On May 12, 2022 SELLAS Life Sciences Group, Inc. (NASDAQ: SLS) ("SELLAS" or the "Company"), a late-stage clinical biopharmaceutical company focused on the development of novel therapies for a broad range of cancer indications, reported its financial results for the quarter ended March 31, 2022 and provided a business update (Press release, Sellas Life Sciences, MAY 12, 2022, View Source [SID1234614350]).

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"SELLAS achieved several key milestones in the first four months of 2022, including expanding our development pipeline and strengthening our balance sheet," said Angelos Stergiou, M.D., Sc.D. h.c., President and Chief Executive Officer of SELLAS. "We entered into an exclusive license agreement with GenFleet Therapeutics (Shanghai), Inc. ("GenFleet") granting us exclusive rights for the development and commercialization of GFH009, a highly selective and potentially first and best in class small molecule cyclin-dependent kinase 9 ("CDK9") inhibitor, across all therapeutic and diagnostic uses worldwide outside of Greater China. We believe that GFH009 is a complementary strategic fit to our overall clinical development plans and provides us with an opportunity to further advance into the market for acute myeloid leukemia ("AML") therapeutics. GFH009 affords us the potential to treat active AML disease while our lead clinical candidate, galinpepimut-S (GPS), is potentially used in the maintenance setting in AML. The in-license of GFH009 also provides us an opportunity to address a very important pediatric market of soft tissue sarcomas as well as other cancers."

Dr. Stergiou added, "During the first quarter, we continued to advance the Phase 3 REGAL trial for our lead asset, GPS and, in April, we also launched an expanded access program for GPS in response to multiple requests from physicians with which we hope to potentially improve clinical outcomes for patients and their families. Subsequent to the quarter, we fortified SELLAS’ balance sheet with the closing of a public offering with gross proceeds of $25 million. The funds position us to advance our clinical programs for both GPS and GFH009. We are pleased by the progress we made over the first quarter of 2022 and remain steadfast in our mission to develop innovative treatments and improve the standard of care available to patients. With GPS and GFH009, we now have two significant clinical assets in our pipeline, with several opportunities to develop and potentially commercialize, cancer drugs that can prolong the lives of patients battling cancer."

Pipeline Updates:

Galinpepimut-S (GPS)
Expanded Access Program: In April 2022, the Company launched a pre-approval access/expanded access program ("EAP") with SELLAS’ lead asset, GPS, for treating patients suffering from AML. For more information on the GPS EAP, please visit the PIPELINE page at www.sellaslifesciences.com.

Phase 3 REGAL Study: SELLAS continued to progress enrollment of patients and activation of additional sites in the United States, Europe, and Asia in the first quarter of 2022. The Company believes that enrollment for the REGAL study will be completed in late 2022 or early in the first quarter of 2023 and the planned interim analysis will occur by the end of the first half of 2023, provided that its statistical assumptions and assumptions regarding the impact of COVID-19 on the operations of clinical sites as well as the duration of the pandemic remain unchanged.

Phase 1/2 GPS Study in Combination with Merck’s KEYTRUDA: In February 2022, the Company completed enrollment in the Phase 1/2 clinical trial of GPS in combination with Merck’s anti-PD-1 therapy, KEYTRUDA (pembrolizumab), in second or third line Wilms Tumor-1 (WT1+) relapsed or refractory metastatic ovarian cancer. Data from 15 patients is currently being reviewed by SELLAS and Merck, with top-line results expected by mid-2022 and a final data analysis for all evaluable patients expected by the end of 2022.

Phase I GPS Study in China: In March 2022, an IND application to initiate the first clinical trial in China for GPS was approved by China’s National Medical Products Administration ("NMPA"), which triggered a milestone payment of $1 million received by the Company in May 2022. The IND, for a small Phase 1 clinical trial investigating safety, was submitted by SELLAS’ partner in China, 3D Medicines Inc. ("3D Medicines"), with 3D Medicines expecting to initiate the trial by mid-2022. 3D Medicines’ current clinical development plan provides for initiation of a Phase 2 clinical trial following receipt of satisfactory safety data from the Phase 1 clinical trial; the initiation of the Phase 2 clinical trial will also trigger a milestone payment to SELLAS.

