On November 5, 2019 CytoSorbents Corporation (NASDAQ: CTSO), a critical care immunotherapy leader using its CytoSorb blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, reported financial and operational results for the quarter ending September 30, 2019 (Press release, Cytosorbents, NOV 5, 2019, View Source [SID1234550502]).

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Third Quarter 2019 Financial Results:

Total Q3 2019 revenues were $6.1 million, including both product sales and grant income, an increase of approximately 6%, up from $5.7 million in Q3 2018
Product sales for Q3 2019 were approximately $5.7 million, compared to $5.1 million for Q3 2018, an increase of approximately 12%
Excluding the change in the Euro to dollar exchange rate from Q3 2018 to Q3 2019, CytoSorb product sales would have been approximately $239,000 higher than actually reported, or approximately $6.0 million, an increase of 18% over Q3 2018 product sales
Blended product gross margins for Q3 2019 rose to 77%, compared to 72% for Q3 2018, and 76% from Q2 2019
Cash and cash equivalents were approximately $16 million at the end of the quarter
Third Quarter 2019 Operational Highlights:

More than 73,000 CytoSorbents treatments delivered cumulatively, up from 51,000 a year ago
Received renewal of CytoSorb CE Mark through May 2024 and annual ISO 13485:2016 certification through September 2022
Publication of a key study demonstrating 28-day mortality benefit and the potential for CytoSorb to save 19 additional lives out of every 100 patients with septic shock on continuous renal replacement therapy
Initiation of first study to evaluate the use of CytoSorb as a treatment of cytokine release syndrome in CAR T-cell immunotherapy
Extended CytoSorb distribution to a total of 58 countries, with Latin America expansion to Brazil, Colombia, and Costa Rica
Two of the three distributor/partners discussed in the Q1 2019 earnings call ordered in Q3 2019
Near completion of the Germany-funded REMOVE endocarditis randomized controlled trial, with the achievement of the targeted enrollment of 250 patients. Well-ahead of schedule, the trial will continue to enroll up to 15 additional patients to account for potential dropouts, which is expected to be completed by the end of 2019
Advancement of the U.S. pivotal REFRESH 2-AKI trial, currently at 144 patients enrolled of a total of 400 patients, and positioned to exceed end-of-year enrollment target of 150
Continued expectation to file HemoDefend IDE to FDA before year end
Strengthened cash position with addition of $5M of debt from Bridge Bank with interest-only period extended to November 2020, provided certain conditions are met
Dr. Phillip Chan, Chief Executive Officer of CytoSorbents stated, "Product sales for the third quarter were just shy of our record Q2 2019 results, despite the summer seasonality and foreign exchange effects. In addition, our blended product gross margins were 77%, nearing our guidance of achieving 80% blended product gross margins on a quarterly basis this year. Though encouraging, we expect the growth in 2020 to be far more robust, driven by a number of important catalysts. Importantly, we have the following already in place:

What we believe to be strong underlying demand for CytoSorb in Germany and other countries, with our limited ability to harvest the opportunity in 2019 due to a lack of manpower and challenge in the timely hiring of the right people
We have invested heavily in our expansion and have increased headcount at the company by approximately 50% in the past year, with most of the key people joining in the past 3-6 months. We have doubled customer facing sales representatives and market specialists, and brought on others who have a direct impact on sales including new sales and marketing directors, and specialists in application and clinical support, reimbursement, manufacturing, and others
Increased the number of direct sales countries from 5 to 10, where CytoSorb is sold to hospitals directly with our own sales reps, leveraging our focused product messaging and positioning, higher product gross margins, and market development that has taken place for the better part of a year
Expanded distribution of CytoSorb to 58 countries, with a number of new countries expected to achieve product registration and contribute to sales in 2020, including Mexico, South Korea, Brazil, Colombia, and others
New published data in major current indications such as septic shock, ECMO, and cardiac surgery, as well as investigational applications, such as anti-thrombotic drug removal in patients undergoing emergency cardiac surgery that was recently reported to reduce perioperative bleeding risk and reduce costs
Potential new data from the REMOVE endocarditis trial that is expected to read out in mid-2020, the recently announced U.K. TISORB trial using CytoSorb to remove the anti-platelet drug ticagrelor in emergency cardiac surgery patients and an associated companion study, and data from a number of investigator-initiated studies
Increased commitment from strategic partnerships to expand CytoSorb commercialization
Dr. Chan continued, "We expect a solid finish to 2019, consistent with our prior guidance that 2H 2019 will be stronger than 1H 2019 and current guidance that Q4 2019 product sales will exceed those in Q4 2018. More importantly, we believe the pieces that we have labored to put into place positions us well to return to more aggressive sales growth of CytoSorb in 2020 and beyond as the leader in this space. In the meantime, we remain committed to our clinical trials program, intended to drive CytoSorb as standard of care in multiple applications."

