On November 13, 2019 Aridis Pharmaceuticals, Inc. (Nasdaq: ARDS), a biopharmaceutical company focused on the discovery and development of targeted immunotherapies using fully human monoclonal antibodies (mAbs) to treat life-threatening bacterial infections, reported financial and corporate results for the third quarter ended September 30, 2019 (Press release, Aridis Pharmaceuticals, NOV 13, 2019, View Source [SID1234551227]).

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!

Third Quarter Highlights and Recent Developments

Advanced Phase 3 global clinical trial of AR-301 in patients with ventilator associated pneumonia (VAP) and remain on track to announce top line data expected in early 2021.
Executed an equity purchase agreement with Serum Institute BV (SIBV), an affiliate of the Serum Institute of India, Ltd. (SIIL), whereby SIBV invested $10 million into Aridis.
Executed license agreement with Serum AMR (SAMR), another affiliate of SIIL, for rights to multiple products and utilization of MabIgX platform technology (transaction included a $15M upfront payment).
Received Orphan Drug Designation (ODD) from The European Medicines Agency (EMA) for AR-501, an inhalable therapy for the treatment of chronic lung infections in cystic fibrosis patients.
Continued enrolling AR-501’s Phase 1/2a clinical trial with top-line data expected in Q1 2020 (healthy subjects), and in Q2 2021 (cystic fibrosis subjects).
Enhanced leadership team with key appointments including infectious disease expert, Dr. Paul Mendelman as Interim Chief Medical Officer.
Presented posters at the Infectious Disease Society of America’s (IDSA) IDWeek 2019 on AR-105 and AR-501.
Announced results from AR-105’s global Phase 2 clinical trial for the treatment of VAP caused by Pseudomonas aeruginosa (P. aeruginosa).
"The major emphasis for the period was laying the foundation for our long-term growth strategy as we head into the final quarter of 2019, and the new year. While we are certainly disappointed by AR-105’s Phase 2 clinical trial result, our intense post-data analysis gives us conviction that the ongoing phase 3 study for AR-301 in S. aureus VAP is being conducted with utmost rigor and scrutiny incorporating lessons learned from AR-105 to bring this drug to market. Similarly, we remain confident in the design and execution of the ongoing phase 1/ 2 trial for AR-501 targeting infections in cystic fibrosis patients," commented Vu Truong, Ph.D., Chief Executive Officer of Aridis Pharmaceuticals.

"I’m especially pleased with the recent addition to management of Dr. Paul Mendelman who brings renowned infectious disease expertise to the team and is already impacting the data analysis of the AR-105 clinical trial as well as management of our ongoing Phase 3 clinical trial for AR-301 and Phase 1/2a clinical trial for AR-501 programs. Moving forward, we are now well positioned to execute on our clinical development strategy and to commence in earnest corporate development activities for the MabIgX platform," continued Dr. Truong.

Clinical Program Update

AR-301: During the third quarter, Aridis continued enrolling its Phase 3 global clinical trial for AR-301, which targets gram-positive S. aureus in critically ill VAP patients. The trial, which was initiated in the first quarter of 2019, is expected to enroll 240 patients at approximately 125 clinical centers in 20 countries. Interim data is expected in early 2020 and top line data is expected in early 2021. Participating centers in all countries are following the same stringent clinical protocols and procedures for critically ill VAP patients, as is standard in the U.S. and Europe. The trial represents the first ever Phase 3 superiority clinical study evaluating immunotherapy with a fully human monoclonal antibody to treat acute pneumonia in the intensive care unit setting. Details of the study can be viewed on www.clinicaltrials.gov using identifier NCT03816956.

AR-301 is a fully human monoclonal IgG1 antibody specifically targeting gram-positive S. aureus alpha-toxin. It has been shown in vitro to protect against alpha-toxin mediated destruction of host cells, thereby potentially preserving the human immune response. AR-301’s mode of action is independent of the antibiotic resistance profile of S. aureus and it is active against infections caused by both MRSA (methicillin resistant S. aureus) and MSSA (methicillin sensitive S. aureus).

