Heron Therapeutics has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission .

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On August 9, 2021 Seagen Inc. (Nasdaq: SGEN), a world leader and pioneer in antibody-drug conjugate (ADC) therapies, and RemeGen Co., Ltd. (9995.HK), a leading innovative biopharmaceutical company in China, reported that the two companies have entered into an exclusive worldwide licensing agreement to develop and commercialize disitamab vedotin, a novel HER2-targeted ADC (Press release, Seagen, AUG 9, 2021, View Source [SID1234586075]).

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Disitamab vedotin combines the drug-linker technology originally developed by Seagen with RemeGen’s novel HER2 antibody exhibiting higher affinity and an increased internalization rate as compared to trastuzumab in preclinical models.1, 2 As monotherapy, disitamab vedotin has demonstrated antitumor activity in clinical trials in several solid tumor types, including urothelial, gastric and breast cancer, as well as across a spectrum of HER2 expression levels. In addition, promising combination activity was demonstrated with a PD-1 inhibitor in urothelial cancer.3 It is believed that vedotin-based immunogenic cell death (ICD) may differentiate this class of ADC’s when combined with checkpoint inhibitors.

"This collaboration leverages Seagen’s world-class expertise and knowledge of ADC development, manufacturing and commercialization to maximize the potential of disitamab vedotin. It also complements our existing franchises and our deep and diverse portfolio of innovative anti-cancer therapies for patients in need," said Clay Siegall, Ph.D., President and CEO, Seagen. "The addition of disitamab vedotin as a late-stage asset with multiple development opportunities aligns strategically with our plans to continue expanding our global footprint and deliver meaningful therapies to patients around the world."

Disitamab vedotin received U.S. Food and Drug Administration (FDA) Breakthrough Therapy designation in 2020 for use in second-line treatment of patients with HER2-expressing, locally advanced or metastatic urothelial cancer (mUC) who have previously received platinum-containing chemotherapy. In the same year, RemeGen announced FDA’s clearance of an Investigational New Drug (IND) application for a Phase II clinical trial in mUC. Disitamab vedotin is conditionally approved for treating locally advanced metastatic gastric cancer in China, and in July 2021 the National Medical Products Administration (NMPA) of China also accepted a New Drug Application for disitamab vedotin in mUC.

"Disitamab vedotin has demonstrated robust antitumor activity in multiple advanced cancers where no effective therapy is available," said Jianmin Fang, Ph.D., Co-founder, CEO and CSO, RemeGen. "Seagen is a well-known global biotechnology company recognized for its capabilities in the field of oncology and ADC therapies. We are delighted to partner with Seagen to maximize the potential of disitamab vedotin and to make it available to patients worldwide. We believe this license agreement highlights the global potential of disitamab vedotin in the ADC arena and is a major milestone for us as we begin the journey to transform from a domestic to a global biopharmaceutical company."

Under the terms of the agreement, Seagen will make a $200 million upfront payment to exclusively license rights to disitamab vedotin for global development and commercialization, outside of RemeGen’s territory. RemeGen will retain development and commercialization rights for Asia, excluding Japan and Singapore. Seagen will lead global development and RemeGen will fund and operationalize the portion of global clinical trials attributable to its territory. RemeGen will also be responsible for all clinical development and regulatory submissions specific to its territory.

Seagen will pay RemeGen up to $2.4 billion in potential total milestone payments based upon the achievement of specified development, regulatory and commercialization goals across multiple indications and products. RemeGen will be entitled to a tiered, high single digit to mid-teen percentage royalty based on net sales of disitamab vedotin in Seagen’s territory.

About Disitamab Vedotin (RC48)

Disitamab vedotin is a novel ADC that selectively delivers the anti-cancer agent monomethyl auristatin E (MMAE) into HER2-expressing tumor cells. The novel antibody component of the ADC exhibits a higher affinity and increased internalization rate as compared to trastuzumab in preclinical models, and in animal models, demonstrates promising antitumor activity. It is the first domestically developed ADC in China to receive marketing approval. In June 2021, disitamab vedotin received conditional approval by the NMPA of China to treat locally advanced or metastatic gastric cancer (GEJ carcinoma). In July 2021, the NMPA accepted the New Drug Application for disitamab vedotin in locally advanced or metastatic urothelial carcinoma. In addition, disitamab vedotin has shown significant antitumor activity in clinical trials of a number of HER2-expressing cancers, including those with low HER2 expression. It is currently being studied in multiple late-stage clinical trials across several solid tumor types.