New Patent Allowance: In February 2022, the U.S. Patent and Trademark Office issued a Notice of Allowance for a patent application covering certain WT1-targeting peptides, in combination with other molecules such as other peptides and immunomodulating compounds, useful for treatment of WT1-expressing cancers. The patent application covers WT1-targeting peptides linked to other molecules and is expected to be granted later this year. The patent will have a term extending to at least 2026. This patent complements the Company’s existing composition of matter patents covering GPS peptides which expire in 2033 not including any potential extensions.
GFH009
In-License: On March 31, 2022 the Company announced it had entered into an exclusive license agreement with GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), that grants rights to SELLAS for the development and commercialization of GFH009, a highly selective small molecule CDK9 inhibitor, across all therapeutic and diagnostic uses worldwide outside of Greater China (mainland China, Hong Kong, Macau and Taiwan). CDK9 activity has shown a negative correlation with overall survival in a number of cancer types, including hematologic cancers, such as AML and lymphomas, as well as solid cancers, such as osteosarcoma, pediatric soft tissue sarcomas, and melanoma, and endometrial, lung, prostate, breast and ovarian cancer.

Ongoing Phase 1 Clinical Trial: In April 2022, SELLAS announced that initial data from the first four dose levels of the ongoing Phase 1 dose-escalating clinical trial of GFH009 show a significant anti-leukemic effect at the 9mg and 15mg dose levels given twice a week in AML patients resistant to standard-of-care treatments, with two patients refractory to, or relapsed after, venetoclax treatment experiencing greater or equal to a 50 percent decrease in bone marrow blasts following GFH009 monotherapy. There have been no dose-limiting toxicities, including no grade 3/4 neutropenia (an abnormally low count of a type of white blood cells), in the first four dose levels (2.5mg, 4.5mg, 9mg and 15 mg) with the twice-weekly GFH009 dosing. The first AML patient has been enrolled in the fifth dose level (22.5mg twice a week) cohort. The last planned dose level in this clinical trial is 30mg.
Corporate Highlights:

Underwritten Public Offering: On April 5, 2022, the Company consummated an underwritten public offering providing gross proceeds to the Company of $25.0 million, before deducting underwriting discounts and commissions and offering expenses.

Bolstered Leadership Team: In March 2022, SELLAS appointed Robert Francomano as Chief Commercial Officer. In January 2022, the Company promoted John Burns to Senior Vice President, Finance, and Chief Accounting Officer.
Settlement of Legacy Galena Litigations: In February 2022, SELLAS received the final court approval of the settlement of securities litigation relating to the Company’s predecessor, Galena. This marked the end to all litigation related to activities of Galena.
Financial Results for the First Quarter 2022:

Licensing revenue: Licensing revenue for the first quarter of 2022 was $1.0 million, as compared to $5.7 million for the same period in 2021. Licensing revenue in the first quarter of 2022 was related to China’s NMPA approval of an IND application by 3D Medicines and licensing revenue during the first quarter of 2021 was related to the initial transaction price of the license agreement with 3D Medicines, which was recognized over a period of time.

R&D Expenses: Research and development expenses for the first quarter of 2022 were $4.6 million, as compared to $4.3 million for the same period in 2021. The increase was primarily due to an increase in clinical trial expenses for the ongoing Phase 3 clinical trial of GPS in AML and personnel related expenses due to increased headcount, partially offset by a decrease in manufacturing expenses due to the timing of the manufacture of registration batches of GPS in the prior year.

Acquired In-Process Research and Development: Acquired in-process research and development for the first quarter 2022 was $10.0 million, related to the in-licensing of GFH009. There was no acquired in-process research and development during the first quarter of 2021.

G&A Expenses: General and administrative expenses for the first quarter of 2022 were $3.0 million, as compared to $3.6 million for the same period in 2022. The decrease was primarily due to a decrease in amortization expense associated with the capitalized contract acquisition costs of the 3D Medicines license agreement and a decrease in professional service fees, partially offset by an increase in personnel related expenses due to increased headcount.

Net Loss: Net loss was $16.7 million for the first quarter of 2022, or a basic and diluted loss per share of $1.05, as compared to a net loss of $2.4 million for the same period in 2021, or a basic and diluted loss per share of $0.16.

Cash Position: As of March 31, 2022, cash and cash equivalents totaled approximately $14.3 million. Subsequent to March 31, 2022, the Company consummated an underwritten public offering providing gross proceeds to the Company of $25.0 million, before deducting underwriting discounts and commissions and offering expenses, and received a $1.0 million milestone payment from 3D Medicines.

On May 12, 2022 Kezar Life Sciences, Inc. (Nasdaq: KZR), a clinical-stage biotechnology company discovering and developing breakthrough treatments for immune-mediated and oncologic disorders, reported financial results for the first quarter ended March 31, 2022 and provided a business update (Press release, Kezar Life Sciences, MAY 12, 2022, View Source [SID1234614349]).

