On August 1, 2024 Arbutus Biopharma Corporation (Nasdaq: ABUS) ("Arbutus" or the "Company"), a clinical-stage biopharmaceutical company leveraging its extensive virology expertise to develop a functional cure for people with chronic hepatitis B virus (cHBV) infection, reported second quarter 2024 financial results and provides a corporate update (Press release, Arbutus Biopharma, AUG 1, 2024, View Source [SID1234645246]).

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"At the EASL Congress we reported impressive imdusiran data. I’m particularly excited that in the IM-PROVE I clinical trial we saw undetectable HBsAg in 67% of those patients with baseline HBsAg less than 1000 IU/mL who were treated with 48 weeks of imdusiran and 24 weeks of IFN," said Michael J. McElhaugh, Interim President and Chief Executive Officer of Arbutus Biopharma. "In addition, these patients stopped all therapy and in early follow-up have maintained undetectable HBsAg and HBV DNA, a precursor to a functional cure. With these encouraging data, we continue to be optimistic about imdusiran as a potential cornerstone therapeutic in a treatment regimen to functionally cure cHBV."

Mr. McElhaugh continued, "We intend to focus our existing resources on conducting a Phase 2b clinical trial with imdusiran, assuming continued positive data. This has the potential to create a true inflection point for both Arbutus and HBV patients. To ensure we have the resources to conduct such a program, we have made the difficult decision to discontinue our HBV research efforts and reduce our headcount leading to a projected cash runway into the fourth quarter of 2026. I want to express my sincere gratitude to those impacted by the workforce reduction for their invaluable contributions to our mission and their dedication to helping HBV patients."

Clinical Development Update

Imdusiran (AB-729, RNAi Therapeutic)

At the EASL Congress in June, end-of-treatment data was presented from IM-PROVE I (AB-729-201), a Phase 2a clinical trial evaluating the safety, tolerability and antiviral activity of the combination of imdusiran, nucleos(t)ide analogue (NA) therapy and pegylated interferon alfa-2a (IFN) in patients with cHBV. The data showed that 33.3% (n=4/12) of patients in Cohort A1 receiving 48 weeks of imdusiran combined with a short course of IFN (24-weeks) and NA therapy, achieved undetectable HBsAg at the end-of-treatment that was maintained in 100% of these patients 24 weeks after completing imdusiran and IFN treatment. Undetectable HBsAg was achieved in 67% of those patients with HBsAg less than 1000 IU/mL at baseline. A total of six patients who received 24 weeks of IFN (n=4 Cohort A1; n=2 Cohort A2) seroconverted, with HBsAg loss accompanied by high titers of anti-HBsAg antibodies. All six of these patients have stopped NA therapy, with two of those patients reaching 12 weeks off all therapy with sustained undetectable levels of HBsAg and HBV DNA. The combination of imdusiran and IFN in this clinical trial was generally safe and well-tolerated.
Also at the EASL Congress in June, end-of treatment data was presented from the IM-PROVE II (AB-729-202) Phase 2a clinical trial evaluating the safety and immunogenicity of imdusiran, NA therapy and Barinthus Bio’s VTP-300, an HBV antigen-specific immunotherapy. The data showed that at 24-weeks post-end of treatment with imdusiran and VTP-300, statistical significance (p<0.05) was achieved in HBsAg levels between the treatment arm (n=5) and placebo (n=6). In addition, more patients maintained HBsAg thresholds of <100 IU/mL and <10 IU/mL when administered VTP-300 vs. placebo at 24-weeks post end-of-treatment. The combination of imdusiran and VTP-300 in this clinical trial was generally safe and well-tolerated.
IM-PROVE II includes an additional cohort of patients who will receive imdusiran plus NA therapy for 24 weeks followed by VTP-300 plus up to two low doses of nivolumab, an approved anti-PD-1 monoclonal antibody. Arbutus is on-track to report preliminary end-of-treatment data from this additional cohort in the second half of 2024.
Arbutus has terminated its Phase 2a clinical trial evaluating the safety, tolerability and antiviral activity of imdusiran and NA therapy in combination with intermittent low doses of durvalumab, an approved anti-PD-L1 monoclonal antibody (IM-PROVE III, AB-729-203) prior to dosing any participants. This decision was based on a prioritization of resources and the projected availability of clinical data from this trial.
AB-101 (Oral PD-L1 Inhibitor)

AB-101-001 is a Phase 1a/1b double-blind, randomized, placebo-controlled clinical trial designed to investigate the safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) of single- and multiple-ascending oral doses of AB-101 for up to 28 days in healthy subjects and patients with cHBV. Part 1 of the clinical trial has enrolled four sequential cohorts of eight healthy subjects each (6 active:2 placebo) to date, each receiving a single dose of AB-101 at increasing dose levels up to 25 mg or placebo. Data from Part 1 of this trial showed that AB-101 was generally well-tolerated with evidence of dose-dependent receptor occupancy. In the 25 mg cohort, all five evaluable subjects showed evidence of receptor occupancy between 50-100%. Arbutus has moved into Part 2 of this clinical trial which evaluates multiple-ascending doses of AB-101 in healthy subjects and expects to report preliminary data in the second half of this year.
Corporate Updates

