On February 11, 2020 Kitov Pharma Ltd. ("Kitov") (NASDAQ/TASE: KTOV), a clinical-stage company advancing first-in-class therapies to overcome tumor immune evasion and drug resistance, reported a corporate update and announced financial results for the six-months and full year ended December 31, 2019 (Press release, Kitov Pharmaceuticals , FEB 11, 2020, View Source [SID1234554137]).
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"The recently completed year represented a transformational period for Kitov that was marked by significant progress in multiple key areas of our business," said Isaac Israel, CEO of Kitov. "Our acquisition of FameWave added an additional exciting oncology product candidate to our pipeline. With CM-24 and NT-219, we now have two promising oncology-focused drug candidates which we intend to enter the clinic this year. We have assembled a seasoned oncology clinical development team with senior and experienced executives, and we are well positioned to execute on our plans. We expect the imminent launch of Consensi in the U.S. with strong distribution partners in place to begin commercialization in 2020. Finally, our balance sheet was strengthened early in 2020 when OrbiMed, Pontifax and Arkin Holdings invested $3.5 million of cash in Kitov, equates to a proforma cash position of approximately $9.5 million. An additional stream of revenues expected to be generated from royalties related to sales of Consensi will further support our core oncology development programs.
Highlights & Achievements in 2019 and to Date:
New appointments to management team and Board of Directors:
■Dr. Eric Rowinsky, M.D., appointed as Chairman of Kitov’s Board. In his distinguished career in academia and in the biopharma industry, Dr. Rowinsky has held various executive leadership and board roles at leading public companies, including ImClone Systems Inc., and Biogen Inc.
■Dr. Bertrand Liang, M.D., Ph.D., appointed as Chief Medical Officer. He will lead the medical affairs related to Kitov’s oncology pipeline. Dr. Liang is a medical oncologist and neurologist by training and previously founded several leading biotechnology companies, and served in various senior roles in the pharma industry.
■Dr. Michael Schickler, Ph.D. appointed as the Head of Clinical Operations. Dr. Schickler joins Kitov from FameWave where he led the development of CM-24 during the transition from its former owners. He will now lead the clinical development of Kitov’s full pipeline.
CM-24
CM-24 is a clinical-stage monoclonal antibody blocking CEACAM1, a well-validated target which is highly expressed in many solid tumors as well as on immune cells and plays a pivotal role in the immune system. In a monotherapy phase 1 study, CM-24 demonstrated safety and efficacy with standard dose in about 30% of patients.
Key CM-24 achievements include:
■In February 2020, we received a Notification of Issuance from the U.S. Patent and Trademark Office (USPTO) for a patent application entitled, "Humanized antibodies against CEACAM1." The patent, which expires in 2035, covers protein and DNA sequences pertaining to humanized antibodies capable of specific binding to human CEACAM1 molecules, including Kitov’s first-in-class monoclonal antibody, CM-24, pharmaceutical compositions comprising these antibodies, as well as methods for their use in treating and diagnosing cancer and other conditions.
■In April 2019, the Company signed on a clinical collaboration agreement between FameWave and Bristol Myers Squibb Company for a planned Phase 1/2 clinical trials to evaluate the combination of CM-24 with nivolumab (Opdivo), a PD-1 inhibitor, in patients with non-small cell lung cancer (NSCLC).
■In March 2019, Kitov contracted for the acquisition of FameWave, strengthening Kitov’s oncology pipeline with the addition of CM-24, a novel checkpoint inhibitor. The full acquisition closed in January 2020, concurrent with OrbiMed, Pontifax and Arkin Holdings investing $3.5 million of cash in Kitov.
NT-219
NT-219 is a first-in-class small molecule targeting both Insulin Receptor Substrates (IRS) 1/2 and Signal Transducer and Activator of Transcription 3 (STAT3), two signal proteins that are part of an anti-cancer drug resistance mechanism.