"Please join us on our earnings conference call today, details for which are below."

Conference Call Details:
Date: Tuesday, November 5, 2019
Time: 4:45 PM Eastern Time
Participant Dial-In: 877-451-6152
Conference ID: 13695453
Live Presentation Webcast: View Source

It is recommended that participants dial in approximately 10 minutes prior to the start of the call. There will also be a simultaneous live webcast of the conference call that can be accessed through the following audio feed link: View Source

An archived recording of the conference call will be available under the Investor Relations section of the Company’s website at View Source

Results of Operations

Comparison for the three months ended September 30, 2019 and 2018:

Revenues:

Revenue from product sales was approximately $5,728,000 for the three months ended September 30, 2019, as compared to approximately $5,103,000 for the three months ended September 30, 2018, an increase of approximately $625,000, or 12%. This increase was driven by an increase in direct sales of approximately $891,000 resulting from sales to both new customers and repeat orders from existing customers, offset by a decrease in distributor sales of approximately $266,000. In addition, sales were negatively impacted by approximately $239,000 as a result of the decrease in the average exchange rate of the Euro to the U.S. dollar. For the three months ended September 30, 2019, the average exchange rate of the Euro to the U.S. dollar was $1.11 as compared to an average exchange rate of $1.16 for the three months ended September 30, 2018.

Grant income was approximately $367,000 for the three months ended September 30, 2019 as compared to approximately $640,000 for the three months ended September 30, 2018, a decrease of approximately $273,000 or 43%. This decrease was a result of the completion of certain grants prior to the three months ended September 30, 2019 and timing of certain other grant revenue.

Total revenues were approximately $6,095,000 for the three months ended September 30, 2019, as compared to total revenues of approximately $5,743,000 for the three months ended September 30, 2018, an increase of approximately $352,000, or 6%.

Cost of Revenues:

For the three months ended September 30, 2019 and 2018, cost of revenue was approximately $1,696,000 and $2,053,000, respectively, a decrease of approximately $357,000. Product cost of revenues decreased approximately $66,000 during the three months ended September 30, 2019 as compared to the three months ended September 30, 2018 due to achieved production efficiencies. Product gross margins were approximately 77% for the three months ended September 30, 2019 and approximately 72% for the three months ended September 30, 2018.

Research and Development Expenses:

For the three months ended September 30, 2019, research and development expenses were approximately $3,185,000 as compared to research and development expenses of approximately $1,943,000 for the three months ended September 30, 2018. The increase of approximately $1,242,000 was due to an increase in clinical trial and related costs of approximately $863,000, which includes expenditures related to our REFRESH 2-AKI study, decreases in direct labor and other costs being deployed toward grant-funded activities of approximately $290,000, which had the effect of increasing the amount of our non-reimbursable research and development costs and an increase in non-clinical research and development salary related costs of approximately $104,000.

Legal, Financial and Other Consulting Expense:

Legal, financial and other consulting expenses were approximately $733,000 for the three months ended September 30, 2019, as compared to approximately $417,000 for the three months ended September 30, 2018. The increase of approximately $316,000 was due to an increase in legal fees of approximately $147,000 related to patent matters and certain corporate initiatives and an increase in employment agency fees of approximately $222,000 related to the hiring of senior level personnel. These increases were offset by a decrease in accounting fees of approximately $37,000 and a decrease in consulting fees of approximately $16,000.

Selling, General and Administrative Expense:

Selling, general and administrative expenses were approximately $6,108,000 for the three months ended September 30, 2019, as compared to approximately $4,041,000 for the three months ending September 30, 2018, an increase of $2,067,000. This increase is related to an increase in salaries, commissions and related costs of approximately $613,000, additional sales and marketing costs, which include advertising and conferences of approximately $462,000, an increase in royalty expenses of approximately $46,000 due to the increase in product sales, an increase in non-cash stock compensation of approximately $529,000 related to options granted and an increase in restricted stock expense of approximately $481,000 related to restricted stock units granted to the Company executive officers.

Interest Expense, net:

For the three months ended September 30, 2019, interest expense was approximately $302,000, as compared to interest expense of approximately $185,000 for the three months ended September 30, 2018. This increase in interest expense of approximately $117,000 was primarily a result of the additional interest incurred related to the draw down of the $5,000,000 Term B Loan with Bridge Bank on July 31, 2019.

