On May 11, 2021 Curaleaf International (formerly EMMAC Life Sciences Group), Europe’s largest vertically integrated cannabis company, reported that its wholly owned subsidiary, Adven GmbH ("Adven"), has launched its own range of medical cannabis products in Germany, Europe’s largest medical cannabis market (Press release, EMMAC Life Sciences, MAY 11, 2021, View Source [SID1234579850]). The initial product launch is to meet immediate patient demand and will be extended over the course of the year to incorporate a number of different product formulations and formats to address a wide range of patient requirements. Germany is Europe’s largest medical cannabis market and is expected to be worth US$2.1 billion by 2025[1].

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Julian Vaterrodt, Managing Director, Adven GmbH, said: "German patients and practitioners are increasingly demanding high-quality, consistent and reliable European natural alternatives to help manage a wide range of complaints. Adven is committed to providing a differentiated product and service for the German market. We focus on providing a consistent supply of high-quality European medical cannabis and cutting-edge digital technologies to improve the patient and healthcare professional experience."

Antonio Costanzo, CEO of Curaleaf International, said: "We are very pleased to bring our first medical cannabis products to market in Germany and, with the rapid extension of our product range in 2021, establishing ourselves as a leader in Europe’s largest medical cannabis market. Curaleaf International’s European supply chain, from cultivation to product research and development and EU-GMP manufacturing processes across Europe, means we are able to guarantee a consistency of product and price to clinicians and patients in need of the highest quality medical cannabis."

[1] Brightfield Group 2020

On May 11, 2021 Perrigo Company plc (NYSE; TASE: PRGO), a leading global provider of Consumer Self-Care Products, reported financial results from continuing operations for the first quarter of fiscal year 2021 ended April 3, 2021 (Press release, Perrigo Company, MAY 11, 2021, View Source [SID1234579640]). The Consumer Self-Care Americas ("CSCA") segment, the Consumer Self-Care International ("CSCI") segment and Corporate are included in results from continuing operations. Financial results from the generic Rx pharmaceuticals business are reported as discontinued operations. All comparisons are against the prior-year fiscal first quarter, unless otherwise noted.

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President and CEO, Murray S. Kessler commented, "Two years ago, we began our journey to transform Perrigo from a healthcare to a consumer self-care company and with the actions taken this quarter, that transformation is now nearly complete. On March 1, 2021, we announced the divestment of our generic Rx business, our tenth transaction over the last two years, essentially completing our portfolio reconfiguration. We have made the necessary investments in infrastructure, capabilities, talent and capacity, and as a result have restored Perrigo to growth, all while weathering the storm of a horrific global pandemic. From where I sit, Perrigo is re-born."

Kessler further noted, "The reported declines in the first quarter were distorted by consumer pantry loading in the year ago quarter and by a historically weak cough/cold season this year, both of which were the result of COVID-19. Our business remains strong, even during this volatile environment, as evidenced by Perrigo’s first quarter 2021 two-year reported and organic compound annual growth rates, compared to the pre-COVID first quarter of 2019. Additionally, Perrigo’s first quarter performance results were in line with our expectations. Looking ahead to the rest of the year, we are encouraged to see the recent increases in retail store foot traffic, more people traveling again, and children returning to school in the fall. Further, according to leading sources, the 2021-2022 cough/cold season is expected to be more normal. That, in combination with Perrigo’s durable business fundamentals, strong pipeline of new product launches, productivity improvements in progress and e-commerce leadership, provides us confidence in our ability to deliver a strong second half and is why we are reaffirming our ‘3/5/7’ growth guidance for 2021."

Kessler concluded, "Perrigo is now a pure-play consumer self-care company that is on-trend and growing. When the Rx deal closes, we will have approximately $2 billion in cash to support the growth of the business and strengthen our balance sheet. We believe this represents a significant value creation opportunity, as Perrigo’s forward price-to-earnings multiple continues to trade at a significant discount to our CPG peers with similar growth profiles. I am more excited than ever about the future of Perrigo and am grateful to all of our teams around the world who have helped to transform Perrigo."