Key NT-219 achievements include:
■In January 2020, we received a notice from the European Patent Office (EPO) of Intention to Grant for its patent application entitled "Combinations of IRS/STAT3 Dual Modulators and Anti-Cancer Agents for Treating Cancer." The patent, which expires in 2036, covers the treatment of NT-219 in combination with EGFR antibodies and inhibitors.
■In September 2019, we presented newly released proof-of-concept data showing evidence of NT-219’s mechanism of action in reversing cancer drug resistance in PDX models, demonstrating that NT-219 reverses tumor drug resistance to trametinib and folfirinox when combined with these treatments. The data were presented in a poster at the American Association for Cancer Research (AACR) (Free AACR Whitepaper)’s (AACR) (Free AACR Whitepaper) Pancreatic Cancer: Advances in Science and Clinical Care conference in Boston.
■In June 2019, we successfully completed the laboratory phase of the IND-enabling studies for NT219. The preclinical GLP toxicology studies have demonstrated good tolerability at the highest dose levels expected to be evaluated in Kitov’s planned Phase 1/2 study.
ConsensiTM
Consensi, a fixed-dose combination of celecoxib and amlodipine besylate was approved by the U.S. Food and Drug Administration (FDA) for marketing in the U.S and is expected to be launched in the U.S. during 2020 by Kitov’s partner Coeptis Pharmaceuticals. Kitov has also partnered to commercialize Consensi in China and South Korea.
Key ConsensiTM achievements include:
■In January 2020, Kitov received a $1.5 million milestone reimbursement from Coeptis related to the CMC plan for ConsensiTM. We expect an imminent U.S. commercial launch of ConsensiTM by our marketing and distribution partner, Coeptis.
■In October 2019, our marketing and distribution agreement with Coeptis Pharmaceuticals for commercialization of ConsensiTM in the U.S has been amended. Under the new terms of the agreement, Kitov will receive up to $99.5M in milestone and reimbursement payments plus 20% in royalties, with a minimum aggregate of $7 million over the next three years.
■In May 2019, we received a notice of allowance from the USPTO for its Patent Application 16/008,538, "Celecoxib and Amlodipine formulation and methods of making the same," covering the proprietary formulation of Consensi, Kitov’s commercial-stage product.
Full US Prescribing Information, including BOXED WARNING and Medication Guide is available at: www.consensi.com.
Financial Results for the Year Ended December 31, 2019
Revenues
Total revenues for the year ended December 31, 2019, were $1.0 million, compared to $1.0 million in the year ended December 31, 2018. The revenues for the year ended December 31, 2019, consisted of the first milestone payment related to ConsensiTM development from Coeptis Pharmaceuticals.
Research and Development Expenses
Research and development (R&D) expenses for the year ended December 31, 2019, were $2.7 million, a decrease of $2.6 million, or 49.3%, compared to $5.3 million for the year ended December 31, 2018. The decrease in research and development expenses resulted primarily from a decrease in costs related to the clinical development of ConsensiTM following FDA approval of the drug.
Selling, General and Administrative Expenses
Selling, General and administrative (SG&A) expenses for the year ended December 31, 2019, were $6.1 million, an increase of $0.9 million, or 18.6%, compared to $5.2 million for the year ended December 31, 2018. The increase in selling, general and administrative expenses resulted primarily from a $0.9 million annual fee paid to the FDA related to ConsensiTM which will be assumed by our marketing partner in the US starting from 2020.
Operating Loss
Operating loss for the year ended December 31, 2019, were $7.2 million, a decrease of $0.6 million, or 8.5%, compared to $7.8 million for the year ended December 31, 2018.
On a non-IFRS basis (as described and reconciled below), adjusted operating loss for the year ended December 31, 2019, was $5.9 million, a decrease of $1.2 million from $7.1 million for the year ended December 31, 2018. The decrease was due to the decrease in R&D expenses mentioned above and a decrease in various SG&A expenses offset by a one-time increase in FDA fee and a one-time decrease in other income.