Gain (Loss) on Foreign Currency Transactions:

For the three months ended September 30, 2019, the non-cash loss on foreign currency transactions was approximately $956,000 as compared to a loss of approximately $109,000 for the three months ended September 30, 2018. The 2019 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2019 as compared to June 30, 2019. The spot exchange rate of the Euro to the U.S. dollar was $1.09 per Euro at September 30, 2019, as compared to $1.14 per Euro at June 30, 2019. The 2018 loss is directly related to the decrease in the exchange rate of the Euro to the U.S. dollar at September 30, 2018 as compared to June 30, 2018. The exchange rate of the Euro to the U.S. dollar was $1.16 per Euro at September 30, 2018, as compared to $1.17 per Euro at June 30, 2018.

Comparison for the nine months ended September 30, 2019 and 2018:

Revenues:

Revenue from product sales was approximately $16,155,000 for the nine months ended September 30, 2019, as compared to approximately $14,782,000 for the nine months ended September 30, 2018, an increase of approximately $1,373,000, or 9%. This increase was driven by an increase in direct sales of approximately $2,053,000 resulting from sales to both new customers and repeat orders from existing customers, offset by a decrease in distributor sales of approximately $680,000. In addition, sales were negatively impacted by approximately $977,000 as a result of the decrease in the average exchange rate of the Euro to the U.S. dollar. For the nine months ended September 30, 2019, the average exchange rate of the Euro to the U.S. dollar was $1.12 as compared to an average exchange rate of $1.19 for the nine months ended September 30, 2018.

Grant income was approximately $1,364,000 for the nine months ended September 30, 2019 as compared to approximately $1,641,000 for the nine months ended September 30, 2018, a decrease of approximately $277,000 or 17%.

Total revenues were approximately $17,519,000 for the nine months ended September 30, 2019, as compared to total revenues of approximately $16,423,000 for the nine months ended September 30, 2018, an increase of approximately $1,096,000, or 7%.

Cost of Revenues:

For the nine months ended September 30, 2019 and 2018, cost of revenue was approximately $5,269,000 and $5,406,000, respectively, a decrease of approximately $137,000. Product cost of revenues increased approximately $17,000 during the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018 due to increased sales, offset by achieved production efficiencies. Product gross margins were approximately 76% for the nine months ended September 30, 2019 and approximately 73% for the nine months ended September 30, 2018.

Research and Development Expenses:

For the nine months ended September 30, 2019, research and development expenses were approximately $8,533,000 as compared to research and development expenses of approximately $5,299,000 for the nine months ended September 30, 2018. The increase of approximately $3,234,000 was due to an increase in clinical trial and related costs of approximately $2,856,000, which includes expenditures related to our REFRESH 2-AKI study, an increase in non-clinical research and development salary related costs of approximately $133,000, decreases in direct labor and other costs being deployed toward grant-funded activities of approximately $154,000, which had the effect of increasing the amount of our non-reimbursable research and development costs and an increase in other non-clinical research and development costs of approximately $91,000.

Legal, Financial and Other Consulting Expense:

Legal, financial and other consulting expenses were approximately $1,887,000 for the nine months ended September 30, 2019, as compared to approximately $1,291,000 for the nine months ended September 30, 2018. The increase of approximately $596,000 was due to an increase in legal fees of approximately $342,000 related to patent matters and certain corporate initiatives, an increase in employment agency fees of approximately $217,000 related to the hiring of senior level personnel, and an increase in consulting fees of approximately $57,000. These increases were offset by a decrease in accounting fees of approximately $20,000.

Selling, General and Administrative Expense:

Selling, general and administrative expenses were approximately $15,372,000 for the nine months ended September 30, 2019, as compared to approximately $14,426,000 for the nine months ending September 30, 2018. The increase of $946,000 was due to an increase in salaries, commissions and related costs of approximately $1,790,000, additional sales and marketing costs, which include advertising and conference attendance of approximately $660,000, an increase in royalty expenses of approximately $107,000 due to the increase in product sales, and an increase in restricted stock expense of approximately $273,000 related to restricted stock units granted to the Company’s executive officers. These increases were offset by a decrease in non-cash stock compensation of approximately $1,689,000 and a decrease in travel and entertainment and other general and administrative expenses of approximately $195,000.