Refer to Tables I – IV at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company’s reported results are included in the attached Consolidated Statements of Operations, Balance Sheets and Statements of Cash Flows.

Given the difficulty in comparing first quarter 2021 net sales results to the first quarter of 2020 due to the pandemic-related pantry load and subsequent destock in the second quarter of 2020, two-year compound annual growth rates (CAGRs) are provided below, offering further insight into underlying growth trends.

First Quarter 2021 Financial Highlights From Continuing Operations

Perrigo first quarter net sales were $1.01 billion, a decrease of 6.8%, due primarily to the pandemic-related pantry load benefit in the prior year quarter and the negative impact from the very low incidence of cough/cold related illness this year. On a two-year CAGR basis, net sales grew 4.1%, including a negative 4.5 percentage points impact from cough/cold, while organic(1) growth declined 0.4%, including a negative 4.1 percentage points impact from the weak cough/cold season.
CSCA first quarter net sales of $641 million were 8.6% lower compared to the prior year quarter, with organic growth down 11.8%; CSCI first quarter net sales of $370 million were 3.4% lower versus the prior year quarter, with organic growth down 9.1%.
Reported diluted earnings per share ("EPS") for the first quarter of 2021 was $0.02 per diluted share as compared to EPS of $0.42 in the prior year quarter.
Adjusted diluted EPS, which excludes certain costs required to operate the RX business until the sale closes(2), for the first quarter of 2021 decreased 25.4% to $0.50 per diluted share as compared to $0.67 per diluted share in the prior year quarter. The prior year quarter benefited from an estimated $0.16 per diluted share from the pandemic-related pantry load, while the current year quarter was negatively impacted by an estimated $0.14 per diluted share from the weak cough/cold season.
(1) See attached Appendix for details. Organic net sales growth excludes the effects of acquisitions and divestitures and the impact of currency.

(2) In addition to other non-GAAP adjustments as described in the attached appendix, adjusted profit measures, including adjusted EPS and adjusted operating income, exclude from both periods certain costs, which are reported in GAAP continuing operations but were previously allocated to the RX business. On a go-forward basis, such costs will either be covered by the transition services agreement or eliminated following closing. Accordingly, as described below under "Non-GAAP Adjustments", we do not believe such operational costs are representative of the future expenses of our continuing operations. See the attached Appendix for additional details.

First Quarter 2021 Perrigo Results From Continuing Operations

Perrigo net sales for the first quarter were $1.01 billion, a decrease of $73 million or 6.8%, including positive impacts of 3.0 percentage points and 2.3 percentage points from acquisitions and favorable currency movements, respectively, offset by a negative impact of 1.2 percentage points from divestitures. Organic net sales declined 10.9%, including the estimated pandemic-related pantry load benefit in the prior year quarter of 6.8 percentage points and the estimated negative impact from the very low incidence of cough/cold related illness this year of 6.4 percentage points.

On a two-year CAGR basis, net sales grew 4.1%, including a negative 4.5 percentage points impact from the very low incidence of cough/cold related illness this year. Organic net sales declined 0.4%, including a negative 4.1 percentage points impact from the weak cough/cold season.

Net sales in the quarter were driven by 1) $32 million from the acquisitions of Dr. Fresh and Eastern European dermatology brands, 2) organic growth of $25 million, excluding the estimated impacts from the pandemic-related pantry load benefit in the prior year and the very low incidence of cough/cold related illness this year, and 3) $25 million in net favorable currency movements. These gains were more than offset by 1) the estimated impact from the pandemic-related pantry load benefit in the prior year of $73 million, 2) the estimated impact from the very low incidence of cough/cold related illness this year of $68 million, and 3) $14 million from divested businesses.

First quarter reported operating income was $51 million in 2021 and $86 million in 2020. Adjusted operating income was $118 million in 2021 and $151 million in 2020, a decrease of $33 million or 21.6%. Results were impacted by lower net sales volumes leading to lower gross profit, divestitures, and higher operating expenses including R&D investments. These factors were partially offset by lower advertising and promotion expenditures, acquisitions and positive pricing.