Net Loss
Net loss for the year ended December 31, 2019, was $5.9 million, or ($0.30) per diluted share, compared to $5.6 million, or ($0.39) per diluted share, for the year ended December 31, 2018.
Net Loss
Net loss for the year ended December 31, 2019, was $5.9 million, or ($0.30) per diluted share, compared to $5.6 million, or ($0.39) per diluted share, for the year ended December 31, 2018.
Financial Results for the 6 months Ended December 31, 2019
Research and Development Expenses
R&D expenses for the six-month period ended December 31, 2019, were $1 million, a decrease of $1.4 million, or 58.3%, compared to $2.4 million for the six-month period ended December 31, 2018. The decrease in research and development expenses resulted primarily from a decrease in costs related to the development of ConsensiTM and decrease in preclinical development costs for NT219.
Selling, General and Administrative Expenses
SG&A expenses for the six-month period ended December 31, 2019, were $2.8 million, an increase of $1 million, or 55.5%, compared to $1.8 million for the six-month period ended December 31, 2018. The increase in SG&A expenses resulted primarily from the one-time fee paid to the FDA relating to ConsensiTM as mentioned above and increase in employees stock option costs.
Operating Loss
Operating loss for the six-month period ended December 31, 2019, was $3.6 million, an increase of $0.2 million, or 5.9%, compared to $3.4 million for the six-month period ended December 31, 2018.
On a non-IFRS basis (as described and reconciled below), adjusted operating loss for the six-month period ended December 31, 2019, was $2.8 million, a decrease of $0.5 million from $3.3 million for the six-month period ended December 31, 2018. The decrease was due to the decrease in R&D expenses mentioned above and a decrease in various SG&A expenses offset by a one-time increase in FDA fee.
Net Loss
Net loss for the six-month period ended December 31, 2019, was $3.3 million, or $0.17 per diluted share, compared to $0.4 million, or $0.02 per diluted share, for the six-month period ended December 31, 2018. The increase in net loss was mainly due to decrease of $2.6M in income from a change in the fair value of derivatives.
Cash & Cash Equivalents
At December 31, 2019, the Company had $4.4 million in cash and cash equivalents compared to $5.2 million at the end of December 2018. In January 2020, Kitov received a $1.5 million milestone payment from Coeptis. This payment, in addition to the $3.5 million financing from Pontifax, Orbimed and Arkin, equates to a proforma cash position of approximately $9.5 million at December 31, 2019.
Adjusted operating loss
Adjusted operating loss is defined as operating loss, plus non-cash share-based compensation expenses. Our management believes that excluding non-cash charges related to share-based compensation provides useful information to investors because of its non-cash nature, varying available valuation methodologies among companies and the subjectivity of the assumptions and the variety of award types that a company can use under the relevant accounting guidance, which may obscure trends in our core operating performance. We present adjusted operating loss because we use this non-IFRS financial measures to assess our operational performance, for financial and operational decision-making, and as a means to evaluate period-to-period comparisons on a consistent basis. Management believes this non-IFRS financial measure is useful to investors because: (1) it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making; and (2) it exclude the impact of non-cash item that is not directly attributable to our core operating performance and that may obscure trends in the core operating performance of the business. Non-IFRS financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, our IFRS results. We expect to continue reporting non-IFRS financial measures, adjusting for the item described above, and we expect to continue to incur expenses similar to certain of the non-cash, non-IFRS adjustments described above. Accordingly, unless otherwise stated, the exclusion of this and other similar items in the presentation of non-IFRS financial measures should not be construed as an inference that these items are unusual, infrequent or non-recurring. Adjusted operating loss is not a recognized term under IFRS and do not purport to be an alternative to IFRS net operating loss as an indicator of operating performance or any other IFRS measure. Moreover, because not all companies use identical measures and calculations, the presentation of adjusted operating loss may not be comparable to other similarly titled measures of other companies.