On August 9, 2021 Ziopharm Oncology, Inc. ("Ziopharm" or the "Company") (Nasdaq: ZIOP),reported that corporate updates for the second quarter of 2021, ended June 30, 2021 (Press release, Ziopharm, AUG 9, 2021, View Source [SID1234586111]). The Company will host a conference call and webcast today at 4:30 pm EDT.

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"Since our last update, the Company has made tremendous progress across multiple fronts," said Heidi Hagen, Interim Chief Executive Officer. "The Company has built significant positive momentum in our TCR-T Library clinical trial enabling activities and in our efforts to strengthen the balance sheet. This quarterly update reflects the Company doing exactly what we said we would do earlier in the year and this is very exciting to see. The appointment of a permanent CEO is also something we look forward to in the very near future. The strong science underlying our work continues to provide us with confidence as we move forward. On behalf of the Board and management team, I want to thank all our dedicated researchers, scientists, partners, and the entire organization for their commitment to our mission."

Significant Progress in Company’s TCR-T Library Clinical Program

Since the last quarterly update, the Company achieved several key milestones in its TCR-T Program. Importantly, the Company remains on track to begin dosing patients in its Phase I/II TCR-T Library trial during the second half of 2021, and now anticipates dosing the first patient during the fourth quarter of this year. The trial initially targets six individual solid tumor indications: cholangiocarcinoma, pancreatic cancer, ovarian cancer, endometrial cancer, colorectal cancer, and lung cancer, which were selected due to the frequency of KRAS and / or TP53 mutations. The Company intends on expanding into additional indications in the future.

The clinical trial will open for enrollment upon establishing clinical manufacturing readiness. During 2020, the Company successfully transferred the manufacturing process for its TCR-T cell products to KBI Biopharma, a previously undisclosed contract manufacturing organization with cGMP cell therapy manufacturing facilities in The Woodlands, TX. TCR-T batch data generated at both KBI and the Company’s own laboratory were the basis of the Chemistry, Manufacturing and Controls portion of the Investigational New Drug Application (IND) filed earlier this year. KBI is now working to complete the process qualification and aseptic process validation to facilitate clinical manufacturing.

Additionally, the Company has been implementing a strategy to build in-house cGMP clinical production capabilities at the Company’s facility in Houston, TX. This is being done to provide greater flexibility and control of this important aspect of clinical development and the Company is moving forward rapidly to establish these manufacturing capabilities. The commissioning of the Company’s clinical production unit (CPU), as well as aseptic process validation, were completed this past quarter, which are meaningful steps in establishing the CPU’s capabilities. The team is completing process qualification, which will support the opening of the facility to manufacture TCR-T cells for the clinical trial. The ability to use both its in-house facility and KBI’s facility for manufacturing will provide the Company a strong degree of risk mitigation and greater capacity as the Company scales up clinical trial activities.

The Company continues to qualify TCRs in its Library and plans to amend the IND during the second half of 2021 to include these additional TCRs. The Company expects that the supplemental TCRs will expand the potential utility, applicable patient population, and addressable commercial market for the Library, and may include additional KRAS and / or TP53 mutations or other genetic hotspots associated with solid tumors such as EGFR.

During the second quarter, the Company presented a poster at the annual American Association of Cancer Research (AACR) (Free AACR Whitepaper) meeting, entitled "Hotspot mutations in KRAS targeted by TCR-T cells genetically modified with the Sleeping Beauty transposon/transposase system". The poster highlighted preclinical work regarding the Company’s TCR-T program and demonstrated that multiple TCRs with unique specificities targeting recurrent p53 and KRAS substitutions in frequent HLA haplotypes could be stably expressed using Sleeping Beauty transposition to re-direct peripheral blood T-cells towards tumor cells. The Company plans on providing additional preclinical data further demonstrating the strong science behind the program later this year at a scientific conference.

"Our TCR-T program continues to build momentum scientifically and clinically, and we remain poised to begin dosing during the fourth quarter of this year. We have begun pre-screening patients and based on initial data from investigators, we are very optimistic that we will consistently find mutation / HLA combinations within the targeted patient populations that match TCRs in our Library," said Raffaele Baffa, MD, Ph.D., Chief Medical Officer. "I thank the team for their tremendous efforts as they work to ensure success."

Closing of Venture Debt Financing with Silicon Valley Bank

The Company reported that it has closed a venture debt facility with Silicon Valley Bank in the aggregate amount of $50 million. The Company will draw down an initial $25 million tranche from this facility immediately. A second $25 million tranche is available contingent on the achievement of certain clinical milestones and other conditions.