Reported net income was $3 million, or $0.02 per diluted share, versus net income of $58 million, or $0.42 per diluted share in the prior year period. Excluding certain charges as outlined in Table I, first quarter 2021 adjusted net income was $67 million, or $0.50 per diluted share, versus $92 million, or $0.67 per diluted share, for the same period last year. Adjusted EPS was lower as positive impacts from growth in certain base business categories, lower advertising and promotion expenditures, acquisitions and savings from Project Momentum were more than offset by the estimated pandemic-related pantry load benefit in the prior year quarter of $0.16 per diluted share, the estimated negative impact from the very low incidence of cough/cold related illness this year of $0.14 per diluted share, and divested businesses of $0.03 per diluted share.

First Quarter 2021 Business Segment Results From Continuing Operations

Consumer Self-Care Americas Segment

CSCA first quarter net sales of $641 million were 8.6%, or $60 million, lower than the prior year, including a positive 3.4 percentage points impact from the Dr. Fresh acquisition. Organic net sales decreased 11.8%, including the estimated pandemic-related pantry load benefit in the prior year quarter of 7.1 percentage points and the estimated negative impact from the very low incidence of cough/cold related illness this year of 5.0 percentage points.

On a two-year CAGR basis, net sales grew 4.9%, including a negative 3.6 percentage points impact due to the very low incidence of cough/cold related illness this year. Organic net sales grew 0.8%, including a negative 3.3 percentage points impact from the weak cough/cold season.

OTC net sales in the quarter were driven by 1) strong e-commerce growth as consumers continued shifting purchases to online where Perrigo has greater market share than in-store, which more than offset lower in-store purchases as measured by IRI MULO, 2) double-digit percentage growth in the branded OTC product portfolio led by Prevacid and ScarAway, and 3) higher net sales in the Digestive Health category, due primarily to favorable consumer conversion to Perrigo OTC products and incremental new product sales from Esomeprazole Mini, and in the Skin & Personal Hygiene category, due primarily to higher demand in the minoxidil franchise. More than offsetting these drivers were the pandemic-related pantry load benefit in the prior year quarter and the very low incidence of cough/cold related illness this year, which impacted the Upper Respiratory and Pain & Sleep Aids categories.

Perrigo omnichannel POS (point of sale) declined 18.7% for the 13-weeks ending March 21, 2021, compared to an estimated decline in total store brand OTC omnichannel POS data of 19.8%, leading to a Perrigo share gain from store brand competitors of 27 basis points. Perrigo’s share of total OTC on an omnichannel basis was stable in categories that declined an estimated 19.1% in the categories in which Perrigo competes.

Net sales in the Oral Self-Care category were driven by the Dr. Fresh acquisition, strong growth in e-commerce net sales, which doubled compared to the prior year quarter, and new products. These drivers were partially offset by soft demand for travel-related oral care products related to COVID-19 and lower customer inventory compared to the prior year due to timing of orders.

In the Nutrition category, net sales growth in e-commerce and contract manufacturing were more than offset by the pandemic-related pantry load benefit in the prior year quarter and an increase in governmental benefits that led to a decline in store brand market share.

Reported operating income for CSCA was $96 million. Adjusted operating income decreased $26 million to $111 million due primarily to 1) gross profit flow-through on lower net sales, 2) higher input costs on certain products and unfavorable plant overhead absorption due primarily to lower production volumes compared to the prior year pandemic-related pantry load benefit, and 3) higher operating expenses, including R&D investments. These factors were partially offset by favorable product mix.

Consumer Self-Care International Segment

CSCI net sales of $370 million decreased $13 million, or 3.4%, including a positive 6.8 percentage points impact from favorable currency movements, a positive 2.3 percentage points impact from acquisitions and a negative 3.5 percentage points impact from divestitures. Organic net sales were 9.1% lower, including the estimated 9.0 percentage points negative impact from the very low incidence of cough/cold related illness this year and the estimated pandemic-related pantry load benefit in the prior year quarter of 6.2 percentage points.