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"I want to thank my colleagues at Kezar for their excellent execution across both of our novel programs so far this year," said John Fowler, Kezar’s Co-founder and CEO. "We are excited to present the topline results from our Phase 2 MISSION trial in lupus nephritis this June and remain committed to exploring zetomipzomib’s potential in inflammatory diseases with high unmet need. Our strengthened balance sheet is key in supporting both of our programs, including our Phase 1 trial of KZR-261 in solid tumors."

Zetomipzomib: Selective Immunoproteasome Inhibitor

MISSION – Phase 2 clinical trial of zetomipzomib (KZR-616) in patients with lupus nephritis (LN) (NCT03393013)

In November 2021, Kezar reported interim data from the MISSION Phase 2 open-label trial in patients with active, proliferative LN. The interim data showed that, of the five patients who completed the full 24 weeks of weekly treatment with zetomipzomib 60mg doses, two achieved partial renal responses (PRRs) and two achieved complete renal responses (CRRs). The primary efficacy endpoint for the trial is the number of patients achieving a renal response measured by a 50% or greater reduction in UPCR at the end of treatment compared to baseline.
Kezar reiterates prior guidance and expects to report Phase 2 topline data in June 2022
An abstract featuring zetomipzomib has been selected for poster presentation as part of the EULAR Science Exhibit session at the upcoming Annual European Congress of Rheumatology (EULAR), taking place June 1-4, 2022, in Copenhagen, Denmark. The virtual presentation will be available beginning Wednesday, June 1, 2022, at 2:00 am Eastern Time through July 31, 2022.
POS0715: Treatment of SLE Patients with Zetomipzomib (KZR-616), a Selective Inhibitor of the Immunoproteasome, Results in Circulating Gene Expression, Protein Level, and Immune Cell Phenotypic Changes with Potential Correlations to Clinical Response, presented by Andrea Fan, PhD, Vice President, Head of Biology and Translational Research, Kezar Life Sciences
PRESIDIO – Phase 2 clinical trial of zetomipzomib (KZR-616) in patients with active dermatomyositis (DM) or polymyositis (PM) (NCT04033926)

On May 3, 2022, Kezar reported topline data from the PRESIDIO Phase 2 clinical trial of zetomipzomib in patients with DM (n=13) and PM (n=12). 20 of the 25 patients enrolled in the study completed end-of-treatment (Week 32). Topline results from PRESIDIO showed that most DM and PM patients saw clinically meaningful improvements in total improvement score (TIS), but zetomipzomib demonstrated no significant differentiation from placebo. The overall safety and tolerability of zetomipzomib was favorable and consistent with previous results.
KZR-616-003E (NCT04628936) is an open-label extension (OLE) study available to patients who completed 32 weeks in the PRESIDIO trial. Following completion of PRESIDIO, 18 out of 20 patients enrolled in the OLE. For the first time, patients have the option to self-administer zetomipzomib in the OLE. As of the release date, active participation in the OLE ranged from 2 to 77 weeks, and six patients had discontinued for reasons unrelated to zetomipzomib. No additional safety or tolerability issues have been observed, and mean TIS scores have improved over scores observed at the 32-week conclusion of PRESIDIO.
KZR-261: Protein Secretion Inhibitor

KZR-261-101 – Phase 1 clinical trial of KZR-261 in patients with locally advanced or metastatic solid malignancies (NCT05047536)

KZR‑261 is a novel, broad-spectrum agent that acts through direct interaction and inhibition of the Sec61 translocon. In preclinical studies, KZR-261 has been shown to induce a direct anti-tumor effect as well as modulate the tumor microenvironment, including enhancing anti-tumor immune responses.
The Phase 1 clinical trial of KZR-261 is being conducted in two parts: dose escalation and dose expansion in subjects with selected tumor types. The trial is designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well as to explore the preliminary anti-tumor activity of KZR-261 in patients with locally advanced or metastatic disease.
At the American Association of Cancer Research (AACR) (Free AACR Whitepaper) 2022 Annual Meeting, held in April 2022 in New Orleans, LA, Kezar presented data on its proprietary small molecule inhibitors of the Sec61 translocon, specifically KZR-834, a working analog of KZR-261.
Financial Results