The initial $25 million tranche extends the Company’s cash runway into the fourth quarter of 2022, well beyond the time required to generate and assess the initial clinical data from the Company’s Phase I/II TCR-T Library trial.

Holger Weis, member of the Board of Directors and Chair of the Audit Committee, commented, "We have developed a very strong relationship with Silicon Valley Bank and are happy to have its partnership and support on this funding. This debt vehicle will be used in a prudent and judicious manner and extends the Company’s cash runway significantly. This is a clear demonstration that the Company is being guided by strong consideration of shareholder impact and a desire to support expanding shareholder value through our capital strategy and tactics."

Update on Phase I CD19 RPM CAR-T Trial Being Conducted by Eden BioCell in Taiwan

As previously disclosed, in March 2021, Eden BioCell, the Company’s Joint Venture in Taiwan with TriArm Therapeutics, began treating patients in a clinical trial with the Company’s investigational CD19 RPM CAR-T cell therapy, under the Phase I IND cleared by the Taiwan Food and Drug Administration in December 2020. The Company today provided an update on this program.

Two patients have been treated in the trial. The lead investigator at National Taiwan University in Taipei has reported no serious adverse safety events in either of these patients. Laboratory results continue to support, as previously published, that non-viral Sleeping Beauty gene transfer is effective in genetically modifying autologous T-cells. Patients were infused two days after gene transfer, thus shortening the turnaround time and providing a clear advantage over viral methods.

However, based on laboratory data generated from the first two patients between March and May 2021, the TriArm/Eden BioCell team concluded, in concert with the lead investigator and with the support from the team at Ziopharm, that further process development work is required. This additional work is intended to optimize and refine the manufacturing process in order to manufacture cells more consistently in the desired clinical dose range seeking to be studied.

Per the terms of the Joint Venture agreement, the TriArm/Eden BioCell team will work towards the necessary process development improvements before infusing additional patients. The length of time to do so is unknown and maybe require up to 12 months. The ongoing COVID-19 outbreak in Taiwan presents added uncertainty, as the operational activities in the manufacturing facility are currently limited due to employee restrictions related to the pandemic. These restrictions are impacting clinical trials broadly in Taiwan.

Additionally, consistent with its strategic focus on TCR, the Company is seeking and considering broader partnerships to enable further development of the investigational CD19 RPM CAR-T cell therapy. Several parties have expressed interest in such a partnership, including TriArm Therapeutics. The Company will carefully consider all options regarding the future of the Joint Venture, the technology, and the global development pathway, in order to maximize shareholder value.

The Company noted the distinctions between the CAR-T program and the TCR-T program. "As we have previously described, the TCR and CAR-T processes are intrinsically different and follow very separate process development pathways," commented Dr. Baffa. "While both involve Sleeping Beauty gene transfer, the constructs, and manufacturing processes are very distinct. The unique clinical presentations and challenges associated with the treatment of blood cancers and solid tumors also reflect differences and we believe the recent findings from CAR-T do not read through to the TCR-T program."

Update on Search for Permanent Chief Executive Officer

The Company expects to make an announcement regarding its permanent CEO position in the near future.

Robert Postma, member of the Board of Directors, said, "We have seen and considered a number of very strong and qualified candidates during the search, and the Board is in the final stages of selecting our new CEO."

Cash Position

As of June 30, 2021, the Company had approximately $76.7 million of cash and cash equivalents. This amount is unaudited and preliminary, and does not present all information necessary for an understanding of our financial condition as of June 30, 2021, which will be presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

Additionally, a prepayment of approximately $1.8 million remains for work to be conducted by the Company at MD Anderson under the Company’s research and development agreements.

The $25 million drawdown of the Silicon Valley Bank debt facility is not included in the above figure as it was closed subsequent to June 30, 2021.
Conference Call and Webcast

Ziopharm will host a conference call and webcast for the investment community today, August 9, 2021, at 4:30 p.m. EDT. The conference call can be accessed by dialing 877-451-6152 (U.S. and Canada) or 201-389-0879 (International). The passcode for the conference call is 13721210. A live webcast may be accessed using the link here, or by visiting the "Investors" section of the Ziopharm website at www.ziopharm.com. The call will be recorded and available for replay on the Company’s website for approximately 90 days after the call.

On August 9, 2021 Castle Biosciences, Inc. (Nasdaq: CSTL), a dermatologic diagnostics company providing personalized genomic information to improve treatment decisions, reported its financial results for the second quarter and six months ended June 30, 2021.