Interest Expense, net:

For the nine months ended September 30, 2019, interest expense was approximately $722,000, as compared to interest expense of approximately $1,264,000 for the nine months ended September 30, 2018. This decrease in interest expense of approximately $542,000 was primarily a result of the settlement of the Success Fee in the amount of $637,000 that became due in May 2018 in accordance with the terms of the 2016 Success Fee Letter, offset by an increase in interest due to the draw down of the $5,000,000 Term B Loan with Bridge Bank on July 31, 2019.

Gain (Loss) on Foreign Currency Transactions:

For the nine months ended September 30, 2019, the non-cash loss on foreign currency transactions was approximately $1,052,000 as compared to a loss of approximately $544,000 for the nine months ended September 30, 2018. The 2019 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2019 as compared to December 31, 2018. The spot exchange rate of the Euro to the U.S. dollar was $1.09 per Euro at September 30, 2019, as compared to $1.15 per Euro at December 31, 2018. The 2018 loss is directly related to the decrease in the exchange rate of the Euro to the U.S. dollar at September 30, 2018 as compared to December 31, 2017. The exchange rate of the Euro to the U.S. dollar was $1.16 per Euro at September 30, 2018, as compared to $1.20 per Euro at December 31, 2017.

History of Operating Losses:

We have experienced substantial operating losses since inception. As of September 30, 2019, we had an accumulated deficit of approximately $184,840,000, which included losses of approximately $15,316,000 and $11,808,000 for the nine-month periods ended September 30, 2019 and 2018, respectively. Historically, losses have resulted principally from costs incurred in the research and development of our polymer technology, clinical studies, and general and administrative expenses.

Liquidity and Capital Resources

Since inception, our operations have been primarily financed through the issuance of debt and equity securities. At September 30, 2019, we had current assets of approximately $22,351,000 including cash on hand of approximately $15,978,000 and current liabilities of approximately $9,302,000. On July 31, 2019, the Company executed an Amendment to its Loan Agreement with Bridge Bank and, simultaneous with this Amendment, received $5 million in proceeds from an additional term loan. In addition, the Amendment extends the interest-only period of the loan for an additional six months through April 2020, with the ability to further extend the interest-only period for another six months through October 2020 should the Company meet certain conditions. We believe that we have sufficient cash to fund our operations into 2020.

Fourth Quarter 2019 Revenue Guidance

CytoSorbents has not historically given specific financial guidance on quarterly results until the quarter has been completed. However, we expect our fourth quarter 2019 product sales will exceed sales reported in the fourth quarter of 2018. In addition, we expect that second half 2019 product sales will exceed first half 2019 product sales.

For additional information, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on March 7, 2019 on View Source

On November 5, 2019 Allogene Therapeutics, Inc. (Nasdaq: ALLO), a clinical-stage biotechnology company pioneering the development of allogeneic CAR T (AlloCAR T) therapies for cancer, reported financial results for the quarter ended September 30, 2019 (Press release, Allogene, NOV 5, 2019, View Source [SID1234550307]).

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"I am very pleased with the progress we have made in a short period of time. While we leveraged the research from Pfizer to launch Allogene, we have built the company from the ground up. In parallel, we have initiated the build-out of in-house manufacturing capabilities, successfully progressed AlloCAR T programs into Phase 1 clinical development while creating next generation therapies and entering into agreements that will keep us at the forefront of cell therapy," said David Chang, M.D., Ph.D., President, CEO and Co-Founder of Allogene Therapeutics. "With the initiation of our ALLO-715 Phase I UNIVERSAL trial in multiple myeloma, we have achieved all of the clinical goals that we set out for ourselves at the beginning of 2019. I am very proud of our team’s accomplishments and firmly believe that the time and investment Allogene is making in research, next generation technologies, manufacturing and personnel will provide us with the key building blocks needed to support our goal of being the first to bring an AlloCAR T therapy to patients."

Pipeline Highlights
ALLO-501 (anti-CD19 AlloCAR T)

ALLO-501 Phase 1 ALPHA trial in patients with relapsed/refractory non-Hodgkin lymphoma (NHL) continues to accrue as planned with data expected in the first half of 2020.
ALLO-715 (anti-BCMA AlloCAR T)
The Company initiated the ALLO-715 Phase 1 UNIVERSAL trial in patients with relapsed/refractory multiple myeloma (MM).

The Phase 1 ALLO-715 UNIVERSAL trial is designed to assess the safety and tolerability at increasing dose levels of ALLO-715 to identify an optimal dose of ALLO-715 for the potential Phase 2 study. This trial utilizes ALLO-647, the Company’s proprietary anti-CD52 monoclonal antibody, as a part of the lymphodepletion regimen. The UNIVERSAL trial also includes the potential to evaluate alternative lymphodepletion regimens that do not include fludarabine and cyclophosphamide.

