Avid Bioservices Reports Financial Results for Quarter and Fiscal Year Ended April 30, 2018 and Recent Developments

On July 16, 2018 Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP), a dedicated biologics contract development and manufacturing organization (CDMO) working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies, reported financial results for the fourth quarter and fiscal year (FY) 2018 ended April 30, 2018, and provided an update on its contract manufacturing operations, and other corporate highlights (Press release, Avid Bioservices, JUL 16, 2018, View Source [SID1234527719]).

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Highlights Since January 31, 2018

"During fiscal 2018, Avid Bioservices initiated a transition to a pure play biologics contract development and manufacturing organization. Today, Avid is a recognized, established and well-respected service provider to the biotechnology and pharmaceutical industry," said Roger Lias, Ph.D., president and chief executive officer of Avid Bioservices. "In recent months we have significantly diversified and expanded our portfolio of customers. This effort has also fostered a steady increase in our backlog, which creates a strong foundation as we diligently pursue our goal to achieve breakeven and positive EBITDA. We have brought in an impressive new board and established a cohesive new leadership team with expertise spanning every vital facet of our business from business development to process development and finance. We are responding to, and winning, more requests for proposal than at any time in Avid’s history and we are filling our available capacity with a product mix consisting of both earlier phase process development and clinical programs, as well as late phase clinical and commercial programs. While fiscal 2018 was an impressive turnaround year for Avid, fiscal 2019 will be our first full year as a focused CDMO business and we are excited about the market opportunity and the very significant prospects for growth and market leadership that lie ahead.

"I would like to recognize the tremendous efforts of the staff at Avid Bioservices. The type of transition that we have effected is not easy and I remain incredibly impressed by the dedication and talent of the Avid team and their commitment to exemplary customer service and continued industry leading compliance. I would like to very specifically thank them for their continued support. Our people remain the backbone of our service offering and our business."

Recent CDMO Developments

Appointed multiple experienced executives to strengthen the leadership team including:

oMagnus Schroeder, Ph.D., vice president of process sciences. Dr. Schroeder is an accomplished scientist with more than 16 years of experience spanning bioprocess development, cGMP manufacturing, CMC strategy and global project leadership. Dr. Schroeder most recently served as a director at AGC Biologics, formerly CMC Biologics, where he participated in the successful commercial launch of multiple products.

oSandra Carbonneau, director, business development, (eastern region

Ms. Carbonneau brings to Avid more than 26 years of relevant industry experience. Previously with Lonza Biologics, Ms. Carbonneau oversaw the global mammalian commercial development business unit, including manufacturing, quality assurance, compliance and contract management.

Michael Faughnan, senior director, business development (western region)
Mr. Faughnan joins Avid with more than 20 years of customer focused sales and management experience. In particular, Mr. Faughnan has 18 years of successful biotech and CDMO sales experience with industry leading companies including Lonza and WuXi Biologics, where he contributed to significant growth.

Initiated expansion and optimization of the company’s process development capabilities and laboratory space, including:

Expanding the total available process development laboratory space to more than 6,000 square feet;
Upgrading the infrastructure and equipment within the existing process development laboratories;
Implementing new state-of-the-art technologies and equipment designed to facilitate efficient, high-throughput development of upstream and downstream manufacturing processes.
The first new laboratories are expected to be operational during the third quarter of calendar 2018.
Signed five new master service agreements (MSAs) in the first six months of calendar 2018. This is more than Avid signed during all of calendar 2017. New projects under the MSAs range from process development to clinical stage biomanufacturing. All projects will contribute to revenue during fiscal 2019.

Recent Corporate Developments

Entered into an Asset Assignment and Purchase Agreement with Oncologie, Inc. in February 2018 for Avid’s phosphatidylserine (PS)-targeting program including bavituximab

Avid is entitled to receive an aggregate of $8.0 million in upfront payments over a period of six months, of which $6.0 million has been received according to the contractually agreed schedule. Avid will also be eligible to receive up to $95.0 million with Oncologie, Inc.’s successful achievement of development, regulatory and commercialization milestones.