AR-501: During the third quarter, Aridis continued enrolling patients in its Phase 1/2a clinical trial of this inhalable formulation of gallium citrate being evaluated for the treatment of chronic lung infections associated with cystic fibrosis. The single ascending dose cohorts of healthy subjects have completed dosing and the safety monitoring committee has recommended proceeding into the multiple ascending dose cohorts. The Company expects to report data from the Phase 1 portion of the trial which consists of healthy subjects in Q1 2020 and the Phase 2a segment with cystic fibrosis subjects in Q2 2021.

AR-501, which is being developed in collaboration with the Cystic Fibrosis Foundation (CFF), has been granted by the U.S. Food and Drug Administration (FDA) both Fast Track and Qualified Infectious Disease Product Designation (QIDP) designations. In addition, during the third quarter (July 19th), the EMA granted the program Orphan Drug Designation (ODD). The FDA had granted ODD status to AR-501 in June 2019.

Details of the Phase 1/2a clinical trial, which is a randomized, double-blinded, placebo controlled single and multiple dose-ascending trial investigating the safety and pharmacokinetics of inhaled AR-501 in healthy volunteers and cystic fibrosis patients with chronic bacterial lung infections, can be viewed on www.clinicaltrials.gov using identifier NCT03669614. The study is expected to accrue 48 healthy adult volunteers and 48 cystic fibrosis patients from approximately 15 sites in the U.S.

AR-105: During the third quarter (September 3, 2019), Aridis reported results for its global Phase 2 clinical trial evaluating AR-105, a fully human IgG1 monoclonal antibody for the treatment of VAP caused by gram-negative Pseudomonas aeruginosa (P. aeruginosa). The completed study did not meet its primary endpoint of demonstrating superiority in clinical cure rates on Day 21 compared to placebo. Furthermore, there was a statistically significant imbalance in all-cause mortality, as well as serious adverse event (SAE) rates between treatment groups that favored placebo. However, no SAE or mortality in the study was deemed to be drug related by the study investigators or the study’s data monitoring committee. AR-105 has a different mechanism of action, directed at a different bacterium, and evaluated in a different patient population as compared to AR-301. While no further development resources will be allocated towards AR-105, the Company will continue to analyze the full data set to better understand the top-line results.

Throughout the third quarter, Aridis continued to attend investor and medical conferences and recently presented two posters at the Infectious Disease Society of America’s (IDSA) IDWeek 2019, which took place on October 2nd-6th in Washington, DC. Both posters, "Pre-Clinical and Phase I Safety Data for Anti-Pseudomonas aeruginosa Human Monoclonal Antibody AR-105," and "In Vitro and In Vivo Non Clinical Efficacy of AR-501 (Gallium Citrate)," were presented on October 3, 2019.

Infectious Disease Specialist CMO Appointment: A recent key highlight occurred on October 11, 2019, when Aridis announced the appointment of Paul Mendelman, MD, as interim Chief Medical Officer, replacing Dr. Wolfgang Dummer who departed the company for personal reasons. Dr. Mendelman brings to Aridis a prolific career in infectious diseases across industry and academia spanning over 30 years with board certification in pediatrics and pediatric infectious diseases. He has held senior clinical development positions at leading companies such as Takeda Vaccines (Vice President, Medical), MedImmune (Vice President & Therapeutic Area Leader, Clinical Development), and Merck (Director, Clinical Research Infectious Diseases). From 1996 to 2005, he managed the clinical development group for FluMist, the live attenuated intranasal influenza vaccine, licensed initially in the U.S. for the 2003-04 season. The Company also promoted Lynne Deans to the position of Vice President, Clinical Operations. Ms. Deans has over 30 years of experience in clinical operations and has held senior director of clinical operations positions in infectious diseases focused companies such as Cerexa, PaxVax, and Kalobios.