ALLO-715 utilizes TALEN gene-editing technology pioneered and owned by Cellectis. Allogene has an exclusive license to the Cellectis technology for allogeneic products directed at the BCMA target. Allogene holds global development and commercial rights for this investigational candidate.
Additional Pipeline Updates

UCART19 (Servier-Sponsored Program in Collaboration with Allogene) – Servier continues to expect that

UCART19, an anti-CD19 AlloCAR T being developed for pediatric and adult relapsed/refractory acute lymphoblastic leukemia (ALL), will advance into potential Phase 2 registrational trials in 2020.
Corporate Highlights

Earlier today, the Company announced a worldwide collaboration with Notch Therapeutics to develop induced Pluripotent Stem Cell (iPSC)-derived allogeneic therapies for hematologic cancer indications.

The Company will receive exclusive rights and targets for initial applications in non-Hodgkin lymphoma, leukemia and multiple myeloma and has made an equity investment in Notch. Notch will receive an upfront payment, research funding, development and commercial milestones, and royalties on net sales.

Notch was established in 2018 by Juan Carlos Zúñiga-Pflücker, Ph.D. and Peter Zandstra, Ph.D., recognized pioneers in iPSC and T cell differentiation technology.
Third Quarter Financial Results

As of September 30, 2019, Allogene had $601.9 million in cash, cash equivalents, and investments.

Research and development expenses were $40.0 million for the third quarter of 2019, which includes $5.5 million of non-cash stock-based compensation expense, compared to $10.9 million for the third quarter of 2018. Research and development expenses also included a $5.0 million milestone to Cellectis that is associated with the initiation of the ALLO-715 UNIVERSAL trial.

General and administrative expenses were $15.0 million for the third quarter of 2019, which includes $7.3 million of non-cash stock-based compensation expense, compared to $11.3 million for the third quarter of 2018.

Net loss for the third quarter of 2019 was $50.7 million, or $0.50 per share, including non-cash stock-based compensation expense of $12.8 million, compared to a net loss of $43.5 million, or $10.71 per share for the third quarter of 2018.

Including expenses associated with the Notch transaction, the Company reiterates full-year 2019 Net Loss guidance of between $200 million and $210 million dollars, which includes an estimated non-cash stock-based compensation expense of $45 to $50 million dollars, and excludes any impact from future business development activities.

Conference Call and Webcast Details

Allogene will host a live conference call and webcast today at 5:30 AM Pacific Time/8:30 AM Eastern Time to discuss financial results and provide a business update. To access the live conference call by telephone, please dial 1 (866) 940-5062 (U.S.) or 1 (409) 216-0618 (International). The conference ID number for the live call is 2747063. The webcast will be made available on the Company’s website at www.allogene.com under the Investors tab in the News and Events section. Following the live audio webcast, a replay will be available on the Company’s website for approximately 30 days.

On November 5, 2019 A2 Biotherapeutics (www.a2bio.com), a biotechnology company developing innovative cell therapies for cancer patients, reported its official launch (Press release, A2 Biotherapeutics, NOV 5, 2019, View Source [SID1234550323]). The company, founded in 2018 by veteran biotechnology leaders, has a unique and potentially broad solution for the central problem of cancer research – targeted killing of tumor cells vs. normal cells. A2 Biotherapeutics employs a powerful discovery and optimization technology to identify antibody and T-cell receptor fragments that bind to targets that are technically challenging but definitively distinguish tumor cells. The target binder platform is seamlessly combined with proprietary cell engineering, modular vector designs, and novel quantitative assays to extend the reach of cell therapies into solid tumors.

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Investors in the $57 million Series A financing include The Column Group, Vida Ventures, Samsara BioCapital and Nextech Invest.

Tumor cells exhibit only subtle differences from normal cells, making it challenging to create cancer therapies that recognize and kill only tumor cells. A2 Biotherapeutics is overcoming this challenge, having already demonstrated targeted killing of tumor cells in its research. The company aims to beat cancer via tumor-specific targeting using a novel approach that considers targets gained or lost in cancer cells. "This approach has the promise of being utilized for multiple tumor types, providing solutions for many cancer patients. A2 Biotherapeutics has potent, highly selective binders that we combine into molecular constructs to integrate multiple signals and potentially provide a large therapeutic window," said Alexander Kamb, Co-Founder and chief scientific officer. Kamb was formerly SVP of Research at Amgen.