Oncologie, Inc. is responsible for all future research, development and commercialization of bavituximab, and related intellectual property costs.

Avid is eligible to receive royalties on net sales that are upward tiering into the mid-teens.

Oncologie has entered into an agreement with Avid for future contract development and manufacturing activities in support of bavituximab and other potential products.

Completed a public offering of 10,294,445 shares of common stock in February 2018 raising gross proceeds of approximately $23.2 million.

Avid intends to use the net proceeds from the offering to support the growth of its contract manufacturing business and general corporate purposes.

Financial Highlights and Guidance

The current revenue backlog increased by 48.2% to $57.8 million from $39.0 million at the end of the third quarter of FY 2018 (ASC 605).

The company is providing revenue guidance for the full FY 2019 of $51.0 million – $55.0 million (ASC 606).

Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services was $6.9 million for the fourth quarter of FY 2018 compared to $17.9 million for the fourth quarter of FY 2017. Revenue for the full FY 2018 met guidance at $53.6 million compared to $57.6 million for full FY 2017. The decline in both the fourth quarter and FY 2018 was primarily due to previously announced lower demand from one of our largest customers.

Gross margin for the fourth quarter of FY 2018 was negative 28%, and gross margin for full FY 2018 was negative 5%. These margins are compared to positive 34% for the fourth quarter of FY 2017 and positive 34% for the full FY 2017.

·Selling, general and administrative (S,G&A) expenses for the fourth quarter of FY 2018 were $4.2 million, compared to $4.5 million for the fourth quarter of FY 2017. For the full FY 2018, total S,G&A expenses were $16.5 million, compared to $18.1 million for FY 2017. S,G&A expense for the fourth quarter of FY 2018 included one-time charges totaling $1.2 million for the write-off of equipment, severance and other one-time charges. The decreases in both the fourth quarter and FY 2018 were driven primarily by lower headcount and expense reductions.

Income from discontinued operations for the fourth quarter of FY 2018 was $9.2 million, which was primarily due to the gain on sale of certain assets to Oncologie, Inc.

For the fourth quarter of FY 2018, the company recorded consolidated net income attributable to common stockholders of $1.6 million or $0.03 per share, compared to a consolidated net loss attributable to common stockholders of $6.7 million, or $0.16 per share, for the fourth quarter of FY 2017. For full FY 2018, the company recorded a consolidated net loss attributable to common stockholders of $26.5 million or $0.56 per share, compared to a consolidated net loss attributable to common stockholders of $32.8 million, or $0.88 per share, for full FY 2017.

·Avid reported $42.3 million in cash and cash equivalents as of April 30, 2018, compared to $46.8 million on April 30, 2017.

More detailed financial information and analysis may be found in Avid’s Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission today.

Conference Call

Avid will host a conference call and webcast this afternoon, July 16, 2018, at 4:30 PM EDT (1:30 PM PDT).

To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Avid Bioservices conference call. To listen to the live webcast, or access the archived webcast, please visit: View Source

Entry Into a Material Definitive Agreement

On July 16, 2018 Forty Seven, Inc. reported that it entered into a settlement and license agreement with Synthon Biopharmaceuticals B.V., or Synthon (Filing, 8-K, Synthon, 16 16, 2018, View Source [SID1234528326]). Under the agreement, we agreed to discontinue our ongoing oppositions and challenges at the European Patent Office, or EPO, and the U.S. Patent and Trademark Office, or USPTO, directed towards certain patents licensed by Synthon from Stichting Sanquin Bloedvoorziening, or SSB, that relate to the use of anti-CD47 products in combination with other antibodies to treat cancer. We also agreed to request the withdrawal of such proceedings with the USPTO and EPO. In return Synthon agreed to grant us a non-exclusive, worldwide sublicense to certain patents they have licensed from SSB, including the SSB patents we are opposing at the USPTO and EPO to commercialize a single anti-CD47 product(such as 5F9 or an alternate anti-CD47 product) to treat cancer in combination with other antibodies.

