On August 12, 2021 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 its financial results and business highlights for the quarter ended June 30, 2021 (Press release, Aptevo Therapeutics, AUG 12, 2021, View Source [SID1234586473]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Business Highlights
Announced results from the Company’s Phase 1 dose escalation trial evaluating lead ADAPTIR candidate, APVO436, for the treatment of acute myeloid leukemia and myelodysplastic syndromes (AML/MDS). Results showed that APVO436 was generally well tolerated and demonstrated a manageable side effect profile. Further, APVO436 showed preliminary single agent activity and an acceptable benefit to risk profile in patients with relapsed, advanced stage AML.
Activation of the Company’s Phase 1 dose expansion trial to evaluate APVO436 in adult patients with acute myeloid leukemia (AML) in a multi-center, multi-arm trial using the active recommended Phase 2 dose of 18mcg identified in the dose escalation part of the study. The expansion trial will include five discreet cohorts of 18 patients each (N=90) who will receive APVO436 in combination and monotherapy.
Announced inclusion in the Russell Microcap Index at the conclusion of the 2021 annual reconstitution. Aptevo’s inclusion in the index became effective after US market close on Friday, June 25, 2021.
"The second quarter was an exciting time for Aptevo as we announced results from our APVO436 Phase 1 dose escalation trial in AML/MDS patients, with both encouraging safety results and observed signs of clinical activity. These results drove the design and activation of the dose expansion part of the trial. This trial is currently recruiting and we anticipate dosing the first patient soon," said Marvin White, President and CEO of Aptevo. He added, "We were also very pleased to be added to the Russell Microcap, as this is a tangible indicator of our growth in the last year, achieved by a team of professionals who are singularly focused on bringing new therapeutic solutions to patients in need."
Second Quarter 2021 Financial Results Summary
Cash Position: Aptevo had cash and cash equivalents as of June 30, 2021 totaling $61.7 million, including restricted cash of $1.3 million. The restricted cash is expected to be released over the next twelve months. Aptevo’s current cash runway is extended through Q3 2022.
Royalty Revenue: Royalty revenue was $3.1 million for the three months ended June 30, 2021, related to the royalty from Pfizer on global net sales of RUXIENCE (rituximab-pvvr).On March 30, 2021, the Company entered into and closed a royalty purchase agreement (the Royalty Purchase Agreement) with an entity managed by HealthCare Royalty Management, LLC (HCR) pursuant to which the Company sold to HCR the right to receive royalty payments made by Pfizer Inc. (Pfizer) in respect of net sales of RUXIENCE. Due to our continuing involvement under our collaboration and license Agreement with Pfizer we continue to recognize royalty revenue on net sales of RUXIENCE and record the royalty payments to HCR as a reduction of the liability related to the sale of future royalties when paid. As such payments are made to HCR, the balance of the liability related to the sale of future royalties will be effectively repaid over the life of the Royalty Purchase Agreement. RUXIENCE is a registered trademark of Pfizer.
Research and Development Expenses: Research and development expenses increased by $0.3 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020. Research and development expenses increased as we continue to invest in the APVO436 clinical trial and our preclinical candidates, including ALG.APV-527, APVO603 and APVO442.
General and Administrative Expenses: General and administrative expenses increased by $1.3 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020. This increase was primarily due to higher costs for professional services.
Other Expense, Net: Other expense, net consists primarily of costs related to debt extinguishment, accrued exit fees on debt, non-cash interest on financing agreements, and interest on debt. Other expense, net was $2.3 million for the three months ended June 30, 2021 compared to approximately zero for the three months ended June 30, 2020. The increase in other expense, net is primarily related to interest expense and accrued exit fees for the MidCap Credit Agreement, as well as non-cash interest expense for the HCR Royalty Purchase Agreement.
Discontinued Operations: Income from discontinued operations was $0.1 million for the three months ended June 30, 2021 and there was no income for the three months ended June 30, 2020. For the three months ended June, 2021, we collected a deferred payment of $0.1 million from Medexus related to first quarter 2021 IXINITY sales.
Net Income (Loss): Aptevo’s net loss for the three-month period ended June 30, 2021 was $7.9 million or $1.75 per share, as compared to a net loss of $6.8 million or $2.10 per share for the corresponding period in 2020.
Liability Related to Sale of Future Royalties: We treat the HCR Royalty Purchase Agreement as a debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream. The liabilities related to sale of future royalties and the debt amortization are based on our current estimates of future royalties expected to be paid over the life of the arrangement. To the extent our estimates of future royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will adjust the effective interest rate and recognize related non-cash interest expense on a prospective basis. We are not obligated to repay the proceeds received under the Royalty Purchase Agreement with HCR.