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"The Castle team delivered an exceptional quarter, which included record test report volume across each of our gene expression profile tests for a single quarter," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "We saw continued recovery trends throughout the second quarter, despite cutaneous melanoma diagnoses remaining below historical 2019 levels by approximately 12%. Our year-over-year growth in DecisionDx-Melanoma test reports of 70% reflects both gains in diagnoses compared to 2020, as well as significant gains in market penetration. Due to our strong performance and expected continued momentum, we are raising our 2021 revenue guidance for the full year to $89-93 million.

"We continue to aggressively invest in our growth initiatives, including the expansion of our commercial team and accelerated R&D investments for our marketed and pipeline tests. Beginning on July 1, 2021, our dermatology-facing commercial team approximately doubled in size to the mid-60s, and each of our sales representatives will support all four of our skin cancer genomic tests. We believe our investments will continue to support our long-term value creation plans and the improvement of patient care.

"Finally, the acquisition of the myPath Melanoma laboratory, and the resulting addition of the myPath Melanoma test to our skin cancer test services, was finalized in late May of 2021. We believe this acquisition furthers our position as the leader in dermatologic diagnostics and enables us to provide the most comprehensive offering for patients with skin cancer and difficult-to-diagnose melanocytic lesions."

Second Quarter Ended June 30, 2021, Selected Results

Revenues were $22.8 million, an 79% increase compared to $12.7 million during the same period in 2020. Included in revenue for the period were revenue adjustments related to tests delivered in prior periods. These (negative) positive prior period revenue adjustments for the quarter ended June 30, 2021, were $(0.2) million, compared to $2.3 million for the same period in 2020.
Adjusted revenues were $22.9 million, a 120% increase, excluding the effects of revenue adjustments related to tests delivered in prior periods, compared to $10.4 million for the same period in 2020.
Total gene expression profile test reports delivered in the second quarter of 2021 were 7,007, compared to 3,314 in the same period of 2020:
DecisionDx-Melanoma test reports delivered in the second quarter of 2021 were 5,128, compared to 3,008, in the second quarter of 2020, an increase of 70%.
DecisionDx-SCC test reports delivered in the second quarter of 2021 were 784.
MyPath Melanoma and DecisionDxDiffDx-Melanoma (Castle’s comprehensive diagnostic offering) aggregate test reports delivered in the second quarter of 2021 were 627.
DecisionDx-UM test reports delivered in the second quarter of 2021 were 468, compared to 306 in the second quarter of 2020, an increase of 53%.
Gross margin for the quarter ended June 30, 2021, was 82.6%.
Adjusted gross margin for the quarter ended June 30, 2021, was 83.9%.
Operating cash flow was $(6.4) million, compared to $13.5 million for the same period in 2020.
Adjusted operating cash flow was $(4.3) million, excluding the effects of certain COVID-19-related government payments, compared to $3.3 million for the same period in 2020.
Six Months Ended June 30, 2021, Selected Results

Revenues were $45.6 million, a 51% increase compared to $30.1 million during the same period in 2020. Included in revenue for the period were positive revenue adjustments related to tests delivered in prior periods. These positive prior period revenue adjustments for the six months ended June 30, 2021, were $5.1 million, compared to $1.0 million for the same period in 2020.
Adjusted revenues were $40.5 million, a 39% increase, excluding the effects of revenue adjustments related to tests delivered in prior periods, compared to $29.1 million for the same period in 2020.
Total gene expression profile test reports delivered in the six months ended June 30, 2021, were 12,149, compared to 8,249 in the same period of 2020:
DecisionDx-Melanoma test reports delivered in the six months ended June 30, 2021, were 9,188, compared to 7,582, during the same period in 2020, an increase of 21%.
DecisionDx-SCC test reports delivered in the six months ended June 30, 2021, were 1,311.
MyPath Melanoma and DecisionDx DiffDx-Melanoma (Castle’s comprehensive diagnostic offering) aggregate test reports delivered in the six months ended June 30, 2021, were 845.
DecisionDx-UM test reports delivered in the six months ended June 30, 2021, were 805, compared to 667, during the same period in 2020, an increase of 21%.
Gross margin for the six months ended June 30, 2021, was 84.7%.
Adjusted gross margin for the six months ended June 30, 2021, was 83.4%.
Operating cash flow was $(10.1) million, compared to $13.3 million for the same period in 2020.
Adjusted operating cash flow was $(9.8) million, compared to $3.0 million for the same period in 2020.
Cash and Cash Equivalents

As of June 30, 2021, the Company’s cash and cash equivalents totaled $368 million, compared to $410 million at December 31, 2020. The decrease is primarily attributable to the acquisition of the Myriad myPath Laboratory for $33 million and cash used in operations of $10 million, including the effect of $2 million in recoupment of the Medicare advance payment the Company received last year.