Corporate Update:

A key highlight during the third quarter was the execution of a license agreement with SAMR, an affiliate of SIIL. The agreement provides SAMR with the right to in-license Aridis’ clinical stage programs AR-301(VAP), AR-105 (VAP) and AR-101 (hospital acquired pneumonia (HAP)). These license rights will be exclusive and to a limited territory which includes markets outside of the U.S., Europe, Canada, UK, China, Australia, New Zealand and Japan. Also, the agreement includes an exclusive, worldwide license (excluding China) to AR-201, a preclinical fully human mAb for the prevention of respiratory syncytial virus (RSV). In addition, SAMR may elect to collaborate with Aridis to utilize MabIgX to identify and advance up to five SAMR wholly-owned programs. MabIgX is Aridis’ proprietary technology platform to rapidly identify rare, potent antibody-producing B-cells from patients who have successfully overcome an infection to produce mAbs.

Under the terms of the Agreement, Aridis received a $15M upfront payment and will be eligible to receive as much as $42.5 million in future milestone payments for achieving product development and commercial objectives, along with royalties on net sales. The consummation of this transaction follows an equity purchase agreement with SIBV, another affiliate of SIIL, which occurred in July 2019 whereby SIBV invested $10 million into Aridis.

"We continued to make major strides in corporate development with a key pharmaceutical alliance, which also improves our balance sheet. SIIL is the world’s largest vaccine manufacturer by dose units and a significant monoclonal antibody development and manufacturing company. This combined product and technology license is a testament to the quality of our pipeline and groundbreaking MabIgX platform for identifying rare, potent antibody-producing B-cells from patients who have successfully overcome an infection to produce mAbs," concluded Dr. Truong.

Fiscal 2019 Third Quarter Results:

Cash: Total cash and cash equivalents as of September 30, 2019 was $17.3 million. In addition, in October 2019 the Company received $10 million, the balance due on the upfront payment from SAMR upon the execution of license agreement referred to above.
Revenues: Total revenues for the quarter ended September 2019 was zero, a decrease of $1.0 million over the same period in 2018 when a $1.0 million milestone payment was recognized from the CFF associated with its grant to fund the AR-501 Phase 1/2a clinical trial.
Research and Development Expenses: Research and development expenses for the quarter ended September 30, 2019 were $6.0 million, a decrease of $0.9 million over the same period in 2018 due primarily to a decrease in spending on clinical trial activities and drug manufacturing for our AR-105 program, which was recently completed, partially offset by an increase in spending on clinical trial activities for both our AR-301 Phase 3 and the AR-501 Phase 1/2a programs.
General and Administrative Expenses: General and administrative expenses for the quarter ended September 30, 2019 were $1.4 million, an increase of $0.6 million over the same period in 2018 due primarily to an increase in personnel related expenses, including stock-based compensation, an increase in patent related fees and an increase in directors’ and officers’ liabilities insurance expense.
Interest and Other Income, net: Interest and other income, net for the quarter ended September 30, 2019 was $90,000, a decrease of $29,000 over the same period in 2018. This decrease was due primarily to a lower average cash balance.
Change in Fair Value of Warrant Liability: As a result of all warrants to purchase preferred stock being converted into warrants to purchase common stock upon our IPO in August 2018, there was no warrant liability recorded at the end of the third quarter of 2019. There was a $1.4 million loss attributed to an increase in the fair value of the warrant liability in the third quarter of 2018.
Net Loss: The net loss available to common shareholders for the quarter ended September 30, 2019 was $7.6 million, or ($0.87) per share, compared to a net loss available to common shareholders of $7.9 million, or ($1.97) per share, for the quarter ended September 30, 2018. It should be noted that there were 166,373 common shares outstanding during the third quarter of 2018 and until the completion of the Company’s IPO in August 2018. Moreover, there were convertible preferred shares outstanding until the time of the IPO which earned dividends that were distributed as additional shares of preferred stock. All preferred shares were converted to common stock upon the completion of the IPO on August 16, 2018. As a result, the weighted average common shares outstanding for the third quarter of 2018 was 4.0 million. At September 30, 2019, the weighted average common shares outstanding for the third quarter of 2019 was 8.7 million.