On a two-year CAGR basis, CSCI net sales grew 2.6%, including a negative 6.1 percentage points impact due to the very low incidence of cough/cold related illness this year. Organic net sales declined 2.9%, including a negative 5.5 percentage points impact from the weak cough/cold season.

Net sales in the quarter were driven by 1) new products, including line extensions in the ACO dermatology product line and in the Davitamon and Granufink VMS (Vitamins, Minerals and Supplements) product lines, 2) positive pricing, 3) the acquisition of three Eastern European OTC Dermatology Brands, 4) higher net sales in the Pain & Sleep Aids category, and 5) $26 million in favorable currency movements. These drivers were more than offset by 1) the very low incidence of cough/cold related illness this year, which impacted the Upper Respiratory category, 2) comparison to the pandemic-related pantry load benefit in the prior year quarter, 3) lower demand for anti-parasite products within the Skincare & Personal Hygiene category due primarily to COVID-19 related school closings and limited travel, and 4) divested businesses of $14 million.

Reported operating income was $17 million. Adjusted operating income decreased $4 million to $60 million due primarily to gross profit flow-through on lower net sales and the impact from divested businesses. These factors were partially offset by lower advertising and promotion spend, greater operational efficiencies and favorable currency movements.

U.S. Licensing Agreement with Burt’s Bees

Perrigo announced today the existence of a licensing agreement with Burt’s Bees to offer a comprehensive, innovative line of organic baby formulas and nature-based remedies for kids under the Burt’s Bees brand. This partnership combines Perrigo’s R&D, regulatory, and sales and marketing capabilities with Burt’s Bees leading trusted and distinctive brand and deep understanding of the efficacy of nature-based ingredients to care for baby and mom, to create innovative organic and nature-based remedies.

Fiscal 2021 Outlook From Continuing Operations

The Company reaffirmed its fiscal 2021 outlook and expects to deliver 3% organic net sales growth, 5% adjusted operating income growth and 7% adjusted diluted EPS growth, translating into an adjusted diluted EPS range of $2.50 to $2.70.

The Company cannot reconcile its expected adjusted diluted earnings per share to diluted earnings per share under "Fiscal 2021 Outlook" without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company’s control and/or cannot be reasonably predicted at this time.

On May 11, 2021 Kronos Bio, Inc. (Nasdaq: KRON), a company dedicated to transforming the lives of those affected by cancer, reported recent business progress and first quarter financial results (Press release, Kronos Bio, MAY 11, 2021, View Source [SID1234579668]).

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"With continued progress in our preclinical and clinical programs and significant milestones expected this year, we look forward to hosting a research and development day to present our pipeline and unveil our development strategy for both of our clinical-stage SYK inhibitors entospletinib and lanraplenib," said Norbert Bischofberger, Ph.D., president and CEO. "We recently showcased progress with our CDK9 program at the AACR (Free AACR Whitepaper) annual meeting in April, where we presented preclinical data indicating that KB-0742 could have utility in the treatment of MYC-amplified cancers. We look forward to sharing more about our development plans for this compound at our research and development day."

Dr. Bischofberger added: "I would also like to take this opportunity to reflect on the recent passing of our Board Member, Dr. John C. Martin, a dear friend and mentor, and to convey our deepest sympathies to John’s family and everyone who was fortunate enough to have known him."

Recent Highlights

Presented preclinical data for KB-0742, the company’s potent oral, highly selective cyclin dependent kinase 9 (CDK9) inhibitor, at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting. The data showed that CDK9 inhibition on an intermittent dosing schedule with KB-0742 resulted in sustained inhibition of tumor growth in multiple types of solid tumors, and suggested that genomic amplification of MYC, a well-characterized transcription factor and a long-recognized driver of cancer, is a key feature in defining sensitivity to CDK9 inhibition.