The Company has made the decision to streamline the organization to focus its efforts on advancing the clinical development of imdusiran and AB-101, and is therefore ceasing all discovery efforts and discontinuing its IM-PROVE III clinical trial. In taking these steps to streamline the organization, Arbutus is implementing a reduction in its workforce of 40%, primarily affecting the discovery and general and administrative functions. As a result, Arbutus will incur a one-time restructuring charge of approximately $3.0 – $4.0 million that will be recorded in the third quarter of 2024. With these organizational changes and its ongoing cost management efforts, the Company now expects its current cash, cash equivalents and investments in marketable securities will be sufficient to fund operations into the fourth quarter of 2026.
LNP Litigation Update

Next steps in the lawsuit against Moderna include expert reports and expert depositions. A trial date has been set for April 21, 2025, and is subject to change.
The lawsuit against Pfizer/BioNTech is ongoing and a date for a claim construction hearing has not been set. 
Arbutus continues to protect and defend its intellectual property, which is the subject of the on-going lawsuits against Moderna and Pfizer/BioNTech. The Company is seeking fair compensation for Moderna’s and Pfizer/BioNTech’s use of its patented LNP technology that was developed with great effort and at a great expense, without which Moderna’s and Pfizer/BioNTech’s COVID-19 vaccines would not have been successful.

Financial Results

Cash, Cash Equivalents and Investments

As of June 30, 2024, the Company had cash, cash equivalents and investments in marketable securities of $148.5 million compared to $132.3 million as of December 31, 2023. During the six months ended June 30, 2024, the Company used $33.8 million in operating activities, which was offset by $44.1 million of net proceeds from the issuance of common shares under its "at-the-market" offering program (ATM Program). The Company expects its 2024 cash burn to range from $63 million to $67 million. With the organizational changes announced today, the Company believes its cash, cash equivalents and investments in marketable securities will be sufficient to fund its operations into the fourth quarter of 2026.

Revenue

Total revenue was $1.7 million for the three months ended June 30, 2024 compared to $4.7 million for the same period in 2023. The decrease of $3.0 million was due primarily to: i) a decrease in license revenue recognized under our licensing agreement with Qilu Pharmaceutical; and ii) a decrease in license royalty revenue from Alnylam due to lower sales of ONPATTRO in 2024 compared to 2023.

Operating Expenses

Research and development expenses were $15.6 million for the three months ended June 30, 2024 compared to $17.7 million for the same period in 2023. The decrease of $2.1 million was due primarily to the discontinuation of the Company’s coronavirus and AB-161 programs in September 2023 as part of its efforts to focus on its lead HBV product candidates, partially offset by an increase in clinical expenses for the Company’s AB-101 Phase 1a/1b clinical trial and its multiple imdusiran Phase 2a clinical trials. General and administrative expenses were $7.5 million for the three months ended June 30, 2024 compared to $6.0 million for the same period in 2023. The increase of $1.5 million was due primarily to higher litigation costs, partially offset by a decrease in compensation-related expenses.

Net Loss

For the three months ended June 30, 2024, the Company’s net loss was $19.8 million, or a loss of $0.11 per basic and diluted common share, as compared to a net loss of $17.1 million, or a loss of $0.10 per basic and diluted common share, for the three months ended June 30, 2023.

Outstanding Shares

As of June 30, 2024, the Company had approximately 188.7 million common shares issued and outstanding. In addition, the Company had approximately 20.5 million stock options and unvested restricted stock units outstanding as of June 30, 2024. Roivant Sciences Ltd. owned approximately 21% of our outstanding common shares as of June 30, 2024.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(in thousands, except share and per share data)

Three Months Ended March 31, Six Months Ended June 30,
2024 2023 2024 2023
Revenue
Collaborations and licenses $ 1,155 $ 3,885 $ 2,094 $ 9,394
Non-cash royalty revenue 571 766 1,164 1,944
Total revenue 1,726 4,651 3,258 11,338
Operating expenses
Research and development 15,551 17,692 30,954 35,967
General and administrative 7,547 5,980 12,859 11,532
Change in fair value of contingent consideration 211 (636 ) 391 (363 )
Total operating expenses 23,309 23,036 44,204 47,136
Loss from operations (21,583 ) (18,385 ) (40,946 ) (35,798 )
Other income
Interest income 1,829 1,461 3,374 2,729
Interest expense (34 ) (171 ) (78 ) (369 )
Foreign exchange gain (8 ) 1 (21 ) 5
Total other income 1,787 1,291 3,275 2,365
Net loss $ (19,796 ) $ (17,094 ) $ (37,671 ) $ (33,433 )
Loss per share
Basic and diluted $ (0.11 ) $ (0.10 ) $ (0.21 ) $ (0.20 )
Weighted average number of common shares
Basic and diluted 188,041,489 166,063,284 181,842,519 163,855,661

Comprehensive loss
Unrealized gain on available-for-sale securities 63 166 113 1,020
Comprehensive loss $ (19,733 ) $ (16,928 ) $ (37,558 ) $ (32,413 )

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 30, 2024 December 31, 2023
Cash, cash equivalents and marketable securities, current $ 141,986 $ 126,003
Accounts receivable and other current assets 6,234 6,024
Total current assets 148,220 132,027
Property and equipment, net of accumulated depreciation 4,059 4,674
Investments in marketable securities, non-current 6,527 6,284
Right of use asset 1,237 1,416
Total assets $ 160,043 $ 144,401
Accounts payable and accrued liabilities $ 11,108 $ 10,271
Deferred license revenue, current 11,034 11,791
Lease liability, current 453 425
Total current liabilities 22,595 22,487
Liability related to sale of future royalties 5,859 6,953
Contingent consideration 7,991 7,600
Lease liability, non-current 1,144 1,343
Total stockholders’ equity 122,454 106,018
Total liabilities and stockholders’ equity $ 160,043 $ 144,401

