On August 11, 2022 Aptevo Therapeutics Inc. ("Aptevo" or the "Company") (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 financial results and business highlights for the quarter ended June 30, 2022 (Press release, Aptevo Therapeutics, AUG 11, 2022, View Source [SID1234618166]).
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Business Highlights
On June 9, 2022, the Company reported positive preliminary data from the on-going Phase 1b trial evaluating lead candidate, APVO436 for the treatment of acute myeloid leukemia (AML). Results included:
Data from cohort 1 (combination therapy) that showed a total of four out of 11 response-evaluable patients (36%) experienced remission while on therapy, as of June 9, 2022
Cohort 3 (monotherapy) also yielded two patients with clinical activity
Also on June 9, 2022, the Company reported that a patient with high-risk myelodysplastic syndrome (MDS) enrolled in the dose escalation phase of the APVO436 clinical trial remained stable and continued treatment with APVO436, exceeding 18 months of therapy
ALG.APV-527 remains on track for IND submission in the second half of 2022, following a pre-IND meeting with the FDA held during the second quarter
Presented preclinical data for APVO442, for the potential treatment of prostate cancer, in a poster session at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting
Aptevo expects to announce the addition of a new molecule to the pre-clinical pipeline by the end of the year
"We are very pleased to have announced clinical activity data in six patients from our on-going APVO436 Phase 1b expansion trial and are encouraged with results that show responses in both combination and monotherapy arms, which will potentially yield multiple clinical development paths in later stage trials. We also intend to share a more comprehensive clinical update later this year," said Marvin White, President and CEO of Aptevo. "Overall, we saw a lot of momentum in the second quarter, with APVO436 leading the way. Adding to the momentum is the planned clinical entry of ALG.APV-527 for the treatment of solid tumors and the introduction of a new pipeline candidate, both of which are expected to occur by the end of the year. Together, achievement of these milestones has the potential to translate into significant value for our shareholders in the future."
Second Quarter 2022 Financial Results Summary
Cash Position : Aptevo had cash, cash equivalents and restricted cash of $30 million as of June 30, 2022. This includes $0.5 million of restricted cash that is expected to be released before the end of the year
Royalty Revenue: For the six months ended June 30, 2022 and June 30, 2021, royalty revenue was $3.1 million and $5.5 million, respectively. Royalty revenue for 2022 reflects revenue recorded only in the first quarter of 2022 due to our Amendment to Royalty Purchase Agreement with HCR, as discussed in the following paragraphs.
During the quarter, the Company successfully renegotiated its Royalty Purchase Agreement with HCR. The Amendment to Royalty Purchase Agreement resulted in Aptevo recognizing a $37.2 million gain during the quarter, which allowed us to be compliant with Nasdaq’s Listing Rule 5550(b)(1) ("Rule") requiring the Company to have at least $2.5 million of stockholders’ equity. This Amendment to Royalty Purchase Agreement allowed us to regain compliance with the Rule in a way that was non-dilutive for our shareholders.
Under the Amendment, Aptevo will not recognize royalty revenue on net sales of RUXIENCE (rituximab-pvvr) paid by Pfizer to HCR on a go-forward basis. The Amendment does not affect cash already collected from HCR or the potential $22.5 million in milestone payments we may collect in the future based on achievement of RUXIENCE sales milestones in 2022 and 2023. RUXIENCE is a trademark of Pfizer.
Research and Development Expenses : For the three months ended June 30, 2022, research and development expenses decreased by $0.8 million, to $3.9 million from $4.7 million for June 30, 2021. The decrease was primarily due to lower spending on preclinical projects and employee costs. The decrease was partially offset by higher spending on our APVO436 clinical trial as we continue to dose patients in our Phase 1b Expansion program.
General and Administrative Expenses : For the three months ended June 30, 2022, general and administrative expenses decreased by $0.4 million, to $3.7 million from $4.1 million for June 30, 2021. The decrease is primarily due to lower employee costs and lower costs related to responding to stockholder activism matters.
Other Income (Expense), Net: Other income (expense), net consists primarily of gain on extinguishment of liabilities, costs related to debt extinguishment, accrued exit fees on debt, non-cash interest on financing agreements, and interest on debt. Other income, net was $35.4 million for the three months ended June 30, 2022, as compared to $2.3 million other expense, net for the three months ended June 30, 2021. The change in other income (expense), net is primarily related to the above-described Amendment to Royalty Purchase Agreement.
Discontinued Operations: For the three months ended June 30, 2022 and 2021, we collected $0.2 and $0.1 million in deferred payments from Medexus related to IXINITY sales, respectively. Pursuant to our LLC Purchase Agreement, the rate for deferred payments increased from 2% to 5% of net sales as of June 30, 2022.
Net Income (Loss) : Aptevo’s net income for the three months ended June 30, 2022, was $28.0 million or $5.58 per share, as compared to a net loss of $7.9 million or $1.75 per share for the corresponding period in 2021.