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In December 2016 and April 2017, we filed third party observations in an opposition proceeding in the EPO with respect to European Patent No. EP 2 282 772 and in January 2018, petitioned for inter partes review of U.S. Patent No. 9,352,037 in the USPTO, each of which is related to the treatment of cancer with an anti-CD47 antibody or an anti-SIRPα antibody in combination with certain other antibodies. The opposition proceeding was rejected by the EPO and the original opponent appealed the decision. On June 4, 2018, we acquired the opposition against this European patent from the original opponent. Pursuant to the agreement, we and Synthon have each agreed to release the other party (and we have agreed to release SSB) from all claims and liabilities relating to the USPTO and EPO proceedings.

The sublicense grant is subject to the satisfaction of specified conditions, including our withdrawal of the proceedings opposing the above-mentioned SSB U. S. and European patents and the termination of these proceedings by the USPTO and the EPO. Our obligation to withdraw such proceedings and the effectiveness of the release of claims by Synthon and us are subject to (i) SSB agreeing to release us from all claims and liabilities under the USPTO and EPO proceedings and (ii) SSB agreeing to grant us a direct license to the sublicensed patents in the event the license between SSB and Synthon is terminated.

Our sublicense will include the right to further sublicense the applicable patent rights to our collaborators, corporate partners and service providers and will cover one named product, which will be 5F9. We will have the right to replace 5F9 with a different anti-CD47 product in the event of a development failure of 5F9. We will also have an option to expand our rights to cover a follow-on anti-CD47 product in exchange for a specified option exercise fee. Synthon will retain the right to use the licensed patents and to grant other third parties the right to do so.

In exchange for these sublicenses and option rights, we agreed to pay Synthon an aggregate of up to approximately $47 million comprising an upfront payment upon grant of the sublicense and the achievement of future regulatory and commercial milestones which comprise the significant majority of the aggregate payments. If we exercise our option right, we will pay Synthon additional amounts upon the achievement of certain regulatory and commercial milestones related to such follow-on anti-CD47 product. In addition, we will be required to pay Synthon an annual license fee and a royalty of a tiered, low single digit percentage on net sales of any approved licensed products. We have the right to buy out our royalty obligations for each licensed product in full by paying Synthon specified lump sum amounts prior to the occurrence of certain defined events. All payments under the settlement and license agreement are specified in Euros and have been converted into U.S. Dollars based on the exchange rate as of July 16, 2018.

This summary is qualified in its entirety by reference to the text of the settlement and license agreement, which we intend to file as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, and is incorporated herein by reference. We also intend to seek appropriate confidential treatment of certain terms and provisions of the settlement and license agreement in connection with the filing of this agreement, in accordance with the procedures of the Securities and Exchange Commission.

Taiho Pharmaceutical Enters into Development of a Novel Immuno-Oncology Therapy with Arcus Biosciences

On July 13, 2018 Taiho Pharmaceutical Co., Ltd. reported that it has exercised the option to adenosine receptor antagonists from Arcus Biosciences, a U.S.-based biotechnology company focused on the discovery and development of innovative cancer immunotherapies (Press release, Taiho, JUL 13, 2018, View Source [SID1234527686]). With the exercise of the option, Taiho has the exclusive right to develop and commercialize AB928 and backup compounds in Japan and certain other territories in Asia (excluding China). The option exercise is based on the Option and License Agreement contracted in September 2017.

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AB928 is an orally bioavailable small molecule compound which inhibits the adenosine 2a and 2b receptors. The activation of these receptors by adenosine on tumor infiltrating immune cells is thought to be one of the key mechanisms of immuno-suppression in the tumor microenvironment. AB928 may have the ability to reverse this situation by blocking these receptors. While adenosine receptor antagonists are being developed for several diseases other than cancer, AB928 was designed specifically for the oncology setting. Adenosine receptor antagonists have been an area of significant interest for many researchers, bio-tech and large pharmaceutical companies in the last decade.