To unequivocally distinguish tumor cells from healthy cells, A2 Biotherapeutics is pursuing two target classes. First, the company addresses peptide MHC targets, which are generated inside the cell and presented on the cell surface, providing the potential to access intracellular targets gained in tumors (e.g., neo-antigens). The second target class is tackled through modular cell engineering to deploy a more powerful version of the mechanism used by natural killer cells. This latter approach addresses targets that are irreversibly lost in tumor cells via loss of heterozygosity.

To advance its product candidates, A2 Biotherapeutics has a fully integrated discovery, development and manufacturing organization in Agoura Hills, California with a team that already includes more than 40 staff. Efforts are led by an experienced management team aggregating the experience of ex-Amgen and ex-Kite Pharma drug and cell therapy developers. Scott Foraker, an executive with 25 years of experience at Amgen, was recently hired as president and chief executive officer. "Our unique approach to targeted killing of tumor cells has the potential to create breakthrough cancer therapies that we look forward to bringing to patients, particularly those in need of new approaches," said Foraker.

The company also has the support of distinguished academic experts in cell therapy and T-cell biology, including:

Mark Davis, PhD, Director, Stanford Institute for Immunity, Transplantation and Infection and The Burt And Marion Avery Family Professor of Microbiology and Immunology at Stanford University

Robert Schreiber, PhD, AM Bursky & JM Bursky Distinguished Professor of Pathology & Immunology at the Washington University School of Medicine in St. Louis

David Maloney, MD, PhD, Medical Director of Cellular Immunotherapy at the Immunotherapy Integrated Research Center (IIRC) and Leonard and Norma Klorfine Endowed Chair for Clinical Research at Fred Hutch

George Tsokos, MD, Professor of Medicine at the Harvard Medical School and Chief of Rheumatology at the Beth Israel Deaconess Medical Center in Boston

A2 Biotherapeutics currently has four programs in development with the first clinical candidate expected next year and is open to collaborations to rapidly advance these programs. The company’s plans also include innovations in manufacturing; it will launch an autologous cell manufacturing facility in 2020 with technology scalable for commercial launch. "A2 Biotherapeutics aspires to increase speed to patients and reduce cost of goods by leveraging its cell therapy manufacturing expertise and advances in technology," said Madhu Balachandran, former EVP of Operations at Amgen and member of A2 Biotherapeutics Board of Directors.

On November 5, 2019 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the third quarter of 2019 and provided a business update (Press release, Regeneron, NOV 5, 2019, View Source [SID1234550339]).

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"Regeneron delivered positive financial and operational results this quarter, marked by significant EYLEA and Dupixent sales growth and progress across our pipeline," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "We are broadening our efforts in retinal and type 2 inflammatory diseases, including initiating late-stage trials of Dupixent in additional type 2 diseases in the coming months. Oncology is a major focus of our research and development efforts, and we are advancing important new potential treatments for patients with a variety of cancers. We currently have six bispecific antibodies in the clinic, and multiple pivotal trials with Libtayo in non-small cell lung, skin, and other cancers."

"This quarter, we realized improving profitability from the Sanofi antibody collaboration, which is contributing to a more diverse earnings base for the Company," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "Our financial results, strength of our balance sheet, and confidence in our business longer-term allow us to continue deploying capital by investing in internal and external innovation to expand our pipeline, while also returning cash to shareholders with the initiation of a $1 billion share repurchase program."

Key Pipeline Progress
Regeneron has 24 product candidates in clinical development, including five of the Company’s U.S. Food and Drug Administration (FDA) approved products for which it is investigating additional indications. Updates from the clinical pipeline include:
EYLEA (aflibercept) Injection

In August 2019, the FDA approved the EYLEA pre-filled syringe, which is expected to be launched before the end of this year.

A Phase 2 study exploring less frequent dosing intervals using a high-dose formulation of aflibercept in wet AMD was initiated.

A Phase 3 study in retinopathy of prematurity was initiated.

Dupixent (dupilumab)

In August 2019, the European Commission (EC) extended its approval of Dupixent in the European Union to include adolescents 12 to 17 years of age with moderate-to-severe atopic dermatitis who are candidates for systemic therapy.

In August 2019, the Company and Sanofi announced that the Phase 3 trial to treat severe atopic dermatitis in children 6 to 11 years of age met its primary and secondary endpoints. Submissions for a supplemental Biologics License Application (sBLA) and Marketing Authorization Application (MAA) for this expanded atopic dermatitis indication in pediatric patients are expected by the end of the year.