Announced the appointment of Taiyin Yang, Ph.D., to its board of directors. Dr. Yang currently serves as the executive vice president of Pharmaceutical Development and Manufacturing at Gilead Sciences, Inc., and has more than four decades of experience developing and manufacturing medicines in a variety of therapeutic categories.

Announced a positive End-of-Phase 2 meeting with the U.S. Food and Drug Administration (FDA) for spleen tyrosine kinase (SYK) inhibitor entospletinib. Kronos Bio will proceed with its plan to assess measurable residual disease (MRD) negative complete response (CR) as the primary endpoint in a registrational Phase 3 trial to support potential accelerated approval of entospletinib in patients newly diagnosed with NPM1-mutated acute myeloid leukemia (AML). The company plans to initiate the Phase 3 trial in mid-2021, with MRD negative CR data expected in the second half of 2023.

Announced the first patient was dosed in the Phase 1/2 clinical trial of KB-0742, which is being developed to treat MYC-amplified solid tumors.
Pipeline updates planned at upcoming Virtual R&D Day on May 25, 2021

Unveil the development strategy for the company’s SYK inhibitors entospletinib and lanraplenib in AML. Kronos Bio executives will be joined by Eytan M. Stein, M.D., assistant attending physician and director, Program for Drug Development in Leukemia, Leukemia Service, Department of Medicine at Memorial Sloan Kettering Cancer Center, who will provide an overview of AML and the current treatment landscape.

Highlight the opportunity to target MYC through CDK9 inhibition with KB-0742, including a review of preclinical data, expectations for initial safety, pharmacokinetic and pharmacodynamic data anticipated in the fourth quarter of 2021 and potential populations for the expansion cohorts in the second stage of the company’s Phase 1/2 clinical trial.

Provide an overview of the company’s differentiated drug discovery platform and potential future pipeline programs.
The live webinar will begin at 1 p.m. ET on Tuesday, May 25, 2021, and will conclude at approximately 4:00 p.m. ET. Registration is accessible on the Investors & Media section of the company’s website at www.kronosbio.com. A replay of the webcast will be archived and available following the event.

First Quarter Financial Highlights

Cash, Cash Equivalents and Investments: As of March 31, 2021, cash, cash equivalents and investments totaled $440.6 million.

R&D Expenses: Research and development expenses were $17.6 million for the first quarter of 2021, which includes $2.5 million in non-cash stock-based compensation expense. R&D expenses for the quarter were primarily driven by costs associated with initiating and conducting the company’s clinical trials.

G&A Expenses: General and administrative expenses were $8.6 million for the first quarter of 2021, which includes $2.7 million in non-cash stock-based compensation expense.

Net Loss: Net loss for the first quarter of 2021 was $26.1 million, or $0.48 per share, including non-cash stock-based compensation expense of $5.2 million.

On May 11, 2021 Dynavax Technologies Corporation ("Dynavax") (Nasdaq: DVAX) reported the pricing of $200.0 million aggregate principal amount of 2.50% convertible senior notes due 2026 (the "notes") in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") (Press release, Dynavax Technologies, MAY 11, 2021, View Source [SID1234579684]). Dynavax also granted the initial purchasers of the notes an option to purchase up to an additional $30.0 million aggregate principal amount of notes. The sale of the notes is expected to close on May 13, 2021, subject to customary closing conditions.

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The notes will be general unsecured obligations of Dynavax and will accrue interest payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021, at a rate of 2.50% per year. The notes will mature on May 15, 2026, unless earlier converted, redeemed or repurchased. The initial conversion rate of the notes will be 95.5338 shares of Dynavax’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $10.47 per share of Dynavax’s common stock). The initial conversion price of the notes represents a premium of approximately 32.5% over the last reported sale price of Dynavax’s common stock on May 10, 2021. The notes will be convertible by the holders thereof into cash, shares of Dynavax’s common stock or a combination of cash and shares of Dynavax’s common stock, at Dynavax’s election.