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Six Months Ended June 30,
2024
2023
Net loss $ (37,671 ) $ (33,433 )
Non-cash items 3,973 2,911
Change in deferred license revenue (757 ) (7,128 )
Other changes in working capital 656 (9,210 )
Net cash used in operating activities (33,799 ) (46,860 )
Net cash provided by investing activities 21,523 18,119
Issuance of common shares pursuant to the Open Market Sale Agreement 44,124 24,604
Cash provided by other financing activities 4,676 555
Net cash provided by financing activities 48,800 25,159
Effect of foreign exchange rate changes on cash and cash equivalents (21 ) 3
Increase/(decrease) in cash and cash equivalents 36,503 (3,579 )
Cash and cash equivalents, beginning of period 26,285 30,776
Cash and cash equivalents, end of period 62,788 27,197
Investments in marketable securities 85,725 136,344
Cash, cash equivalents and marketable securities, end of period $ 148,513 $ 163,541

Conference Call and Webcast Today

Arbutus will hold a conference call and webcast today, Thursday, August 1, 2024, at 8:45 AM Eastern Time to provide a corporate update. To dial-in for the conference call by phone, please register using the following link: Registration Link. A live webcast of the conference call can be accessed through the Investors section of Arbutus’ website at www.arbutusbio.com.

An archived webcast will be available on the Arbutus website after the event.

About Imdusiran (AB-729)

Imdusiran is an RNA interference (RNAi) therapeutic specifically designed to reduce all HBV viral proteins and antigens including hepatitis B surface antigen, which is thought to be a key prerequisite to enable reawakening of a patient’s immune system to respond to the virus. Imdusiran targets hepatocytes using Arbutus’ novel covalently conjugated N-Acetylgalactosamine (GalNAc) delivery technology enabling subcutaneous delivery. Clinical data generated thus far has shown single and multiple doses of imdusiran to be generally safe and well-tolerated, while also providing meaningful reductions in hepatitis B surface antigen and hepatitis B DNA. Imdusiran is currently in multiple Phase 2a clinical trials.  

About AB-101

AB-101 is our oral PD-L1 inhibitor candidate that we believe will allow for controlled checkpoint blockade while minimizing the systemic safety issues typically seen with checkpoint antibody therapies. Immune checkpoints such as PD-1/PD-L1 play an important role in the induction and maintenance of immune tolerance and in T-cell activation. Preclinical data generated thus far indicates that AB-101 mediates re-activation of exhausted HBV-specific T-cells from cHBV patients. We believe AB-101, when used in combination with other approved and investigational agents, could potentially lead to a functional cure in patients chronically infected with HBV. AB-101 is currently being evaluated in a Phase 1a/1b clinical trial.

About HBV

Hepatitis B is a potentially life-threatening liver infection caused by the hepatitis B virus (HBV). HBV can cause chronic infection which leads to a higher risk of death from cirrhosis and liver cancer. Chronic HBV infection represents a significant unmet medical need. The World Health Organization estimates that over 250 million people worldwide suffer from chronic HBV infection, while other estimates indicate that approximately 2.4 million people in the United States suffer from chronic HBV infection. Approximately 820,000 people die every year from complications related to chronic HBV infection despite the availability of effective vaccines and current treatment options.

On August 1, 2024 Moleculin Biotech, Inc., (Nasdaq: MBRX) ("Moleculin" or the "Company"), a clinical stage pharmaceutical company with a broad portfolio of drug candidates targeting hard-to-treat tumors and viruses, reported the positive discussion in and outcome of its End of Phase 1B/2 (EOP1B/2) meeting with the US Food and Drug Administration (FDA) supporting the advancement of Annamycin in combination with Cytarabine (also known as "Ara-C" and for which the combination of Annamycin and Ara-C is referred to as "AnnAraC") to a Phase 3 pivotal trial for the treatment of AML patients who are refractory to or relapsed after induction therapy (R/R AML) (Press release, Moleculin, AUG 1, 2024, View Source [SID1234645265]). This Phase 3 "MIRACLE" trial (derived from Moleculin R/R AML AnnAraC Clinical Evaluation) will be a global trial, including sites in the US.

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"We thank the FDA’s Divisions of Hematologic Malignancies I and Cardiology and Nephrology, as well as related divisions, for a very constructive EOP1B/2 meeting and for their valuable feedback. Armed with this, we are now able to finalize plans for a pivotal approval pathway in AML," commented Walter Klemp, Chairman and Chief Executive Officer of Moleculin. "Importantly, consistent with the FDA’s recommendations, the adaptive Phase 3 trial will rely solely on CR (complete remission) at day 30 as the primary endpoint versus placebo, a standard we are confident Annamycin will meet and that provides an opportunity for accelerated approval."

Mr. Klemp continued: "We now also have additional confidence that our planned pivotal trial should be able to generate data supportive of a true value inflection point for shareholders in a timely manner. We plan to utilize a double-blind, placebo-controlled design, where the control arm is high dose cytarabine (HiDAC) plus placebo. There is considerable historical data on the use of HiDAC. You can see in this graphic that, compared to this historical data, AnnAraC has already demonstrated more than double the CR rate. The MIRACLE trial will initially focus on 2nd line treatment for R/R AML subjects and then follow-up with treatment for 3rd line R/R AML."