In October 2019, the EC approved Dupixent in chronic rhinosinusitis with nasal polyposis (CRSwNP).

The Company and Sanofi plan to initiate Phase 3 studies in bullous pemphigoid, prurigo nodularis, chronic spontaneous urticaria, and additional type 2 inflammatory diseases.

Praluent (alirocumab)

In August 2019, the Company and Sanofi announced the U.S. District Court for the District of Delaware ruled in their favor and found as a matter of law that Amgen’s asserted patent claims for antibodies targeting PCSK9 are invalid based on lack of enablement.

Evinacumab, an antibody to ANGPTL3

In August 2019, the Company announced positive top-line results from a Phase 3 trial of evinacumab in patients with homozygous familial hypercholesterolemia (HoFH). The Company plans to submit a BLA in mid-2020.

REGN-EB3, a multi-antibody therapy to Ebola virus infection

In August 2019, the Company announced that a randomized, controlled trial evaluating four investigational therapies for Ebola virus infection was stopped early because REGN-EB3 was superior to ZMapp (the control arm of the trial since it was considered standard-of-care) in preventing death. REGN-EB3 and another investigational drug are being further studied as part of the Extension Phase of this trial.

The FDA granted Breakthrough Therapy designation for the treatment of Ebola virus infection and the Company has initiated a rolling BLA submission.

REGN5678, a bispecific antibody targeting PSMA and CD28

A Phase 1 study evaluating this first-in-class co-stimulatory bispecific antibody was initiated in prostate cancer.

REGN5093, a bispecific antibody targeting two distinct MET epitopes

A Phase 1 study evaluating this first-in-class bispecific antibody was initiated in MET-altered advanced non-small cell lung cancer.

Share Repurchase Program
In November 2019, the Company’s board of directors authorized a share repurchase program to repurchase up to $1.0 billion of the Company’s Common Stock. Repurchases may be made from time to time at management’s discretion through a variety of methods. The program has no time limit and can be discontinued at any time. No shares have been repurchased under the program to date.

Third Quarter 2019 Financial Results

Total Revenues: Total revenues increased by 23% to $2.048 billion in the third quarter of 2019, compared to $1.663 billion in the third quarter of 2018.

Net product sales were $1.238 billion in the third quarter of 2019, compared to $1.025 billion in the third quarter of 2018. EYLEA net product sales in the United States were $1.188 billion in the third quarter of 2019, compared to $1.022 billion in the third quarter of 2018. Overall distributor inventory levels for EYLEA in the United States remained within the Company’s one-to-two-week targeted range.

Total revenues also include Sanofi and Bayer collaboration revenues(5) of $707 million in the third quarter of 2019, compared to $521 million in the third quarter of 2018. Sanofi collaboration revenue in the third quarter of 2019 included the Company’s share of profits from collaboration antibodies (Dupixent, Praluent, and Kevzara) of $94 million, while Sanofi collaboration revenue in the third quarter of 2018 included the Company’s share of losses from collaboration antibodies of $39 million. The increase in the Company’s share of profits from collaboration antibodies was primarily driven by higher Dupixent profits.

Refer to Table 4 for a summary of collaboration and other revenue.

Research and Development (R&D) Expenses: GAAP R&D expenses were $663 million in the third quarter of 2019, compared to $557 million in the third quarter of 2018. The higher R&D expenses in the third quarter of 2019 were principally due to additional costs incurred in connection with fasinumab as well as our earlier-stage pipeline, and higher headcount and

headcount-related costs. In each of the third quarters of 2019 and 2018, R&D-related non-cash share-based compensation expense was $60 million.

Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were $420 million in the third quarter of 2019, compared to $369 million in the third quarter of 2018. The higher SG&A expenses in the third quarter of 2019 were primarily due to higher headcount and related costs, as well as an increase in commercialization-related expenses for Dupixent and EYLEA. In the third quarter of 2019, SG&A-related non-cash share-based compensation expense was $41 million, compared to $43 million in the third quarter of 2018.

Cost of Goods Sold (COGS): GAAP COGS was $116 million in the third quarter of 2019, compared to $31 million in the third quarter of 2018. The increase in COGS was primarily due to the Company’s obligation to pay Sanofi its share of Libtayo U.S. gross profits, higher period costs at the Company’s Limerick manufacturing facility, and higher inventory reserves and write-offs.