In a Phase-I clinical trial in healthy volunteers conducted by Arcus, the safety, tolerability, pharmacokinetic and pharmacodynamic profile of AB928 was evaluated. Arcus has initiated several Phase-I/Ib studies to investigate the safety and clinical activity of AB928 in combination with chemotherapy or an anti-PD1 antibody in multiple types of cancer. Taiho and Arcus will work collaboratively to effectively investigate the optimal therapeutic approach and bring AB928 to cancer patients as quickly as possible.

Through this collaboration, Taiho continues its mission to deliver innovative drugs to patients and medical professionals.

Bausch Health Companies Inc. completes name change

On July 13, 2018 Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we") reported the Company’s name change from Valeant Pharmaceuticals International, Inc. to Bausch Health Companies Inc. is complete (Press release, Bausch Health, JUL 13, 2018, View Source [SID1234542277]).

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"Choosing Bausch Health as our new corporate name is very meaningful, because the Bausch name has long been a highly respected name in the health care space, synonymous for 165 years with innovation and an unwavering dedication to improving people’s lives," said Joseph C. Papa, chairman and CEO, Bausch Health. "It is a legacy that defines us today and sets the stage for our future as we continue to transform the Company."

Bausch Health will begin trading as "BHC" on the New York Stock Exchange and Toronto Stock Exchange on July 16, 2018.

As part of the name change, Bausch Health has unveiled a new corporate brand visual identity, and on July 16, 2018, will launch a new corporate web site: www.bauschhealth.com.

Because the Company’s businesses and subsidiaries have strong brand equity, all entities that have separate established brands will continue to operate under the corporate umbrella using their existing names.

The National Comprehensive Cancer Network (NCCN) Guidelines Recommend BRAFTOVI™ (encorafenib) in Combination with MEKTOVI® (binimetinib) as a Category 1 Treatment Option for Patients with Advanced BRAF-mutant Melanoma

On July 13, 2018 Array BioPharma Inc. (NASDAQ: ARRY) reported that the National Comprehensive Cancer Network (NCCN) has updated the Clinical Practice Guidelines in Oncology for Melanoma to include BRAFTOVI in combination with MEKTOVI as a Category 1 first-line and second-line treatment option for patients with BRAFV600E or BRAFV600K-mutant metastatic or unresectable melanoma (Press release, Array BioPharma, JUL 13, 2018, View Source [SID1234527691]).

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The U.S. Food and Drug Administration (FDA) approved BRAFTOVI in combination with MEKTOVI on June 27, 2018 for the treatment of patients with unresectable or metastatic melanoma with a BRAFV600E or BRAFV600K mutation, as detected by an FDA-approved test based on data from the pivotal Phase 3 COLUMBUS trial, which demonstrated the combination doubled median progression-free survival (mPFS) compared to vemurafenib alone (14.9 months versus 7.3 months, respectively [hazard ratio (HR) (0.54), (95% CI 0.41-0.71), p<0.0001]. In the trial, only 5% of patients who received BRAFTOVI + MEKTOVI discontinued treatment due to adverse reactions. BRAFTOVI is not indicated for the treatment of patients with wild-type BRAF melanoma.

"We greatly appreciate the NCCN’s rapid evaluation and recommendation for BRAFTOVI + MEKTOVI as a Category 1 treatment option for patients with advanced BRAF-mutant melanoma," said Ron Squarer, Chief Executive Officer. "These products represent a new standard of care for patients with this deadly type of skin cancer."

A Category 1 recommendation indicates that, based upon high-level evidence, there is uniform NCCN consensus that the intervention is appropriate.

In June 2018, Array also announced updated results from the COLUMBUS trial which demonstrated that the combination encorafenib and binimetinib reduced the risk of death compared to treatment with vemurafenib [HR (0.61), (95% CI 0.47-0.79, p <0.0001] in the planned analysis of overall survival (OS). Median OS was 33.6 months for patients treated with the combination, compared to 16.9 months for patients treated with vemurafenib as a monotherapy.

Array offers a $0 copay for eligible, commercially-insured patients. For more information about treatment of BRAFTOVI in combination with MEKTOVI, visit www.braftovimektovi.com.