2021 Revenue Guidance

Castle Biosciences is increasing its previously issued guidance for anticipated total revenue in 2021. The Company now anticipates generating $89-93 million in total revenue in 2021, compared to the previously provided guidance of $80-83 million.

Second Quarter and Recent Business and Clinical Evidence Highlights

In April, the Company announced it signed a definitive agreement to acquire the equity of Myriad myPath, LLC (Myriad myPath Laboratory), from Myriad Genetics. myPath Melanoma is a clinically validated gene expression profile (GEP) test designed to be used as an adjunct to histopathology when the distinction between a benign nevus and a malignant melanoma cannot be made confidently by histopathology alone (difficult-to-diagnose melanocytic lesions). With the acquisition, which closed in late May 2021, Castle provides the most comprehensive diagnostic offering for difficult-to-diagnose melanocytic lesions. See the Company’s news release from April 27, 2021, for more information.
In April, at the 10th World Congress of Melanoma, the Company presented data on three of its skin cancer tests, including from an independent validation study which demonstrated the i31-GEP artificial intelligence algorithm improved precision of sentinel lymph node positivity prediction in cutaneous melanoma. The poster, titled "Integration of the 31-gene expression profile test with clinicopathologic features (i31-GEP) to assess sentinel lymph node positivity risk in patients with cutaneous melanoma," highlighted the i31-GEP validation study data and demonstrated that the algorithm provided a more precise, personalized likelihood of sentinel lymph node positivity. The poster can be accessed here.

Study methods and findings:

The study reviewed the development and validation of the i31-GEP, which deploys an artificial intelligence neural network algorithm to integrate the continuous DecisionDx-Melanoma score with histologic and clinical features on a development cohort of 1,398 patients. The i31-GEP algorithm was locked using these 1,398 patients and was then independently validated on an independent, U.S. based cohort of 1,674 patients.
The development phase identified that the DecisionDx-Melanoma score was the most important variable in predicting SLN positivity under both the variable importance assessment function (DecisionDx-Melanoma score = 100, Breslow thickness = 56, Mitotic rate = 25, ulceration = 83 and Age = 0; with 100 being the highest possible value) and log-likelihood value (DecisionDx-Melanoma score = 91.3, Breslow thickness = 53.5, Mitotic rate = 20.7, ulceration = 19.1 and Age = 10.5; with 100 being the highest possible value).
The independent validation phase showed that the i31-GEP provides a highly concordant prediction of SLN positivity rate compared to observed rates (linear regression slope of 0.999, with 1.0 representing complete concordance).
Of patients originally classified with 5-10% SLN positivity risk, i31-GEP reclassified 63% of those patients, whose actual risk of SLN positivity was outside that range in either direction (less than 5% or greater than 10%).
i31-GEP had a high negative predictive value of 98% in patients with T1-T4 tumors.
Information about the additional data presentations can be found here on the Company’s news release from April 16, 2021.