"This approach should also allow us to use this trial for approval in Europe. Based on our discussions with the FDA, we intend to amend our current investigational new drug application or IND to allow dosing above the lifetime maximum allowable dose (LTMAD) for currently prescribed anthracyclines in this trial in the US."

The Company obtained valuable input from the FDA and having resolved a number of key issues, believes that it has significantly de-risked the pathway to approval. The MIRACLE study, subject to appropriate future filings with and potential additional feedback from the FDA and their foreign equivalents, is expected to initially utilize an adaptive design whereby the first 75 patients will be randomized to receive HiDAC combined with either placebo, 190 mg/m2 of Annamycin, or 230 mg/m2 of Annamycin. At that point, the trial will be unblinded to select the Optimum Dose for Annamycin. For the second half of the trial, approximately 120 additional patients will be randomized to receive either HiDAC plus placebo or HiDAC plus the Optimum Dose of Annamycin. The selection of the Optimum Dose will be based not only on the absence of dose limiting toxicities but also on the overall balance of safety, pharmacokinetics and efficacy, consistent with the FDA’s new Project Optimus initiative.

Mr. Klemp concluded: "The FDA also wants to see the durability of response (DoR) and overall survival (OS) as secondary endpoints, as well as data for patients beyond 2nd line, which is why our plan includes a follow-on MIRACLE2 trial in 3rd line patients starting once the optimum dose is established in the MIRACLE trial. From a Company perspective, we believe this approach is the best of all worlds. We are not only making the leap into being a Phase 3 company, but our planned approval is also based on a primary endpoint comparing to a control that we are optimistic we can beat with the ability to report unblinded progress after just 75 patients. We are truly excited to launch the MIRACLE trial."

Moleculin Planned Significant Milestones

The Company has established plans for the following milestones:

2H 2024 – Begin contracting with MIRACLE trial sites
Q1 2025 – First subject treated in MIRACLE trial
Mid 2026 – Interim data (n=75) unblinded and Optimum Dose set for MIRACLE trial
2026 – Begin enrollment of 3rd line subjects in MIRACLE2
2027 – Enrollment ends in 2nd line subjects
2028 – Final Data for 2nd line subjects in MIRACLE
2H 2028 – Begin submission of a new drug application (NDA) the treatment of R/R AML for accelerated approval on primary endpoint of CR from MIRACLE
Annamycin currently has Fast Track Status and Orphan Drug Designation from the US Food and Drug Administration for the treatment of relapsed or refractory acute myeloid leukemia, in addition to Orphan Drug Designation for the treatment of soft tissue sarcoma. Furthermore, Annamycin has Orphan Drug Designation for the treatment of relapsed or refractory acute myeloid leukemia from the European Medicines Agency (EMA). For more information about the ongoing MB-106 Phase 1B/2 trial, visit clinicaltrialsregister.eu and reference EudraCT 2020-005493-10 or clinicaltrials.gov and reference NCT05319587.

On August 1, 2024 Innate Pharma SA (Euronext Paris: IPH; Nasdaq: IPHA) ("Innate" or the "Company") reported members of its executive team are scheduled to participate in the upcoming conference, detailed below (Press release, Innate Pharma, AUG 1, 2024, View Source [SID1234645283]). Participants will include Yannis Morel, EVP, Chief Operating Officer and Arvind Sood, EVP, President of US Operations.

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BTIG Virtual Biotechnology Conference
Dates: August 5 – 6 2024 | Virtual

On August 1, 2024 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (Aurinia or the Company) reported its financial results for the second quarter and six months ended June 30, 2024 (Press release, Aurinia Pharmaceuticals, AUG 1, 2024, View Source [SID1234645247]). Amounts are expressed in U.S. dollars.

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Total net revenue was $57.2 million for the three months ended June 30, 2024, and $41.5 million for the same period in 2023, representing growth of approximately 38%. Year to date total net revenue was $107.5 million for the six months ended June 30, 2024, compared to $75.9 million for the same period in 2023, representing growth of approximately 42%.

Net product revenue was $55.0 million for the three months ended June 30, 2024, and $41.1 million for the same period in 2023, representing growth of approximately 34%. Net product revenue was $103.1 million for the six months ended June 30, 2024, and $75.4 million for the same period in 2023, representing growth of approximately 37%. Net product revenue in the second quarter included sales of semi-finished product to Otsuka Pharmaceutical Co., Ltd. (Otsuka) for distribution in Europe and in anticipation of product approval in Japan.

"Our quarter-over-quarter growth in the second quarter is a result of our continued focus on commercial execution and business fundamentals. We are well prepared as we exit the first half of 2024, with upcoming innovative commercial initiatives targeting rheumatologists, the advancement of our AUR200 pipeline asset, and the anticipated approval of LUPKYNIS in Japan. Additionally, achieving positive free cash flow ahead of our initial projections further strengthens our financial position and allows more flexibility to explore opportunities to diversify our portfolio," said Peter Greenleaf, President and Chief Executive Officer of Aurinia.

The Company anticipates Japanese regulatory authorities’ approval of LUPKYNIS in the second half of this year, based on the JNDA that Otsuka filed in November 2023 for approval of LUPKYNIS to treat adults with LN. Upon approval, the Company expects to receive a milestone payment of $10 million with low double-digit royalties on net sales once launched.

Additionally, the Company is moving forward with development of its pipeline asset AUR200, a differentiated, potential next generation therapy for autoimmune diseases that targets both BAFF (B-cell Activating Factor) and APRIL (A Proliferation-Inducing Ligand).