Cash, cash equivalents and marketable securities totaled $242.6 million as of March 31, 2022, compared to $208.4 million as of December 31, 2021. The increase was primarily attributable to net proceeds from the issuance of common stock under the "at-the-market" Sales Agreement with Cowen and Company, LLC, net of cash used by the company in operations to advance its clinical stage programs and preclinical research and development.
Research and development expenses for the first quarter of 2022 increased by $1.7 million to $11.0 million compared to $9.3 million in the first quarter of 2021. This increase was primarily related to advancing the KZR-616 clinical program and the KZR-261 Phase 1 clinical trial.
General and administrative expenses for the first quarter of 2022 increased by $1.1 million to $4.9 million compared to $3.8 million in the first quarter of 2021. The increase was primarily due to an increase in personnel expenses, including non-cash stock-based compensation.
Net loss for the first quarter of 2022 was $16.0 million, or $0.26 per basic and diluted common share, compared to a net loss of $13.0 million, or $0.25 per basic and diluted common share, for the first quarter of 2021.
Total shares of common stock outstanding were 59.6 million shares as of March 31, 2022. Additionally, there were outstanding pre-funded warrants to purchase 3.8 million shares of common stock at an exercise price of $0.001 per share and outstanding options to purchase 8.9 million shares of common stock at a weighted average exercise price of $7.94 per share as of March 31, 2022.
About Zetomipzomib (KZR-616)

Zetomipzomib (KZR-616) is a novel, first-in-class, selective immunoproteasome inhibitor with broad therapeutic potential across multiple autoimmune diseases. Preclinical research demonstrates that selective immunoproteasome inhibition results in a broad anti-inflammatory response in animal models of several autoimmune diseases, while avoiding immunosuppression. Data generated from Phase 1 clinical trials provide evidence that zetomipzomib exhibits a favorable safety and tolerability profile for development in severe, chronic autoimmune diseases.

About Lupus Nephritis

Lupus nephritis (LN) is one of the most serious complications of systemic lupus erythematosus (SLE). LN is a disease comprising a spectrum of vascular, glomerular and tubulointerstitial lesions and develops in approximately 50% of SLE patients within 10 years of their initial diagnosis. LN is associated with considerable morbidity, including an increased risk of end-stage renal disease requiring dialysis or renal transplantation and an increased risk of death. There are limited approved therapies for the treatment of LN. Management typically consists of induction therapy to achieve remission and long-term maintenance therapy to prevent relapse.

About KZR-261 and the Inhibition of Protein Secretion

KZR-261 is a first-in-class small molecule compound, derived from Kezar’s research and discovery platform of protein secretion pathway inhibitors. This broad-spectrum anti-tumor agent directly targets the Sec61 translocon and inhibits multiple cancer drivers both within tumor cells and the tumor microenvironment. A Phase 1 clinical trial is underway for the treatment of solid tumor malignancies.

Kezar’s drug discovery platform of protein secretion pathway inhibitors is a novel approach with broad application. The protein secretion pathway is a highly conserved and ubiquitously functioning pathway in all cells in the body and involves a conserved protein complex called the Sec61 translocon, the target of Kezar’s compounds. In preclinical models, Kezar’s library of protein secretion inhibitors have demonstrated broad activity with far-reaching potential in oncology, immune-oncology, and autoimmunity.

On May 12, 2022 Equillium, Inc. (Nasdaq: EQ), a clinical-stage biotechnology company focused on developing novel therapeutics to treat severe autoimmune and inflammatory disorders with high unmet medical need, reported financial results for the first quarter 2022 and provided an update on its corporate development and clinical programs (Press release, Equillium, MAY 12, 2022, View Source [SID1234614348]).

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"It’s been a transformative start to the year, leading to significant enhancements in how we are building value going forward," said Bruce Steel, chief executive officer at Equillium. "Since the beginning of the year we announced the acquisition of Bioniz Therapeutics, adding two first-in-class therapeutic candidates to our pipeline and an underlying novel drug discovery platform. This enables us to further expand our approach to business development and partnering efforts and significantly adds to our future operational milestones and pending data catalysts. In March we also announced the initiation of our Phase 3 EQUATOR study of itolizumab in first-line acute graft-versus-host disease and look forward to interim data from the Phase 1b EQUALISE study of itolizumab in patients with lupus nephritis expected mid-year."