Dynavax may redeem for cash all or any portion of the notes, at its option on or after May 20, 2024 and prior to the 31st scheduled trading day immediately preceding the maturity date, if the last reported sale price of Dynavax’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which Dynavax provides notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If Dynavax undergoes a "fundamental change" (as defined in the indenture governing the notes), subject to certain conditions and exceptions, noteholders may require Dynavax to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or if Dynavax delivers a notice of redemption, Dynavax will, in certain circumstances, increase the conversion rate for a noteholder who elects to convert its notes in connection with such a corporate event or convert its notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be.

Dynavax estimates that the net proceeds from the offering of the notes will be approximately $195.1 million (or approximately $224.4 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Dynavax. Dynavax expects to use the net proceeds from the offering of the notes, together with cash on hand, to repay in full the outstanding debt and other obligations under Dynavax’s term loan agreement and to pay the costs of the capped call transactions described below. Dynavax expects that approximately $190.2 million will be needed to repay the outstanding debt and other obligations under the term loan agreement and approximately $24.2 million will be needed to pay the cost of the capped call transactions.

If the initial purchasers exercise their option to purchase additional notes in full, Dynavax expects to use approximately $3.6 million of the net proceeds from the sale of such additional notes to enter into additional capped call transactions. Dynavax expects to use any remaining net proceeds from the sale of such additional notes for general corporate purposes.

In connection with the pricing of the notes, Dynavax entered into capped call transactions with one of the initial purchasers and other financial institutions (the "option counterparties"). The capped call transactions will cover, subject to customary adjustments, the number of shares of Dynavax’s common stock that initially underlie the notes. The capped call transactions are expected to offset the potential dilution to Dynavax’s common stock as a result of any conversion of notes, with such offset subject to a cap initially equal to $15.80 (which represents a premium of 100% over the last reported sale price of Dynavax’s common stock on May 10, 2021).

In connection with establishing their initial hedges of the capped call transactions, Dynavax has been advised that the option counterparties and/or their respective affiliates expect to enter into various derivative transactions with respect to Dynavax’s common stock concurrently with or shortly after the pricing of the notes and/or purchase shares of Dynavax’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Dynavax’s common stock or the trading price of the notes at that time.

In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Dynavax’s common stock and/or purchasing or selling Dynavax’s common stock or other securities of Dynavax in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each exercise date of the capped call transactions, which are expected to occur during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity date of the notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the notes). This activity could also cause or avoid an increase or a decrease in the market price of Dynavax’s common stock or the notes, which could affect a noteholder’s ability to convert its notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that a noteholder will receive upon conversion of such notes.

Neither the notes, nor any shares of Dynavax’s common stock issuable upon conversion of the notes, have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

On May 11, 2021 Aptevo Therapeutics Inc. ("Aptevo" or "the Company") (NASDAQ:APVO), a clinical-stage biotechnology company focused on developing novel immuno-oncology therapeutics based on its proprietary ADAPTIR and ADAPTIR-FLEX platform technologies, reported its financial results for the quarter ended March 31, 2021 (Press release, Aptevo Therapeutics, MAY 11, 2021, View Source [SID1234579700]).

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"We are pleased to report progress in the clinical trial of our ADAPTIR platform candidate APVO436, with the dose limiting toxicity (DLT) evaluation in cohorts 1 through 9 now completed and 44 patients enrolled to date in cohorts 1-10. We remain confident in the clinical impact potential of APVO436 and our platform technologies, and look forward to sharing interim data readouts from our ongoing APVO436 study later this year," said Mr. Marvin White, President and CEO of Aptevo. "The transaction with HCR, which we completed in March 2021, provided significant non-dilutive funding, which adds to our cash runway and helps fund the company through the next twelve months."