"We are thrilled to advance AUR200, which has the potential to serve as a best-in-class treatment in disease areas with high unmet need. We intend to develop it in disease states where there are currently few market entrants, including exploring one larger indication and one fast-to-market smaller indication that meets the FDA criteria for orphan and rare diseases," said Dr. Greg Keenan, Chief Medical Officer of Aurinia.

First patients are expected to enter the Phase 1 Single Ascending Dose (SAD) study of AUR200 in the third quarter of 2024. Data from the SAD study, including safety, tolerability, pharmacokinetics, and biomarkers, is anticipated in the first half of 2025. The Company anticipates funding this development program with available cash flow, which is not anticipated to impact previously announced post restructuring operating expense targets. As previously reported, the Company expects to recognize $50 to $55 million in annual cost savings following the restructuring, with approximately 75% of that recognized in 2024.

For the fiscal year 2024, the Company is narrowing its net product revenue guidance range to $210 to $220 million, from the previously established range of $200 to $220 million. The guidance range is based on assumptions regarding historical run rates for patient start forms (PSF), patients restarting therapy, hospital fills, conversion rates, time to convert, persistency, and pricing.

Second Quarter 2024 Highlights

In the second quarter of 2024 the Company:

Achieved 22% growth in patients on LUPKYNIS therapy, with approximately 2,336 patients on therapy as of June 30, 2024, compared to 1,911 as of June 30, 2023.
Added 428 PSFs and approximately 127 new patients who were either restarting LUPKYNIS or receiving it through a hospital pharmacy in the second quarter, compared to 451 PSFs in the prior year second quarter.
Added approximately 538 PSFs and approximately 155 new patients from restarts and the hospital channel from April 1, 2024, through July 31, 2024.
Sustained conversion rates, with approximately 85% of PSFs converted to patients on therapy.
Sustained time to convert, with approximately 60% of patients on therapy by 20 days.
Maintained high overall adherence rate at approximately 88%.
Continued strong persistency, with approximately 56% of patients remaining on therapy at 12 months, 51% at 15 months, and 46% at 18 months.
Financial Results for the Three and Six Months Ended June 30, 2024

Total net revenue was $57.2 million and $41.5 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Total net revenue was $107.5 million and $75.9 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

Net product revenue was $55.0 million and $41.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Net product revenue was $103.1 million and $75.4 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase is primarily due to an increase in sales of LUPKYNIS to the Company’s two main specialty pharmacies, driven predominantly by further penetration of the LN market. Additionally, Aurinia had sales of semi-finished product to Otsuka as Otsuka continues to commercialize in its territories.

The U.S. penetration can be demonstrated by a total of approximately 2,336 patients on therapy as of June 30, 2024, compared to approximately 1,911 patients on therapy as of June 30, 2023. Additionally, the 12-month persistency rate has increased to 56% at June 30, 2024 from approximately 54% at June 30, 2023.

License, collaboration and royalty revenue was $2.2 million and $0.4 million for the three months ended June 30, 2024 and June 30, 2023, respectively. License, collaboration and royalty revenue was $4.4 million and $0.5 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase is primarily due to manufacturing services revenue from Otsuka related to shared capacity services that commenced in late June 2023.

Total cost of sales and operating expenses, inclusive of a restructuring charge in the second quarter of 2024, were $58.7 million and $57.7 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Total cost of sales and operating expenses inclusive of a restructuring charge were $122.3 million and $121.7 million for the six months ended June 30, 2024 and June 30, 2023, respectively. Further breakdown of cost of sales and operating expense drivers and fluctuations are highlighted in the following paragraphs.

Cost of sales were $8.9 million and $1.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Cost of sales were $16.7 million and $2.0 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase is primarily due to the amortization of the monoplant finance right of use asset, which was placed into service in late June 2023, semi-finished product sales to Otsuka and increased sales of LUPKYNIS (voclosporin).

Gross margin was approximately 84% and 96% for the three months ended June 30, 2024 and June 30, 2023, respectively. Gross margin was approximately 85% and 97% for the six months ended June 30, 2024 and June 30, 2023, respectively.

SG&A expenses, inclusive of share-based compensation, were $44.9 million and $47.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. SG&A expenses, inclusive of share-based compensation, were $92.6 million and $97.2 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The decrease is primarily due to lower employee and overhead costs as a result of a reduction in general and administrative headcount, which occurred late in the first quarter of 2024 partially offset by an increase in legal fees.

Non-cash SG&A share-based compensation expense included within SG&A expenses was $8.1 million and $9.8 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Non-cash SG&A share-based compensation expense included within SG&A expenses was $15.6 million and $17.4 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

R&D expenses, inclusive of share-based compensation expense, were $4.1 million and $12.7 million for the three months ended June 30, 2024 and June 30, 2023, respectively. R&D expenses, inclusive of share-based compensation expense, were $9.6 million and $25.8 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The primary drivers for the decrease were lower employee costs due to a reduction in headcount, which occurred late in the first quarter of 2024, a decrease of CRO and developmental expenses related to ceasing development of Aurinia’s AUR300 program and timing of expenses related to AUR200.

Non-cash R&D share-based compensation expense included within R&D expense was $0.1 million and $2.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Non-cash R&D share-based compensation expense included within R&D expense was $(2.1) million and $3.7 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The non-cash R&D share-based compensation credit in the six months ended June 30, 2024 is due to the reversals of expense for forfeitures related to a reduction in headcount in the first quarter of 2024.