Clinical Highlights Since the Beginning of Q1 2022:

Initiated Phase 3 EQUATOR study of itolizumab in first-line acute graft-versus-host disease (aGVHD), a randomized, double-blind global pivotal study assessing the efficacy and safety of itolizumab versus placebo as a first-line therapy for aGVHD in combination with corticosteroids that will enroll up to 200 patients. The primary endpoint assessment is complete response rate at Day 29, with key secondary endpoints of overall response rate at Day 29 and durability of complete response rate from Day 29 through Day 99.
Published data in the Journal of Clinical Investigation confirming the role of T cells activated by the CD6-ALCAM pathway in the development of lupus nephritis.
Corporate Highlights Since the Beginning of Q1 2022:

Acquired Bioniz Therapeutics, a privately held clinical-stage biotechnology company, significantly expanding the company’s pipeline of novel immunomodulatory drug candidates, including two first-in-class clinical-stage assets (EQ101 & EQ102) and a proprietary product discovery platform. Lead assets are multi-specific inhibitors of key disease-driving, clinically validated cytokine targets aimed at addressing unmet needs across a range of immuno-inflammatory indications.
Appointed Barbara Troupin, M.D., formerly of Myokardia, ERX Pharmaceuticals, Aquinox and Apricus Biosciences to Equillium’s board of directors.
Anticipated Upcoming Milestones & Catalysts:

Itolizumab – EQUALISE Phase 1b study: interim data from the Type B part of the study in patients with lupus nephritis expected mid-2022
EQ101 – Phase 2 study in alopecia areata initiation expected 2H 2022
EQ102 – Phase 1 study initiation expected in 2H 2022, anticipated to include normal healthy volunteers and celiac disease patients
First Quarter 2022 Financial Results

Research and development (R&D) expenses for the first quarter of 2022 were $10.8 million, compared with $5.9 million for the same period in 2021. The increase was primarily due to greater clinical development expenses, driven by start-up expenses related to the EQUATOR study, greater employee compensation and benefit expenses driven by increased headcount, greater non-clinical research costs, and transaction costs associated with the Bioniz acquisition.

Acquired in-process research and development (IPR&D) expenses for the first quarter of 2022 were $23.0 million resulting from the accounting for the Bioniz acquisition. Those IPR&D expenses were comprised of $22.5 million in non-cash expense associated with the fair value of the equity consideration and $0.5 million for the net liabilities acquired. There were no IPR&D expenses in the first quarter of 2021.

General and administrative (G&A) expenses for the first quarter of 2022 were $3.5 million, compared with $2.8 million for the same period in 2021. The increase was primarily due to greater employee compensation and benefits, greater legal fees and consulting expenses.

Net loss for the first quarter of 2022 was $37.4 million, or $(1.17) per basic and diluted share, compared with a net loss of $9.0 million, or $(0.33) per basic and diluted share for the same period in 2021. The increase in net loss was largely attributable to greater operating expenses, especially the acquired IPR&D expenses.

Cash used in operations for the first quarter of 2022 was $12.1 million compared to $10.2 million in the fourth quarter of 2021. Key drivers of the quarter-over-quarter increase in cash used in operations include the 2021 annual bonuses that were paid in the first quarter of 2022, increased payments related to non-clinical research, and payments related to the Bioniz acquisition, partially offset by our annual directors and officers insurance premiums which were paid in the fourth quarter of 2021.

Cash, cash equivalents and short-term investments totaled $68.8 million as of March 31, 2022, compared to $80.7 million as of December 31, 2021. Of that $11.9 million reduction in cash and investments in the first quarter of 2022, approximately $1.0 million was estimated to be one-time costs related to the Bioniz acquisition transaction. Equillium believes that its cash and investments will be sufficient to fund operations for at least the next 12 months.

About Itolizumab

Itolizumab is a clinical-stage, first-in-class anti-CD6 monoclonal antibody that selectively targets the CD6-ALCAM pathway. This pathway plays a central role in modulating the activity and trafficking of T cells that drive a number of immuno-inflammatory diseases. Equillium acquired rights to itolizumab through an exclusive partnership with Biocon Limited.

About Multi-Cytokine Platform: EQ101 & EQ102

Our proprietary multi-cytokine platform (MCP) generates rationally designed composite peptides that selectively block key cytokines at the shared receptor level targeting pathogenic cytokine redundancies and synergies while preserving non-pathogenic signaling. This approach provides multi-cytokine inhibition at the receptor level and is expected to avoid the broad immuno-suppression and off-target safety liabilities that may be associated with other therapeutic classes, such as JAK inhibitors. Many immune-mediated diseases are driven by the same combination of dysregulated cytokines, and we believe identifying the key cytokines for these diseases will allow us to target and develop customized treatment strategies for multiple autoimmune and inflammatory diseases.
Current MCP assets include EQ101, a first-in-class, tri-specific inhibitor of IL-2, IL-9 and IL-15, and EQ102, a first-in-class, selective inhibitor of IL-15 and IL-21.

