand-ready arrangement. This change has been considered as part of the immaterial out-of-period adjustment (see discussion below entitled "Out-of-Period Adjustments"). As such, the Company is now separately disclosing lease revenues on the statement of operations. For Q3 2021, revenue from contract development and manufacturing leases decreased $175.0 million largely due to a reduction in lease revenues associated with the public-private partnership with BARDA as the Company recognized revenue of $85.9 million in Q3 2020 and recorded a reversal of revenue of $86.0 million during Q3 2021 based on the lack of cash collections under the arrangement in recent months. In November 2021, the Company and BARDA mutually terminated this arrangement ending the public-private partnership with BARDA. As a result of the termination, the Company expects to record CDMO lease revenue in the fourth quarter 2021 to reflect the remaining unrecognized contract value and associated payments of approximately $155.7 million.

Contracts and Grants
For Q3 2021, revenues from contracts and grants decreased $9.0 million as compared to Q3 2020. The decrease is primarily due to a decrease in activities associated with the COVID-HIG therapeutic product candidate. As a result of the CIADM base contract termination, the Company expects to record approximately $60.0 million of contracts and grants revenue during the fourth quarter 2021.

Operating Expenses

Cost of Product Sales
For Q3 2021, cost of product sales decreased $17.0 million as compared to Q3 2020. The decrease in cost is primarily due to significant items in the prior year that did not recur in the current period offset by higher volume of product sales, specifically NARCAN Nasal Spray and ACAM2000. During Q3 2020, the Company incurred charges of $30.2 million related to the Company’s contingent consideration liabilities and $13.8 million related to a write-down of inventory balances related to the Company’s travel health vaccines.

Cost of CDMO
For Q3 2021, cost of CDMO increased $85.5 million as compared to Q3 2020. The increase in cost is primarily due to increases in CDMO services and additional investments in manufacturing and quality systems and capabilities, largely from the Company’s arrangements to address the COVID-19 pandemic and out-of-period adjustments (see discussion below entitled "Out-of-Period Adjustments").

Research and Development
For Q3 2021, research and development expenses decreased $34.8 million as compared to Q3 2020. The decrease is primarily due to a decline in costs associated with the Company’s COVID-HIG therapeutic product candidate and a non-recurring charge for an impairment of the Company’s in-process research and development (IPR&D) intangible asset of $29.0 million during Q3 2020.

Selling, General and Administrative
For Q3 2021, selling, general and administrative expenses increased $6.6 million due to organizational growth in headcount and professional services in support of the expansion of the Company’s business operations.

Out-of-Period Adjustments
During the three months ended September 30, 2021, the Company made immaterial out-of-period adjustments related to its revenue recognition policy for contract development and manufacturing (CDMO) services and classification of the BARDA public-private partnership as a lease. These adjustments resulted in out-of-period increases of $38.3 million in CDMO service revenue, $36.9 million of costs of product sales and CDMO services for the three months ended September 30, 2021 with a net impact to income before income taxes of $1.4 million.

Additional Financial Information
Product Margin and Adjusted Product Margin (2)

For Q3 2021, product margin increased $85.3 million as compared to Q3 2020. Adjusted product margin increased $42.2 million as compared to Q3 2020. The increase in gross margin is primarily due to the $44.0 million of charges related to inventory write-offs of the travel health vaccines and the Company’s contingent consideration liabilities which were not recurring in Q3 2021. Adjusted product margin percent is consistent from Q3 2021 as compared to Q3 2020.

For Q3 2021, CDMO margin decreased $26.0 million as compared to Q3 2020. Adjusted CDMO margin decreased $29.1 million as compared to Q3 2020. The decline in CDMO margin and adjusted CDMO margin is primarily due to an increase in CDMO service activities, increase in costs due to out-of-period adjustments (see discussion below entitled "Out-of-Period Adjustments") and additional costs to support remediation efforts for our COVID-19 manufacturing activities.

For Q3 2021, capital expenditures increased largely due to the Company’s continued investments associated with increased capacity and capabilities at the Company’s Rockville facility. The increase in gross capital expenditures was offset by reimbursements of $5.7 million related to arrangements funded by the USG.

2021 FINANCIAL FORECAST

For full year 2021, the Company’s updated forecast includes the following financial metrics:

The Company’s financial forecast for 2021 includes the following additional considerations:

Revised Considerations

Gross margin reflects the impact of the Q3 2021 performance as well as expectations for the remainder of the year.
CDMO services revenue reflects the impact of the mutual agreement with HHS to end the Company’s involvement in the CIADM program and to close out remaining obligations under the CIADM base contract and related task orders. This agreement reduces the total contract value to be realized under the 2020 task order to $470.9 million from $650.8 million.
Unchanged Considerations

Narcan Nasal Spray revenues assume the naloxone market remains competitive and incorporates the impact of at least one new branded entrant into the market (one branded competitor entered the market during the third quarter of 2021), as well as no generic entrant into the market prior to the anticipated appellate decision related to the pending patent litigation, which is expected by the end of 2021.
Anthrax vaccines revenue is expected to continue to primarily reflect procurement of AV7909 under the terms of the Company’s existing contract with BARDA at a more normalized annual level.
ACAM2000vaccine revenues incorporate the expected full delivery of product under the $182 million option exercise received in July 2021 as well as other international sales.
CDMO services revenue reflects the continued manufacturing of Johnson & Johnson’s COVID-19 vaccine bulk drug substance. On July 29th, the Company announced that it was informed by the FDA that it can resume production at its Bayview manufacturing facility.
Total revenues, specifically other product sales, are expected to be impacted due to the Company’s assumption that a new raxibacumab contract will be awarded later than previously planned.
R&D expenses are expected to reflect continued pipeline progress across the portfolio, including the assumption of at least one Phase 3 launch and one Biologics License Application (BLA)/Emergency Use Authorization (EUA) filing.
Capital expenditures, net of reimbursement, are expected to be in a range of 8% to 9% of total revenues, reflecting ongoing investments in capacity and capability expansions in support of the Company’s CDMO services business and product portfolio.
FOOTNOTES

(1) All financial information incorporated within this release is unaudited.
(2) See "Reconciliation of Net Income to Adjusted Net Income," "Reconciliation of Net Income to Adjusted EBITDA," "Reconciliation of Product Margin and Adjusted Product Margin," "Reconciliation of CDMO Margin and Adjusted CDMO Margin" and "Reconciliation of Net Research and Development Expenses" for a definition of terms and the reconciliation tables.
(3) Product sales, net are reported net of variable consideration including returns, rebates, wholesaler fees and prompt pay discounts.
(4) Other can include a combination of sales of any of the following products: BAT, VIGIV, Anthrasil, raxibacumab, RSDL, Trobigard, Vivotif, and Vaxchora.
(5) CDMO backlog is defined as estimated remaining contract value as of the indicated period pursuant to signed contracts, the majority of which is expected to be recognized over the next 24 months.
(6) CDMO new business is defined as initial value of contracts secured as well as incremental value of existing contracts modified within the indicated period and is incorporated into Backlog.
(7) CDMO opportunity funnel is defined as proposal values from new work with new customers, new work with existing customers and extensions/expansions of existing contracts with existing customers that, if converted to new business, the majority of which is expected to be realized over the next 24 months. This excludes any value associated with an extension of the commercial supply agreement (CSA) with Johnson & Johnson.

CONFERENCE CALL, PRESENTATION SUPPLEMENT AND WEBCAST INFORMATION

Company management will host a conference call at 5:00 pm (Eastern Time) today, November 4, 2021, to discuss these financial results. The conference call and presentation supplement can be accessed from the Company’s website or through the following