On May 11, 2023 Aptevo Therapeutics Inc. (NASDAQ:APVO), a clinical-stage biotechnology company focused on developing novel immuno-oncology therapeutics based on its proprietary ADAPTIR and ADAPTIR-FLEX platform technologies, reported its financial results for the quarter ended March 31, 2023 and provided a business update (Press release, Aptevo Therapeutics, MAY 11, 2023, View Source [SID1234631577]).
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First Quarter Highlights
Raised $9.7 million in non-dilutive funding, extending cash runway beyond 12 months
A portion of the proceeds was used to fully repay the existing debt facility on the Company’s balance sheet
The Company achieved this by closing a transaction for the complete sale of all future IXINITY deferred payments and a portion of IXINITY milestones to XOMA Corporation
Announced plans to initiate its Phase 2 program in the second half of 2023 to further evaluate APVO436, a bispecific CD3xCD123 ADAPTIR molecule, in combination with venetoclax and azacytidine in frontline and relapsed/refractory venetoclax treatment naïve patients with acute myeloid leukemia (AML). The trial design will be informed by the positive Phase 1 results announced at ASH (Free ASH Whitepaper) in December 2022
Dosed the first patient in the Company’s Phase 1 trial evaluating ALG.APV-527 intended for the treatment of solid tumors, potentially including, but not limited to, breast, colon, lung and pancreatic, which are likely to express the 5T4 antigen
ALG.APV-527 is a bispecific antibody designed to target cancer cells by activating both T-cells and natural killer cells and is intended to bind to tumor-specific antigens while sparing healthy cells and maximizing immune response
Introduced pipeline candidate, APVO711, a PD-L1 x CD40 compound with a dual mechanism of action that includes a checkpoint inhibitor that blocks the T cell inhibitory pathway while also stimulating antigen presenting cells
APVO711 has the potential to fight a range of solid malignancies such as head and neck squamous cell carcinoma, melanoma, and carcinomas of the lung, gastrointestinal tract and colon
The Company filed a provisional patent for APVO711 in January 2023
"As promised, momentum on all fronts continued into the first quarter of this year. Clinical plans continue to progress for our APVO436 Phase 2 program in the treatment of AML, and we continue to advance our ALG.APV-527 Phase 1 trial for the treatment of multiple solid tumor types after dosing the first patient in early February. This trial is ongoing, and we expect preliminary results in the second half of this year, said Marvin White, President and Chief Executive Officer at Aptevo. "We are particularly excited about our new molecule, APVO711. It’s dual mechanism of action has the potential to both stimulate cells that fight cancer and as a checkpoint inhibitor, block the pathways that cause it to spread. APVO711 was also built with safety in mind and is specifically designed to overcome the clinical toxicity commonly associated with CD40."
He added, "On the business front, we were very pleased to raise $9.7 million in non-dilutive capital by completing the sale of all future IXINITY deferred payments and a portion of IXINITY milestones to XOMA Corporation. We used part of the proceeds to fully repay our debt and are very pleased to say that Aptevo is a debt-free company," Mr. White concluded.
First Quarter 2023 Financial Results
Cash Position: Aptevo had cash and cash equivalents as of March 31, 2023 totaling $25.3 million.
Royalty Revenue: Royalty revenue for the period covered by this report reflects revenue recorded only in the first quarter of 2022 due to our Amendment to Royalty Purchase Agreement with HCR. As a result of the amendment, we ceased reporting as royalty revenue, royalties paid by Pfizer to HCR related to Pfizer’s sales of RUXIENCE (rituximab-pvvr). The last quarter for which we reported this royalty revenue was Q1 2022. The Amendment was effected to address a Nasdaq compliance matter and had the additional effect of eliminating the requirement to report all future Pfizer non-cash royalty revenue and extinguishing the liability that we recorded upon the initial sale of the royalties to HCR. RUXIENCE is a registered trademark of Pfizer.
Research and Development Expenses: For the three months ended March 31, 2023, research and development expenses decreased by $0.7 million, to $4.2 million from $4.9 million for the three months ended March 31, 2022. The decrease was primarily due to lower spending on APVO436 as we concluded enrollment in our dose expansion phase of the clinical trial and working toward the launch of Phase 2, following promising clinical data reported in the fourth quarter of 2022. Additionally, we had lower consulting and employee related costs compared to the same period in prior year. The decrease was partially offset by higher spending on the ALG.APV-527 Phase 1 clinical trial.
General and Administrative Expenses: For the three months ended March 31, 2023, general and administrative expenses decreased by $0.3 million, to $3.6 million from $3.9 million for the three months ended March 31, 2022. The decrease is primarily due to lower employee and consulting costs.
Other Income (Expense): Other income (expense) consists primarily of a gain related to sale of nonfinancial asset, costs related to debt extinguishment, accrued exit fees on debt, non-cash interest on financing agreements, and interest on debt.
Other Expense, Net
Other expense, net was $0.1 million and $2.3 million for the three months ended March 31, 2023 and 2022, respectively. Beginning in Q2 2022, we no longer record non-cash interest expense due to our Amendment to the Royalty Purchase Agreement in the second quarter of 2022, which eliminated the liability related to the sale of royalties. This contributed $1.7 million of the decrease during the period. The rest of the decrease is primarily due to lower interest expense recorded in Q1 2023 on our MidCap term loan due to principal paydown.
Gain Related to Sale of Non-Financial Asset
We recorded $9.7 million in other income for the three months ended March 31, 2023, due to the sale of the deferred payments and milestones to XOMA during the quarter. We did not have any such gain for the comparative period in the prior year.
Discontinued Operations: Income from discontinued operations was $1.0 million and $0.2 million for the for the three months ended March 31, 2023 and 2022, respectively. For the three months ended March 31, 2023, we collected $0.5 million in deferred payments from Medexus related to IXINITY sales and $0.2 million related to funds released from escrow from the sale of Aptevo BioTherapeutics in 2020. Additionally, we received $0.3 million related to the sale of hyperimmune business Saol as a result of the collection of certain accounts receivable. For the three months ended March 31, 2022, we collected $0.2 million in deferred payments from Medexus related IXINITY sales.
Net Income (Loss): Aptevo had a net income of $2.8 million or $0.39 per share for the period ended March 31, 2023, compared to a net loss of $7.7 million or $1.55 per share for the corresponding period in 2022.