Restructuring expenses were approximately $1.1 million and nil for the three months ended June 30, 2024 and June 30, 2023, respectively. Restructuring expenses were approximately $7.8 million and nil for the six months ended June 30, 2024 and June 30, 2023, respectively. Restructuring expenses primarily included employee severance, one-time benefit payments and contract termination expenses.

Other income, net was $0.3 million and $3.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Other income, net was $4.4 million and $3.3 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The change is primarily driven by changes in the fair value assumptions related to Aurinia’s deferred compensation liability and the foreign exchange remeasurement of the monoplant lease liability, which commenced in June 2023 and is denominated in CHF.

Interest income was $4.2 million and $4.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Interest income was $8.7 million and $7.9 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

Interest expense was $1.2 million and $0.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Interest expense was $2.5 million and $0.1 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The interest expense is due to the monoplant finance lease, which commenced in June 2023.

For the three months ended June 30, 2024, Aurinia recorded net income of $0.7 million or $0.01 net income per common share, as compared to a net loss of $11.5 million or $(0.08) net loss per common share for the three months ended June 30, 2023. For the six months ended June 30, 2024, Aurinia recorded a net loss of $10.0 million or $(0.07) net loss per common share, as compared to a net loss of $37.7 million or $(0.26) net loss per common share for the three months ended June 30, 2023.

Financial Liquidity at June 30, 2024

As of June 30, 2024, Aurinia had cash, cash equivalents, restricted cash and investments of $330.7 million compared to $350.7 million at December 31, 2023. The decrease is primarily related to the continued investment in commercialization activities and post approval commitments of our approved drug, LUPKYNIS, monoplant payments, share repurchases and restructuring related payments, partially offset by an increase in cash receipts from sales of LUPKYNIS and cash payments from Otsuka.

Cash generated from operations and non-GAAP free cash flow generated were $15.8 million for the three months ended June 30, 2024 compared to cash used in operations of $2.8 million and non-GAAP free cash flow used of $3.0 million for the three months ended June 30, 2023. Cash used in operations and non-GAAP free cash flow used were $2.8 million for the six months ended June 30, 2024 compared to cash used in operations of $34.5 million and non-GAAP free cash flow used of $35.0 million for the six months ended June 30, 2023.

Free cash flow is a non-GAAP financial measure calculated by subtracting purchases of property and equipment from net cash provided by or used in operating activities. Free cash flow reflects a view of Aurinia’s liquidity that, when viewed with the Company’s GAAP results, provides a more complete understanding of factors and trends affecting Aurinia’s cash flows. The Company believes it is a more conservative measure of cash flow since capital expenditures are necessary for ongoing operations. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate the principal portion of payments made or expected to be made on finance lease obligations. Therefore, the Company believes it is important to view free cash flow as a complement to its entire consolidated statements of cash flows.

A reconciliation of free cash flow to its most directly comparable GAAP measure, net cash provided by or used in operating activities, is set out in the Condensed Consolidated Statement of Cash Flows included at the end of this press release.

Share Repurchase Program

As previously announced, Aurinia’s Board of Directors approved a share repurchase program of up to $150 million common shares of the Company. Canadian securities regulators also granted exemptive relief for the Company’s share repurchase program, authorizing the Company to purchase up to 15 percent of its issued and outstanding shares in any 12-month period for up to 36 months. Through July 31, 2024 Aurinia has repurchased 3.4 million shares for approximately $18.6 million at an average cost of $5.36. The Company expects to fund any future discretionary share repurchases from cash flows from operations and cash currently on hand.

This press release is intended to be read in conjunction with the Company’s unaudited condensed consolidated financial statements and Management’s Discussion and Analysis for the quarter and six months ended June 30, 2024 in the Company’s Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, including risk factors disclosed therein, which will be accessible on Aurinia’s website at www.auriniapharma.com, on SEDAR at www.sedarplus.ca or on EDGAR at www.sec.gov/edgar.

Conference Call Details

Aurinia will host a conference call and webcast today, August 1, 2024, at 8:30 AM ET to discuss the quarter and six months ended June 30, 2024, financial results. The link to the audio webcast is available here or on Aurinia’s corporate website at www.auriniapharma.com under "News/Events" through the Investors section. To join the conference call, please dial +1 (866) 682-6100 / +1 (862) 298-0702 (Toll-free U.S. & Canada). A replay of the webcast will be available on Aurinia’s website.

On August 1, 2024 Neurocrine Biosciences, Inc. (Nasdaq: NBIX) reported its financial results for the second quarter ended June 30, 2024 and provided an update on its 2024 financial guidance (Press release, Neurocrine Biosciences, AUG 1, 2024, View Source [SID1234645266]).

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"At Neurocrine, we are energized by the tremendous opportunity we see to help many more patients, and we are encouraged by our recent progress, including INGREZZA’s continued success in treating tardive dyskinesia and Huntington’s disease chorea and the FDA’s decision to grant Priority Review for crinecerfont to treat congenital adrenal hyperplasia," said Kevin Gorman, Ph.D., Chief Executive Officer of Neurocrine Biosciences. "We are in the process of building our endocrinology team and expanding the INGREZZA salesforce, positioning our company for continued strong growth in the years ahead."

Kevin Gorman added, "As I look ahead to my planned retirement in October, I have never been more confident in Neurocrine’s future. I am incredibly proud of all that we have achieved together and excited to see what this team will continue to accomplish for patients under Kyle Gano’s leadership."