On May 12, 2022 Kinnate Biopharma Inc. (Nasdaq: KNTE) ("Kinnate"), a biopharmaceutical company focused on the discovery and development of small molecule kinase inhibitors for difficult-to-treat, genomically defined cancers, reported financial results for the quarter ended March 31, 2022 (Press release, Kinnate Biopharma, MAY 12, 2022, View Source [SID1234614347]).

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"The company continues to make meaningful progress with our pipeline candidates, inclusive of our pan-RAF inhibitor, KIN-2787, and our FGFR inhibitor, KIN-3248, both in the clinic, and with initial data from the Phase 1 KN-8701 clinical trial forthcoming later this year for KIN-2787," said Nima Farzan, Chief Executive Officer of Kinnate. "We remain focused on developing a new generation of small molecule kinase inhibitors that target a wide range of cancers, including those that resist current treatment, and we are incredibly proud that in just four years we have advanced two compounds into clinical trials, with several more compounds in the pipeline. Our consistent, disciplined use of capital and updated cash runway guidance is expected to enable Kinnate to fund scientific innovation and operations into early 2024."

Recent Business Highlights and Corporate Update:

KIN-2787, pan-RAF inhibitor

Initial monotherapy data from the ongoing Phase 1 KN-8701 clinical trial expected in the fourth quarter of 2022.
Upon meeting a combination of pre-specified milestones in the ongoing Phase 1 KN-8701 clinical trial, initiated combination portion of KN-8701 to study KIN-2787 with binimetinib in NRAS-mutant melanoma; initial data expected in the first half of 2023.
Abstract highlighting the company’s KIN-2787 program was accepted for publication at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) ("ASCO") Annual Meeting taking place June 3-7, 2022, in Chicago, Illinois. The abstract is titled: Antitumor activity of KIN-2787, a next-generation pan-RAF inhibitor, in combination with MEK inhibition in preclinical models of human NRAS mutant melanoma.
Presented three separate poster presentations highlighting (1) preclinical activity of KIN-2787 in BRAF alteration positive and NRAS-mutant melanoma models, (2) an overview of the KN-8701 clinical trial design and (3) a clinico-genomics study and outcome analysis that documented the common occurrence of BRAF Class II and Class III alterations across solid tumors, at the 2022 American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting. (View release)
KIN-3248, FGFR Inhibitor

Abstract highlighting KIN-3248 was accepted for poster presentation during the ASCO (Free ASCO Whitepaper) 2022 Annual Meeting. The abstract is titled: Design and rationale of a first-in-human (FIH) phase 1/1b study evaluating KIN-3248, a next-generation, irreversible (irrev), pan-FGFR inhibitor (FGFRi), in adult patients with solid tumors harboring FGFR2 and/or FGFR3 gene alterations (NCT05242822).
Announced that the first patient has commenced treatment in KN-4802 (NCT05242822), a Phase 1 clinical trial evaluating KIN-3248. KIN-3248 is a next-generation pan-FGFR inhibitor being developed for the treatment of intrahepatic cholangiocarcinoma (ICC) and urothelial carcinoma (UC), as well as other solid tumors. KN-4802 will evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics and anti-cancer activity of KIN-3248 in FGFR inhibitor naïve and pretreated cancer patients with FGFR2 and/or FGFR3 gene alterations. (View release)
Corporate Update

Expanded the organization to 68 full-time employees as of March 31, 2022, of which 52 were engaged in research and development activities, and subsequently appointed the following senior leaders:
Ben Powell, Vice President, Discovery Biology
Priyanka Shah, Vice President, IR & Communications
First Quarter 2022 Financial Results

Cash and Cash Equivalents and Investments Position: As of March 31, 2022, the total of cash and cash equivalents and investments was $302.4 million, exclusive of Kinnjiu’s cash. Existing cash and cash equivalents and investments as of March 31, 2022 with budget reallocation is expected to fund current operations, including initiation of multiple registrational studies, into early 2024.
Research and Development Expenses: First quarter research and development expenses for 2022 were $19.6 million, compared to $12.7 million for the same period in 2021.
General and Administrative Expenses: First quarter general and administrative expenses for 2022 were $7.4 million, compared to $4.8 million for the same period in 2021.
Net Loss: First quarter net loss for 2022 was $26.9 million, compared to $17.5 million for the same period in 2021.

