On March 6, 2017 Mast Therapeutics, Inc. (NYSE MKT: MSTX), a clinical-stage biopharmaceutical company, reported financial results for the fourth quarter and year ended December 31, 2016 (Filing, Q4/Annual, Mast Therapeutics, 2016, MAR 6, 2017, View Source [SID1234518024]).
“We are pleased with the progress made with AIR001 during the year and anticipate the closing of the merger with Savara to take place in the second quarter of this year,” stated Brian M. Culley, Chief Executive Officer. “We believe this merger offers our stockholders a diversified, late-stage product development pipeline with important forthcoming milestones.”
Fourth Quarter 2016 Operating Results
The Company’s net loss for the fourth quarter of 2016 was $6.0 million, or $0.02 per share (basic and diluted), compared to a net loss of $10.2 million, or $0.06 per share (basic and diluted), for the same period in 2015.
The Company recognized $83,000 of revenue for the fourth quarter of 2016, representing reimbursement of costs related to the nonclinical study of vepoloxamer that is being funded by a Small Business Innovation Research (SBIR) grant. The Company recognized no revenue for the same period in 2015.
Research and development (R&D) expenses for the fourth quarter of 2016 were $78,000, a decrease of approximately $7.1 million, or 99%, compared to $7.2 million for the same period in 2015. This reduction in R&D expense was due principally to the Company’s decision to discontinue clinical development of vepoloxamer in September 2016. External clinical study fees and expenses decreased by $3.9 million, external nonclinical study fees and expenses decreased by $2.9 million and R&D personnel costs decreased by $0.3 million for the fourth quarter of 2016 compared to the same period in 2015.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2016 were $1.9 million, a decrease of $0.6 million, or 23%, compared to $2.5 million for the same period in 2015. The decrease was primarily due to reduced fees for consulting and legal services and personnel costs compared to the 2015 period.
Interest expense was $0.2 million for the fourth quarter of 2016, compared to $0.5 million for the same period in 2015. The decrease in interest expense was primarily due to the Company’s prepayment of $10.0 million of the principal balance of its debt facility in October 2016, which lowered the overall principal balance of the debt significantly. The principal balance was $3.3 million at December 31, 2016 compared to $15.0 million at December 31, 2015.
Fiscal Year 2016 Financial Results
The Company’s net loss for the year ended December 31, 2016 was $36.1 million, or $0.17 per share (basic and diluted), compared to a net loss of $39.8 million, or $0.25 per share (basic and diluted), for the same period in 2015.
The Company recognized $128,000 of revenue for the year ended December 31, 2016, representing reimbursement of costs related to the nonclinical study of vepoloxamer that is being funded by a SBIR grant. The Company recognized no revenue for the same period in 2015.
R&D expenses for the year ended December 31, 2016 were $20.8 million, a decrease of $7.5 million, or 26%, compared to $28.3 million for the same period in 2015. The decrease was due primarily to a $4.1 million decrease in external nonclinical study fees and expenses, a $3.3 million decrease in external clinical study fees and expenses, and a $0.3 million decrease in personnel costs, offset by a $0.3 million increase in share-based compensation expense.
The decrease in external nonclinical study fees and expenses resulted primarily from decreases in research-related manufacturing costs for vepoloxamer ($4.7 million) and nonclinical studies of vepoloxamer ($1.5 million), offset by
increased costs related to preparing a new drug application for vepoloxamer ($1.9 million), which project was discontinued in September 2016, and research-related manufacturing costs for AIR001 ($0.2 million). The decrease in external clinical study fees and expenses was due primarily to decreases in costs for the Phase 3 study of vepoloxamer in sickle cell disease ($5.0 million) and the Phase 2 study of vepoloxamer in ALI that was discontinued in the third quarter of 2015 ($0.5 million), offset by increased costs related to the Phase 2 study of vepoloxamer in heart failure ($1.3 million) and the investigator-sponsored Phase 2 studies of AIR001 in HFpEF ($0.9 million). The $0.3 million decrease in personnel costs was due primarily to reductions in the Company’s workforce that occurred in the fourth quarter of 2016.
SG&A expenses for the year ended December 31, 2016 were $9.3 million, a decrease of $1.7 million, or 15%, compared to $11.0 million for the same period in 2015. This decrease was due primarily to a $1.0 million decrease in personnel costs and a $0.5 million decrease in professional and consulting fees.
Interest expense was $2.1 million for the year ended December 31, 2016, an increase of $1.5 million compared to $0.6 million for the same period in 2015. The increase in interest expense was primarily due to interest expense on a $15 million principal balance under the Company’s debt facility for nine months in 2016 versus approximately four months of interest expense on the debt facility in 2015, as well as increased amortization of debt issuance costs as a result of a change in the amortization schedule of such costs due to prepayment of $10 million of the principal balance in October 2016.