Financial Highlights

Three Months Ended

June 30,

Six Months Ended

June 30,

(unaudited, in millions, except per share data)

2024

2023

2024

2023

Revenues:

Net Product Sales

$ 583.8

$ 446.3

$ 1,092.8

$ 861.6

Collaboration Revenue

6.4

6.4

12.7

11.5

Total Revenues

$ 590.2

$ 452.7

$ 1,105.5

$ 873.1

GAAP Research and Development (R&D)

$ 191.1

$ 145.8

$ 350.5

$ 285.3

Non-GAAP R&D

$ 175.3

$ 122.0

$ 317.7

$ 247.7

GAAP Selling, General and Administrative (SG&A)

$ 242.0

$ 221.8

$ 485.1

$ 464.5

Non-GAAP SG&A

$ 200.7

$ 177.1

$ 416.3

$ 393.7

GAAP Net Income

$ 65.0

$ 95.5

$ 108.4

$ 18.9

GAAP Earnings Per Share – Diluted

$ 0.63

$ 0.95

$ 1.04

$ 0.19

Non-GAAP Net Income

$ 168.9

$ 125.7

$ 293.7

$ 76.2

Non-GAAP Earnings Per Share – Diluted

$ 1.63

$ 1.25

$ 2.83

$ 0.76

(unaudited, in millions)

June 30,

2024

December 31,

2023

Total Cash, Cash Equivalents and Marketable Securities

$ 1,676.7

$ 1,719.1

INGREZZA Net Product Sales Highlights

INGREZZA second quarter 2024 net product sales were $580 million and grew 32% compared to the second quarter 2023
Year-over-year growth driven by strong underlying patient demand and improvement in gross-to-net dynamics
Other Key Financial Highlights

Differences in second quarter 2024 GAAP and Non-GAAP operating expenses compared with second quarter 2023 were driven by:
Increased R&D expense in support of an expanded and advancing clinical portfolio including investments in muscarinic compounds, gene therapy programs and second generation VMAT2 inhibitors. R&D expense for the second quarter 2024 includes $27 million for development milestones achieved under our collaborations with Nxera Pharma UK Limited (Nxera, formerly known as Sosei Heptares), Takeda Pharmaceutical Company Limited (Takeda) and Voyager Therapeutics, Inc. (Voyager)
Increased SG&A expense includes incremental investment in crinecerfont-related headcount, crinecerfont-related pre-launch activities, and continued investment in INGREZZA. GAAP SG&A expense also includes impairment charges of $14 million associated with leased office space that has been vacated as we continue to occupy our new campus facility
Second quarter 2024 GAAP net income and earnings per share were $65 million and $0.63, respectively, compared with $96 million and $0.95, respectively, for second quarter 2023
Second quarter 2024 Non-GAAP net income and earnings per share were $169 million and $1.63, respectively, compared with $126 million and $1.25, respectively, for second quarter 2023
Differences in second quarter 2024 GAAP and Non-GAAP net income compared with second quarter 2023 driven by:
Higher INGREZZA net sales and improved operating margin
Second quarter 2024 includes $50 million charge associated with the settlement of convertible senior notes conversions (Non-GAAP adjustment)
Second quarter 2024 includes $20 million loss from changes in fair value of equity security investments compared to $37 million gain the second quarter 2023 (Non-GAAP adjustment)
Second quarter 2024 includes $27 million of development milestones expense achieved under collaborations
Second quarter 2024 includes $14 million leased office space impairment charge (Non-GAAP adjustment)
At June 30, 2024, the Company had cash, cash equivalents and marketable securities totaling approximately $1.7 billion which reflects the $309 million payment to fully retire our convertible senior notes
A reconciliation of GAAP to Non-GAAP financial results can be found in Table 3 and Table 4 at the end of this news release.

Recent Developments

Announced Kevin Gorman, Ph.D., will retire as Chief Executive Officer on October 11, 2024. Kyle Gano, Ph.D., currently Neurocrine’s Chief Business Development and Strategy Officer, will succeed him in the CEO role. Dr. Gano will also join the Company’s Board of Directors at that time, and Dr. Gorman will continue to serve on the Company’s Board.
Announced positive topline data for the Phase 2 SAVITRI study. This randomized, double-blind, placebo-controlled dose-finding study assessed the efficacy and safety of NBI-1065845 in adult subjects with major depressive disorder (MDD). NBI-1065845 is an investigational alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid (AMPA) positive allosteric modulator (PAM) in development as a potential treatment for patients with MDD who have not benefited from treatment with at least one antidepressant in their current episode of depression.
Announced FDA accepted New Drug Applications (NDAs) and granted Priority Review for crinecerfont for adult and pediatric patients with congenital adrenal hyperplasia (CAH). The agency set Prescription Drug User Fee (PDUFA) target actions dates of December 29, 2024 for the capsule formulation and December 30, 2024 for the oral solution formulation.
At the Endocrine Society Annual Meeting (ENDO 2024), presented new Phase 3 clinical study data from the CAHtalyst registrational studies of crinecerfont in pediatric and adult patients with classic congenital adrenal hyperplasia (CAH) due to 21-hydroxylase deficiency. In parallel, announced that the primary study results from the CAHtalyst registrational studies of crinecerfont in pediatric and adult patients with classic congenital adrenal hyperplasia (CAH) due to 21-hydroxylase deficiency have been published in The New England Journal of Medicine.
Initiated Phase 2 study of NBI-1070770 in adults with major depressive disorder. NBI-1070770 is a novel, selective and orally active, negative allosteric modulator (NAM) of the NR2B subunit-containing N-methyl-D-aspartate (NMDA NR2B) receptor.
Initiated Phase 1 study of NBI-1117567 in healthy adult participants. NBI-1117567 is an investigational, oral, M1/M4 (M1 preferring) selective muscarinic agonist for the potential treatment of neurological and neuropsychiatric conditions.
Initiated Phase 1 study of NBI-1076968 in healthy adult participants. NBI-1076968 is an investigational, oral, M4 subtype-selective muscarinic antagonist for the potential treatment of movement disorders.
Received notification from the Centers for Medicare and Medicaid Services that INGREZZA qualified for the Specified Small Manufacturer Exception pertaining to the Part D redesign of the Inflation Reduction Act.
Settled the convertible senior notes due May 15, 2024 in full in cash upon maturity.
Announced planned expansion of the INGREZZA psychiatry and long-term care sales teams to better serve patients by accelerating the number of people who are diagnosed and treated for tardive dyskinesia and chorea associated with Huntington’s disease.
Launched new sprinkle formulation of INGREZZA (valbenazine) capsules for the treatment of adults with tardive dyskinesia and chorea associated with Huntington’s disease.
Raised 2024 Net Sales Guidance and Updated Expense Guidance