Data from an independent, prospective study was published in the American Journal of Surgery, which demonstrated DecisionDx-Melanoma’s utility for prediction of outcomes in patients with cutaneous melanoma. The publication, titled "Utility of a 31-gene expression profile for predicting outcomes in patients with primary cutaneous melanoma referred for sentinel node biopsy," describes a study comparing tumor features, sentinel node biopsy (SLNB) results, and patient outcomes from a prospective database of 383 patients with cutaneous melanoma who both underwent SLNB and had their primary tumor assayed with DecisionDx-Melanoma. The study’s results demonstrated that a Class 2 (high-risk) DecisionDx-Melanoma result was significantly associated with higher rates of SLNB positivity compared to Class 1 (low risk). With respect to risk prognoses, patients who received a Class 2B DecisionDx-Melanoma result and were SLNB-positive experienced the highest recurrence rates (38%), compared to only a 2% recurrence rate for patients who were Class 1A and SLNB-negative. DecisionDx-Melanoma Class 2 results were significantly associated with poorer RFS and DMFS rates compared to Class 1 results, both in the entire cohort of 383 cases and in patients staged as "low risk" (IA-IIA) according to American Joint Committee on Cancer (AJCC) staging criteria. See the Company’s news release from April 14, 2021, for more information.
Publication of prospective, multi-center long-term outcomes data in cutaneous melanoma appeared in the peer-reviewed journal, JCO Precision Oncology, and was titled "Long-term outcomes in a multicenter, prospective cohort evaluating the prognostic 31-gene expression profile for cutaneous melanoma." The study’s key objective was to demonstrate the prognostic value of DecisionDx-Melanoma with long-term follow-up that extends the assessment time period for a previously studied cohort. The study achieved its key objective and expanded upon prior results to show the ability of the test to accurately identifying recurrence risk of patients with American Joint Committee on Cancer (AJCC) 8th Edition staging system early stage I-IIA disease. See the Company’s news release from April 13, 2021, for more information.
In May, the Company announced the launch of its innovative pipeline initiative to develop a genomic test aimed at predicting systemic therapy response in patients with moderate to severe psoriasis, atopic dermatitis and related conditions. See the Company’s news release from May 10, 2021, for more information.
In May, the Company announced a publication describing the findings of a squamous cell carcinoma (SCC) GEP expert panel in the Journal of Drugs in Dermatology. The publication provides a framework for integrating DecisionDx-SCC into clinical practice. The article, titled "Clinical Considerations for Integrating Gene Expression Profiling into Cutaneous Squamous Cell Carcinoma Management," describes the findings of a multidisciplinary expert panel, representing backgrounds from academic medical centers and community practices. The panel also included specialties clinicians, such as Mohs surgeons, surgical oncologists and a radiation oncologist. The panel reviewed traditional risk assessment practices, guidelines and expert recommendations on DecisionDx-SCC. The panel also focused on decision-making points, where information from DecisionDx-SCC might inform the clinical management of patients with SCC and one or more risk factors. See the Company’s news release from May 20, 2021, for more information.
In June, the Company announced that it received approval from the New York State Department of Health (NYSDOH) for its DecisionDx-SCC test. Castle’s laboratory in Phoenix is a NYSDOH permitted laboratory. This designation allows patients in New York to access the Company’s molecular diagnostic tests, designed to provide actionable molecular information to inform patient care decisions. The Company has previously received approvals in the state of New York for its other genomic tests, DecisionDx-Melanoma, DecisionDx-UM and DecisionDx-PRAME, as well as its next generation sequencing panels, DecisionDx-CMSeq and DecisionDx-UMSeq. See the Company’s news release from June 9, 2021, for more information.
In July and August, the Company presented evidence on its family of skin cancer tests at numerous in-person, hybrid and virtual medical conferences, including American Head & Neck Society (AHNS) 2021 International Conference, Society of Dermatology Physician Assistants (SDPA) Annual Summer Dermatology Conference, DERM 2021 and 2021 American Academy of Dermatology Association (AAD) Summer Meeting.
Conference Call and Webcast Details

Castle Biosciences will hold a conference call on Monday, Aug. 9, 2021, at 4:30 p.m. Eastern time to discuss its second quarter 2021 results and provide a corporate update.

A live webcast of the conference call can be accessed here: View Source or via the webcast link on the Investor Relations page of the Company’s website (www.castlebiosciences.com). Please access the webcast at least 10 minutes before the conference call start time. An archive of the webcast will be available on the Company’s website until Aug. 31, 2021.

To access the live conference call via phone, please dial 844 200 6205 from the United States and Canada, or +1 646 904 5544 internationally, at least 10 minutes prior to the start of the call, using the conference ID 538115.

There will be a brief Question & Answer session following management commentary.

Use of Non-GAAP Financial Measures (UNAUDITED)

In this release, we use the metrics of Adjusted Revenue, Adjusted Gross Margin and Adjusted Operating Cash Flow, which are non-GAAP financial measures and are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). Adjusted Revenue and Adjusted Gross Margin reflect adjustments to net revenues to exclude changes in variable consideration related to test reports delivered in previous periods. Adjusted Gross Margin also excludes acquisition-related intangible asset amortization. Adjusted Operating Cash Flow excludes the effects of cash activity associated with COVID-19 government relief payments to healthcare providers.