The full prescribing information for BRAFTOVI can be found here:
View Source

The full prescribing information for MEKTOVI can be found here:
View Source

About BRAF-mutant Metastatic Melanoma
Melanoma develops when unrepaired DNA damage to skin cells triggers mutations that may lead them to multiply and form malignant tumors. Metastatic melanoma is the most serious and life-threatening type of skin cancer and is associated with low survival rates. [1, 2] There are a variety of gene mutations that can lead to metastatic melanoma. The most common genetic mutation in metastatic melanoma is BRAF. There are about 200,000 new cases of melanoma diagnosed worldwide each year, approximately half of which have BRAF mutations, a key target in the treatment of metastatic melanoma. [1, 3, 4, 5]

About BRAFTOVI + MEKTOVI
BRAFTOVI is an oral small molecule BRAF kinase inhibitor and MEKTOVI is an oral small molecule MEK inhibitor which target key enzymes in the MAPK signaling pathway (RAS-RAF-MEK-ERK). Inappropriate activation of proteins in this pathway has been shown to occur in many cancers including melanoma, colorectal cancer, non-small cell lung cancer, thyroid and others. In the U.S., BRAFTOVI + MEKTOVI are approved for the treatment of unresectable or metastatic melanoma with a BRAFV600E or BRAFV600K mutation, as detected by an FDA-approved test. BRAFTOVI is not indicated for treatment of patients with wild-type BRAF melanoma.

Array has exclusive rights to BRAFTOVI and MEKTOVI in the U.S. and Canada. Array has granted Ono Pharmaceutical exclusive rights to commercialize both products in Japan and South Korea and Pierre Fabre exclusive rights to commercialize both products in all other countries, including Europe, Asia and Latin America.

BRAFTOVI + MEKTOVI are not approved outside of the U.S. The European Medicines Agency (EMA), as well as the Swiss Medicines Agency (Swissmedic) and the Australian Therapeutic Goods Administration (TGA), are currently reviewing the Marketing Authorization Applications submitted by Pierre Fabre, and Japan’s Pharmaceuticals and Medical Devices Agency has accepted the Manufacturing and Marketing Approval applications submitted by Ono Pharmaceutical Co, Ltd.

About COLUMBUS
The COLUMBUS trial (NCT01909453) is a two-part, international, randomized, open label Phase 3 trial evaluating the efficacy and safety of BRAFTOVI (encorafenib) in combination with MEKTOVI (binimetinib) compared to vemurafenib and encorafenib monotherapy in 921 patients with locally advanced, unresectable or metastatic melanoma with BRAFV600 mutation. All secondary efficacy analyses, including overall survival, are descriptive in nature. Over 200 sites across North America, Europe, South America, Africa, Asia and Australia participated in the trial.

Indications and Usage
BRAFTOVI (encorafenib) and MEKTOVI(binimetinib) are kinase inhibitors indicated for use in combination for the treatment of patients with unresectable or metastatic melanoma with a BRAFV600E or BRAFV600K mutation, as detected by an FDA-approved test.

Limitations of Use: BRAFTOVI is not indicated for the treatment of patients with wild-type BRAF melanoma.

BRAFTOVI + MEKTOVI Important Safety Information
The information below applies to the safety of the combination of BRAFTOVI and MEKTOVI unless otherwise noted.

Warnings and Precautions
New Primary Malignancies: New primary malignancies, cutaneous and non-cutaneous malignancies can occur. In the COLUMBUS trial, cutaneous squamous cell carcinoma, including keratoacanthoma, occurred in 2.6% and basal cell carcinoma occurred in 1.6% of patients. Perform dermatologic evaluations prior to initiating treatment, every 2 months during treatment, and for up to 6 months following discontinuation of treatment. Discontinue BRAFTOVI for RAS mutation-positive non-cutaneous malignancies.

Tumor Promotion in BRAF Wild-Type Tumors: Confirm evidence of BRAFV600E or BRAFV600K mutation prior to initiating BRAFTOVI.