Income Taxes: In the third quarter of 2019, GAAP income tax expense was $99 million and the effective tax rate was 12.9%, compared to $41 million and 6.5%, respectively, in the third quarter of 2018. The effective tax rate for the third quarter of 2019 was positively impacted, compared to the U.S. federal statutory rate, primarily by federal tax credits for research activities and the foreign-derived intangible income deduction, partly offset by the taxation of certain global intangible low-taxed income. The Company’s effective tax rate for the third quarter of 2018 was positively impacted, compared to the U.S. federal statutory rate, primarily by the tax benefit associated with the U.S. Tax Reform Act and the federal tax credit for research activities.

GAAP and Non-GAAP Net Income(1): GAAP net income was $670 million, or $5.86 per diluted share, in the third quarter of 2019, compared to GAAP net income of $595 million, or $5.17 per diluted share, in the third quarter of 2018.

Non-GAAP net income was $762 million, or $6.67 per diluted share, in the third quarter of 2019, compared to non-GAAP net income of $675 million, or $5.87 per diluted share, in the third quarter of 2018.

A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

This press release uses non-GAAP net income, non-GAAP net income per share, non-GAAP unreimbursed R&D, and non-GAAP SG&A, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the estimated income tax effect of reconciling items.

The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company’s control (such as the Company’s stock price on the dates share-based grants are issued or changes in the fair value of the Company’s equity investments) or items that are not associated with normal, recurring operations. Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company’s core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company’s non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company’s historical GAAP to non-GAAP results is included in Table 3 of this press release.

The Company’s 2019 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release.

A reconciliation of full year 2019 non-GAAP to GAAP financial guidance is included below:

Unreimbursed R&D represents GAAP R&D expenses reduced by GAAP R&D expense reimbursements from the Company’s collaborators and/or customers (refer to Table 4).

The Company’s collaborators provide it with estimates of the collaborators’ respective sales and the Company’s share of the profits or losses from commercialization of products for the most recent fiscal quarter. The Company’s estimates for such quarter are reconciled to actual results in the subsequent fiscal quarter, and the Company’s share of the profit or loss is adjusted on a prospective basis accordingly, if necessary.

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its third quarter 2019 financial and operating results on Tuesday, November 5, 2019, at 8:30 AM. To access this call, dial (800) 708-4540 (U.S.) or (847) 619-6397 (International). A link to the webcast may be accessed from the "Investors and Media" page of Regeneron’s website at www.regeneron.com. A replay of the conference call and webcast will be archived on the Company’s website and will be available for at least 30 days.

On November 5, 2019 Oncternal Therapeutics, Inc. (Nasdaq: ONCT), a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies, reported that interim data on TK216 – an investigational targeted small molecule inhibitor of ETS transcription factor oncoproteins – will be presented at the Connective Tissue Oncology Society (CTOS) 2019 Annual Meeting in Tokyo, Japan, on November 16, 2019 (Press release, Oncternal Therapeutics, NOV 5, 2019, View Source [SID1234550355]). The oral presentation (abstract 3250355) titled "A Phase 1 Dose Escalation Study of Intravenous TK216 in Patients with Relapsed or Refractory Ewing Sarcoma" will be given by Paul A. Meyers, M.D., Chief, Pediatric Sarcoma Service and Vice Chair for Clinical Affairs of Memorial Sloan Kettering Cancer Center.

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About TK216

TK216 is an investigational, potentially first-in-class small molecule that is designed to inhibit the biological activity of E26 transformation-specific (ETS) transcription factor oncoproteins, including fusion proteins. Tumorigenic gene fusions involving ETS factors are frequently found in tumors such as Ewing sarcoma and prostate cancer, and ETS factors are often overexpressed in many other tumors, including prostate cancer and acute myeloid leukemia (AML). TK216 was developed based on discoveries of Jeffrey Toretsky, M.D., and his team at Georgetown University, who discovered inhibitors of EWS-FLI1 using a novel chemical screening assay. In preclinical models, TK216 binds to EWS-FLI1 and blocks the interaction between ETS family members and RNA helicase A leading to tumor cell apoptosis.

About the Study

TK216 is being evaluated in a Phase 1 clinical study as a single agent and in combination with vincristine in patients with relapsed or refractory Ewing sarcoma, a rare pediatric cancer that has historically been very challenging to treat effectively, particularly for recurrent and metastatic disease. A dose-finding arm of this study is nearing completion, after which Oncternal intends to begin enrolling patients in an expansion cohort of the study to evaluate the clinical response of treatment with TK216 in combination with vincristine, an approved chemotherapy agent. This multi-center study is actively enrolling patients at six clinical trial centers across the U.S. Additional information about the TK216 study may be accessed at ClinicalTrials.gov (NCT02657005).