First Quarter 2021 Financial Results Summary

As announced in March, Aptevo received $35 million ("the Investment Amount") from its sale of the right to royalty payments made by Pfizer Inc. ("Pfizer") with respect to net sales of RUXIENCE to an entity managed by HealthCare Royalty Management, LLC ("HCR"). Aptevo is eligible to receive additional payments in aggregate of up to an additional $32.5 million based on the achievement of sales milestones in 2021, 2022, and 2023 (collectively, the "Milestone Amounts"). The Royalty Purchase Agreement further provides that, once HCR reaches aggregate royalty payments totaling 190% of the Investment Amount plus the Milestone Amounts to the extent paid by HCR to the Company, Aptevo will be entitled to receive 50% of any additional royalty payments by Pfizer thereafter. In connection with this royalty purchase agreement, Aptevo amended its term loan agreement with MidCap Financial and used $10 million of the proceeds received to pay down outstanding principal.

Cash Position: Aptevo had cash and cash equivalents as of March 31, 2021 totaling $58.8 million, including restricted cash of $1.3 million. The restricted cash is expected to be released over the next twelve months.

Royalty Revenue: Royalty revenue was $2.4 million for the three months ended March 31, 2021, related to the royalty from Pfizer on global net sales of RUXIENCE, a biosimilar to the drug RITUXAN, launched by Pfizer in early 2020. RUXIENCE is a trademark of Pfizer; RITUXAN is a trademark of Biogen. Due to our continuing involvement under the Definitive Agreement originally between Trubion and Wyeth, we continue to recognize royalty revenue on net sales of RUXIENCE and record the royalty payments to HCR as a reduction of the liability when paid. As such payments are made to HCR, the balance of the liability will be effectively repaid over the life of the Royalty Purchase Agreement.

Research and Development Expenses: Research and development expenses increased to $5.4 million for the three months ended March 31, 2021 from $4.0 million for the three months ended March 31, 2020 as we continue to invest in the APVO436 clinical trial and our preclinical candidates, including ALG.APV-527, APVO603 and APVO442.

General and Administrative Expenses: For the three months ended March 31, 2021, general and administrative expenses increased to $3.9 million from $3.6 million for March 31, 2020, with higher costs for professional services.

Other Expense, Net: Other expense, net consists primarily of interest on debt and costs related to debt extinguishment. Other expense, net was $0.8 million for the three months ended March 31, 2021 and $2.4 million for the three months ended March 31, 2020. A slight increase in interest expense this quarter was offset by a significant decrease due to a loss on extinguishment of debt of $2.1 million recognized in the first quarter of 2020 when we repaid our previous loan to MidCap Financial using the proceeds from the sale of Aptevo BioTherapeutics LLC.

Discontinued Operations: Income from discontinued operations was $0.4 million for the three months ended March 31, 2021 and $12.9 million for the three months ended March 31, 2020. For the three months ended March 31, 2021, we collected a deferred payment of $0.2 million from Medexus related to fourth quarter 2020 IXINITY sales and $0.2 million from the Saol Therapeutics, related to the 2017 sale of the Hyperimmune Business to them. For the three months ended March 31, 2020, we recognized net income from discontinued operations totaling $12.9 million. This included the gain on the sale of Aptevo BioTherapeutics LLC of $14.3 million and net operating losses from Aptevo BioTherapeutics LLC of $1.6 million related to the period prior to the sale on February 28, 2020.

Net Income (Loss): Aptevo’s net loss for the three-month period ended March 31, 2021 was $(7.3) million or $(1.64) per share, as compared to a net income of $2.9 million or $0.89 per share for the corresponding period in 2019. Our net loss from continuing operations for the first quarter of 2021 was $(7.6) million compared to $(10.0) million in the first quarter of 2020.

Liability Related to Sale of Future Royalties: We treat the Royalty Purchase Agreement with HCR as a debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream. The liabilities related to sale of future royalties and the debt amortization are based on our current estimates of future royalties expected to be paid over the life of the arrangement. We will periodically assess the expected royalty payments using projections from external sources. To the extent our estimates of future royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will adjust the effective interest rate and recognize related non-cash interest expense on a prospective basis. We are not obligated to repay the proceeds received under the Royalty Purchase Agreement with HCR.