Range

(in millions)

Low

High

INGREZZA Net Product Sales 1

$ 2,250

$ 2,300

GAAP R&D Expense 2

$ 665

$ 695

Non-GAAP R&D Expense 3

$ 600

$ 630

GAAP and Non-GAAP IPR&D 4

$ 9

$ 9

GAAP SG&A Expense 5

$ 955

$ 975

Non-GAAP SG&A Expense 3, 5

$ 830

$ 850

1.

INGREZZA sales guidance reflects expected net product sales of INGREZZA in tardive dyskinesia and chorea associated with Huntington’s disease.

2.

GAAP R&D guidance includes $33 million of expense for development milestones in connection with our collaborations (Nxera, Voyager and Takeda) achieved or deemed probable to achieve. These milestone expenses are associated with our advancing pre-clinical and clinical pipeline.

3.

Non-GAAP guidance adjusted to exclude estimated non-cash stock-based compensation expense of approximately $65 million in R&D and $110 million in SG&A and $14 million leased office space impairment charge in SG&A.

4.

Acquired in-process R&D (IPR&D) is included in guidance once significant collaboration and licensing arrangements have been completed.

5.

SG&A guidance range reflects expense for ongoing commercial initiatives supporting INGREZZA growth including the announced planned expansion of the psychiatry and long-term care sales teams and pre-launch commercial activities for crinecerfont.

2024 Pipeline Milestones and Key Activities

Program

Indication

Milestones / Key Activities

NBI-1065845*

(AMPA Potentiator)

Inadequate Response in Major Depressive Disorder

Reported Positive Top-Line Phase 2 Data;

Conducting End of Phase 2 Meeting with FDA; Initiating Phase 3 Studies in 2025

Crinecerfont

(CRF1 Receptor Antagonist)

Congenital Adrenal Hyperplasia

(Pediatric and Adult)

Priority Review with PDUFA Dates Set for December 29 and 30, 2024

NBI-1117568**

(M4 Agonist)

Schizophrenia

Top-Line Phase 2 Data in Q3’24

Luvadaxistat*

(DAAO Inhibitor)

Cognitive Impairment Associated with Schizophrenia

Top-Line Phase 2 Data in Q3’24

NBI-1070770*

(NMDA NR2B NAM)

Major Depressive Disorder

Phase 2 Study Ongoing;

Top-Line Data in 2025

NBI-1065890

(Selective VMAT2 Inhibitor)

CNS Indications

Phase 1 Study Ongoing

NBI-1117569**

(M4-Prefering Agonist)

CNS Indications

Phase 1 Study Ongoing

NBI-1117570**

(M1/M4 Dual Agonist)

CNS Indications

Phase 1 Study Ongoing

NBI-1117567**

(M1 Agonist)

CNS Indications

Phase 1 Study Ongoing

NBI-1076986

(M4 Antagonist)

Movement Disorders

Phase 1 Study Ongoing

Key: AMPA = alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid; CFR1 = Corticotropin-Releasing Factor Type 1; M4 = M4 Muscarinic Receptor; DAAO = d-amino acid oxidase; NMDA NR2B NAM = n-methyl-d-aspartate Receptor Subtype 2B Negative Allosteric Modulator; VMAT2 = Vesicular Monoamine Transporter 2; M1 = M1 Muscarinic Receptor

Neurocrine Biosciences Partners: * Partnered with Takeda Pharmaceutical Company Limited; ** In-Licensed from Nxera Pharma UK Limited (formerly Sosei Heptares)

Conference Call and Webcast Today at 8:00 AM Eastern Time
Neurocrine Biosciences will hold a live conference call and webcast today at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time). Participants can access the live conference call by dialing 800-445-7795 (US) or 785-424-1699 (International) using the conference ID: NBIX. The webcast and accompanying slides can also be accessed at approximately 8:00 a.m. Eastern Time on Neurocrine Biosciences’ website under Investors at www.neurocrine.com. A replay of the webcast will be available on the website approximately one hour after the conclusion of the event and will be archived for approximately one month.