On May 12, 2022 Applied DNA Sciences, Inc. (NASDAQ: APDN) (the "Company"), a leader in cell-free, enzymatic DNA production, reported consolidated financial results for the second quarter of fiscal 2022, ended March 31, 2022 (Press release, Applied DNA Sciences, MAY 12, 2022, View Source [SID1234614346]).

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"We delivered strong momentum in revenue growth with a second consecutive quarter of record revenues that reduced cash burn while advancing our strategic priority to develop and further position our LinearDNA platform as a novel approach for the production of the increasing number of nucleic acid-based therapeutic applications under development by the biotherapeutics industry," stated Dr. James A. Hayward, president and CEO of Applied DNA. "Our clinical lab subsidiary, ADCL (Applied DNA Clinical Labs), continues to power our topline performance in the first half of fiscal 2022 with revenues that exceed total revenues for the entirety of fiscal 2021. During the quarter, COVID-19 testing demand remained durable due to our largely academic and corporate client base that continues to test to protect their stakeholders and mitigate disruptions to their operations.

"Similarly, we are starting to realize the value from investments made last year to optimize and advance our LinearDNA platform to commercialization. We are generating compelling data, most recently concluding in vitro studies that demonstrated that LinearDNA encapsulated by LNP expresses well and giving us greater confidence that a LinearDNA-LNP platform is the best delivery means for LinearDNA as a direct therapeutic agent. We concurrently progressed the use of the platform as a rapid IVT templating and production system for RNA-based therapeutics that is, we feel, the most proximal path to incremental biotherapeutic revenues. The second half of the fiscal year should also feature data on the applicability of our LinearDNA platform to the manufacture of advanced therapies, including mRNA, adoptive cell therapies, and DNA-based vaccines. In many instances, a key gating factor to rapid and broader adoption of novel and potentially clinically invaluable therapies is the bottleneck of plasmid DNA."

Continued Dr. Hayward, "Looking ahead to the second half of the fiscal year, our ability to continue to mitigate cash burn and further commercialize the LinearDNA platform will be informed by the durability of ADCL-generated revenues, as well as the conversion of supply chain security opportunities into CertainT platform orders. We expect COVID-19 testing demand to attenuate over the summer months, given our concentration of academic clients but foresee a path to demand resumption in the fall with the start of the new academic year. We have continued to diversify our client base, most notable of which was the addition of an investment management organization after the close of the reported quarter. In addition, we will begin validation of a new testing platform in ADCL that empowers several forms of high-value genetic testing, including pharmacogenetics, for which we believe consumer demand is growing.

"Furthermore, after the close of the reported quarter, our cotton merchant partner received a request to ship the first quantities for traceable tagged cotton that is directly attributable to the recent passage of the Uyghur Forced Labor Prevention Act (the "Act"), a new Federal law. Our team has presented to many members of Congress, Federal agencies, and Committees regarding the utility of our platform in enforcing the Act. Though not expected to be material to revenue in the current fiscal year, the shipment anticipates a global brand’s multi-year commitment to our CertainT platform through a scaled deployment across its many supply chains. We believe that the passage of the Act is a trigger point for the wider adoption of our CertainT platform that holds the potential for molecular taggant sales for textile fiber applications to become a second material revenue stream along with ADCL revenue. With less than 45 days before the Act goes into force, we believe interest in CertainT by brands and their supply chains has never been higher."

Concluded Dr. Hayward, "We believe the business model of Applied DNA is unique in the biotechnology sector. Our expertise in polymerase chain reaction (PCR) empowers the Company to commercialize DNA technologies across targeted industries to give us multiple sources of revenue growth and cash flow to help support the development of the LinearDNA platform to produce biotherapeutic DNA."

Recent Operational Highlights:

Further to a recent Letter of Intent entered into with Spindle Biotech Inc. ("Spindle Biotech"), Applied DNA and Spindle Biotech have formalized a research collaboration and initiated a Proof-of-Concept study (the "PoC") to generate mRNA at high yields. The companies believe the combination of their respective platforms provides for a simplified, high yield, and 100% cell-free workflow that is differentiated from current mRNA production that uses pDNA. In addition to increased speed and purity, the use of LinearDNA as an IVT template for mRNA production removes several complex manufacturing steps necessitated by plasmid DNA. The companies intend to present results from the PoC study upon its conclusion.
The Company entered into a research agreement to advance LinearDNA-based vaccine research and discovery for animal diseases with agricultural biosecurity implications with a leading college of veterinary medicine at a leading university on the East Coast, USA. The research agreement seeks to combine LinearDNA as a platform for rapid drug development with the college’s expertise in viral vector design to advance a differentiated approach to animal vaccine development.
Corporate Updates:

The Company initiated a branding refresh aligned with its positioning of the LinearDNA platform as a novel, cell-free manufacturing foundation for nucleic acid-based therapies. As part of the brand refresh, a LinearDNA-specific website will be launched in the coming months dedicated to showcasing LinearDNA’s attributes to therapy developers and manufacturers.
Dr. Hayward voluntarily waived 50% of his cash compensation effective March 7, 2022, as part of a cost management program implemented by the Company in the reported quarter.
Second Quarter Fiscal 2022 Financial Highlights:

Revenues increased 130% for the second quarter of fiscal 2022 to $6.1 million, compared with $2.7 million reported in the same period of the prior fiscal year and increased 48% from $4.2 million for the first quarter of fiscal 2022. The increase in revenues year-over-year was due primarily to an increase in clinical laboratory service revenues from the safeCircle COVID-19 testing platform of $3.9 million. This increase was offset by a decrease in product revenues of approximately $557 thousand due mainly to a decrease of approximately $605 thousand in sales of the Linea 1.0 COVID-19 Assay Kit.
Gross profit for the three months ended March 31, 2022, was $2.5 million, or 40%, compared with $1.7 million and 65% for the same period in the prior fiscal year. The decline in gross margin was primarily the result of a higher portion of clinical laboratory service revenues coming from the managed services testing contracts where ADCL also provides and staffs test collection centers, as these contracts have higher costs associated with them compared with ADCL’s surveillance testing contracts. The Company saw an improvement in gross profit percentages for the second quarter of fiscal 2022 to 40% as compared to 28% for the first quarter of fiscal 2022. The improvement was the result of the decrease in COVID-19 positivity rates as sample pooling returned during the second fiscal quarter, and sample numbers remained at higher levels.
Total operating expenses increased to $4.5 million for the second quarter of fiscal 2022, compared with $4.0 million in the prior-year quarter and decreased from $5.7 million for the first quarter of fiscal 2022. The year-over-year increase is primarily attributable to an increase in payroll of approximately $740 thousand. The increase in total payroll is due to the three months ended March 31, 2021, having a reversal of an accrual of approximately $817 thousand for an accrued bonus that was forgiven by the CEO. The increase was also due to an increase in insurance expense of approximately $129 thousand, which was primarily the result of increased Directors and Officers insurance premiums. These increases were offset by a decrease of approximately $376 thousand and $169 thousand in stock-based compensation and professional fees, respectively. To a lesser extent, the increase was attributable to an increase in Research and Development expenses of $114 thousand.
Net loss applicable to common stockholders for the second quarter of fiscal 2022, was $1.8 million, or $0.23 per share, compared with a net loss of $1.5 million, or $0.21 per share, for the prior-year quarter.
Excluding non-cash expenses, Adjusted EBITDA was negative $1.6 million and negative $1.5 million for the second quarters of fiscal 2022 and 2021, respectively. See below for information regarding non-GAAP measures.
Cash and cash equivalents stood at $6.5 million on March 31, 2022, compared with $6.6 million as of September 30, 2021. Cash and cash equivalents include net proceeds of $3.7 million from a registered direct offering closed on February 24, 2022.
Second Quarter Fiscal 2022 Conference Call Information

The Company will hold a conference call and webcast to discuss its second quarter fiscal 2022 financial results today, Thursday, May 12, 2022, at 4:30 PM ET. To participate in the conference call, please follow the instructions below. While every attempt will be made to answer investors’ questions on the Q&A portion of the call, not all questions may be answered.

Presentation slides will also be posted to the ‘Company Events’ sub-page of the Company’s Investor Relations website and embedded into the live webcast.

Information about Non-GAAP Financial Measures

As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. To supplement our condensed consolidated financial statements prepared and presented in accordance with GAAP, this earnings release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information presented in accordance with GAAP. We use this non-GAAP financial measure for internal financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our business by excluding non-cash expenses that may not be indicative of our recurring operating results. We believe this non-GAAP financial measure is useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

"EBITDA"- is defined as earnings (loss) before interest expense, income tax expense and depreciation and amortization expense.

"Adjusted EBITDA"- is defined as EBITDA adjusted to exclude (i) stock-based compensation and (ii) other non-cash expenses.