We use Adjusted Revenue, Adjusted Gross Margin and Adjusted Operating Cash Flow internally because we believe these metrics provide useful supplemental information in assessing our revenue and cash flow performance, respectively. We believe Adjusted Revenue and Adjusted Gross Margin are also useful to investors because they provide additional information on current-period performance by removing the effects of revenue adjustments related to tests delivered in previous periods and acquisition-related intangible asset amortization, which we believe may facilitate revenue and gross margin comparisons to historical periods. We believe Adjusted Operating Cash Flow is also useful to investors as a supplement to GAAP measures in the assessment of our cash flow performance by removing the effects of COVID-19 government relief payments, which we believe are not indicative of our ongoing operations. However, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. These non-GAAP financial measures are not meant to be substitutes for net revenues or net cash (used in) provided by operating activities reported in accordance with GAAP and should be considered in conjunction with our financial information presented on GAAP basis. Accordingly, investors should not place undue reliance on non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of this release.

On August 9, 2021 Heron Therapeutics, Inc. (Nasdaq: HRTX), a commercial-stage biotechnology company focused on improving the lives of patients by developing best-in-class treatments to address some of the most important unmet patient needs, reported financial results for the three and six months ended June 30, 2021 and highlighted recent corporate updates (Press release, Heron Therapeutics, AUG 9, 2021, View Source [SID1234586143]).

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Recent Corporate Updates

Acute Care Franchise

ZYNRELEF Now Available: In May 2021, the U.S. Food and Drug Administration (FDA) approved the Company’s New Drug Application (NDA) for ZYNRELEF (bupivacaine and meloxicam) extended-release solution. ZYNRELEF is indicated for use in adults for soft tissue or periarticular instillation to produce postsurgical analgesia for up to 72 hours after bunionectomy, open inguinal herniorrhaphy and total knee arthroplasty. ZYNRELEF became commercially available in the U.S. on July 1, 2021. During the initial weeks of commercial launch, the reception to ZYNRELEF has been positive with 61 unique accounts already purchasing the product. The Company has applied for a unique C-code for ZYNRELEF, which would provide 3-year Medicare reimbursement outside the surgical bundle payment for outpatient procedures. In the interim, Medicare will reimburse ZYNRELEF under a miscellaneous C-code. In addition, multiple payers covering over 86 million commercial and Medicaid lives have already agreed to reimburse ZYNRELEF outside the surgical bundle payment for surgeries performed in ambulatory surgical centers, with many of these covered lives also having their hospital outpatient procedures reimbursed outside the surgical bundle payment.
NDA for HTX-019 for Prevention of PONV in Adults Planned in Late 2021: A 505(b)(2) NDA for HTX-019 for prevention of postoperative nausea and vomiting (PONV) in adults is on track for filing in late 2021.
Oncology Care Franchise

2021 Net Product Sales: For the three and six months ended June 30, 2021, oncology care franchise net product sales were $22.4 million and $42.5 million, respectively, compared to $22.7 million and $48.1 million, respectively, for the same periods in 2020. During the second quarter of 2021, the net product sales increased by 12% compared to the prior quarter and this increase was in-line with the 10% to 20% growth anticipated for the quarter. Heron continues to expect growth of the oncology care franchise net product sales, but at a slower rate than originally projected. Key factors influencing our growth rate projections are the lower rate of new cancer patient treatment starts due to the COVID-19 pandemic, fewer clinic anti-emetic administrations during the first half of 2021 compared to the prior year, stronger than expected competition, and the impact of value-based payer reimbursement.
CINVANTI Net Product Sales: Net product sales of CINVANTI (aprepitant) injectable emulsion for the three and six months ended June 30, 2021 were $19.7 million and $38.2 million, respectively, compared to $22.6 million and $47.8 million, respectively, for the same periods in 2020. During the second quarter of 2021, CINVANTI demand units increased by 22% over the prior quarter, which was partially offset by a lower net selling price.
SUSTOL Net Product Sales: Net product sales of SUSTOL (granisetron) extended-release injection for the three and six months ended June 30, 2021 were $2.7 million and $4.3 million, respectively, compared to $0.1 million and $0.3 million, respectively, for the same periods in 2020. During the second quarter of 2021, SUSTOL demand units increased by 108% over the prior quarter, which was partially offset by a lower net selling price.
2021 Oncology Care Franchise Net Product Sales Guidance: Heron currently expects third quarter of 2021 net product sales for the oncology care franchise to increase approximately 5% to 10% compared to the prior quarter. The Company is withdrawing its full-year 2021 net product sales guidance for the oncology care franchise based on the uncertainty associated with the rate of new cancer patient treatment starts and the impact of value-based contracting reimbursement.
"The reception in the marketplace for ZYNRELEF has been outstanding, with a large number of ordering accounts for the first weeks of a launch. Another important accomplishment in these first weeks of launch has been securing an unprecedented number of commercial and Medicaid payers agreeing to reimburse ZYNRELEF outside the surgical bundled payment. We are currently working with the FDA to determine the requirements to expand the drug’s label for use in additional indications," said Barry Quart, Pharm.D., Chairman and Chief Executive Officer of Heron. "For the oncology care franchise, our net product sales for the first half of 2021 were $42.5 million, and we expect sales for CINVANTI and SUSTOL to continue to grow in the second half of the year. In addition, we continue to advance HTX-019 and remain on track to submit an NDA to the FDA for PONV prevention in Q4 2021."