Cardiomyopathy: In the COLUMBUS trial, cardiomyopathy occurred in 7% and Grade 3 left ventricular dysfunction occurred in 1.6% of patients. Cardiomyopathy resolved in 87% of patients. Assess left ventricular ejection fraction by echocardiogram or MUGA scan prior to initiating treatment, 1 month after initiating treatment, and then every 2 to 3 months during treatment. The safety has not been established in patients with a baseline ejection fraction that is either below 50% or below the institutional lower limit of normal.

Venous Thromboembolism (VTE): In the COLUMBUS trial, VTE occurred in 6% of patients, including 3.1% of patients who developed pulmonary embolism.

Hemorrhage: In the COLUMBUS trial, hemorrhage occurred in 19% of patients and ≥Grade 3 hemorrhage occurred in 3.2% of patients. Fatal intracranial hemorrhage in the setting of new or progressive brain metastases occurred in 1.6% of patients.

Ocular Toxicities: In the COLUMBUS trial, serous retinopathy occurred in 20% of patients; 8% were retinal detachment and 6% were macular edema. Symptomatic serous retinopathy occurred in 8% of patients with no cases of blindness. In patients with BRAF mutation-positive melanoma across multiple clinical trials, 0.1% of patients experienced retinal vein occlusion (RVO). Permanently discontinue MEKTOVI in patients with documented RVO. In COLUMBUS, uveitis, including iritis and iridocyclitis, was reported in 4% of patients. Assess for visual symptoms at each visit. Perform ophthalmic evaluation at regular intervals and for any visual disturbances.

Interstitial Lung Disease (ILD): ILD, including pneumonitis, occurred in 0.3% of patients with BRAFmutation-positive melanoma across multiple clinical trials. Assess new or progressive unexplained pulmonary symptoms or findings for possible ILD.

Hepatotoxicity: In the COLUMBUS trial, the incidence of Grade 3 or 4 increases in liver function laboratory tests was 6% for alanine aminotransferase (ALT) and 2.6% for aspartate aminotransferase (AST). Monitor liver laboratory tests before and during treatment and as clinically indicated.

Rhabdomyolysis: In the COLUMBUS trial, elevation of laboratory values of serum creatine phosphokinase (CPK) occurred in 58% of patients. Rhabdomyolysis was reported in 0.1% of patients with BRAF mutation-positive melanoma across multiple clinical trials. Monitor CPK periodically and as clinically indicated.

QTc Prolongation: In the COLUMBUS trial, an increase in QTcF to >500 ms was measured in 0.5% (1/192) of patients. Monitor patients who already have or who are at significant risk of developing QTc prolongation. Correct hypokalemia and hypomagnesemia prior to and during BRAFTOVI administration. Withhold, reduce dose, or permanently discontinue for QTc >500 ms.

Embryo-Fetal Toxicity: BRAFTOVI or MEKTOVI can cause fetal harm when administered to pregnant women. Nonhormonal contraceptives should be used during treatment and for at least 30 days after the final dose for patients taking BRAFTOVI + MEKTOVI.

Adverse Reactions
The most common adverse reactions (≥20%, all Grades, in the COLUMBUS trial) were: fatigue, nausea, diarrhea, vomiting, abdominal pain, arthralgia, myopathy, hyperkeratosis, rash, headache, constipation, visual impairment, serous retinopathy.

In the COLUMBUS trial, the most common laboratory abnormalities (≥20%, all Grades) included: increased creatinine, increased CPK, increased gamma glutamyl transferase, anemia, increased ALT, hyperglycemia, increased AST, and increased alkaline phosphatase.

Drug interactions
Avoid concomitant use of strong or moderate CYP3A4 inhibitors or inducers and sensitive CYP3A4 substrates with BRAFTOVI. Modify BRAFTOVI dose if concomitant use of strong or moderate CYP3A4 inhibitors cannot be avoided.

Please see full Prescribing Information for BRAFTOVI and full Prescribing Information for MEKTOVI for additional information. You may report side effects to the FDA at (800) FDA-1088 or www.fda.gov/medwatch. You may also report side effects to Array at 1-844-Rx-Array (1-844-792-7729).