Financial Results

Net product sales for the three and six months ended June 30, 2021 were $22.4 million and $42.5 million, respectively, compared to $22.7 million and $48.1 million, respectively, for the same periods in 2020.

Heron’s net loss for the three and six months ended June 30, 2021 was $61.0 million and $113.6 million, or $0.62 per share and $1.20 per share, respectively, compared to $55.2 million and $106.8 million, or $0.61 per share and $1.18 per share, respectively, for the same periods in 2020. Net loss for the three and six months ended June 30, 2021 included non-cash, stock-based compensation expense of $11.2 million and $22.7 million, respectively, compared to $11.1 million and $23.1 million, respectively, for the same periods in 2020.

As of June 30, 2021, Heron had cash, cash equivalents and short-term investments of $257.7 million, compared to $208.5 million as of December 31, 2020. Net cash used for operating activities for the six months ended June 30, 2021 was $104.9 million, compared to $90.2 million for the same period in 2020. The increase in our net cash used for operating activities was primarily due to changes in working capital to prepare for the launch of ZYNRELEF in July 2021, including manufacturing of commercial inventory. We expect our net cash used for operating activities to moderate later this year.

About ZYNRELEF for Postoperative Pain

ZYNRELEF is the first and only dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of nonsteroidal anti-inflammatory drug meloxicam. ZYNRELEF is the first modified-release local anesthetic to be classified by FDA as an "extended-release" product because ZYNRELEF is also the first and only extended-release local anesthetic to demonstrate in Phase 3 studies significantly reduced pain and significantly increased proportion of patients requiring no opioids through the first 72 hours following surgery compared to bupivacaine solution, the current standard-of-care local anesthetic for postoperative pain control. ZYNRELEF was approved by the FDA in May 2021 for use in adults for soft tissue or periarticular instillation to produce postsurgical analgesia for up to 72 hours after bunionectomy, open inguinal herniorrhaphy and total knee arthroplasty. Safety and efficacy have not been established in highly vascular surgeries, such as intrathoracic, large multilevel spinal, and head and neck procedures. In September 2020, the European Commission granted a marketing authorization for ZYNRELEF for the treatment of somatic postoperative pain from small- to medium-sized surgical wounds in adults. As of January 1, 2021, ZYNRELEF is approved in 31 European countries including the countries of the European Union and European Economic Area and the United Kingdom.

Please see full prescribing information, including Boxed Warning, at www.ZYNRELEF.com.

About HTX-019 for PONV

HTX-019 is an IV injectable emulsion formulation designed to directly deliver aprepitant, the active ingredient in EMEND (aprepitant) capsules, which is the only substance P/neurokinin-1 (NK1) receptor antagonist (RA) to be approved in the U.S. for the prevention of PONV in adults. The FDA-approved dose of oral EMEND is 40 mg for PONV, which is given within 3 hours prior to induction of anesthesia for surgery. In a Phase 1 clinical trial, 32 mg of HTX-019 as a 30-second IV injection was demonstrated to be bioequivalent to oral aprepitant 40 mg.

About CINVANTI for Chemotherapy Induced Nausea and Vomiting (CINV) Prevention

CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (HEC) including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic cancer chemotherapy (MEC) as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen. CINVANTI is an IV formulation of aprepitant, an NK1 RA. CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND capsules. Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK1 RA to significantly reduce nausea and vomiting in both the acute phase (0–24 hours after chemotherapy) and the delayed phase (24–120 hours after chemotherapy). The FDA-approved dosing administration included in the U.S. prescribing information for CINVANTI is a 30-minute IV infusion or a 2-minute IV injection.

Please see full prescribing information at www.CINVANTI.com.

About SUSTOL for CINV Prevention

SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens. SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 RA that utilizes Heron’s Biochronomer drug delivery technology to maintain therapeutic levels of granisetron for ≥5 days. The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer. SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0–24 hours after chemotherapy) and delayed phase (24–120 hours after chemotherapy).